VNU, the world's largest marketing and media research company, Monday confirmed details of a massive reorganization reducing 10% of its global workforce (MediaDailyNews, Dec. 11), the sale of its trade publications in Europe and a management restructuring that effectively makes Nielsen Media Research CEO Susan Whiting the No. 2 person in the company. The moves, which come months after VNU was taken private by a group of private equity firms, and former GE honcho David Calhoun was named CEO, are part of a radical repositioning of VNU that puts the expansion of Nielsen's media research services at the heart of the organization. Much of the savings realized by the 4,000-person workforce reduction will be reinvested into new Nielsen products, including its so-called A2/M2 (Anytime/Anywhere) initiative, and NielsenConnect, the new unit headed by former MediaCom heavy Jon Mandel, who continues to report directly to Calhoun. As part of the restructuring, Nielsen's whiting was named executive vice president of VNU, making her the highest ranking person reporting to Calhoun, and chairman of Nielsen Media Research. Insiders say Whiting will continue to oversee the day-to-date operations of Nielsen, but has gradually been elevating the role of her core management team, including Sara Erichson (head of national business), Catherine Herkovic (head of local business), Scott Springer (head of operations), and Dave Thomas, how has emerged as Nielsen's chief deal-maker and also filled in as acting CEO when Whiting took an eight-week leave of absence during August and September to adopt two children. During the extended leave, outsiders speculated that Whiting had butted heads with Calhoun and might be stepping off of VNU's fast-track. While Nielsen is taking more of a center role within VNU, some other areas, especially trade publications, will become a smaller factor. As part of today's announcements, VNU confirmed it has sold its European trade publications to a European private equity firm.
Scatter prime-time ad sales have been good for network coffers in the fourth quarter--and that's expected to continue into the first quarter of 2007. "It's very strong, very active," says one network executive, regarding estimated scatter sales activity for the first part of 2007. Still, overall revenue projections are more sanguine--with TV pulling in a collective--and more modest--2% to 3% overall gain in revenue in the fourth quarter, versus 2005. Those numbers should continue into the new year. "Broadcast networks will be at the lower end of that range, with cable networks somewhat higher," says Rino Scanzoni, chief investment officer at Group M and Mediaedge:cia. "Upfront money was flat to down, and then money resurfaced in the fourth quarter." "I would expect this to continue into the first quarter," adds Scanzoni. "The expectations for the economy are pretty positive. Retailers have done well. You have Olympic money from Torino last year that will now make its way into the general TV marketplace [in the first quarter]." All that will drive up quarterly revenues for TV and cable networks. Scanzoni estimates that networks sold more than usual in last spring's upfront market. With less inventory supply for the rest of the year, he believes that cost-per-thousand viewer [CPM] prices are still poised to gain somewhat. Network executive report that pricing on prime-time programming grew anywhere from 5% to 10% in CPMs, versus that of the upfront. Evening-news programming and morning news shows posted higher numbers. "The Today Show" is normally priced at around $60,000 for a spot, but has gone as high as $90,000. "Good Morning America" is priced around $40,000, with CBS grabbing about $25,000 to $30,000 per spot. Even some dayparts such as late night--which in the years past has been weak--is now seeing good results. According to a CBS spokeswoman, "Late Show With David Letterman" has been sold out in the fourth quarter and heavily sold in the first quarter, with prices in the fourth quarter higher than deals stuck during the upfront period. "Late Show with David Letterman" typically gets around $50,000 for a 30-second commercial. NBC's "The Tonight Show with Jay Leno" is higher at around $58,000 to $65,000. Another media executive said "The Tonight Show" has been seeing 10% CPM gains during the period.
The Venice Project, the code-name for a super secret online video file-sharing service that has people buzzing it will transform the business of television, quietly launched its beta testing on Friday, inviting thousands of people to begin using the service to help its developers work out its early bugs. The buzz comes in no small part from the fast that its developers are the same people who shook up the music industry with Kazaa and the telephone industry with Skype, online services that utilized the power of peer-to-peer file-sharing to disrupt big, established players. Although few details are known about how the Venice Project actually works, they will become increasingly public as beta testers begin using it. In a letter sent to prospective testers on Friday, Venice Project CEO Fredrik de Wahl said the service would enable "better content surfing, improvements to the installer, an elegant [user interface] and "While we're still in beta, we feel we have a strong proof of concept and we know that we'll be able to count on you to help us uncover any bugs and glitches and provide recommendations, so that we can make The Venice Project ready for the whole world to enjoy," de Wahl wrote. While little else is known about the Venice Project, the organization's blog indicates it plans to do something different from earlier incarnations of peer-to-peer file-sharing services like Kaza: it will work only in a copyrighted framework. That's something that should ease the anxiety of the major TV networks and studios, even as they wait to find out exactly how the Venice Project will impact their businesses. But the buzz at this point is that it could be every bit as transformational as Disney's deal with Apple's iTunes was a year ago. "We are in the process of launching a secure P2P streaming technology that allows content owners to bring TV-quality video and ease of use to a TV-sized audience mixed with all the wonders of the Internet," one of its developers, Henrik Werdelin, wrote recently on the project's blog. "All content on The Venice platform is provided by content owners directly, and it's all protected with the highest standard of encryption and we are working within the Digital Millennium Copyright Act (DMCA) framework to ensure that it complies with appropriate content protection and ownership regulations."
Back in February, News Corp. executives cited a successful track record in launching new networks, and promised that the company's latest venture would follow suit. MyNetworkTV didn't follow orders. Instead, the network delivered lifeless ratings, straining its credibility with buyers and endangering future upfront sales. Its first telenovelas--"Desire" and "Fashion House"--finished their 13-week runs Dec. 5 with weeknight 18-to-49 ratings of .3 and .4, respectively. The network had hoped to draw in the 1.5 range in its target demo, a source said. Other warning signs: After Morgan Fairchild joined "Fashion House" in October, setting up a cat-fight story line with Bo Derek's character, ratings initially rose, then dropped. And that show's finale--telenovelas are supposed to build to a gripping crescendo--posted the same rating as the season average. ("Desire" did see a .1 uptick.) Plus, weeknight ratings are stagnant for MNTV's two new telenovelas that launched Dec. 6--both "Wicked Wicked Games" and "Watch Over Me" delivering a .3, on par with cable channels such as Court TV. The network is reaching about the same number of 18- to-49-year-olds as there are TV homes in Green Bay. "I thought the thing had a shot--I'm surprised it really hasn't gotten out of the starting gate," says Ira Berger, director of national broadcast at the Richards Group in Dallas. He considered buying time on the network, but took a pass. With ambitions of drawing a 1.5, MNTV is undoubtedly giving advertisers considerable make-goods, meaning that current inventory could be close to full. In fact, two buyers at top agencies say the network hasn't called over at all recently. "Usually that means they don't have a lot to sell," one buyer says. An MNTV rep declined comment on ratings guarantees, inventory levels or whether the network is happy with its ratings over its first three-plus months. "We're working to grow the ratings, and we're having meetings on growing the numbers and the network," he says. "Their biggest challenge is going to be the next upfront presentation," says Bill Carroll, vice president/director of programming at Katz Television Group. "The biggest question, both from their affiliate base and advertisers, is going to be: 'Where do we go from here?' " "The reality is that credibility is important from upfront to upfront. Buyers and planners have really good memories," says John Moore, director of ideas and innovation at MediaHub, the buying unit of Mullen. "We all know when ABC promises a lot and they don't deliver they get hammered; NBC the same thing. [MNTV] is going to have to totally reinvent who they are." Still, Moore said to maintain the credibility with the buying community, MNTV will probably say it still believes in telenovelas, but admit its mistakes and offer a solution. The situation, he says, will likely expand the network's programming into other genres. MNTV officials have always maintained that they are committed to the telenovela format, which offers original programming five nights a week and has been successful in Latin America. Now, they seem less committed. While two more telenovelas are in production and scheduled to run through the 2007 upfront, none are yet scheduled for the summer. (MNTV, part of the Fox group at News Corp., has promised originals 52 weeks a year.) "It's the nature of this business to constantly evaluate what you have on the air and what you have coming down the pipe," the MNTV rep says. In launching Fox, FX and the Fox News Channel, News Corp. has shown a willingness to adapt in search of success. MNTV could take on a traditional network format with different shows each night. In February, the company said it had shows in development, such as "Celebrity Love Island," where stars and pedestrians are marooned on a fantasy island with the potential for love connections. News Corp. also could continue with a telenovela for one hour a night, and run other programming in the second hour. "We know Fox has a willingness to try new formats and new ideas to find a winner," Vincent Young, the chairman of an affiliate group (Young Broadcasting) that runs the MNTV station (KRON) in San Francisco, said last month. Katz's Carroll said affiliates have confidence that News Corp. CEO Rupert Murdoch will focus on a turnaround, since the company owns 10 large-market MNTV stations. "They have as much of an investment as the affiliates do, and they're not going to allow this to languish," he predicts. "They're going to address the situation in a reasonably aggressive way." "The Fox folks are not happy with the ratings yet, and that bodes well for the future," says Mark Antonitis, president/general manager at San Francisco's KRON. Antonitis says KRON is profiting under the MNTV affiliation, because the station doesn't have to pay for programming. (MNTV requires no reverse compensation). It can typically sell prime spots at higher CPMs than it did before as an independent. "When you pay zero for programming, the net is generally good," he says, adding that even with the low ratings, "we're extremely profitable." San Francisco aside, some affiliates are disappointed in the network's performance--even though it made a bid to attract them with the promise of nine minutes an hour to sell locally--perhaps three times what other networks offer--and the lack of reverse compensation. "We expect the MyNetworkTV stations to continue to trail our expectations, as ad buyers become comfortable with the new network's program genre," David Amy, CFO of Sinclair Broadcast Group, which runs 17 MNTV stations, said earlier this fall.
The Tribune Company did not respond to a high-profile bid for the Los Angeles Times from Hollywood mogul David Geffen last week, but a bigger deal with dissident shareholders from the Chandler family may be in the works. Geffen made a $2 billion bid for the Los Angeles Times, the paper reported Friday--but the Tribune Company wants time to consider other bids for the entire company. Geffen's bid is considered a reasonable price for the paper, but Tribune is seeking more advantageous financial terms by selling its properties as a group. Altogether, the company's assets are valued at $8 billion to $8.5 billion, with annual revenues in 2005 of $5.7 billion. The competing offer from the billionaire Chandler family, which owns 20% of the stock, is surprising. It comes after complaints about the company's poor performance and running counter to previous suggestions. The Chandlers kicked off the consideration of bids in June, when they suggested that the company be dismantled and sold off piece by piece. The Chandlers said the performance and value of individual properties would be boosted if they were unbundled. Now, the family shareholders are taking a different tack, recruiting investors to help them bid for ownership of the entire company. Analysts speculate that the Chandlers' latest move comes in reaction to the tepid response to the Tribune Company auction in the business world. Alarmed by the possibility of low bid prices, they may be planning a leveraged buyout with private-equity firms. As part of the buyout, the new owners may dismantle the company as originally planned--spinning off additional assets, including 22 television stations that remain unsold. The Tribune Co. has also attracted expressions of interest from private-equity firms, as well as two Los Angeles-area billionaires: Eli Broad and Ron Burkle. Although the noises could mean a competitive auction, the lack of interest from other major newspaper publishers is a telling sign of the industry's health. The Tribune Co. has already sold off a raft of peripheral properties valued at about $500 million, including a number of local television stations. Although Tribune Co. board members have condemned the Chandlers' motives as mercenary in the past, it's unclear that ownership by "benevolent" billionaires like Geffen, Broad, and Burkle would be much better. All three men have said they want to take ownership of the Los Angeles Times as a service to the community. They envision freeing the newspaper from stock market pressures and enabling it to refocus on quality journalism. But ownership by "sugar daddies" is no panacea, if the recent acquisition of the Philadelphia Inquirer and Philadelphia Daily News by private investors is any indication. Led by Brian Tierney, CEO of Philadelphia Media Holdings, Philly-area investors vowed an end to the strategy of "cut, cut, cut for short-term profits" that typified corporate ownership. However, less than five months later, Tierney was quoted as saying that substantial layoffs at both papers are "unavoidable," given long-term structural trends affecting the newspaper industry. Rumors are circulating that he plans to ax as much as 30% of the newsroom--about 150 people.
CBS Records, once a virtual All-Star team of musical superstars like Sinatra and Springsteen, is now just virtual. But corporate parent CBS Corporation announced Friday that it will resurrect the CBS Records brand name. The original CBS Records was sold to Sony in 1988, and its assets are now part of Sony Music Entertainment. The difference this round is the focus. Instead of the eponymous vinyl product, or even CDs, the initial target will be digital distribution of the music online. The primary reason for the label's return is media synergy. The goal of the new label will be to build awareness for CBS Records' artists and songs by integrating music into CBS television series. The big-picture plan is to harness the powerful marketing reach of CBS' mass-media platforms to promote its music and talent directly to millions through the network's television schedule. That means shows produced by CBS Paramount Television (which includes shows on NBC, The CW and USA), on CBS's broadband "innertube" channel, the college-targeting CSTV Networks of Web sites and broadband channels, and on YouTube and other digital outlets and wireless carriers. CBS Records will be launched primarily utilizing the existing infrastructure of CBS Entertainment and CBS Interactive. Larry Jenkins--a 23-year music industry veteran with vast experience at major labels and currently head of his own management company, L J Entertainment--has been brought onboard to consult for CBS Records during its initial phase. "The idea of integration, being able to use CBS as a launching pad of sorts for their artists, is a pretty big deal," says David Peisner, an Atlanta writer who covers the music industry. "For better or worse, from an artistic standpoint, TV has become a powerful player for the music business, and I'm not talking about MTV." Peisner says that while the Internet has leveled the playing field for music artists because it allows everyone to get their music out, it's also difficult for a band to separate from the pack. "If you can get a song on holy land like "Grey's Anatomy," it's a huge leg up," he says, pointing to The Fray and its hit song "How to Save a Life." "That album has been huge, but it's TV that's made it huge." CBS Records will make songs, music videos and other music-related content available for purchase and download at iTunes and its own Web site, www.cbsrecords.com, as well as other online providers to be announced later. Through partnerships with other companies, CBS Records will also make some music available through physical distribution. Jenkins will work closely with Amy Osler--vice president, music, CBS Entertainment and CBS Paramount Network Television--and Jeff Sellinger from CBS Interactive to sign new talent, hire key music-industry executives and work with the various divisions to promote and distribute CBS Records music. Any potential downside won't affect the business, but the creative art, Peisner adds. "Producers of these programs probably have a lot less flexibility," he says. "It won't cost them as much to license songs, but if they want to go get a song from Epic or Warner Brothers, their hands are going to be tied. The suits are going to be pushing these CBS artists on people."
Beginning on January 2nd, the Wall Street Journal Web site will offer an online stock-tracking feature that will compensate for some of the reductions in market information resulting from the smaller paper size, which will also become effective on January 2nd. In addition to providing a valuable new tool that could draw substantial traffic to its Web site, the Journal's move symbolizes the shifting balance between print and online media. Stock data will appear in an area of the WSJ Web site called the "market data center." The feature will be accessible to users who don't subscribe to the Web site. This open approach appears to be designed to boost traffic and new subscriptions to the Web site. In addition to appearing on the main WSJ Web site, the feature will be available at its own Web address, www.wsjmarkets.com. The Wall Street Journal online had 788,000 paying subscribers at the end of the third quarter. The Journal cut down the size of its print newspaper to save money on production costs. Formerly listing about 4,500 stocks, as of January 2nd the paper edition will list just 1,500. The Journal's decision to migrate stock data to the Internet, where it can be updated more frequently, is an elegant use of virtual publishing to achieve cost efficiencies.