Cable's Loss Is Telco's Gain

I came across this website through an associate and when I scrolled down saw this chart of basic sub growth from Q3 2008 through Q2 2009. It indicates a serious problem for the cable operator:



Over the four quarters cable basic subscription has dropped, while the telcos, AT&T and Verizon, and Direct TV has shown growth. In fact, telco and dish basic growth is greater than cable's loss, indicating that there are still homes that are new to cable television.

Of the cable operators, only Insight has for the most part gained subscribers for three of the four quarters. Comcast has consistently had the most loss for the same period. While cable may be selling more services to their current customers, data and telephone - the triple play, it is finding itself selling to a smaller and smaller universe.

In summary, the incumbent has a serious challenger in the telcos and better do more to reverse this trend or will find itself selling less of its other products and losing serious revenue. Today, AT&T and Verizon's share of the cable universe remains small, but the indication is that they are growing fast. Per the JD Power report, telcos and satellite are beating cable for customer satisfaction. The trend should be disturbing to cable and they need to act FAST or risk losing their lead in the next few years. Customers are dissatisfied with the service, choice, quality, and price. Cable is zero for four and has built for itself a bad reputation in the marketplace. It is time to re-evaluate and change internally, then market that new approach to win back customers. Otherwise, the leak in the dam will only continue to grow!

Google Android Versus Apple iPhone

Will the iPhone ever be offered on the Verizon Wireless network? Certainly a partnership with Google seems to indicate that Apple won't join Verizon any time soon. "Verizon Wireless and Google said Tuesday that they will partner to co-develop a bevy of Android-based devices. Verizon Wireless also said that it will tightly integrate its network with Google apps—including Google Voice." Sounds like a direct frontal assault to the Apple App store to me. It certainly is directly aimed at Apple and iPhone. Given the headstart that Apple has, it may not be such a fair fight. It may depend on how open the device is and how many third party developers come on board to help load it with interesting and useful application.

Will it preclude a future deal with Apple for Verizon. Let's just say, I believe a Line has been drawn in the sand. It may depend who blinks first. And this staring contest could go on for a while.

Condé Nast Doesn't See A Future With Magazines

In a true blow to the magazine industry, Condé Nast threw up their hands and says "No Mas" to a number of long time, popular magazines. The axe hit some notable titles including Gourmet, Modern Bride, Elegant Bride and parenting magazine Cookie. Rather than sell these title to another entity, Condé Nast will just shut them down and lay off its employees. This move isn't new to them. "Condé Nast in the past year closed its Portfolio, Domino and Golf for Women magazines. It folded Men’s Vogue into Vogue magazine."

Certainly the ad market for magazine has slowed although some are seeing it turn the corner. And subscription has taken a toll as well, especially when it competes against free content on the web. Still, Kindle and other portable devices are growing rapidly and need content to grow more. A subscription service does make sense on these devices and could work well.

Condé Nast may have suffered as none of their magazine brands have broadened outside their media. Scripps seems to have done a better job tying in their cable network brands with magazines including cooking, home repair, etc. Could Condé Nast have done more to be part of the trend and not left behind it. It seems more could have been done.

It seems too that this business decision was made because of a consultant's recommendation. "Condé Nast hired consulting firm McKinsey & Co. in July to evaluate its magazine properties and other aspects of its business, said Maurie Perl, a spokeswoman for the publisher." Was this the best decision they could come up with. I sometimes wonder if all consultants do is create change to justify their fee; did they ever evaluate the choice of status quo. And was a sale of the brands even a possibility. Was the ending of Gourmet, Modern Bride, and others truly the best course of action.

Should Magazines Follow The Hulu Model?

It seems print media wants a recharge and they think aggregating their digital content onto one site, a la Hulu, is the solution. "The new service, as yet unnamed, would serve as a digital storefront for magazines, possibly newspapers and other publications and is expected to be announced in about a month. The launch is planned for 2010, people familiar with the plan said." And I ask why.

Hulu is fraught with problems for the video industry. it offers free content, and enables consumers to drop their cable subscription for free programming. Hulu takes viewers away from the networks own brand into a new one. Thus you can watch The Office without caring whether it came from NBC or Fox or somewhere else. It disrupts the current subscription model, not extends it. The TV everywhere concept at least attempts to force consumers to first be subscribers before they get to view content.

So why buy the magazine if the content is free elsewhere? And how can individual print brands be maintained as this new entity develops an overlaying umbrella brand? And finally, why will the consumer subscribe, if the content is free? Rather, these same content creators should instead pursue a store approach that competes with Amazon and Apple and sells digital copies of their pages over different media devices. Support Kindle, E-reader, Iphone, and others with both a digital and print copy for one low price. Offer single copies and subscriptions at different price points and benefits. Use these readers to your advantage; they are the future for printed content. A Hulu-like web site is not the best solution.

Comcast, GE Said to Discuss NBC Universal Stake Sale

Don't let the facts get in the way of a good lie. Where once there was denial, quickly comes proof. It seems that Comcast is indeed looking to buy NBC and GE is willing to part with 51% as it would spin off NBC into a separate company where GE would see its ownership drop from 80% to 49%. Still it keeps GE in the entertainment game and allows them to reap some of the rewards, including trips to future Olympics.

"Negotiations for Comcast to buy about 50 percent of NBC Universal have been under way for at least two months and a deal would depend in part on Vivendi SA making a decision to sell its 20 percent holding, said one of the people, who declined to be identified because the talks are private." As Vivendi has been talking about selling, I doubt that they will be the problem; valuation of the NBC Universal asset will surely affect the negotiations as they move forward.

Andy while the negotiations are at a very early stage, speculation remains on how Comcast would run this kind of business. Would current senior management remain? Would the philosophy of cheaper entertainment, i.e. The Jay Leno Show, be applauded or switched off? And will it be run out of New York or would operations switch to Philadelphia? Maybe, GE will recognize the power of the NBCU business to its bottom line, offsetting the losses of its other operations. They could just as easily walk away from this deal. Too, too early, but always fun to ask the questions.

Rumor Alert - Comcast Buying NBC

Quickly denied, but certainly a possibility, Comcast may be bidding to take NBC away from General Electric. About five years ago, Comcast was unsuccessful in its bid for Disney/ABC, so a NBC acquisition is certainly not out of the question. Still, because it is still so early in the process, denials are aplenty. "'While we do not normally comment on M&A rumors, the report that Comcast has a deal to purchase NBC Universal is inaccurate,' the spokesman said." What else are they supposed to say.

The issue of NBC being sold is not going away because of Vivendi's plan to sell its 20% ownership of the company. If GE doesn't choose to buy out its partner or spin it off into a separate company, a sale remains a distinct possibility and Comcast looks like it could be a good buyer. With its distribution platform coupled with its ownership of other cable networks, NBC, its broadcast and cable operations, would fit nicely into the mix. Will it happen? Stay tuned...

Will Parents Pay for Disney Books On The Web?

We do almost everything for our kids. And as new parents,, reading to them is one of the fundamental joys. But in an age of two working parents, free time sometimes becomes hard to find. Even non-working parents would agree. So we sit our kids in front of the TV and find other activities to keep "our lil darlins busy". Disney has another alternative. For $80 bucks a year, they will provide access to books on the web. Will parents bite; I'm not so sure.

"DisneyDigitalBooks.com, which is aimed at children ages 3 to 12, is organized by reading level. In the “look and listen” section for beginning readers, the books will be read aloud by voice actors to accompanying music (with each word highlighted on the screen as it is spoken). Another area is dedicated to children who read on their own. Find an unfamiliar word? Click on it and a voice says it aloud. Chapter books for teenagers and trivia features round out the service." Does this subscription offer access to other devices. It doesn't appear to. As E-book readers are becoming the hot product, Disney prefers to tether their product to the PC. And that may be what hurts it. Parents have many more alternatives in the home. It is when we are on the go, away from home, that we seek "help" to distract and entertain our children. We hand them our iPhone, gameboys, blackberries, and other devices. That is when we are most vulnerable and that is when it is easy to buy the app on the iPhone to offer something new.

Disney offers wonderful content and finding new revenue streams for content is what keeps companies growing. Still, I doubt there will be many that bite at this particular offering. Expand its reach to external devices and price competitively and I believe this could potentially be a huge winner for Disney.

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.