Music Is The New Black

With all the buzz of video streaming and platforms like Netflix competing rigorously in the media space, audio has been pushed aside a bit.  Well, it seems it may now be their turn given the recent acquisition of Beats by Apple.  Now music streaming is the hot commodity and competing in this space the place to be.  While downloading music is nice, the cost to own can add up; a music subscription service on the other hand provides a steady diet of new and old music at a low price. 

For Apple, the Beats subscription service may not be the largest, but it had a cache and pool of talent that Apple wanted to own.  According to reports, Google is also interested in owning a larger piece of the music streaming business.  "Some folks speculate that Google’s best option would be to snap up Spotify, which has a $4 billion valuation, 10 million paying subscribers — and a rapidly growing business. It is said to be on track for a fall IPO."  Of course there are other competitors to consider including Pandora and Rhapsody.  Perhaps Sirius would like to extend itself further away from the automobile through acquisition as well.  And Apple may not be done acquiring; music has been a key attribute of their iPod and iPhone brands. 

Where the audio industry, most known as the world dominated by radio, has appeared mature and flat, the rise of digital streaming has fanned the flames of interest.  The iHeart radio app, while free, offers an ad supported way to enjoy your favorite music on these same streaming devices.  Choosing which service to use becomes the consumers challenge.  Download, subscribe, stream, are all options.  For now, music is the hot commodity. 

Net Neutrality And John Oliver

On last Sunday's HBO series Last Week Tonight, host John Oliver, fresh off a successful turn at The Daily Show, took on the cable industry and net neutrality.  It was a very funny description of the monopolistic tendencies of cable distribution and the potential loss of free and equal broadband speed.  Unfortunately, as Oliver points out, the FCC is now chaired by Tom Wheeler, former lobbyist for the cable industry.  A move that clearly stacks the deck for cable operators to control who gets best of class service.  If you have a moment, enjoy the segment from the show:



Now John Oliver's show is shown on HBO, a Time Warner company, along with TBS, TNT, and other networks, on these same cable operators.  So to talk about changing the name from "protecting net neutrality" to "Preventing Cable Company Fuckery",  he is certainly biting the hand that feeds him.  And whether his asking his viewers to visit the FCC website, FCC.com/Comments and raise their voice may soon determine the kind of social power John Oliver can create.

His points are valid.  His insights on the lack of competition resulting in less service is illustrated by the chart he shares that ranks our download speed 31st in the world, below countries like the UK, Israel, and even Estonia.  Yet the cost for speed is higher than most other countries.  The compelling reason for net neutrality is not just that all services are treated equally; rather, that when some are given preferential lanes, the speed for the rest falls further down.

So enjoy the video and if you feel compelled after watching it, let the FCC know. 

The Next Media Merger

From the cable operator side, the road to savings and distribution lies with mergers.  The Comcast - Time Warner Cable and AT&T - DirecTv announcements may only be the tip of the iceberg.  Does Cablevision finally see the writing on the wall and decides to finally sell its Long Island franchise?  And what about Cox Communication and their cable future?

The same thoughts on media mergers should also look to the other side of the table and the cable networks and all their programming.  Yes, NBC and all its cable networks are a powerhouse as is ABC and its handful of mainly sports networks.  But what about the other networks?  Does consolidation and merger help them when dealing with these new operator behemoths?  Is it time for Discovery Networks to look around and what about Scripps, AMC Networks, Time Warner, Inc, and Viacom.  Are they buyers or sellers?  Sure the Fuse sale to NuvoTV was minor, but it did help them to grow their subscriber reach.  It seems the pressure to gain distribution and retain license fees is growing and smaller networks could use the power of larger multichannel networks to promote and pursue full basic distribution.

The FCC may have their hands full with the two recent merger plans, but that may make the timing of a network merger that much more necessary.  So don't be surprised to hear of more media changes.  The pressure to compete is mounting.

Content And TV Everywhere

The challenge facing TV networks and their distribution efforts is having the best content that many people want to watch.  When you have a hit, it makes money from advertising and syndication through different windows; when you have a dud, it is a write-off.  But for networks that negotiate with production companies for content, deciding what rights to buy is a gamble.  Some networks buy the linear and on demand rights but may not also buy the streaming rights.  Some buy domestic distribution but stay away from international.  Depending on what the license rights are for content determines how much of a networks' content can be offered to a cable operator to carry with streaming media rights.  Thus TV Everywhere may not be everywhere.

AMC Network certainly had two major content hits with Mad Men and Breaking Bad.  But their deal with Lions Gate was for cable carriage; Lions Gate retained other distribution rights.  So as AMC  moves forward in its content strategy, it has evolved from a buyer of content to an owner of content.  According to the Wall Street Journal, "At a time when more people are binge-watching shows on streaming services like Netflix NFLX -0.10% and Amazon Prime, ownership could pay off handsomely with future streaming deals, as it has already done for AMC with "The Walking Dead," the first show it owned. But it also brings higher risks and more upfront costs, which have lately been spooking some investors."  Welcome to the world of risk and reward.  And should AMC find another breakout hit, it is well positioned to succeed in the new world of TV Everywhere. 

Is There Room For Another Cable News Network?

Newsmax Media has announced their plans to launch a new, conservative - skewed news network next month with its first distributor, DirecTv.  And with a 20 mm subscriber base, expected to grow with its merger with AT&T, it's not a bad place to start.  It will instantly make them bigger then a lot of other stand alone cable networks.  That depends on where the network is positioned, assuming it is to the largest tier base.  " Newsmax also plans to launch an OTT channel later in the summer offering a live feed of the network as well as content from  Newsmax’s websites Newsmax.com, Newsmaxhealth.com, and Moneynews.com which draw close to 14 million unique monthly visitors."  Not a bad way to start and promote itself.  

But can Newsmax survive when others before it have not.  Fox News was very successful when it launched but it had powerful synergies with lots of other cable and print media to support them.  Current TV could not find an audience although it did get distribution.  It ended up selling its business to Al Jazeera to rebrand and compete.  But they too have had difficulty.  After spending a ton of money on anchors, staff, and content, they have squeezed shut the cash flow, layed off dozens of employees, and have done little new marketing to expand its viewership.  

Ratings continue to be a challenge to MSNBC and CNN while Fox News has done a modest business.  The broadcast news teams still get the biggest share and when the big stories appear, get the first look.  It is during election time when the news networks appear to get the biggest traction.  And all these linear networks must now compete with online alternatives, even in the video streaming space.  Is there room for one more cable news network, especially one with a conservative approach?  If you are willing to go after Fox News and have the dollars to invest, anything is possible, but success will be difficult.  

Newsmax also plans to launch an OTT channel later in the summer offering a live feed of the network as well as content from  Newsmax’s websites Newsmax.com, Newsmaxhealth.com, and Moneynews.com which draw close to 14 million unique monthly visitors. - See more at: http://www.multichannel.com/news/content/newsmax-launch-tv-network/374807#sthash.70GQJecB.dpuf

Driverless Cars, How About Solar Roadways

As much talk about Google building driverless cars, I am more impressed by the idea of solar roadways.  The video may be a little silly, but the ideas are fantastic.



The information that it enables, the future savings it offers, the positive impact on the environment, could be enormous.  Of course the cost to rebuild every road in America would be enormous and take a lifetime to complete.  But ultimately it would make driverless cars a much more realistic next step.  So sit back and enjoy. 

Darwin Asks Why Stop Acquisitions

The NY Times Editorial, A Cable Merger Too Far, worries that allowing Comcast to buy Time Warner Cable would create a too powerful entity with a huge controlling stake in cable and broadband service.  I say, so what?  Isn't this exactly what Darwin discovered in the animal kingdom that big animals eat little ones; we either conquer or adapt to survive.  It works the same way in business.  We have seen acquisitions and mergers across every industry as they grow from entrepreneurial to mature.  The big eight accounting firms are no more, the airline industry has fewer and fewer competitors, the auto makers almost died out from bankruptcy if not for the help of the US Government.  So why should the cable industry be any different.

While it would be nice to have more competition for cable service; frankly, we never really did.  Cable operators bought franchises to gain exclusivity and as a result, Comcast never competed head to head with Time Warner cable.  As a consumer, we were lucky to have the choice of a cable operator, telco, or satellite provider.  That choice doesn't go away with a Comcast acquisition. 

What should the FCC do?  Darwin still remains relevant.  The FCC should be encouraging new innovation, technology and new types of connectivity.  Adapt, change, or be eaten.  The future of content connectivity lies with new entrants with new technologies that can topple old technology off the mountain.  You can't stop the natural instinct to grow through acquisition but there are other means.

TiVo Strategic Shift To MSO Working

As a standalone set top box, TiVo worked hard to build a market and attract consumers willing to buy their DVR recorder.  The need for CableCards and costs to own limited the interest and appeal.  It was the Porsche of set top boxes but for a business seeking growth, a slow road.  The decision to attract cable MSO partnerships to offer a TiVo rental box to households has enabled TiVo to grow much faster.  " TiVo swung to a first quarter profit as the DVR pioneer and video software company set a record by signing on 341,000 subscribers through partnerships with pay-TV partnerships, enough to nudge its total sub base past 4.5 million for the first time."  As a result, TiVo has over 3.5 million cable subscribers through this partnership and less than a million subscribers through direct purchase.  

Unfortunately, the top cable MSOs have been reluctant to offer TiVO set top boxes.  Currently, "

TiVo is only about 5% penetrated with its current batch of U.S. cable partners."Should TiVo start to do deals with Comcast, Time Warner Cable, Cablevision, and others, future growth of TiVO could be enormous.  

TiVo swung to a first quarter profit as the DVR pioneer and video software company set a record by signing on 341,000 subscribers through partnerships with pay-TV partnerships, enough to nudge its total sub base past 4.5 million for the first time. - See more at: http://www.multichannel.com/news/technology/tivo-adds-record-341000-mso-subs-q1/374733#sthash.G4sFsn1j.dpuf

Media Merger Mania - What Will Dish Do

Talk about being left out in the cold.  Comcast wants Time Warner Cable and AT&T wants DirecTv.  Charter gets more subscribers from the Comcast merger and ownership in a newly created cable Spinco company.  Some hope that a Sprint and T-Mobile merger will drive more wireless competition to the industry leaders.  And let's not forget Verizon who recently purchased the remainder of its wireless business from former partner Vodafone.  So what about Dish Network?

Certainly Dish tried to merge with DirecTv a decade or more ago but was denied by the FCC.  Different times indeed.  And while they would have loved to do a deal with AT&T, Dish's spectrum business seemed to produce a conflict.  Some hoped that Verizon would respond to say they were interested in Dish, but they were quick to vehemently deny those rumors. So with all the media merger mania occurring, Dish sits like a wallflower on the sidelines.

So what comes next for Dish?  There has been speculation that Dish could make a play for the NFL Sunday Ticket package and wrestle it from DirecTv.  That could both hurt subscribers and give an out to AT&T to terminate their acquisition efforts.  Perhaps other cable companies might be interested in acquiring Dish.  Should Charter have enough access to capital, they might consider making a run at Dish.  Whether the FCC thinks fondly of that deal is unclear.  Cablevision, who once tried their hands at satellite with Voom, might consider a Dish purchase as a means to augment their subscriber numbers as well.  That would certainly propel them into double digit subscriber numbers.  And then there are the hedge fund guys who see future value in picking up Dish for the time being.

For now, Dish sits idly by as the FCC ponders two huge acquisition issues.  But I doubt very much that Dish is being idle.  We shall wait and see what is up their sleeve.