Archive for December, 2010

What follows is an item from the (Phil) Matier and (Andy) Ross column on SFGate earlier this week. It’s about the Bay Citizen, which, according to @jayrosen_nyu, (who attributes this to Bay Citizen Editor Jonathan Weber) was funded to the tune of $14 million, with $5 million coming from San Francisco philanthropist Warren Hellman, but is now out looking for public funding.

I applaud all efforts to commit quality Journalism, and the Bay Citizen certainly is that. The future of quality journalism will ultimately depend on it being built as a business and not a charitable enterprise. Independence is critical. Bay Citizen is smart to diversity funding, but we can’t lose sight of the need to have quality journalism support itself.

Here’s the item:

“Can you spare a dime? Move over, Street Sheet – now the New York Times-affiliated Bay Citizen is hustling donations on the corner.

“One of our readers ran across two of the online publication’s hired guns trying to scrape up donations last week over on Lakeshore Avenue in Oakland. They weren’t offering free papers, but those who pledged were eligible to receive a free Dave Eggers poster and an editor’s newsletter.

“So what happened to the $5 million in seed money that the 6-month-old Bay Citizen got from San Francisco philanthropist Warren Hellman for an experiment in local nonprofit journalism?

“Bay Citizen membership director Rose Roll tells us that money – a chunk of which went to hiring top executives – is expected to last for only about a year.

“‘Of course, we want to be sustainable and rely on a variety of funding sources, and one of the most crucial is memberships,’ Roll said.

“So the online paper – some of whose content runs in the Times – launched a fundraising drive, with a half dozen paid professionals trolling the streets in hopes of landing new members at a minimum $50 a pop.

“Roll wouldn’t reveal how many people have signed up, but said, ‘Our goal by the end of the year is to have between 1,500 and 2,000 members.’

Read more: http://www.sfgate.com/cgi-bin/article.cgi?f=/c/a/2010/12/25/BAQ61GURLD.DTL#ixzz19cLpK2OS

Suddenlink is a small cable operator (about a million subs) in the south and southwest. But it’s the scene of just the latest skirmish in the ongoing wars between content providers and distributors, a war that in the new digital world continues to go better for the content owners.

And for we the consumers, it’s worth paying attention to how these smaller battles play out as an indication of how the overall war is going.

In this case, according to Suddenlink, Viacom, wants a 20% hike in overall payments from Suddenlink to continue to allow Suddenlink to carry all the Viacom networks, a rather large group that includes Nickelodeon, MTV, TV Land, Comedy Central, Spike TV, VH1 and CMT, Logo, Palladia HD, Nick Jr., TeenNick, NickToons, Nick2, MTV Hits, MTV2, MTV Jams, Tr3s, VH1 Classic, VH1 Soul, and CMT Pure Country.

On its website, Suddenlink told it’s subscribers:
“Unfortunately, despite a challenging economic environment, Viacom wants a more than 20% overall increase in what they are paid, which includes significant payment for a new network with R-rated programming that our customers have not requested and may not want.”

“In the unusual event these negotiations are unsuccessful and Viacom removes its channels, we reiterate our pledge to reduce customer prices by the cost of the affected channels for whatever length of time they are unavailable,” Suddenlink added.

What Viacom is offering to offset the sting of the large increase, is the addition of yet another movie network from Viacom, Epix.

Suddenlink has until midnight, Dec. 31, to agree or lose all the Viacom Networks for its customers.

The Viacom position is consistent with many content providers now feeling the growing power they have in a world where the ultimate viewer now has more and more choices to get that content. Not only are they pushing for a huge price increase, they are demanding more real estate with the addition of a new network on the system. Gone are the days that the distributor owned a market in a government sanctioned monopoly and had enormous control over whether or not the content provider could even serve a particular market.

While cable companies still do provide multiple services that consumers want and need, and are scrambling to diversify their businesses, the content providers are now pushing hard in every single negotiation and for the most part are getting improved deals.

To be sure, the cable companies are also negotiating for the consumer in these negotiations. Any price increases are likely to be passed on directly to the consumer.

The consumer is also shouting for more choice over WHAT channels he or she pays for, rather than the present situation where the consumer is paying for many channels because they are on “tiers”, i.e. grouped as a single buy with several other networks. That is not something the cable operators want. They prefer tiers, which give them power to divide up fees.

No matter what happens, the one sure bet is that the consumer will be paying more for the content. The ultimate question, which centers around whether or not the consumer is getting any more for his or her money, will be harder to answer.

It’s about time. People don’t have any.
For the ninth straight year Fox News is cable television’s top News Network. This year, it beat CNN and MSNBC combined.

And, the top five cable news programs among 25-54 year-old viewers were all on Fox: The O’Reilly Factor, Hannity, Glenn Beck, On the Record and, get this, The O’Reilly Factor repeat show.

This year, for the first time, MSNBC has moved into second place, with CNN dropping to third place. CNN’s marquee shows –Anderson Cooper’s 360 and Parker-Spitzer have been extremely weak.

Politics and prejudices aside, there is a central theme to this change, and it’s not an altogether positive one. I don’t believe this is about one political opinion versus another. I believe this is about people wanting, and needing, to form opinions faster and with less work on their own part.

It is, frankly, easier for someone to turn on either Fox News or MSNBC, listen to the frequent opinion expressed, right or left, and benchmark themselves against that opinion rather than forming their own opinion based on independent thinking.

So if a new Supreme Court Justice was named tomorrow, more people would check out what Fox and MSNBC said about him or her, and then quickly decide whether or not they were in favor or opposed to approving the candidate. “If Fox (or MSNBC) like him, so do I,” a viewer can decide, (or the opposite) based totally on that viewer’s political stance and how it relates to Fox or MSNBC.

In the past, many of those people would have spent the time with a more objective outlet, like CNN or the New York Times, done more research of the candidate, and made up their own minds. Now, it’s just faster to have someone do that for you.

It’s a bad thing for democracy. We are creating a less-informed but more opinionated public.

By the way, it does not mean that more objective sources CAN’T be more interesting. They just aren’t. In an effort to appear totally unbiased, CNN ridded itself of opinion or emotion. You CAN express opinions and still present a balanced report. It takes more work on the news gathering side to both report and curate.

But that will be the future of Journalism.

Troubled news channel CNN reorganized its reporting structure yesterday, taking a giant step in the right direction. Consolidating the many CNN news operations under one structure is apparently a “Key recommendation of the One CNN project” which appears to be moving the worldwide news operation toward the kind of convergence that will be necessary in the new digital media landscape I outline in my book “C-Scape”.

Besides recognizing the fact that consumers now engage CNN on multiple platforms, this new structure, announced by Ken Jautz and Tony Maddox, should allow the news gathering force to adapt to new technologies and delivery forms quickly and without disruption. The important thing is to build an efficient news gathering operation that is able to deliver it’s output on every platform imaginable, thus reaching their prime audience wherever and whenever they want to be reached.

Under the new structure announced yesterday, News gathering for all the CNN operations will, for the first time, be placed unto one group, operated by Maddox and a newly-named (in 2011) Managing Editor. The group will produce the content for CNN, CNN International, CNN.com “and all other editorial units and platforms”.

This is much more than a traditional reorganization. This is a major step in the right direction by a news operation desperately in need of rejuvenation and one that has been bogged down by confusing and overlapping reporting and editing structures. There is still a lot of work needed to clean up operations on the inside. For example, this structure will require a new generation of editor/producers who understand multiple platforms. Do they have them? Can they be found?

Also, no mention was made of CNNMoney.com and where it fits in the new news gathering operation, but one can hope that they will continue down the path of convergence.

And, as Time Warner is acutely aware, the potential for success ultimately lies in the execution of the idea, not the idea itself.

Good news on several fronts in the media world this week. According to Advertising Age, the media business saw a real turnaround this year. After a disastrous 2009, during which the 100 Leading Media Companies saw revenues fall (they dropped 3.8%) for the first time since Ad Age started paying attention in 1981, the picture turned positive again in the first half of 2010.

Revenue for the group jumped 6.1% in the first half of 2010. Even more interesting is the fact that employment by the top media companies, which had dropped to their lowest level in May of this year, has also started to rebound. Again, according to Ad Age, U.S. Media Employment has added 4,600 jobs since May. MaganGlobal, the forecasting arm of Interpublic agencies, predicts the final tally for all of 2010 will be 6.9%. They expect growth to continue throughout 2011, but at a slightly reduced pace of 5.4%

Another indication of an improving Media environment came this week when American Media, Inc., announced that a judge had approved its reorganization and that it would be coming out of bankruptcy a mere 5 weeks after it entered it. (Full Disclosure, I am a board member at AMI).
American Media, publisher of Star Magazine, The National Enquirer, Shape and Mens’ Fitness, among others, was one of 14 companies in the Ad Age top 100 that went through or are going through bankruptcy reorganization over the past two years.

The good news is that many of these companies, particularly those like Readers Digest and American Media, were actually functioning rather well with significant profits, but could not carry the huge debt loads they had been saddled with when they were purchased by financially driven buyers before the advertising recession.

The lesson the industry learned, again, is that advertising-dependent companies get vulnerable quickly during economic downturns. The economics of high leverage deals can work in robust times, but when advertising goes south, a high debt burden can’t be “Managed” away by tightening operations or cutting costs. The danger is that in trying to carry a huge debt load while cutting costs, a company has to cut so much the products are damaged forever.

Fortunately, in the case of American Media, Readers Digest and others, many of the debt holders have participated in debt for equity swaps that demonstrate their appetite for not only saving the company in question but positioning it for the kind of growth that will make those equity investments pay off.

It’s nice to the confidence in the industry and it’s a testimony to several companies that learned to manage through tough times, even saddled with huge debt, and maintain companies worth saving and investing in. They often redefined lean and mean and give us hope that the improved profitability of those firms going forward will come from increased revenues not decreased costs.

Just getting a Net Neutrality law on the books is huge. It does make the statement that the Internet has to be open to everyone. It tries to tell everyone to play fair. Like so many laws, though, there will ultimately be a series of court cases and challenges that determine just how much protection this new law provides up and coming entrepreneurs trying to launch businesses on the Internet.

For a time it seemed like there might never be a law. Many existing media companies were conflicted, with some divisions favoring strong rules and other divisions as adamantly in favor of doing nothing.

But the step taken by the FCC today is clearly in the right direction. It recognizes the growing power of content and giving the public the best access to that content for a fair price. These digital platforms will go way beyond the business they deliver today.

Increasingly, the Internet and it’s affiliated networks will be delivering everything from our childrens’ education to important information to all forms of entertainment. Encouraging entrepreneurism on these platforms is mission critical for our future and the future of American business.

It will be up to courts and individual cases to help sculpt the actual interpretation of the rules, but for supporters of a free and open internet, that’s the best possible outcome here. They will be able to take individual cases to court or elsewhere and challenge the clarity of the ruling.

Online Video web site Hulu quietly pulled the plug on its planned IPO this week. The company had hoped to use the money raised by selling stock to buy more rights to content that it could put up on its platform.

Now it has shifted its attention to other forms of fund raising, including new subscription plans that would have viewers directly pay for content. It may also ask it’s investors to put in more money.

The harsh reality is that Hulu has had to face up to the fact that it doesn’t actually own any of its content and being only a distributor, especially on an internet-based platform, isn’t enough any more. Without long term ownership of content, investors have become skittish. In the new digital media world Content once again becomes king. With so many distribution platforms floating around, content providers have everything to gain by being on as many effective channels as possible. It’s hard to know which platforms will emerge as dominant ones as newer and newer technology is introduced into the marketplace, so most content creators will likely do what they can to deliver that content to a consumer every possible way the consumer wants it.

That doesn’t bode well for the businesses that do little more than aggregate.