Add Print, Box Store, and Digital, Then Stir

I am always intrigued when new partnerships emerge, especially when they seem so out of box. To me the latest announcement that Esquire and JC Penney are working together strikes me as a terrific opportunity. "Clad, a new e-commerce partnership between JC Penney and Esquire magazine, will launch later this month." I like it for both parties for a number of reasons. The JC Penney brand comes with a ton of pre-conceived notions; perhaps, too, so does Esquire. Each brand is known for its particular space, but less impact in the digital, e-commerce world. The two together brings upscale print with merchandising and distribution. And an e-commerce site ideally captures new business without hurting the existing business strategies of each company.

Obviously I wonder if the recent hiring of the head of Apple's retail stores to JC Penney helped to initiate such a deal. Whether it had an effect or not, it brings JC Penney further into the present and matches the editorial style of the Esquire brand. Like what you see, why not easily buy it.

Time Warner, Inc. Proves That Content Is King

Time Warner made a strategic decision to separate its distribution platform company, Time Warner Cable, from its content producing company, Time Warner, Inc. Given the name similarity, few outside business probably know that they are no longer related. Yet this split has enabled Time Warner, Inc to concentrate on building revenue building content without feeling encumbered by a particular distribution platform. The result, double digit quarterly growth.

In all of its content producing businesses, TV shows and networks, print magazines, game software, Time Warner has successfully embraced new media and found additional revenue streams. From iPad magazine subscriptions to ad-supported networks, Time Warner is finding multiple revenue streams to fill the coffers. "Time Inc. announced on Wednesday that all of its magazines would be available on tablets by the end of the year. It asserted in a news release that it would be 'the first major U.S. magazine publisher to make all of its titles available on all leading tablet platforms, with products designed specifically for this medium.'” Embracing the digital world has also helped with cable networks. They cite HBO GO, their new app, as resulting in higher HBO usage and better satisfaction.

Of course it is all about the content and Time management recognize that investment in better content lends itself to better returns. But owning the content, including digital distribution, allows Time Warner the flexibility to best present such content how and where it best serves its audience. Earlier this year, they announced that authenticated cable customers can access the live CNN linear feed on mobile devices. That is an important step. As consumers are more and more demanding that content follow them and not the other way around, Time Warner, without the burden of the cable wire, has the freedom and flexibility to serve it up in multiple ways. Today HBO GO is mobile on demand, CNN is live and mobile. Their magazines are offering iPad subscriptions. It is this digital push and recognizing that "content is king" that will serve Time Warner well in future quarters and years to come.

Apple Prefers to Build Than Buy

Why buy from someone else when you have the resources and vision to build it from scratch. For those like me thinking that Apple might just buy Hulu or Netflix and merge it with it's own iTunes Store, comes word that the opposite may be true. "Apple might be ready to roll out its own video subscription service similar to Amazon and Netflix, Peter Misek at Jefferies reports in a note this morning. Specifically, he says, 'As part of Apple's roll-out of cloud video services (and eventually an iTV), we believe Apple has unannounced deals with all/most of the studios/TV networks that are similar to the subscription streaming deal between Amazon and CBS.'"

Frankly, not too hard to believe. Apple has always been a tough negotiator. Heck their 30/70 subscription deal with newspapers and magazines for the iPad indicates that ability. Rather than accept the current deals tucked inside an acquisition, why not negotiate independently and build the best possible subscription model. Hopefully, with such a deal, Apple will enable a video content platform as large, if not larger than Amazon, Hulu, and Netflix. If the content deals are thin, this may not be the most desired outcome.

When could such an announcement be made, most suspect not till later next month. Apple has never been shy about doing things on their own timeline. Coupled with the re-release of Apple TV and its iCloud platform, this could potentially be a very big news story.

Comcast Cable Subs Drop, Broadband Grows, Content Grows

As a total business entity, Comcast had a good financial quarter. Both revenues and earnings grew at a healthy pace, and the business seems poised for more opportunity. At the same time, Comcast is experiencing a change in its business model where broadband and content are at the heart of its future.

For the last quarter, Comcast, like the second largest cable operator, Time Warner Cable, saw its video subscriber base fall. This has been a consistent theme, quarter after quarter after quarter. While Comcast's 238,000 sub loss as a percentage of total subscription is small, the fact is that it remains a consistent story. On the other hand the wire to the home, enabling broadband and telephone access, continues to reap growth, with its combined total, 337,000 customers, more than making up for the video subscription decline. And less surprising, that their recently acquired programming entity, NBCU, combines with Comcast's other cable networks, is seeing a healthy growth in license fee and advertising revenue. Content certainly remains king.

Can Comcast stem the losses in video subscription? With the rise in IP programming from other platforms, and an almost crippling cost to subscribe to digital cable, it seems highly unlikely. Consumers will continue to shift their viewing habits to other means to find ways to pay for only the programming they want to watch and to hope that the aggregated cost of buying Netflix, Hulu Premium, or other content, remains less than cables' monthly subscription fee. It is highly unlikely that cable companies can lower their rates as programming license fees rise annually. Cable's solution may need to be dropping lower performing cable nets or developing cheaper packages, to lower subscription prices. Unlikely, but perhaps necessary.

For now, the wired pipe to the home is still providing strong revenue, especially with internet and phone growth. While the cable business may continue to erode, content distribution through NBCU and an ad sales rebound will only keep growing the whole Comcast business.

Sirius See Subscriber Growth As It Raises Its Rates

Forecasters expect an increase of 1.6 million customers, 200,000 over its initial forecast. All this as the recession and auto industry have been suffering for some time. At the same time, Sirius believes it is time to raise its monthly fees. They plan to raise fees to $14.95, a $2.00 increase. That translates into a healthy 15.44% bump. Does such price elasticity exist for current subscribers or will this plan change affect the current and future subscriber base? While I have yet to read about much outcry, once the change occurs next year, I'm sure voices will be heard.

Apple Needs Content

Apple has taken another leap into the TV set with a new and improved "converter box" experience. No longer will the Apple TV need to access content from a mac, now it can go directly to the clouds. "Apple TV had previously allowed users to rent television shows from iTunes, but the new update essentially allows them to use iTunes like a storage locker for purchased shows that can be watched at any time. Rentals are still allowed, but part of Apple’s pitch for iCloud has been the ability to access your files essentially anywhere at any time if you’re using an Apple mobile device." Easier to access, easier to watch, it's a whole new experience.

But like the boy in "Oliver", we want more. For Apple it means more content. Netflix users have argued that their is limited content available to stream. Apple users will demand even more content for viewing. As Apple moves down this path of cloud access for content, consumers will expect that they will have ultimate choice: Do they want to rent or own the content, do they want a hard copy or just streamed, can they rent for one day or get a discount for multiple days. And that there will be choice.

If Apple is truly in the hunt for acquiring a content distributor, a Hulu or Netflix to fill the queue. Or Apple needs to make more aggressive deals with networks to access their content directly. The consumer is yelling for more and Apple is clearly moving in that direction to deliver.

Goodbye Versus, Hello ?

I love branding. A name can say so much...or so little. Some brands show logos, like Nike and Apple, need we say more. And initials always seems to come from names that are too long. That seems especially true in the cable network department.

Today it was announced that the Versus network will be changing its name the beginning of the year to NBC Sports Network. A mouthful. So many networks that started that eventually become just initials. Here's a partial list:

American Movie Classics to AMC
The Learning Channel ... TLC
Home Box Office ... HBO
Movietime ... E Entertainment ... E!
Romance Classics ... Women's Entertainment ... WE
Arts & Entertainment ... A&E
Black Entertainment Television ... BET
SciFi ... SYFY
and of course Outdoor Life Network ... OLN ...Versus to ?

Some have always been initials like fx, CNBC, AND MSNBC. Some have names that people barely remember. ESPN - Entertainment Sports and Programming Network, and CNN - Cable News Network. Or even defunct regional networks like PRISM - Philadelphia Regional In-Home Sports and Movies.

So I can only imagine that the newly named NBC Sports Network will soon be known simply as NBCS or SNBC or NBCSN. We love our initials and NBC Sports Network is simply too long to say.

Should Comcast Buy Tivo

Since I felt it necessary to tell Apple what to buy with its money, I feel compelled to do the same with other companies. No attaching article, just my own thoughts to best serve my needs. And so my first recommendation is for Comcast to buy Tivo. If you don't mind proactively recording future shows, then the DVR is your friend. Having used both the Tivo and DVR, I wish that Comcast would buy them so as to quickly integrate them into their DVR service. Sure Comcast has a deal with Tivo, but do they market it, no. A Tivo DVR should be standard on every Comcast DVR box. And it might make it a lot easier for Tivo to get traction with other cable operators as well.

Okay, so Comcast has a lot on their plate, still arguing with the DOJ about their NBC merger. So if not Comcast, then Cisco should step up. They bought Scientific Atlanta, the company that makes the DVR boxes, they should buy Tivo and thus make their DVR superior. Why am I obsessed with upgrading the cable DVR experience? Because when you have driven a better car, it is hard to go back to the old clunker.

Okay, one more acquisition idea. Ultimately, I want Apple to have a second distribution platform and Sirius could be the company that also supports their cloud based approach. Add to that the content that Sirius produces, and Apple gets the one two punch with an acquisition of both content and distribution. Far-fetched or brilliant, it may initially seem like an odd couple but it could just be the next spark for what you want, when you want, where you want, how you want. As long as Steve Jobs and Howard Stern get along.

How Should Apple Spend It's Money

Record profits and earnings, Apple has more money, over 76 billion dollars, in the bank, than even our own government. So what should Apple and Steve Jobs do with it besides hide it in the mattress.

There has been some speculation that Apple should release a dividend or buy back it's stock, pleasing to shareholders, but not a long term strategy for growth. Others want Apple to purchase another company, and the latest talk is Hulu. Where Apple has had a purchase strategy through its iTunes' store, Hulu has delivered a rental and subscription strategy. But it's owners, a consortium of programmers, may have deals in place with Hulu that may not be ideal in the long term. I don't believe that Hulu and Apple would be a great fit.

So let me throw out other possible acquisitions for Apple that would excite me more. Apple needs a streaming rental play; Netflix is pushing hard in that space. With Amazon and You Tube on its heels, Netflix could use a strategic partner in Apple and Apple could easily integrate the Netflix model into it's products and software stores. It would also enable a better fit to the Apple TV device pushing rental content as well as purchased content into the TV. And as content drives use of iPads and iPhones, Netflix brings Apple more content and another streaming platform.

Another idea for Apple is Barnes and Noble. While Liberty Media may be making a run, Apple could benefit again with another content play. E-books are growing, a Nook powered by Apple, gives it additional credibility and broadens Apple's product line, and the digital print platform fits nicely with the iTunes library. Add to that the retail locations, which gives Apple even more access across the country.

Lastly, and perhaps a long shot, Apple should buy a company like Lightsquared. To own a wireless platform to enable broadband access across the country means that Apple could have more control of its content delivery directly into the hands of the consumer. At the same time, it puts them into a stronger competitive position against the cable operators, and lead to even faster cord cutting. The challenge for such an acquisition is that it would also put them against the telcos as well, who currently sell 3G and 4G distribution for their products.

Now I wouldn't mind if Apple sent me a check for a 100G, but that is not going to happen. Still with so much cash on its hands, and a shareholder desire for Apple to keep growing, Apple must either be spending more on R&D or looking for an acquisition to build out better synergies. It is unlikely that Apple will simply issue a cash dividend or stock buyback. It is their nature to innovate and grow. With that in mind, a content or distribution play is the likely next step.