The aggressive marketing wars waged by cable, telco and satellite companies may look like a fight to the death. In fact, it is only a scrimmage in the battle to manage shifting economic values among rival sectors. When the dust settles on next year's mandated digital television conversion, cable will come out on top, with telcos a distant second.
The resolution of the writers' strike, Microsoft's attempted takeover of Yahoo, the power play between John Malone and Barry Diller--and virtually all media conflicts--have more to do with good old-fashioned math than fancy corporate maneuvers.
The opening day of this week's global Mobile World Congress in Barcelona, Spain was ironic. It was marked by a massive service blackout among North American BlackBerry users. Another reminder of the gaping void between where the most advanced mainstream mobile technology is and where empowered consumers want it to be.
It's not what you have, it's what you do with it. That is the new golden rule in cyberspace, even as the biggest players jockey for position in an ad-powered online world. They're all scrambling for ways to integrate marketing and transactions into niche social networks. Finding ways to make it pay is a burning challenge for Google, Yahoo, AOL, Microsoft, Facebook, MySpace and their peers.
The media and entertainment proletariat, thrashing about in uncharted waters, should embrace the hard-learned lessons of the WGA writers' strike before the industry powers resume their former ways. The broadcast and cable networks, their corporate parents, and the creative community have everything to gain by not doing business as usual.
Time Warner is struggling to command a respectable valuation for AOL in a troubled deal market--after running the once-premiere search engine into the ground. This may be the worst case ever of destroying shareholder value not once, but twice. InterActiveCorp Chairman Barry Diller, who previously expressed interest in AOL, said: "If AOL came down in price to something really ridiculous, we probably would look at it."
Will media conglomerates, with powerful cable and other assets to balance out the failing fortunes of their broadcast networks, have the courage to transform their archaic advertising sales and creative content process into something more productive for an interactive marketplace? It would be one in a series of bold, proactive moves they need to make as they forge their digital destinies.
Do not expect a clear reading on the negative impact a troubled economy and shifting advertising dollars will have on media balance sheets this year from companies' most recent quarterly earnings reports. Financial results for the three months ended December 2007 are too soon to reflect the brunt of the three-month writers' strike or the consumer-led economic slowdown. Those factors are surfacing in the first quarter of 2008, which will not be reported until April or May.
Google is ferociously protecting its dominance of the burgeoning online advertising market -- including trying to thwart Microsoft's proposed $45 billion buyout of Yahoo. The only explanation for Google's scathing criticism of Microsoft's bid -- at heart, a grab for display and search ad share -- is fear and loathing. Google does not want the unprecedented market competition that a combined Microsoft-Yahoo represents.
Microsoft's plans to utilize Yahoo's community, search and display advertising platforms to "transform" its software business to more effectively harness the power of the Web could undermine the proposed $45 billion acquisition that is reigniting the strategic deal market.