John Malone Sees a Revenue Model in Broadband Content

In an interview with Walt Mossburg, the chairman of Liberty Media, John Malone, believes the very survival of online content depends on a subscriber revenue fee. He recalls a time when TV was free and the question was how to get people to pay for additional TV type content (cable). As Malone saw it, "The way it was successful was blending together the transport service with the charge for the content. When you were a cable subscriber, you weren’t sure whether you were paying for connectivity or whether you were paying for the content that was embodied in the connectivity."

The problem in comparing the launch of cable to the launch of broadband video is that the consumer already subscribes to the internet and is already receiving free video content. In the cable example, its content was not made available unless you bought it.

The issue is to get the consumer to pay more for what they are already receiving. The answer may still lie in connectivity and multi-platform viewing. Providing the consumer with the means to synchronize all their viewing platforms into one easy to use program has a value and appeal. To that end, the telcos may have a leg up on their cable rivals because they have a four screen advantage to work with: wire and wireless, cable and broadband. If I could receive my sports network on my cell phone because I am away from my home, receive my TV networks on my laptop, these extra features of connectivity have an incremental value.

Malone sees a future more pay per view. "People will pay on a per-view or on some kind of subscription basis for content on the Internet if the quality is there and there’s convenience. The question you have to ask yourself is, is there going to be an aggregator doing that? This is the role that HBO traditionally did in movies. They aggregated movies and they sold you in bulk. You got 30 movies a month for seven bucks when they started." As Mossberg correctly notes, that is what Netflix and Apple and others are doing. But then again, so is cable through VOD!

Should Time Warner Sell Itself?

Interesting opinion speculating Time Warner's next move, post AOL spin off. Now that the cable distribution and AOL businesses are spun off, what is next. It seems though that spinning off the cable networks makes little sense although it is delivered as one such option. "Option 3: Which brings us to Mr. Bewkes’s third, and possibly most attractive option. To sell the company to the likes of, say, Comcast, or News Corp. " His rationale, "though Time Warner operates a number of solid businesses, from Turner Broadcasting to Warner Bros. and HBO, none hold growth potential." And yet NBC and others see their cable networks as growth opportunities and solid business ventures. Is the Time Warner business over and done? Is Chief Executive Jeff Bewkes clueless on how to run these businesses? Has the merger of Time, Inc. and Warner Brothers been a huge missed opportunity?

I believe that Time Warner can save itself and should not consider option 3, a sell to another company. It is the home for great content in multiple forms, print, TV, film, and terrific cable networks in the basic and premium space. If content is king, then maintaining its hold on content is essential. Consumers continue to seek out great content and have shown that they are willing to pay for it too. The business does not need to stagnate; Time Warner simply need to build a new strategy and direction to take them to the next level. It can be done.

The Future Is Cable Not Broadcast

More cuts at WNBC as its movie critic Jeffrey Lyons is following Len Berman out the door. In fact the focus is no longer news as their Live At 5 news program may be replaced with general entertainment, low cost programming. "Rumors are currently swirling at WNBC-4, NBC's flagship station in New York, that executives at NBC Universal are considering the creation of a daily 5 p.m. lifestyle show that could debut on affiliate stations around the country as early as the fall of 2009."

At some point, news will leave the broadcast air and be exclusively on cable, whether national with CNN, MSNBC, Fox News, or regional with News 12, NY1, and NBC Nonstop. Perhaps soon we will rely on the local High School to supply cable with a local news program too.

Broadcast is passe and cable is where the money is. Recently, Jeff Zucker has commented that they would be very interested in acquiring more cable networks. The future is cable and the web and that is how broadcasters will make up lost broadcast revenue dollars. Research shows that the next generation of TVs will have direct internet access. "Worldwide shipments of consumer-electronics devices capable of supporting Internet video are projected to rise by nearly a factor of five from 2009 to 2013, according to research firm iSuppli." If that is the case, cable companies as well as cable programmers should be concerned that subscriber revenue will fall as consumers stop buying cable to get programming on their TV. Will consumers accept broadband rates to double to offset that lost revenue; probably not likely. And that will lead to another quantum technological leap as another new distribution choice will likely emerge.

Time Warner to split off AOL

The great merger of 2001 failed. AOL bought Time Warner, withered and is now being separated from the content company. Synergy did not work! It seems that content and distribution just doesn't go together very well. First Time Warner separates from its cable distribution side and now its portal side. Perhaps as a stand alone business, AOL has more flexibility to reshape itself and succeed.

AOL's future success is in the content it creates, it's email and build other products and services. The business of dial up has been lost as broadband connections from telco and cable have become the primary means to access the web. Can AOL survive on their own? I wish them well.

Where's The Beef, NBC

I want my...I want my NBC (no, not MTV), but you get my drift. What has happened to one of my favorite networks. I was a huge fan of so many NBC shows, Cosby, Friends, Seinfeld, Hill Street Blues, LA Law, St. Elsewhere, Cheers, the list goes on and on...until now. It's primetime programming is in a shambles. The Must See TV Thursdays franchise is long gone, and cost decisions are now more important than creative ones. And so, "NBC set a low-water mark of historic proportions for TV viewership last week" according to Nielsen.

It's most valuable property today is the NFL on Sunday nights. And NBC is riding its weekday future on The Jay Leno Show, Monday through Friday at 10 pm. You can blame cable, you can blame the internet, but perhaps the harder truth is that NBC has no one to blame but themselves. Instead of creativity we get old shows in new clothes - Knight Rider and Bionic Women. And where are they now - off the air very quickly! We get shows that are past their prime and we get reality shows that are simply inane like I'm a Celebrity, Get Me Out of Here!

The solution is clear; cost management does not make a successful show. Creativity, quality, promotion, strong writing and talent are missing. Without them, all you get are shows that highlight what was once great with TV. And why NBC is left to airing shows on the 50 Most Memorable TV Lines, highlighting other networks great TV shows. You need scripted shows to make great lines and build viewer buzz. It's time for a turnaround NBC.

Cable Industry Weighs Its Approach to Targeted Ads

Many, many years ago, 23 years to be exact, I sold local cable advertising up in Boston. At that time, we sold local ads into 4 national cable networks and (CNN, USA, MTV, and ESPN) and 2 regional sports networks (Sportschannel and NESN). At that time, our pitch was simple, cheap TV advertising into targeted markets. Where radio and print went everywhere in the region, we could target the ad by headend into the markets that mattered. You wanted Boston but not Peabody, MA; done. Ratings were small so repetition was essential. And CPMs were low! We provided an opportunity for the local business to advertise inexpensively on TV, something they couldn't afford to do on broadcast TV. Our leads came from radio and the telephone book. My have times changed.

Today, cable competes for ad dollars with broadcast TV and buys are regional not local. The local business person can no longer afford cable for its message and has gone to the web to advertise. And so cable has found a way to offer that same targeted message today, not just by zip code, but by other demographic variables as well. Will that make cable affordable again to the little guy; probably not. But that is not who cable is targeting. Not anymore.

Cable's local ad audience is actually becoming national! Allowing national ad buyers to effectively target audience demographics across the cable audience. Not just by market, but through a partnership of all the big cable companies: Comcast, Time Warner, Cablevision, etc. Cable wants to take dollars away from the national cable network buy because it can more effectively target its reach and effectiveness. And for cable companies, national advertisers are where the real dollars can be found. Cable programmers never intended their local advertising inventory to be used against them, but that seems to be the case.

And the customer that local cable companies originally sought; they probably can no longer afford to buy cable ads today. They may have more luck going back to their local broadcast network and radio. That is the changing landscape of cable advertising.

Twitter, Brillstein develop TV series

Do you Twitter? Do you enjoy reading other people's Tweets? Do you like reality shows, especially ones featuring C and D list celebrities? Then do I have a show for you. "The San Francisco-based web phenom has partnered with Reveille and Brillstein Entertainment to develop an unscripted TV skein described as 'putting ordinary people on the trail of celebrities in a revolutionary competitive format.'" Me...I'm watching something else!

When I was younger, I learned of a game called celebrity tag. The goal, to find celebrities out in public and quietly touch them while saying tag. Simple and stupid. Unfortunately, the last thing on my mind when I met a celebrity was to say tag; rather, I was happy enough to simply say hi. So to hire people to chase stars, knowingly or unknowingly, seems equally as inane. It's hunting celebrities which just doesn't seem right. I don't expect this show to last. If this is what TV is coming to, perhaps it is time to go back to radio!

Lastly, how will Twitter make money. Today's WSJ article asks the same question. I am not a firm believer of Twitter either, although I like it within the social networking structure of Facebook. How many Tweets can you follow before it becomes mind numbing. And that said, how many "friends" can you have before you can't keep track of any of them. Just asking.

As TV Dwindles, It Still Leads

TV is not dead yet. It kinda reminds me of the Monty Python film where the townspeople are encouraged to "bring out your dead". Of course the ones they bring out aren't quite dead yet. "In fact, I'm feeling better." Yet they can't wait for the actual death, so the collectors help to facilitate it in order to expedite the process of collecting and move on. Such is the case for TV viewing.

In fact, TV is not dead but in fact still thriving. And marketers continue to use TV in their advertising budget. The rise of the web won't kill TV, as TV didn't kill radio, or DVDs kill the movie house business. "Think network television is washed up, overwhelmed by targeted and measurable ads on the Web? How is it that Apple, a tech company, and by the way, probably the most talented marketing company on the planet, is all over network television right now? And remember the movie industry is having a big year with big movies, using, yes, network television to drive people into theaters."

Should advertisers worry about DVRs and Tivo killing the ad business. No. Creative promotion, limited breaks, sponsorships, and product placement can all be used successfully to beat the fast forward button. TV is still the most watched device and advertisements can still be effective. Don't kill TV off just yet.

Satellite, Telcos In 'TV Everywhere' Camp

How do you control online video content, only give it to those customers that have bought it; otherwise, more consumers will drop their cable subscription and watch everything through the web. "The idea: to reinforce the value of paying for television service, by serving up TV episodes or even live programming, to customers' PCs or other Internet devices simply by providing a user name and password." Is this done to eke out additional dollars or to simply reinforce value to those already paying for the brand on cable. And it preserves the cable model.

"Programmers, however, have expressed a preference to deliver Internet TV content via their own, or affiliated, sites." any interest quote but I am not sure it is true. Cable risks losing subscription revenue when they make it free to consumers on the web. And if programmers believe they can charge for access to their website, they may be mistaken. Consumers really don't want an a la carte experience, paying for content on each site they visit. Cable's packaging philosophy has enabled consumers to get access to channels they might never have the chance to find and view on their own. And helps to disperse the costs across a larger number, thereby reducing the cost per sub amount while increasing the value proposition.

Ultimately, the consumer wants the flexibility and convenience to decide what, when and where they want to watch content; push it to the PC, the big screen or even the mobile. And we prefer to only pay once for the content as we believe we should control where we watch it and not have to pay multiple times for different devices. Will the world end up this way; it certainly keeps changing.