CBS May Drop Affiliate TV Stations, Les Moonves Says

While Marketwatch didn't quote Les Moonves directly, this is a CBS site and it makes the news much more credible. The comment reads "that in 10 years, CBS may no longer have traditional affiliated TV stations, but could offer its feed straight to cable and satellite operators. For now, however, the network has contracts with local stations that are binding for several years." But is 10 years too soon or too long. Today, the networks are having a hard time filling their current air time. To be responsible for 24/7 programming may be a bigger financial issue than they can already afford. NBC has already announced that they are replacing 5 hours of prime time programming with Jay Leno. How would they fill the off prime hours, too?

Technology has changed the game. Already we are seeing local affiliate news teams dismiss anchors, reporters, and staff to remain lean and mean. Cable distribution will enable local advertising breaks and access to interactive applications. Local affiliates may have to either combine into more regional than local nets or morph into stand alone networks. For WCBS and others, it means negotiating a separate channel on the cable line-up from the CBS national feed.

It seems that localism is losing to regionalism. Cable companies are closing local offices to compete more regionally against their distribution rivals. Other companies are also consolidating operations to handle more activities with less labor. Technology has had a hand in this too. Need support, your phone call to a company support desk might just be handle across the continent. Where local once mattered as a competitive distinction, cost efficiencies mean regional or even global matters more. For the local TV station, Les Moonves may just be right and their days are numbered.

Actors Union Urges Members to Approve Strike Authorization

Strike, strike, strike. Is it just talk or is it a serious threat? Yes, people are watching the web; Comscore just released its latest metrics and they show huge year over year growth. Hulu has jumped up to 6th place and average usage per viewer has increased. But advertising revenue is dropping and online media has been difficult to fully monetize. As Jeff Zucker has said that he fears they are turning TV dollars into digital pennies. The unions are fighting for a bigger share of the digital world when they are ignoring the fact that their bread and butter revenue is drying up more quickly. "Bill Ratner, a voice-over actor who records commercials and teasers for television programs, said he will vote against authorization “partly because of the economy” and also because not enough is known about the value of online programming." Instead of following the trend, SAG needs to look at the aggregate of usage, regardless of where the content is being consumed. Take a percentage of the whole revenue, not a percentage of each distribution piece; otherwise, they will find themselves on a wild goose chase.

Back to a potential strike, with so many layoffs being announced, cities in economic hardship, and company's revenue down, now is not the time to strike. It may be an idle threat, but if it becomes reality, it will be the final straw. NBC is already reacting to the high costs of TV programming; with the announcement of Jay Leno taking 5 hours of prime time programming, they have reduced their costs tremendously. Talk shows pay very little. Inexpensive programming that can be repurposed cheaply for the web. That is how NBC will beat SAG. Add more game shows and reality programming and the unions will be fighting for non-existent jobs. And as for the movies, independent films, foreign films, and non SAG productions will find consumption. You may kill movie theater business, but viewers will find it on the web and push it to their TV.

Prime Time on NBC is Changing - Can It Work?

Imagine this scenario: The writer's strike stopped production of broadcast content, TV advertising revenue, like other media is down, and forecasts are for more decline. The actors union is threatening to strike which would shut production again. Costs are going up and revenue is going down. With NBC, repeats haven't been working, new shows haven't been working, old shows are getting more expensive to produce and are seeing their audience declines. Solution, talk show programming weekdays on prime time!

When the announcement was made that Jay Leno was being taken off the Tonight Show to be replaced by Conan O'Brien, the speculation was where Leno was going. To ABC to compete against his former show? Or to Fox (which has had a lousy history with talk shows - remember Joan Rivers and Chevy Chase). Well today's announcement by NBC essentially kills two birds with one stone. They keep Leno and they fill the primetime with cheap programming. "Interesting how this news comes right after NBC Universal chief Jeff Zucker told an investors conference today that he's considering cutting the number of hours and even the number of nights that the network airs programming. Since The Tonight Show is a cash cow, Zucker no doubt figures that Leno at 10 PM could be another."

But can a talk show/variety show work on prime time, 5 days a week? I personally am a fan of seeing a variety show come back to prime time. And while Rosie Live was a fiasco, a polarizing host with frenetic pacing, the concept has potential. But it is not a five night a week show, nor should it be a talk show. Five nights will kill this experiment....FAST. And what will it do to a Conan hosted Tonight Show? I'm afraid, it will be viewed as competition and could actually kill the Tonight Show franchise once and for all.

Let me propose to NBC how this show should be developed. First, pick one night. Second, move it to the family hour - 8pm. Next, relocate the show to Vegas to utilize a different talent base. While some of Jays bits should transfer, the new local provides an endless resource of Vegas talent to draw from as well as tourists to make fun of. You also benefit by getting audiences interested in attending the show. Live or taped, your call, the viewer won't object to either. Lastly, make Jay more the master of Ceremonies and less the centerpiece. One bit a show is fine but the remainder should be the acts onstage. These changes will provide you with an inexpensive program, a greater chance of ratings success, and won't damage the Tonight Show brand.

Don't follow this advice and lets count how many shows air before this 10pm fiasco fades to distant memory.

Once Something Is Free, It Is Hard To Start Charging A Subscription

Free samples have proven a great marketing tool to get customers to try something before they buy it. But in the case of online content, when content has been given and consumed for free, it is hard to convince the user to start to pay a subscription fee, even with the incentive of no advertising. Perhaps it is that the consumer has got hardened to the fact that there is always advertising. And in most cases, even with a subscription (newspaper, magazine, cable TV, etc.), there is both subscription AND advertising.

In the case of Facebook looking to offer a premium subscription model, ad free, a paltry 2.4% would be willing to pay about $40 a year. There is some elasticity in the model. As the proposed price point is reduced 25%, another 2% would be likely to pay. And likely to pay and actually buying a premium subscription is most likely much lower than that. Linked In has tried a premium model as well, offering additional services and better information for a fee. Whether they are successful or not, only they can tell us.

Still this was an interesting study by Ad Age. In the case of the internet, the revenue is still in authorizing the connection to the web. The cat seems out of the bag to try and convert free content into paid content. With barriers of entry onto the web so low, anyone can author a website and deliver content, content can be copied and share easily, and free content has become the status quo. Today, it seems that advertising and e-commerce are the best way to produce revenue.

Magazines Rethink Strategies to Deal With Economy

Magazines should not be the only type of content companies to rethink their strategies. This same retrenchment will affect all media outlets: newspapers, radio, TV, film, etc. "A perfect storm of sectoral pressures (rising paper and printing costs, plateauing circulation across most titles) and the broader economy’s woes have swallowed profits and revenues..." This statement is relevant to every outlet that relies on either subscription or advertising or both. But it is not just today's economy that is to blame, changing technologies and environmental issues add to these economic woes.

There is good news. We are consumers on content. There is an infinite appetite to consume and a need to be entertained, interested, informed, and educated. We may change our consuming habits but those companies that read the trends will adapt to reach these new behaviors. It may be timing and a little bit of luck, combined with good strategic thinking and tactical solutions.

Economic Turmoil As These Doors Close, Which Ones Will Open?

I consider myself a very optimistic person. As I watch our economy deal with a recession, it comes with many costs. And unfortunately the list of layoffs keeps getting longer:
AT&T - 12,000 workers
Motorola - 3000
Viacom - 850
Adobe - 600
NBC - 500
Comcast - 300
Ticketmaster - 300

And more announcements will come very shortly.

It has already affected consumer spending and retail is facing it head on. Bankruptcy is touching Linen and Things, Circuit City, Bally's, and perhaps soon one or more auto manufacturers.

I am empathetic to those affected by this retrenchment. Change does not always mean growth; sometimes it requires a step backwards before driving ahead. But I remain optimistic, even as this list is sure to expand, that the economy, and us as individuals, will be stronger and healthier in the long run. I remain optimistic that even as one door closes, another opens.

Cable - If You Can't Join Em, Beat Em!

Two interesting articles in today's New York Times. On one page an article headed, Who Needs a TV? I’m Watching on a Laptop, and on the next page, another article, YouTube and Hulu Visit the Living Room. The first highlights the fact that with video at you fingertips on the PC, you get what you want, when you want it, where you want it, and with limited commercial interruptions. The main limitations remain sports and newer movies today, but that is a short term problem that will be solved.

The second article should scare cable operators and linear networks even more. What is interesting about the article is not either Hulu or You Tube; rather, the device to connect these services to HD TV sets. "The Neuros Link is a device that connects to a television via an HDMI cable and can stream Web video to any HD display. The device requires a broadband connection and little else: there is no subscription fee, because the device brings in free content from the Internet." Now you have your streaming content and see it on a big screen Hi Def TV set.

So what saves the operator - making the set top box more ergonomic and flexible than it is today. Add a web connection, add interfaces to the Wii and PS3 for direct downloading, add Tivo, and move its functionality to a remote control that is easier to use and simpler to work. Save networks by enabling interactive advertising across all video so that it recognizes brands and connects to relevant content.It is time to think "outside the box"!

Are There Too Many Content Choices - Condé Nast Pulls Plug on Properties

Classic business lifecycle means that when products and services move from segmentation to fragmentation, then customer shares get smaller and smaller. Over time, these fragments can no longer sustain their business model and must get acquired or disappear. Look at any industry, any product line, and eventually, because of internal, technological, environmental, and other factors, consolidation eventually occurs and the fragments return into viable segments. Need some examples, how about the auto industry today, Accounting companies, Banks, and yes even content.

Condé Nast is shutting down sites and others will follow. If they can't adequately create a business model that will become profitable, the brands must adapt or die. What surprises me today is that TV networks have yet to see much consolidation. Currently, I would describe the number of cable networks as highly fragmented. If history is a guide, then it cannot sustain itself and reductions must occur. Initially, I expect some brand extensions to reduce back to its parent network. If the network's niche cannot sustain a positive cash flow, the network may need to go dark. In addition, alternate ways to view content, via VOD and the web, may limit available content on these extension brands. Lastly, declining ad revenue means that their is less money to support too many networks. This will filter down to ultimately affect a networks' longevity.

Networks need to own their content and all its distribution platforms. Those that rely on buying rights better buy all the rights, domestic and international, streaming, VOD, etc. Otherwise, it may lose its audience share and ultimately its value to the consumer. Streamlining the business model will become the next step. It's what the auto industry is facing today and what content companies are starting to experience.

Most People Don't Watch Web Video For More Than 60 Seconds

We tend to have short attention spans. If we don't like what we are watching immediately, we are quick to turn it off. Technology has put controls on the tip of our fingers and we tend to keep our finger on the button all the time. Add to that the infinite choice available on the PC and we are unlikely to watch more than a few minutes before stopping. "After clicking play, viewers only watch to the end of 5-minute long Web videos about 10% of the time. Only 16% make it through three minutes, Web video services provider TubeMogul reports, after measuring 23 million streams on six top video sites over two weeks."

Given that the PC lets us multitask, it is hard to devote our attention to one screen when we are juggling multiple projects. It becomes harder to devote attention to one screen or video for too long a time without some distraction, either on the PC or external (phone call, meeting, etc) to interrupt us. Still, this research simply looks at a moment in time. What I think confuses people is technology with content. All lengths are relevant, and ultimately the consumer decides where they want to watch their videos. How it is transmitted to a screen, TV, PC, or cell, will one day be meaningless. That is to say, we won't be differentiating between a web video and a broadcast video; rather, we will describe it as simple short form or long form. And to the question of monetization, the length of the content and the device it is displayed on may ultimately determine which type of advertising is most effective.