Is Time Warner Changing Back to Warner Bros

It seems that Time Warner is ready to spin off another business. First it was AOL and now the talk is that Time Inc will be next. It seems that its core competency is video production and the print business has no synergy for them to utilize. Once done, they will be left with the Warner Bros studio, HBO, and the Turner Networks, TNT, TBS, TCM, et al. And what to do then? The talk is that the cash from these sales will be used to purchase more video product. "One of those mentioned often is debt-hobbled MGM, the fabled but faded movie studio that has recently sent its chairman Harry Sloan packing and brought in restructuring expert Stephen Cooper to seek additional capital. Warner’s name also pops up often when talk turns to NBC, although its owner General Electric has so far said it has no intentions of selling." Of course there is speculation on other smaller cable networks like Hallmark, AMC, and others.

It seems the talk in the industry remains consolidation. It is big fish eating little fish and perhaps some big fish being eaten as well. At the end, content, like the distribution side of the business, will be controlled by a limited few, with some independents nibbling at the fringes and trying to make a living.

How The Digital World Has Changed The Real World

The world has gotten faster. No it still takes 365 days to make a year and 24 hours in a day, but new technologies have enabled data to reach us faster than ever before. It is that pace that is quickening. From letters that needed days to be sent to electronic mail that is received in seconds to instant messages that are received in moments, information is transmitted and shared instantaneously. We are no longer a wired world, but untethered and allowed to roam free with wireless all around. Where once we had to wait till 9 PM for our movie to start, today it is not only accessible at the moment but is of our choosing and not scheduled by someone else. And we have come to expect this. In fact our children only understand this type of world; it is unfathomable when they go to Grandma's house and they can't pause the TV.

And it is a good thing, speed, accessibility, choice, instant communication, and constant connection: E-mail, IM, Facebook, Skype, Twitter, VOD, DVR, etc. In a way we are all like children demanding instant gratification, an "I want it now" philosophy. But has it hurt us as a society? Have we also gotten short-tempered and without patience, unable to wait our turn? And has that led to a lack of manners because we are always in a hurry and need our answers sooner rather than later. And thus we have Congressmen shouting out "You Lie" to our President during a televised speech. We have become ruder and less patient with drivers slower than us. On the other hand, this instant communication has also enabled Amber Alert, to quickly get news of a child's abduction into the public and help rescue children. It has brought many other good things, too.

Like any change in an environment, it comes with both good and bad results. In this changing entertainment landscape, let's appreciate the good that comes from the digital age, from convergence, speed, and instant flow of information, but let's also be conscious of our actions with others. Sometimes a more personal direct connection is better than an e-mail or IM. Despite the urgency and shortcuts, let's still find our patience when dealing with others and don't just let the speed of life pass us by; instead, remember to stop and smell the roses.

Cable Networks Will Be Last Old Media to Face Digital Destruction

According to Peter Chernin, former head of News Corp, cable networks should also worried at how the digital age will destroy their business. "Whether niche cable programming can survive and thrive in a streaming on-demand video world 'is the single biggest question facing the media industry,' Chernin said Wednesday during a roundtable discussion USC Annenberg School for Communications." And he is 100% right! Cable networks have been leading a charmed life, blessed with at least two revenue streams, advertising AND subscription. Broadcast, on the other hand has had to rely on advertising only, although that has changed too as these same companies own both broadcast and cable and have used their leverage to get higher subscription fees for their sister networks. Digital distribution has the potential of hurting the cable subscription model by reaching directly to the consumer. Without this huge chunk of revenue, cable networks would be in serious trouble, unable to afford their programming.

And Chernin should also be held responsible. His role partnering News Corp with NBC has led to the creation of Hulu, a web-based streaming media aggregator of broadcast and cable shows and films. Cable's response has been TV Everywhere, an authentication model designed to only allow streaming media programming to consumers who also purchase cable TV. But as long as Hulu and TV.com offer free programming, it will be a losing battle. And should they try to convert themselves into a fee-based service, they will be competing with themselves and their cable partners who will most likely re-negotiate their deals under this changing environment.

Cable can win this game, but they need to build a better mousetrap, enabling programming to be seen absolutely everywhere and across any device - TV, pc, cellphone, etc. Convergence and portability of an authorized signature. And this content should include both live, DVR, and VOD. Makes you think that maybe a network based DVR could be the first step to making this accessibility work most efficiently and effectively. Otherwise, the consumer will gravitate to the cheapest source and all parties will be hurt.

Jury Still Out on Leno

Until all the premieres are out and viewers settle into their viewing patterns, I will withhold judgement on the success of The Jay Leno Show. It is said that because the show is inexpensive to produce and fills 5 hours of programming a week, a small rating can still generate a significant return. In fact, "With just a 1.5 rating, "The Jay Leno Show" could make $300 million a year for NBC". That is assuming that it is reaching the right demographic and that advertisers see value for its dollar.

While there are many who have voiced their criticism on the content, the audience size is really what counts. If it generates enough audience to get a sufficient CPM, then all will be good. Or will it? Can The Jay Leno Show be syndicated like a scripted show? Will the audience watch a rerun? Will they buy it on iTune or watch it with ads on Hulu? Does the show have any ancillary value to compete with other scripted series or is it simply a stop gap to keep Jay from switching to a rival network?

And so I withhold judgement till Thanksgiving cause then I think it will all shake out.

Online and Radio Up, TV Still Most Credible

Not all old media is dying. In fact, according to a recent study, radio usage for news and information has grown. In fact even magazine usage grew slightly while newspaper and TV consumption dropped. Online usage has grown especially among the younger demos and is considered a credible source for factual content. "Not surprisingly, the research also found that the younger the respondent, the more reliant that person was on online sources." Online usage growth was also found by the higher educated and higher earning population.

Is any of this surprising; perhaps just that some old media (radio and magazines) still have some lags in them. New media will continue to find ways to converge the past into the future. Think Sirius on the iPhone and newspapers and magazines on the Kindle. At some point in the future, everything will be consider online and will instead be defines as audio, video, text, or some form of all three.

Convergence On The TV Screen

Viewers are watching TV differently today. The rise of VOD, DVR, and internet viewing of video programs, along with the new HD screens has given TV manufacturers an opportunity to put the integration back into the TV set. "Improvements to the processors in TV sets are making it feasible to run Web applications on a TV without the need for a special set-top box, such as those offered by TiVo Inc. or Apple Inc." And with the web running on TV screens it brings more flexibility and the opportunity of more choice directly to the viewer without a black box standing between programming and screen. TVs from Sony and Vizio and others are now appearing with web access. Still there is a long way to go. "Yankee Group analyst Carl Howe said TVs are still lacking is a compelling user interface for the Internet. 'On the mobile phone it looked like it was never going to work until Apple's iPhone took off. That needs to happen with the TV,' he said."

This change is happening fairly quickly. Just look at how cell phones and blackberries have adapted to web browsing and video in such a short time. The TV screen seems the next to go and cable needs to proactively defend its turf. Cable has stood behind their clunky converter boxes, with poor interfaces and limited information flow, and have created a disgruntled population. The attitude toward cable companies seems to mimic the bad attitude felt toward the phone company decades ago.

"It's not clear whether consumers, long accustomed to the distinction between the 'lean back' mode of television and the more engaged mode of the PC, will welcome the introduction of interactivity into the television." And I agree; but that is not the only piece that will drive this change. A friendlier interface, faster response, as well as a better search engine, recommendations for different members of the family, choice, and the ability to "move" content from one screen to another (i.e. Slingbox) are other reasons why this convergence will take place and be embraced quickly. Cable needs to get onboard quickly or they will simply find themselves losing their cable subscription revenue business.

Battle Lines Drawn in FCC Net Neutrality Fight

"The gloves are off. Julius Genachowski, Chairman of the FCC, announced new guidelines to formalize the concept of net neutrality. " And so all content needs to be treated equally, emails and videos, small files and large ones get equal attention to the consumers' home. "The FCC is charged with responsibility for managing the airwaves, bandwidth, and communication in this country. Genachowski is simply working to address emerging technologies and the changing landscape of communications to adapt and evolve in a manner that is fair to both providers and customers." So why is everyone up in arms. Clearly it is not as simple as it appears.

What sounds fair at first blush is really quite complicated. Imagine two people trying to sit in an airplane row. Both should have equal rights to their seat, but what if one is grotesquely heavier than the other. The seats may fit both, but one is clearly affected by the other. It creates congestion, slows down movement, and may even create more problems. So is the case with the pipeline for the web and the "clogging of the pipes". Smaller files may be harmed simply because they are sharing the pipe with fatter files.

Perhaps it is more indicative that the size of the pipeline needs to grow or that a more efficient manner of delivery needs to be created so that file size is much less an image. That may be the better approach to making the web equal and open to all. Net neutrality sounds like a short term fix to a longer term problem.

Who Might Buy NBC

Like sharks circling their prey, media companies are smelling blood in the water and itching to bite. Vivendi is looking to unload their 20% ownership in NBC and GE may be faced with a decision, buy, sell or spin. "GE has already said it is unlikely to pay the $5 billion to $7 billion to buy back the stake, which Vivendi acquired in 2004 as part of the merger between Universal and NBC." Spinning it off into a new company may show its valuation to be less than it is and open itself to an acquisition. Seeking a buyer outright may allow GE to get more money for their piece.

So the question is, if NBC is for sale, who could the prospective buyers be: Time Warner, Comcast, Liberty. Funny how the names mentioned all are cable companies. I guess, despite competition, cable operators are doing ok. Distribution and content seem to go together. GE doesn't have that distribution business to support holding on to NBC; the others do. The synergy between content and distribution is only getting stronger. Perhaps too there should be another name added to this list: Verizon. It seems the best way to compete in this new media world. So spin the wheel and pick your horse cause this race could potentially go down to the wire.

Tweeter Makes Money For Others, Not Itself

First individuals, then companies got into the habit of Twittering to share the latest and greatest news about themselves and their opinions. It has enabled a customer dialogue, although personally I have found little use or interest in it. But it has become a great marketing tool, pushing revenues and profits north, except for one, Twitter itself. "Lack of earnings isn't stopping Twitter's founders from shooting for the stars. Earlier this year, it was widely reported that Facebook offered to acquire Twitter for $500 million of in stock and cash, but the co-founders said they turned down the offer, holding out for more."

So the thinking must be that there is more dollars out there than in the buyout offer. And getting Facebook to make an offer means that Facebook would rather join them than beat them. So how will Twitter turn itself into a moneymaking machine. The obvious is to use either an advertising or subscription route or both. But will Twitter's "fans" accept ads with their tweets or will they turn away. Twittering on the computer leaves room on the screen for ads that can easily be overlooked; but Twittering on a mobile device may be more problematic.

And can a free service be turned into a subscription service (Variety thinks they can do that) and grow that way. Twitter faces some huge challenges to right itself while others have successfully deployed it to serve their other profitable businesses. Perhaps too, the Facebook offer was simply not high enough. "Numerous rumors of acquisitions by giants such as Apple and Amazon rise and disappear like the tides." We will have to wait and see but my vote is that Twitter needs to take the money and run.