| Friday, Jan 11, 2008 |
What's inside:
Today's Media News
1. Moonves Optimistic About CBS' Future by Wayne Friedman
2. Local TV Ad Spending Projected To Climb Double Digits by Wayne Friedman
3. French Plan Likely To Reduce Supply Of TV Ad Time, Accelerate The Internet by Joe Mandese
4. Young Puts KRON On Block, SF Market Big Draw by David Goetzl
5. DirecTV: Ads Don't Deliver Goods, But Up Revs by David Goetzl
6. Satellite Radio Could Get HD Radio by Erik Sass
7. Mag Bag: Digital Initiatives Soar In 2007 by Erik Sass
On Media
8. Key To Recession Survival: Master Consumer Media Habits by Diane Mermigas
News Briefs
9. CBS News, WGA Reach Agreement
10. Kia Inks Deal With NBC
11. Barrington Joines MPG, Exits MyNetwork TV
Today's News
1. Moonves Optimistic About CBS' Future
by Wayne Friedman
CBS has no makegoods inventory problem this season--but it will see lower overall revenue for this broadcast year, while shelling out even lower production costs. For a beleaguered industry, that's tantamount to good news.
"In terms of the near term, we'll finish the TV season just fine," said CBS Corp. president/CEO Les Moonves, during CitiGroup's Annual Global Entertainment, Media & Telecommunications Conference. "Obviously, revenue will be down because ratings are down," he said, "but our costs of producing original programs will be down more."
Regarding makegoods inventory and other potential problems, such as NBC recently giving back cash to advertisers, Moonves noted: "There were some makegoods from the 2006-2007 season. It has been primarily taken care of. Scatter pricing has been very high, and we haven't had to turn away any scatter buys. We don't view it as a serious liability."
In regard to giving cash back to advertisers, he said: "I couldn't imagine that scenario."
Overall, it's going to be a big year for CBS stations, Moonves said, because some $3 billion in political advertising will be available. "We anticipate taking a big chunk of that; radio will take a big chunk of that as well," he said.
The writers' strike continues for TV networks and studios. But Moonves is hopeful. "I'm guardedly optimistic it will be over in the next few months," he said.
He added that all CBS businesses continue to do well--outperforming the company's own estimates for the fourth quarter of 2007. Moonves noted that with plenty of cash on hand, CBS will look into buying digital and other new media assets.
2. Local TV Ad Spending Projected To Climb Double Digits
by Wayne Friedman
Local television has cause for hope. Station revenues sank just over 1% to $22.2 billion in 2007--but should climb 11% in 2008 because of higher political ad dollars, according to the Chantilly, Va.-based financial advisory service, BIA Financial Network.
BIA says the revenue gain in 2008 will mean a 10-year high for TV station advertising revenue.
Future years will show more of a yo-yo effect. BIA projects a 3.0% decline in 2009; an 8% gain in 2010, and a 1.4% decline in 2011. TV station advertising revenues are on a two-year cycle, since they see Olympic advertising and political advertising revenue every other year.
BIA said big growing markets in 2007 included Florida, Pennsylvania, Ohio, Virginia, South Carolina, Maine, Iowa, Wisconsin, Colorado, Nevada, and southern California. All states witnessed increases of 12% of more.
The lower revenue gains of between 6% and 8% were seen in Vermont, New Hampshire, Massachusetts, Rhode Island, Connecticut, Delaware, Utah, and parts of Montana, North Dakota, Nevada, Kansas, Oklahoma, Michigan and Alabama.
BIA also reported 2007 sales of 294 stations for an estimated $4.6 billion, compared with 202 sold in 2006 for $18.1 billion. A large piece of the 2006 total was the sale of Univision stations (as part of the network deal) and four NBC stations.
The top station transaction in 2007 was News Corp.'s sale of eight television stations in markets that included Cleveland, Denver, St. Louis, Kansas City and Milwaukee. The second-largest transaction of the year was Lincoln Financial Media's sale of three stations in Charlotte, NC, Richmond, VA, and Charleston, SC to Raycom Media for $583 million.
3. French Plan Likely To Reduce Supply Of TV Ad Time, Accelerate The Internet
by Joe Mandese
TV still is the world's dominant medium, and it remains No. 1 in every major advertising market - so far. But that is expected to change starting this year, when at least one major agency forecaster - GroupM's Adam Smith - predicts the Internet will overtake television as the dominant ad medium in Sweden. Smith predicts the U.K. will be next in 2009, and if some recent developments in France are any indication, its neighbor across the Channel won't be far behind.
The French media marketplace is bracing for a government plan to take advertising off the nation's state-owned TV channels, a move that could slow overall advertising growth in the marketplace at a time when many in the industry are concerned about a potential recession - or stagflation - in the advertising economy. At the very least, the move is expected to erode TV's share of ad spending in France, and is likely to accelerate the Internet's.
The plan unveiled by French President Nicolas Sarkozy has had a negative effect on the shares of the nation's two agency holding companies - Publicis Groupe and Havas - whose stock are trading at or near recent lows.
French advertising trade association Union des Annonceurs has estimated that the plan could reduce the supply of TV advertising inventory in the market by 25%, which would also push the price of TV CPMs up in the market, driving some advertisers to shift their budgets into other, more efficient media, especially the Internet.
4. Young Puts KRON On Block, SF Market Big Draw
by David Goetzl
Back in August, the head of Young Broadcasting said he was so concerned about the company's San Francisco station that he woke up one morning thinking about making a deal. On Thursday, he put it on the market.
The company said it has hired Moelis & Co. to advise on a sale of the largest station in its portfolio, the MyNetworkTV affiliate in the country's sixth-largest DMA. The goal is a divestiture by April 1.
Despite much uncertainty in the market for station sales, KRON could fetch a high price, due to its strong brand identity in the San Francisco market. Still, its affiliation with the struggling MNTV could deter some buyers.
Young, which acquired the former independent station in 2000, said it has "an important position in the market as the television news source for San Francisco. The station, due to its many hours of local programming, is benefiting from the industry trend towards increased localism."
As advertiser dollars shift to the Internet and national spot dollars continue to decline, some station groups are re-positioning themselves as more community-connected local-market ad vehicles. E.W. Scripps, for example, is creating a separate publicly traded entity focusing on local media offerings with 10 local stations and a newspaper portfolio.
Vincent Young, chairman of Young Broadcasting, said: "Our decision to sell (KRON) is based on the high level of interest in the property that we have received. It is purely a strategic economic decision, allowing us to benefit from the proceeds of the sale to further our future corporate initiatives."
Some investors have felt that KRON has been a drag on Young's performance.
Amid an overall downturn in media stocks, Young was trading Thursday at $.82 a share, down from a 52-week high of nearly $4 more a share. Young operates 10 stations--five affiliated with ABC, including in top-30 market Nashville and mid-size-markets such as Albany and Richmond. Its CBS affiliate, KELO in Sioux Falls, SD, has wide reach throughout the state and surrounding area.
5. DirecTV: Ads Don't Deliver Goods, But Up Revs
by David Goetzl
DirecTV CEO Chase Carey offered more evidence this week that the satellite operator produced one of the more extraordinary ad campaigns of 2007--an effort with a message that reverberated, although the company failed to deliver on the implied promise.
Through much of the year, DirecTV spent millions using celebrities and maneuvers--such as a blimp over the World Series--to hammer home a message that it would offer 100 national HD channels by Jan. 1.
As of yesterday, it was at 90.
Yet, surveys today would likely show the "century-mark branding" looks to have given consumers the perception that DirecTV reached its goal, and more importantly, is the trailblazer in high-definition programming. And at an investor conference, Carey offered some evidence that perception is leading to revenues, saying the company is signing up higher-paying HD subscribers at a rate more than double a year ago.
Carey praised the ad campaign, but didn't address the failure to deliver the 100-network lineup Wednesday--an issue that would seem to leave DirecTV open to criticism.
"The marketing group for DirecTV did a very good job at sort of having a message that resonated with the marketplace," Carey said. "The 100 channels was relatable, was understandable--and, I think, grabbed people. It excited people, and our results are showing that--the reception we're getting, and the energy we're getting around it, the quality of subs we're attracting with it."
Much of the immediate future for DirecTV--which does in fact offer far more HD channels than the competition--hinges on how many current customers it can get to upgrade to pricier HD lineups and new ones it can persuade to sign up to receive niche channels, such as the Big Ten Network and Biography Channel. At the heart of the push is widespread consumer reaction that once they view something in HD, they find it difficult to revert to the traditional standard-def broadcasts.
"Everything we see really says HD is becoming a top-of-the-list priority for a large percentage of the customers out there," Carey said this week. (Nielsen says 11% of U.S. homes get HD channels; others say that is low.)
In fairness to DirecTV, although it began the year promising the 100 channels by the end of 2007--at one point even hinting it would soon be at 150--by mid-year, it invoked fine print, using phrases such as "on schedule" to reach 100 and "up to 100."
Still, Carey did not deviate from the impressive figure in August, saying that "we'll get to the 100 channels that we talked about." But by November--as the DirecTV HD suite was fully in motion and the company was running a blizzard of spots promoting it--he hedged by adopting a "close to" 100 refrain.
DirecTV says it will reach 100 soon and attributes the failure to do so by Jan. 1 to networks not launching HD versions on schedule.
6. Satellite Radio Could Get HD Radio
by Erik Sass
The proposed merger between XM and Sirius just got a little more complicated.
In a letter of complaint sent to the Federal Communications Commission in late December, HD iBiquity's lawyers proposed that the merger should not be allowed to go forward unless all new satellite radio sets are also made compatible with terrestrial HD radio.
Even more ambitious, the complaint calls for all exclusive partnerships between the satellite radio companies and cars to be declared void in case of a merger, arguing that together, they would allow monopolistic exclusion of HD radio from the market. The two satellite broadcasters have deals with every single major U.S. car manufacturer, effectively blanketing the market.
The two new radio technologies have been squaring off for several years. Beginning in the 1990s, satellite radio promised consumers a huge variety of radio programming, mostly commercial-free, with CD-quality sound. Not long after, HD iBiquity Digital Corporation began offering the same basic features with no subscription fees.
The penetration of both technologies remains relatively low--just a small percentage of radio listeners own either kind of set--but the companies feel there is potential for rapid growth.
Sirius and XM have aggressively partnered with automobile manufacturers to reach new consumers. The HD Radio Alliance, including most major terrestrial broadcasters, has organized campaigns worth hundreds of millions of dollars to raise awareness of HD.
Although Sirius CEO Mel Karmazin dismissed iBiquity's proposal, the idea could gain traction--especially as FCC Chairman Kevin Martin struggles to curry favor with Congress in an election year. Under fire from both parties for his handling of recent revisions to media ownership laws, Martin could play his popularity card--expanding consumer choice and control over media delivery. HD iBiquity's proposal could also provide both Martin and Congress with a way to present the satellite merger as benefiting the public.
Currently, Martin supports the "a la carte" subscription structure that Karmazin has promised to implement if the merger goes through. However, congressional critics, and the National Association of Broadcasters, a terrestrial radio lobbying group, say the a la carte plan delivers no real benefit to consumers.
7. Mag Bag: Digital Initiatives Soar In 2007
by Erik Sass
Digital Initiatives Soar in 2007
The number of new digital initiatives launched by magazine publishers increased 33.5% in 2007 compared to 2006, according to the Magazine Publishers of America, which has been tallying launches over the last few years. Overall, MPA members pursued 207 projects to increase digital content or distribution in 2007--up from 155 in 2006.
The new initiatives included more Web video, content-sharing partnerships, integrated marketing, new kinds of user-generated content and social-network functionality. 2007 also saw a flurry of new blogs, podcasts, widgets and mobile applications.
Among the high-profile digital projects were partnerships by Conde Nast, Forbes Media, and Hearst Magazines with YouTube, Facebook and MySpace, respectively. Time Inc. created an original interactive reality show, an online video library and various exclusive games.
In addition, Bonnier Corporation introduced social networking and original video content; BusinessWeek created an online video hub and partnered with LinkedIn; Conde Nast introduced integrated marketing programs and online video channels for its magazines; Consumer Reports began hosting an archive of videos of vehicle crash tests; the Economist introduced a social networking portal; Hachette Filipacchi pushed online and mobile video; Forbes Media introduced wikis and online databases; Meredith bowed new online video channels, wikis, and social networking; and National Geographic introduced video and podcasts and began hosting user-generated photos.
The full list of new initiatives is available online at the MPA Web site: www.mpa.org.
Conde Nast Launches Web Sites, Shuffles Execs
On Jan. 16, Conde Nast is launching a new destination site for Gourmet magazine, separating the brand from its general Epicurious.com site covering fine dining. The new Gourmet site will feature daily news, test kitchen videos, and episodes from "Diary of a Foodie." Sister publications Bon Appetit and W will also get their own stand-alone sites in the second quarter, followed by Conde Nast Traveler, Details, GQ and Vogue in 2009, according to Conde Nast.
The company also shuffled its top management this week, with the publishers of Glamour and Vogue--Bill Wackermann and Tom Florio--assuming new responsibilities, as other executives also expanded their portfolios. Wackermann was named senior vice president and publishing director with responsibility for the bridal media group. Likewise, Florio was promoted to senior vice president and publishing director at the Vogue division, including Teen Vogue. David Carey, publisher of Conde Nast Portfolio, assumed responsibility for Wired Media and the Golf Digest group. Louis Cona, previously the publisher of The New Yorker, has been named senior vice president of the Conde Nast Media Group; he is replaced by Drew Schutte, now senior vice president and publishing director of The New Yorker. Finally, Gina Sanders has been named vice president and publisher of Lucky.
Three sales executives--Amy Churgin, Mitchell Fox, and Sandy Golinkin --have left the company. The publishers of W, Bon Appetit and Fairchild Fashion will now all report directly to CEO Charles Townsend.
Ladies' Home Journal Gets Redesign
For its 125th anniversary, the February 2008 issue of Ladies' Home Journal is introducing a new look for the magazine, including all-new typefaces, grid, photography and illustration treatments. Diane Salvatore, editor in chief, said the goal is an overall more sophisticated look, perhaps even slightly edgy: "Now we want to have a touch more swagger and intensity in key places."
Alpha Media Poaches Levy from Rolling Stone
Alpha Media has hired Joe Levy, previously the editor of Rolling Stone, as editor in chief of Blender, the music magazine recently acquired by Alpha from Dennis Publishing. The move, attributed to Alpha CEO Kent Brownridge, is the second big hire from his previous company, following Jim Kaminsky, who left Men's Journal for Maxim. Levy replaces Craig Marks, who will leave the company in March.
Janet Tipton Named Corporate Sales Director at Time Inc.
Time Inc. has named Janet Tipton to the post of corporate sales director in its corporate sales and marketing division. Tipton will be responsible for the food category in the Eastern region, reporting to Monique Manso, the vice president of corporate sales and marketing. Tipton comes to the post from Cottage Living, where she has served as account manager since 2004.
On Media
8. Key To Recession Survival: Master Consumer Media Habits
by Diane Mermigas
The importance of studying and responding to consumer use of traditional and new digital media has reached a critical juncture. The widening gap between assuming and knowing media habits can be a make-or-break difference for businesses--especially in recessionary times.
Having turned the first corner in the digital revolution, the number of radical new devices and services is temporarily waning. While media-related companies reset their business plans and models, consumers are drilling down into refined interactive devices and platforms. Companies that need to leverage their resources for digital growth must master consumer need. The disappointing retail holiday sales and credit-card company results released Thursday amid bleak economic forecasts suggest that a smarter, more skillful use of digital services and devices is necessary. The continuing slide in technology and media stocks underscores these industries' vulnerability to reduced spending by consumers and companies.
Many of the vendors exhibiting at this week's Consumer Electronics Show get it. While there were no new product thresholds, many of the gadgets and services generally reflected a deeper understanding of how consumers of all ages want digital interactivity to be integrated in every aspect of their lives. Those attending the National Association of Television Program Executives conference later this month should heed the implications for their content part of the equation.
Indeed, consumers' swift adoption of digital interactivity to achieve more personalization, relevance and utility is profound. Consider that the touch-screen technology Apple's iPhone introduced less than a year ago was evident everywhere, on all kinds of devices, at CES. Similarly, larger, thinner television screens dominated CES--not as living-room shrines, but as ubiquitous monitors for every kind of content, communications and interactive service.
It is in that context that recent surveys of consumer media use published by Forrester Research provide glimpses of some surprising trends.
According to the North American Technologies Benchmark Survey published by Forrester Research, all adult consumers still devote more than twice as many hours in a typical week watching television as using the Internet. Gen Yers 18-27 are moving toward parody in spending as many hours online as watching TV. But they also spend nearly as much time watching DVDs--a hybrid activity on TVs, PCs and video-game consoles. It suggests what other surveys also reflect: Young consumers move fluidly from one media-related activity to another (whether interactive or passive) because a screen is a screen is a screen.
However, as interactivity becomes more pervasive and all of television goes digital in a year, more Boomer consumers will follow suit. So the increasing interactive attention and spending of consumers ages 42 to 62 is key. These 78 million Boomers (the single largest demographic segment) already make a healthy showing in an array of interactive activities--from managing and printing personal photos to conducting finance and security checks. The focus should be on how to increase maturing consumers' routine use of interactive devises for potentially profitable social networking--e-commerce, entertainment and communications --not a comparison to younger early adopter habits.
Some of the business opportunities will come as the lines blur between the average 16 hours a week that all surveyed adults said they watch some combination of television and DVDs, and the average three hours (in the case of seniors 63-plus) to 8.1 hours (in the case of GenYers ages 18-27) they spend weekly tending personal business on the Internet.
Some of the pastimes and functions driving new interactive media use are not what you might expect. For instance, one-quarter of all seniors and boomers (ages 42 to 62) surveyed say they play online games alone, compared to 32% of Gen Xers (ages 28-41), 41% of Gen Yers (ages 18 to 27), and nearly one-third of all U.S. adults online. That suggests a potentially healthy interactive game market for middle-aged and older consumers that is rarely discussed, except for online gambling. In fact, half or more of younger Boomers rival the 67% of Gen Yers who own and use video game consoles, the survey says.
Research and purchasing products online also crosses demographics at high levels, suggesting it is time for serious reform of legacy retail businesses. More than half of all adults surveyed are researching products for purchase, and about 40% are actually buying online (senior consumers being the only exception). Other surveys (such as this week's annual JWT Boom trend monitor) are posting more zealous estimates.
There are places where the lines of demarcation (like Gen Yers spending most time using media in aggregate) are fading as simpler, cheaper interactivity infuse everyday life. More than 60% of seniors have computer access and are regular email users. The fact that mature consumers spend nearly three times more time reading print media than GenYers suggests the activity could be transferred to the right kind of interactive platforms, such as Amazon's new Kindle electronic reader.
One thing is clear: Consumers will follow their passions and interests into the interactive world armed with the right kind of tools and support. So it's roll-up-your-sleeves time for media and tech companies wanting to make the most of the change.
News Briefs
9. CBS News, WGA Reach Agreement
At least some writers are happy. The Writers Guild of America has reached a tentative agreement with CBS. The new contract, which covers the network's news writers, editors, researchers and other Guild members, has been long in coming. The employees have worked without a contract for almost three years. The new deal stipulates that WGA-CBS employees will get a 3.5% pay increase once the contract is ratified, and another 3.5% raise in 2009.
10. Kia Inks Deal With NBC
Kia Motors America finished its 14th straight year of sales growth by selling more than 300,000 units in the U.S. But the company wants to build even greater brand awareness here. To that end, the Irvine, Calif.-based sales arm of the Korean automaker has inked a multi-year marketing partnership with the NBA to promote its vehicles and also to trumpet the brand. --Karl Greenberg
11. Barrington Joines MPG, Exits MyNetwork TV
Dave Barrington has joined MPG as director of media investment. Previously, Barrington was the senior vice president of ad sales for MyNetwork TV, owned by News Corp.
Friday, Jan 11, 2008
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