Is News Corp. becoming a publishing centric media conglomerate? That appears to be a pattern emerging following Saturday's announcement that the company would divest of eight U.S. television stations to private equity firm Oak Hill Partners for about $1.1 billion. The divestiture, which is expected to close in the third quarter of 2008, follows News Corp.'s deal to acquire print and online publisher Dow Jones & Co. for $5 billion, and moves to liquidate other TV assets, including stakes in DirecTV and Gemstar TV Guide. While the deal with Oak Hill Capital Partners will still leave News Corp. with 27 owned-and-operated stations, nine duopolies in major markets as well as single stations in nine mid- to large-sized markets, the sale comes as conventional television broadcasters face the transition from analog to digital broadcasting in early 2009, and as online media begins to compete more aggressively with traditional television programming. It also follows recent moves that would reduce News Corp.'s position in television, even as it expands its stake in online and print media via the acquisition of Dow Jones & Co., publisher of The Wall Street Journal. Last year, News Corp. agreed to a deal to swap its controlling stake of satellite TV broadcaster DirecTV to Liberty Media in exchange for Liberty's minority stake in News Corp. And earlier this month, News Corp. - a 41% stakeholder in Gemstar TV Guide - blessed a deal that would sell the TV listings guide and television network to Macrovision. Stations being divested in the Oak Hill sales include: *WJW in Cleveland, OH *KDVR in Denver, CO *KTVI in St. Louis, MO *WDAF in Kansas City, MO *WITI in Milwaukee, WI *KSTU in Salt Lake City, UT *WBRC in Birmingham, AL *WGHP in Greensboro, NC
A new report suggests that the gulf between what striking writers want and studios will pay can be valued at some $120 million--considerably more than previous estimates of $20 million. Yet the divide isn't enough to impact major media companies' earnings. The real issue is future outlay. "From Wall Street's perspective, we estimate the impact of accepting the [writers'] proposal is largely negligible," Bear Stearns wrote in a report last week. The firm estimates that the $120 million figure would carry an average impact of less than 1% on annual earnings per share for the media companies. That does not factor in any concessions by the writers' side (the WGA), where the principal issue is a desire for a piece of ad dollars from new-media distribution. The potentially small financial impact suggests that studios (Alliance of Motion Pictures and Television Producers) are more concerned about setting a precedent in new-media revenue sharing. However, Bear Stearns wrote that the writers' forecast for that market "strikes us as fairly aggressive." The firm hinted that studios are looking to the future. They are concerned that a favorable settlement would embolden directors and actors in their coming renegotiations. Bear Stearns wrote its report after speaking with WGA leaders to determine the current state of negotiations. The strike negotiations ended Dec. 5. Even with residuals from online streaming and paid downloads at the top of the writers' agenda, there's another issue. Bear Stearns notes that the studios (AMPTP) fiercely oppose. The WGA wants to expand its membership to include writers for reality series, hoping to gain bargaining power. TV networks rely on reality series for low-cost programming and hope to keep it that way, although Bear Stearns doesn't believe the proposal will add much to their costs. "Financially small, emotionally huge" is how Bear Stearns described the divide. The demand, however, may be something the WGA would be willing to concede for another gain. The principal divide remains the 2.5% of revenues from sales and ad dollars gained from shows streamed off-air--which the WGA estimates could reach $3 billion annually by 2010. Writers currently get a small cut from download sales, but nothing from ad revenues, Bear Stearns said. In addition, there are issues involving salary increases. Bear Stearns asserts that the latter would only add $13 million in costs for studios, but the issue is "pushing the sides further apart than what the actual size of the 'ask' would justify." "Despite the perception that reality programming is unscripted, the WGA argues that reality writers are performing the job of a writing staff for a scripted series, as reality television does have pseudo story lines, such as tension build-up between characters," Bear Stearns wrote. "Therefore, the WGA's position is that reality writers deserve the same benefits and protections as scripted writers." The work stoppage by the 10,500-member Writers Guild of America will be two months old on Jan. 4. Networks are scrambling their schedules, adding reality programs and saving new episodes of scripted shows to offer as much fresh programming as possible. On a broader level, Bear Stearns suggests that studios could be helped in the near term from lower programming costs and other factors. The firm also said it does not subscribe to the theory that viewers won't return en masse after a settlement. "We find this notion fairly hard to believe."
USA Network will unveil a new off-network consumer marketing campaign this spring--the same time that sister network NBC will be airing episodes of USA series "Monk" and "Psych." USA's recently promoted executive vice president of marketing, digital and brand strategy Chris McCumber says it's been about three years since the network started its big "Characters Welcome" branding campaign, which included some off-air marketing components. USA has yet to work out details over the new marketing effort. When the "Characters Welcome" campaign began, elements included vignettes of its show's characters' interacting with each other, including a print campaign. USA also did an off-air, Internet campaign asking viewers to "Show Us Your Character," through user-generated content via a social networking area. NBC will run "Monk" and "Psych" on Sunday night starting in March, which should help give USA some new marketing spin and sampling, says McCumber. McCumber explains that both "Monk" and "Psych" run on USA on Fridays. "Not everyone gets a chance to see the shows then," he says. "It'll give us a chance to do some cross-marketing." NBC's airing of the popular shows at this time will help fuel USA's pre-summer marketing efforts, which includes a new series, "In Plain Sight," starring Mary McCormack as a federal marshal working with the witness-protection program. Both "Monk" and "Psych" will have an estimated six to eight fresh episodes starting in January--episodes that NBC will use for their respective runs. McCumber had been the network's senior vice president of marketing and brand strategy since 2004. He was instrumental, along with his marketing team, in establishing the "Characters Welcome" campaign. McCumber has been key in the successful marketing of many new USA shows, including its highly touted and award-nominated miniseries, "The Starter Wife."
Two of the nation's largest newspapers plan to raise their newsstand prices in 2008. The Washington Post will be raised from $0.35 to $0.50 on Dec. 31, and the Chicago Tribune will increase from $0.50 to $0.75 at the same time. The price increases--which follow similar hikes at The New York Times and The Wall Street Journal--are a symptom of the broader problems afflicting the newspaper industry, including steep declines in print advertising and circulation revenues. Although they may help offset losses in the near term, analysts say the newsstand price increases are a band-aid that fails to address the causes of the underlying secular downturn. In the first three quarters of 2007, the Washington Post Company saw total revenue at its newspaper division decline 8% to $657.2 million, compared to the same period in 2006, offsetting strong performances by the company's education and cable TV businesses. The situation in print advertising is the most alarming, with ad revenue at the flagship paper down 14% to $366.6 million in the first three quarters, due largely to precipitous drops in classified ads. Its daily and Sunday circulation revenues both declined 3.5%. According to the Audit Bureau of Circulations, during the six-month period from March-September 2007, Sunday circulation fell 9% and daily circulation 3%, compared to the same period in 2006--to 894,428 and 635,087, respectively. The Chicago Tribune is in the same boat, suffering substantial declines in print ad revenue, driven by big drops in classified ad categories. In the third quarter, the Tribune Company's total revenues slipped 4% to $1.28 billion, due largely to a 7% decrease in revenues at its publishing division, compared to the same period in 2006. This, in turn, was due to a 9% drop in advertising revenues. Circulation revenues fell 5% in the third quarter. According to ABC, Sunday circulation for the flagship Chicago Tribune fell 2% to 917,868, as weekday circulation fell 3% to 559,404.
The kings of late-night satire are back, sans the writers. Comedy Central's "The Daily Show with Jon Stewart" and "The Colbert Report" will return to production Jan. 7, although the strike continues. Cable net Comedy Central has been airing reruns of the shows. The pair of hosts follow NBC's Jay Leno and Conan O'Brien and ABC's Jimmy Kimmel in announcing their return, although all expressed regret that they would do so without their writing staffs. The Writers Guild of America continues its work stoppage, which began Dec. 5. Comedy Central said its two programs will be back in January, due to a previously scheduled two-week break. Both will return after the Jan. 3 Iowa caucus--potential fodder for their political cracks. Stewart and Colbert said in a joint statement: "We would like to return to work with our writers. If we cannot, we would like to express our ambivalence, but without our writers, we are unable to express something as nuanced as ambivalence."
As ESPN the Magazine celebrates its 10th anniversary, ESPN is set to expand its youth-publishing operations with the purchase of SchoolSports Inc., which publishes Rise and Girl, both targeting high-school-age athletes. The terms of the deal, which also included the Rise Web site, Risemag.com and its high-school basketball event business, were not disclosed. The acquisition of SchoolSports allows ESPN to share youth-oriented content across multiple platforms in both directions, with ESPN using content from the magazines and vice versa. The top management at SchoolSports will remain intact, with CEO Jim Kaufman staying on and reporting to Gary Hoenig, general manager of ESPN publishing. Over the last several years, new publications and Web sites have emerged targeting high-school athletes, a highly engaged audience that spends a considerable amount on athletic equipment and entertainment. Stack magazine, published with corporate sponsorship from Nike, is distributed by coaches to athletes for free. Its stated mission is to inform and entertain athletes, while also discouraging the use of steroids and other performance-enhancing drugs. It maintains a Web site where users can post video clips of their performances, engage in social networking and join discussion and fan forums for famous athletes. Stack also holds events that bring together high-school athletes aspiring to play in college with college coaches and recruiters. In December 2006, Takkle.com partnered with Sports Illustrated to give the magazine access to its audience of high-school athletes. Like Stack's Web site, Takkle.com offers users social-networking features and the ability to post videos of themselves in action.
Continuing with a new model of on-air/online campaigns, TBS is running a holiday effort with Home Depot. The promotion is aimed at reaching consumers who may have some holiday time off, as well as those who may make New Year's resolutions to take care of unfinished business working around the house. Turner's TBS developed spots for Home Depot that are running on the network during its afternoon "Breakroom" comedy block. One in particular looks to drive viewers to a micro-site on TBS.com, where viewers can enter a contest to win Home Depot gift cards. The promotion is an offshoot of Home Depot's current sponsorship of the "Breakroom." The sweepstakes ends Dec. 30. In addition to the chance to enter, the Home Depot site includes other options such as do-it-yourself ideas. Past "Breakroom" sponsors include Hyundai and Kia; Pepsi and Frito-Lay; and Nestle. "We have had past sponsors for the programming block, but this is the first time we've done a custom "Breakroom" promotion of this type for a partner, notably the type of micro site developed ... you do not have to buy just linear or digital, you can do both," said Linda Yaccarino, executive vice president of Turner Entertainment ad sales and marketing.