Malone Speculates A Different Future For Disney

Given the high cost of sports content and the decline in subscriber numbers, ESPN may no longer be the darling brand of the Disney organization.  And at a recent conference, John Malone, Chairman of Liberty Media speculated "that The Walt Disney Co. could spin off ESPN, merging the rest of its operations with a deep pocketed suitor, perhaps Apple", according to Multichannel.  But is ESPN such an albatross and does a sale make sense.

Truthfully, sports programming costs are high and continue to go higher.  It has forced the channel to continue to raise subscriber fees and advertising rates, and push more ad minutes into every hour.  The result has been consumers no longer watching and a drop in ratings.  Still, could ESPN be fixed instead of sold.  They could drop expensive programming deals like NFL and pursue other programming choices.  They could deliver a streaming model, ala HBO Now, with exclusive content not accessible elsewhere.  Sports has been a driver of consumer interest and the opportunity to recapture eyeballs seems viable.

Regardless of whether Disney sells or spins off ESPN or not, a partner like Apple does seem to make sense.  The two had a very close relationship when Steve Jobs was alive and sold Pixar to Disney.  And content is what Apple needs to drive its Apple TV device.  Hopefully other synergies, including the theme parks would help to drive Apple product sales.  Malone claims to not have an inside scoop to this idea, but he certainly sees the possibility, as do I. 

Why Apple Should Buy A Content Company

In a world where a box is just a box and distribution needs original and exclusive content to drive growth, media is big business.  And given the insatiable appetite for content affecting every consumer, content drives usage and multiple revenue streams.  Content can be purchased, it can be rented, it can be advertised; it can be downloaded and streamed and provide rich, measurable date about the user and usage.  And Apple should invest more in the business.

It is true that Apple has been dabbling in content with a trove of downloadable content on its iTunes platform.  And it has been build out a music streaming business.  But there is much more room to grown and acquisition may be the means to building a bigger better business model.  I have suggested a bid for Time Warner for its cable programming and theatrical distribution business and I have suggested other cable networks as a stepping stone into the media production and distribution universe.  Business Insider thinks that Apple should make a play for Netflix.  In the article, Stratechery analyst Ben Thompson says ""If Apple wants its usual ownership of end users it needs to buy its way in, and that means buying Netflix." With original and acquired content, Netflix's streaming model could enhance the Apple Music value, enabling packaging scenarios to drive further adoption of both models.  And it could also add value to the Apple TV business. 

Is Apple even looking at Time Warner, Netflix or other content creators and distributors?  The worry is that Apple is not innovating enough, not driving further adoption, not expanding, and facing increased competition from those eager to push Apple off the top of the mountain.  Maintenance and remodels of current products are not enough to remain a leader; rather, it says that you are treating your business more to maintain value than drive growth.  Beyond any possible plans to create a new technological product, Apple should look at content makers like Netflix to grow its business. 

Will AT&T Time Warner Deal Get Approved

The excitement caused by the latest media merger news of AT&T buying Time Warner has been tempered by concern of "too big".  And that the timing of such news is just two weeks before an important national election.  Politically speaking, both Democrats and Republicans are encouraged to speak out against the merger, as it on the surface looks to limit competition. Economically, it may be harder to press such a claim.

First, both AT&T and Time Warner will point to the Comcast NBC union as precedent to approve their deal.  Second, they will speak to the point that neither business directly competes with the other.  In fact, they each offer to the other a stronger vertical position with AT&T providing distribution through DirecTv, U-Verse, and AT&T Wireless, and Time Warner contributing strictly the content side with production, broadcast, and cable television networks, as well as some web sites.  Neither side currently plays in the other sides' world.  Third, this deal should also pass because Time Warner previously spun off their Time Warner Cable business, a direct competitor to AT&T, as a means to make their content business look more attractive.  Since then, Charter Communication picked up Time Warner Cable and that deal also passed regulatory approval.

So what will the FCC and Justice Department have to say about this merger.  Most likely, a lot with some need to set certain requirements to assure other distribution sites get equal availability to Time Warner content.  But it may be very difficult to outright deny such a deal given the above points.  Could this deal get derailed, possibly: especially if another player seeks to offer a higher priced bid.  Could that still be Apple or Google or maybe even Facebook?  Its been rumored that some of these folks have already kicked the tires a bit.  So stay tuned.

UPDATE: AT&T Buys Time Warner

Time Warner has agreed to terms, according to multiple sources, to be purchased by AT&T.  According to USA Today, AT&T is acquiring "a diverse media portfolio that includes HBO, CNN, TNT, TBS, Warner Bros., theme parks, Bleacher Report and a 10% stake in streaming service Hulu, at about $105-110 per share."  Prior to the rumor, TWX was priced around $70 a share.  It rose to $90 on Friday and will see a nice bump on Monday.  Rupert Murdoch and his Fox Network had tried previously to acquire Time Warner with an offer near $85 a share about a year ago.

Once the paper is signed, expected to happen later this weekend, the next step is likely regulatory approval by the FCC.  I would expect that some requirements will be imposed but that, since the Comcast acquisition of NBC was allowed, AT&T should have no major problems getting this deal approved as well.  A great catch for AT&T; I still wonder if Apple even kicked the tires and if so, what prevented them from putting out a competitive offer.  We may never know.

What will be the next media merger?  Will CBS and Viacom recombine, will Scripps or AMC seek a larger partner to add leverage to their deals, and will other telcos seek to bring content into their family?  Verizon went the digital route with AOL and soon Yahoo, but it may be necessary for them to look at more traditional video media producers.  For now the merger of Time Warner and AT&T is just the next leap in media mergers. 

Time Warner For Sale?

If content is truly king, then its no wonder a distribution company like AT&T might want to buy Time Warner.  AT&T, who is now also the owner of DirecTv and U-Verse, recognizes the value content, especially exclusive content can bring to the distribution model.  DirecTv's deal with the NFL to exclusively offer all games, especially out of market games, to its subscribers, has been a hit.  Cable subscribers would love the chance to buy that package.  Now its parent, AT&T, may have set its eyes on a bigger content prize in Time Warner, Inc.

Time Warner, owner of the Turner cable networks including CNN, TBS, TNT and others, as well as HBO and the Warner Bros studio, may just be soliciting bids for purchase.  AT&T may be a prospective buyer and obviously believes they are also a good fit, but will they pull the trigger?  And who else may now be interested in obtaining such a prize?  I content that Apple should also look to purchase TW; a deal that would immediately give them more leverage in advancing their Apple TV platform.  Perhaps Trump might want to buy TW after the election and turn CNN into Trump TV.  And you never know what Google might do to drive both their fiber rollout as well as their Chromecast product.

Is Time Warner really for sale?  Some believe the company is actually open to a sale.  And so is the stock market. 

Google Smartphone Getting Strong Reviews

With the Samsung Galaxy Note 7 recall, timing is everything.  And Google may just capitalize on such timing with the release of its Pixel smartphone.  For Android fans who despise the Apple closed architecture, Google seems to have delivered a worthy alternative.  Of the reviews I have read, all seem to rate the Pixel phone a strong competitor.

Most seem to especially point to the Google Assistant, a Siri AI alternative to answer verbal questions at a touch of a button.  Per Walt Mossberg, former WSJ writer and now re/code co-founder, "the Assistant blew away every competitor I’ve tried. It shredded Siri, which has a five-year lead. It not only did on-phone tasks reliably — like launching an app, or creating reminders or notes, or playing music — but it understood most of the wider-world questions I asked it."  Impressive, although Siri is the least of the reasons today to purchase an Apple iPhone.

For other Android phone manufacturers, the release by Google of its own line of smartphones may cause trouble in the Android universe.  No longer is Google a partner offering an alternative operating system to Apple, it is a competitor as well using the same operating system to drive users to buy a Google smartphone.  And that may be troubling as smartphone wars seem to heat up between Apple and Google. 

UPDATE - Samsung Ends Galaxy Note 7 Production

Just yesterday, I shared in my blog that replacement Galaxy Note 7 Phones were exploding.  That has led to a rise in Apple share as folks are expected to switch from Samsung to Apple.  Well just this morning Samsung has announced that they are permanetly discontinuing the Galaxy Note 7.  Will Samsung customers stay loyal and switch to another Samsung phone or does it permanently hurt their smartphone business?

The Wall Street Journal sees Samsung losing a large sum of money from this move, "As the recall has gone from bad to worse for the world’s largest manufacturer of smartphones by shipments and sales, stock analysts have begun tallying up the likely financial hit for Samsung."  This is their Tylenol moment.  It is unfortunate that their fast move to issue recalls did not solve their problem.  But how they continue to respond from this setback will determine the future financial health of this electronic giant. 

For Apple, it is good news for now.  iPhone production should increase to assure supply meets demand and revenues for this quarter could likely "explode".  Sorry for the bad pun.  As to the stock market, shares this morning BEFORE the bell are already up almost $2. 

Galaxy Note Still Burning Customers

It seems that the release of the Apple 7 couldn't come at a more fortuitous time.  The latest Apple smartphone might just attract a whole new batch of customers as Samsung continues to have combustion issues with its mobile phone as its replacement phones may also be exploding.  Airlines don't want the phone on flights and customers may be wary of keeping one in their pocket.

Even wireless providers have given up on the Samsung Galaxy Note 7.  According to re/code, both AT&T and T-Mobile will no longer sell or exchange for another Galaxy phone.  Will customers choose to try another Samsung phone or is it more likely that they will switch to the Apple iPhone?  The stock market seems to believe they will switch and become Apple customers and that is making the stock price go higher.  In the last month, the stock price has risen almost 10%.

Can the Samsung smartphone business survive?  Could this help Google find a market for its new smartphone, the Google Pixel?  Timing is everything and the timing seems right. 

Netflix For Sale?

While no official word, the market is speculating that Netflix is for sale and that Disney is interested in acquiring them.  Of course, there is nothing yet to prove that Netflix is ready to be taken over or that Disney is ready to make an offer; still, it raises the question, is it a good fit or better for another company. 

Disney certainly is a content and distribution powerhouse with the capabilities to both produce and distribute great TV and film content.  With ESPN, they also bring a sports component to the mix and with the theme parks, another way to market and appeal to consumers.  But in building their brand, the House of Mouse has a particular identity. 

Netflix, on the other hand, streams content from everyone and creates unique content, some extremely graphic, that is not consistent with the Disney brand.  Netflix is Switzerland, not beholden on any particular cable network or studio, free to deliver content across all genres and all interests to all interested subscribers.  It seems to me that a Disney ownership has the potential to restrict that freedom and change Netflix to an identity that caters more to streaming Disney content.

Should Netflix be up for sale, I would suggest other companies could make a fit.  Apple and Amazon are the first two to come to mind.  Each would bring strong synergy to the mix and each could further grow the Netflix brand.  Others that might want to think about entering the streaming content fray include Microsoft, Intel, AT&T and Verizon.  For the longer term future of Netflix, I see these choices a better fit than Disney.  We will have to watch and see how serious this current rumor is. 

Apple Music Beats The Rest

According to the recent JD Powers was ranked first in customer satisfaction.  According to CNET, "Apple's streaming service, which hit 17 million subscribers in September, ranked particularly well in performance and reliability, content, and ease of use, J.D. Power said."  In second place was Rhapsody, in third Pandora, followed by Spotify, TuneIn, Amazon Prime and last was Google Music.  Apple Music was particularly noted for having exclusive content as well as its accessibility and ease of use with peripheral devices. 

And while Apple was slow to enter the space, they certainly have grown at a nice pace.  At almost $10 month at 17 million customers, the business is becoming quite a revenue driver.  Getting noted by JD Powers should only help to drive further customer acquisition. 

iPhone 7 Succeeds Through Timing

Analysts concern over the iPhone 7 and the lack of new products coming out of Apple never figured that the new phone could bring real growth.  But given the recent battery problems coming from leading competitor Samsung and its Galaxy smartphones, Apple could gain valuable market share.  Consumers may become worried that their Galaxy phone may explode and cause personal injury.  And airlines are banning the phone from flights for fear that they may lead to fires on board the plane.  And so the consumer next step is to switch phones and why not get the latest iteration this Friday.

Already wireless companies are reporting huge preorders for the iPhone 7.  T-Mobile says that sales are reaching record levels.  Sprint has said that sales are higher.  Apple has told us that they will not release weekend numbers.  Still it looks like the rest of the year for iPhone sales could be very strong. Such news may not have been so likely if not for the Samsung Galaxy issues.  Apple's timing couldn't have been better. 

Apple And Self Driving Cars Stall

According to the NY Times, Apple is laying off employees from its self driving car business unit.  As to the full implication of the move, the article offers little.  Still, I don't believe that Apple should be adding car manufacturer to its line of business.  Cars are not phones or computers.  There is much more to the manufacturing process. 

But I do hope that Apple continues to invest in technology that can be licensed to every car manufacturer, from Ford to Tesla.  Whether it is Apple Music in the entertainment system or Siri offering voice recognition and assistance to the driver.  Apple can license its iPad screen to be installed in every car and truck and help GM, Chrysler and others improve their dashboard.  Be a partner, not a competitor to the car industry.

To investors, Apple has indeed become a value stock, not a growth company.  It has yet to surprise us with new technology that drives consumers to rush to purchase.  The Apple Watch, or iWatch as I still prefer to call it, is trying to gain that full appeal, but hasn't yet.  Many doubt that the Series 2 version will cause Holiday sales to explode.  And the consideration to be a car manufacturer strayed to far from its core business.  With its huge cash reserves Apple can buy any company it wants.  If it truly wanted to be in that business, it might have been better to just buy Tesla or Ford, not that I believe they should. 

So good luck Apple, it is now time to really impress us with some important news.  How about an October press conference to reveal some secret new consumer product.  That might just make the stock rise dramatically. 

Is Apple Moving Toward A Wireless Future?

The new Apple iPhone removes the headphone jack as it sells its new wireless headphones.  And with one less hole in the iPhone design, we are offered a more water resistant, dust resistant future.  But is there more on the way?  Could Apple be leading us down the path to a completely wireless future with not even a lightening jack to plug into?  Is the next iteration of the iPhone one that has no wires whatsoever and offers us complete wireless charging to power our iPhone and headset battery life?

The dropping of the headphone jack is not a new notion for Apple, five years ago they removed the cd/dvd slot from all macs.  The idea of less holes must have been appealing to lead their engineers to look at the same thing for iPhones.  Likely, the next generation of iPads will also eliminate the headphone jack, too.  Removing these features help to make the units smaller and faster to operate.  And extending battery life has always been of high importance to users.

So back to the headline, is Apple telling us to look for their devices to one day be wire free?  It depends on how they plan to construct a workable wireless charging solution that consumers will embrace.  But it seems clear that a complete wireless product is the next step for the iPhone and iPad product lines. 

Apple Offers No Surprises

It gets harder and harder to keep a secret.  The more people that know it, the greater the chance it gets shared.  People love to gossip and it seems inside Apple, people love to share all the things that they are up to. So yesterday's announcement was news that had all been released in the rumor mill.  No surprises.

When Steve Jobs was alive, it seemed that Apple was able to surprise us with new technology, new products, and new features.  There was the "one more thing" that offered a big reveal.  But that has been missing since his death.  No surprises, no big reveal, no new product, no amazing new feature.  Apple continues to excel and consumers are buying.  They are a solid company with a huge user base buying cloud services and apps from the App Store.

And we learned that they have 17 million subscribers to the Apple Music streaming service.  Not a bad source of revenue each month.  With expectations that the service will grow, it is by itself a solid business.  Pandora and Spotify think so.  And that is just one small part of the Apple universe.

Still no surprises from the media conference.  No "one more thing" announcement.  Given how hard it is to keep a secret, it is hard to expect that Apple will ever surprise us.  Leaked pictures, insider scoop, will doom that possibility.  Without Jobs, one wonders if we will ever be surprised by Apple again. 

Apple Eliminates The Headphone Jack

Confirmed, the new iPhone 7 will remove the headphone jack and require an adapter to connect the headphone to the iPhone via the lightening port.  So now you can't charge and use your headphone at the same time.  Ideally, it is time to upgrade to a bluetooth enabled headphone.  RIP Headphone Jack!

Why Wireless Headphones For Apple

Check out this Business Insider story on the possible iPhone 7 and "wireless earpods".  While good reasons to go wireless includes no tangling of wires, BI says that there may also be a marketing angle.  They point to the intro of the iPod with the "white wire" in Apple ads and other ad examples including the lime atop the Corona Light.  Advertising pushed the appeal and made it a must have item.  The same could be true for the iPhone 7.  Sold and marketed with an initial wireless earpod, the new iPhone 7 could become the next must have device.  It does sound appealing.

Can good marketing be the difference?  With the prospect of a new iPhone without a headphone jack, Apple needs to let us see just how different its new earbud will be.  That will include such physical attributes as freedom of movement, no tangling, and better sound quality.  Of course that must be balanced with how frequently we need to recharge the ear bud to make them work.  Just how many chargers do we have to own?  Hopefully the marketing helps consumers fully realize the full value of the next iPhone release. 

Apple Event September 7

Next Thursday, just 8 days from today, Apple will once again try to dazzle us with its next set of upgrades.  Just in time to have on the shelves for the Holiday Season, many expect the next iteration of the iPhone, as well as upgrades to its Apple Watch and mac computers.  Upgrades yes, a new product launch no.

Given the rumor mill that always precedes these events, none have included or hinted at a new product release.  No Amazon Echo clone, no Apple car, no Apple TV set.  No buzz means that we can expect to simply here how each product has been tweaked to encourage us to upgrade our own devices.  And don't expect that Apple announces plans to acquire any content companies.  As much as we would love to hear them make a play for Scripps or CBS or Netflix, that is also an unlikely scenario for the event on Thursday. 

Be careful though if you do decide to upgrade your iPhone when it comes out.  You may find that it no longer syncs with your older mac and iTunes program.  That means you can't back up on a computer and must do it online.  And cloud backups will cost you.  The more memory you use on the iPhone or iPad, the more storage it may cost you.  Given the need for more icloud storage, expect too that Apple will announce new service plans to support you and your family's devices.

It has been rumored that the iPhone 7 may no longer have a separate headphone jack.  All connections are made through the lightening adaptor or via bluetooth.  As to those folks that have a Beats Headset, now owned by Apple, you will have to decide whether to buy a new bluetooth headset or stick with your old iPhone.  For Apple, Beats was all about the music subscription service and not the products.

So get revved up for next Thursday.  Always fun to watch the announcement and see how the stock market immediately reacts to it.  Enjoy!

CBS's Newest Revenue Stream

The rise of streaming, the challenge to increase ad revenue as well as licensing of its network to cable companies all play into the strategic mix as CBS seeks revenue growth.  Certainly content matters and quality shows that generate buzz hope to find audiences that stay loyal to their plots.  And building new distribution outlets to grow as a business remain relevant.

In the case of CBS, they chose not to be a partner in the Hulu streaming business.  The other three broadcasters NBC, ABC, and Fox, and now Time Warner have ownership shares in the Hulu business.  Instead, CBS is trying something new, its own streaming subscription service called CBS All Access.  For a $5.99 monthly fee, subscribers get "more than 7,500 on-demand episodes from the current season and previous seasons of classic shows, as well as the ability to stream local CBS stations live in more than 150 markets across the U.S." according to Multichannel News.  And following the learning curve of other streaming services like Amazon and Netflix, CBS All Access will offer original productions too, "including Star Trek: Discovery, a spin-off of The Good Wife and a new digital edition of Big Brother."

The question this strategy hopes to answer, is it better to build a new service or partner with an existing one.  Is there enough content of interest to subscribers to entice them to join?  Can marketing sell the value of adding another streaming service charge to the entertainment household budget?  CBS is trying to make it easy to access its streaming service with Roku, Apple TV, Chromecast, XBox, Amazon Fire TV and more.  Accessibility does not seem to be a problem.

But I wonder if going it alone and not with Hulu, CBS studied whether a brand name associated with the broadcast network or one without a connection made more sense.  Will customers more likely embrace the subscription service because of the CBS name or feel that they should be getting this content already if they are current cable subscribers with on demand.  Would it have better suited the service to create a more unique name like Carousel or Tainment or StreamCity to compete in the streaming media landscape?  Was CBS All Access a better name choice to drive subscription revenue?  We will watch and see. 

The Profit In Data - Storing And Streaming

I'm struck by an epiphany as I watch how much data I continue to acquire.  I don't mean bookshelves or albums or DVDs; they get less filled as my books, my music, my photos, my videos, my life are all now bits and bytes of data.  And I see too that the cost to store and stream continues to grow as I accumulate more stuff. 

Already, I have on my computer over 15,000 photos, the more recent ones requiring more memory than the ones taken in 2000.  My iTunes account includes more and more downloaded books, music, and videos and my computer's memory is nearly at capacity.  My Carbonite account helps safeguard these digital assets, at a cost, as I sense that I will need a new computer with more memory in the not too distant future.  And Apple is gracious enough (lol) to sell me more cloud backup space for my iPhone and iPad.  The costs to store will only continue to rise.

And then there are the costs to stream data.  Subscription fees from folks like Netflix, Hulu, and Amazon, help drive up the monthly costs.  One's love of music means monthly subscription plans from Pandora, Spotify, and Apple Music.  We no longer need to own when we can rent and stream as much as we want.  But the costs to access also extend to the companies that sell us data plans to receive these streaming signals.  The more we stream, the more we consume, the more data services we buy.  Of course, the speed to receive these streams can also come with a higher cost; the faster the stream, the more we pay. 

As we move further and further from physical media to digital media, the cost to access data, stream it, and receive it will only increase.  And the profits will only grow.  Data is our new gold and we are mining it at an ever increasing pace.  It is the business to be in. 

Comcast Says Future Of TV Is X1

Great read in Business Insider called  "How the battle for TV's future could take over your whole house".  Matt Strauss, EVP of Comcast Video Services, sees TV evolving in a new way.  The TV continues to be the centerpiece of the house and that smarter features out of the X1 cable box offers the user more control.  "X1 is a cross between an advanced TV guide and a virtual assistant, and Comcast thinks it will compete with the likes of Amazon's Alexa-powered Echo and Apple's Siri-powered Apple TV."  With a touch of the microphone button on the remote, the X1 box can find channels, shows, answer simple questions, and possibly more.

Strauss believes that the X1 box can be the "hub" for which the home can likely get smarter.  As we tend to have TVs in almost every room, attaching an X1 box to each TV that all communicate up to the cloud and share back info, creates a unified smart home experience.  And while we may not always want the TV screen to be on, the X1 box is always on.  That opens itself up to a larger future.

From my own experience with X1 so far, I see the potential.  The next generation of boxes will need to work on voice command without remote button push, like the Amazon Echo.  One could say, "X1, what is the weather today",  just as we ask Alexa.  It could potentially then answer back rather than put answer on screen.  Than we could say, "X1 turn TV on or off", again without a remote button push.  The future possibilities are endless.  Perhaps a partnership for Comcast and Apple Siri to explore.

As to the Comcast plan, As Business Insider suggests, "So for Comcast, winning the future of TV could mean winning the entire house in the process."  I agree.