Back in the day when John Malone was heading up TCI and I was selling a small cable network to cable operators, I was taken with the style and substance of the man. I heard him at cable conferences, read about him, and watched as he successfully sold TCI and started Liberty Media. Since then, he has continued to do what few others are able to do; unlock the value of his company by purchasing into companies and spinning them out into separate businesses. He continues to do it today as his plan is to spin off his ownership of Starz into a separately traded company.
"Liberty Media, based in Englewood, Colorado, has used tracking stocks and financial transactions over the years to pursue tax benefits and make its diversified assets more attractive to shareholders. They included the separation of Liberty Interactive (LINTA), owner of the shopping network QVC." He has also done it with Discovery Networks and his next plan involves Sirius Satellite. As Liberty moves to become the majority owner, he is ready to take those shares and spin them out as well.
For now, it seems to be the ongoing strategy of Liberty Media to be the holding company through investments in other brands. He takes them, grows them, grows his ownership in them, and then like children, kicks them out of the nest into separate companies, all with Malone ownership behind them. Good news for investors that like to watch their stock holdings expand through spin offs.
Wednesday, August 8, 2012
Friday, August 3, 2012
Facebook Faces Concerns On Size Of Its Customer Base
When is a customer not a customer? How many times can you count a customer? Simple questions, but as we are finally learning from Facebook, not all is what it appears to be. "In a quarterly filing with the Securities and Exchange Commission, the social media company said that as many as 83 million of its accounts are fake." Out of the latest number of 955 million subscribers, that is a whopping 8.7%. In addition, 5% of the accounts are duplicates and another "1.5 percent of its accounts are likely spam or accounts set up for other malicious activity." So all in, almost 15% are not true uniques. And that is what is uncovered today. How many set up pages for their pets or use different email addresses for different accounts. And of the true accounts, how many are active and how many are DOA.
Obviously the total remaining number is still large and valuable to marketers. But the bottom line is for businesses to measure its ROI, it needs to have real numbers that can be analyzed properly. For now, the stock market is concerned as subscriber growth has slowed and the false accounts are being separated from the real ones.
Obviously the total remaining number is still large and valuable to marketers. But the bottom line is for businesses to measure its ROI, it needs to have real numbers that can be analyzed properly. For now, the stock market is concerned as subscriber growth has slowed and the false accounts are being separated from the real ones.
Thursday, August 2, 2012
Digital Branded Entertainment Has Moved Off The TV
How do digital content creators find revenue for their productions? Certainly pre-rolls and banner ads aren't paying all the bills. The solution is clear, branded entertainment. Aided by big name advertisers, online series are finding high level production values, that can include celebrity talent, and the promotional expertise to raise viewership. "For the third time in five months, Ford's testing branded online video entertainment. The Detroit automotive brand and Schick are sponsoring the second installation of 'Dating Rules,' a Web video series by Alloy Entertainment that premiered on Hulu Wednesday (Aug. 1)." This has been a popular strategy for a number of brands including KFC, Luis Vuitton, and many others.
But this notion of a branded series didn't start on the web. It was a strategy first used on radio and then on television. TV series like the Texaco Star Theater that featured Milton Berle, Kraft Television Theater, and The Jack Benny Program which had a number of different sponsors all getting exclusive advertising within the show including Jello, Lucky Strike, and Chevrolet. It was advertising that paid 100% of the cost of programming, not license fee revenue. But as costs rose, one advertiser couldn't pay all the costs. Ads were no longer a part of the show but made into distinct breaks, outside the show.
And so it is the web's turn to use this staple of advertising, branded entertainment, as a means to support the cost. But if history is a guide, as those costs rise, the web will one day also look at license fees to watch certain online networks and series.
But this notion of a branded series didn't start on the web. It was a strategy first used on radio and then on television. TV series like the Texaco Star Theater that featured Milton Berle, Kraft Television Theater, and The Jack Benny Program which had a number of different sponsors all getting exclusive advertising within the show including Jello, Lucky Strike, and Chevrolet. It was advertising that paid 100% of the cost of programming, not license fee revenue. But as costs rose, one advertiser couldn't pay all the costs. Ads were no longer a part of the show but made into distinct breaks, outside the show.
And so it is the web's turn to use this staple of advertising, branded entertainment, as a means to support the cost. But if history is a guide, as those costs rise, the web will one day also look at license fees to watch certain online networks and series.
Wednesday, August 1, 2012
Comcast Growing Revenue Despite Cable Sub Declines
Comcast is a profitable, growing organization. With one foot in distribution and the other planted in content, Comcast saw their second quarter of revenue grow over 6% while operating income grew over 4% from the same quarter last year. In a recessionary economy, Comcast seems to be doing well. The stock market must like the numbers because the stock price is up today as well.
As for the cable part of the business, Comcast must recognize that its subscriber numbers continue to drop. While the loss is lower than anticipated, it still adds up to almost 400,000 less subscribers for the year. But Comcast is able to offset those losses with an increase in both broadband and telephone customers. And that trend is likely to continue for quite some time. The younger generation is more oriented toward a broadband connection than to cable and the cost of a cable subscription only pushes the envelope for more cord cutting.
On the programming front, NBC and their owned cable networks are performing within an expected range, the Olympics could actually break even, and Universal Studios has had some hits to offset their box office duds. Thumbs up to "Ted", thumbs down to "Battleship". So congrats to Comcast, content and distribution together seems to be a successful mix.
As for the cable part of the business, Comcast must recognize that its subscriber numbers continue to drop. While the loss is lower than anticipated, it still adds up to almost 400,000 less subscribers for the year. But Comcast is able to offset those losses with an increase in both broadband and telephone customers. And that trend is likely to continue for quite some time. The younger generation is more oriented toward a broadband connection than to cable and the cost of a cable subscription only pushes the envelope for more cord cutting.
On the programming front, NBC and their owned cable networks are performing within an expected range, the Olympics could actually break even, and Universal Studios has had some hits to offset their box office duds. Thumbs up to "Ted", thumbs down to "Battleship". So congrats to Comcast, content and distribution together seems to be a successful mix.
Tuesday, July 31, 2012
Will Apple Split Its Stock And Go Into The Dow?
Apple is sure in the news lately and not just because of its anticipated fall release of the iPhone 5 and Mini iPad. And not because of their courtroom drama with Samsung over patent rights. Now it is will Apple decide it is time to split its stock price and become a part of the Dow Jones Industrial Average. According to Bernstein Research analyst Toni Sacconaghi, it is being discussed. "The idea of splitting the stock does not seem to be a religious issue for Apple: the company has actually split the stock three times before, each time a 2-for-1 split – the previous splits were in June 1987, June 2000 and February 2005. One question is whether a two-for-one split would be enough to get the stock into the index without overwhelming other components; you could argue that the stock ought to split four-for-one, or even six-for-one, which would still make it one of the highest priced companies in the index."
Of all the tech companies out there, Apple has been the most fun to watch, both for investors and for consumers. For now, Apple continues to be questioned on how long it can grow its momentum. Once everyone has an iPhone and an iPad in their home, what is the next big product that every home and every consumer must have? It could be the Apple TV or perhaps there is something else being secretly designed.
Of all the tech companies out there, Apple has been the most fun to watch, both for investors and for consumers. For now, Apple continues to be questioned on how long it can grow its momentum. Once everyone has an iPhone and an iPad in their home, what is the next big product that every home and every consumer must have? It could be the Apple TV or perhaps there is something else being secretly designed.
You Tube Channel Focus Building A Bigger Content Distribution Platform
Google's investment in You Tube continues to grow as it turns You Tube into an aggregated distribution platform of hundreds of channels. More content, more choice, more eyeballs to online, and more ad revenue. And perhaps secondarily, an alternative to linear cable distribution. "The site has launched nearly 100 new channels so far this year, attracting talent such as actor Amy Poehler to create or star in original episodes in an effort to draw new audiences—and blue-chip advertisers."
It reminds me of the early days of cable, as networks tried to appeal to viewers to augment their favorite channels and give CNN or USA a try. Over time, broadcast viewership has eroded while cable has gained. Today, it is You Tube and other online platforms that are taking its slice of the share away from cable and broadcast. Over time, their percentage will also become significant.
As cable programmers and now online programmers continue to learn, what you put on the platform needs to be interesting and it needs to be found. "The channels themselves, meanwhile, are working to find their place, with a lot of trial and error along the way. 'Just because you build it doesn't mean they'll come,' says former television executive Larry Aidem, talking about YouTube viewers." But being small allows you to make quick changes to adapt quickly to new information. Learning what the viewer likes is a strange fickle business, just ask NBC and the other networks as they premiere new shows year over year hoping to find the next hit. For online, there is less risk at stake so there is more opportunity to experiment.
You Tube and online has the advantage of less barriers to entry. It's easy to upload content. The bigger challenge is promoting it and helping viewers to find it. With so much clutter, it is only getting harder and harder to get noticed. The key is being featured and recommended so that you break through and become viral. So far, my favorite channel on You Tube is the Above Average Network and my favorite series, The Front Desk.
It reminds me of the early days of cable, as networks tried to appeal to viewers to augment their favorite channels and give CNN or USA a try. Over time, broadcast viewership has eroded while cable has gained. Today, it is You Tube and other online platforms that are taking its slice of the share away from cable and broadcast. Over time, their percentage will also become significant.
As cable programmers and now online programmers continue to learn, what you put on the platform needs to be interesting and it needs to be found. "The channels themselves, meanwhile, are working to find their place, with a lot of trial and error along the way. 'Just because you build it doesn't mean they'll come,' says former television executive Larry Aidem, talking about YouTube viewers." But being small allows you to make quick changes to adapt quickly to new information. Learning what the viewer likes is a strange fickle business, just ask NBC and the other networks as they premiere new shows year over year hoping to find the next hit. For online, there is less risk at stake so there is more opportunity to experiment.
You Tube and online has the advantage of less barriers to entry. It's easy to upload content. The bigger challenge is promoting it and helping viewers to find it. With so much clutter, it is only getting harder and harder to get noticed. The key is being featured and recommended so that you break through and become viral. So far, my favorite channel on You Tube is the Above Average Network and my favorite series, The Front Desk.
Monday, July 30, 2012
Does Apple Need To Own A Social Network?
Some public speculation that Apple is considering a major investment in social networking site, Twitter, as a means to extend itself in this space. Perhaps also to compete as much with Google who chose to build their own social site, Google Plus. But is this the best investment choice for Apple? "Apple and Twitter are logical partners in some ways. Unlike Facebook or Google, Twitter has no plans to compete with Apple in the phone business or elsewhere. And as Apple has found, social is just not in its DNA." Still I wonder if there is a profitable long term future in social networking?
Ask Facebook that question and the stock price today says no. Trading below its IPO, Facebook is yet a runaway financial success. Twitter is only as successful as the ads that run on it; but those ads, like the ones on Facebook's timeline have started to become intrusive and unwanted. And should Twitter fall out of favor, there are other sites eager to take a lead. A financial investment in Twitter may be a defensive move, but Apple's success has been in being an innovative company.
Where I would like to see more investment is in products that improve and differentiate the security of their products. And in products that enable more e-commerce and wallet applications. For me, that could mean investments in PayPal and Square. These companies and others are changing our purchase behaviors and improving the ease in which we transact business. Apple's push to better security over our devices will also be an important differentiator. And lastly, the battery that runs our devices and the quantum leap that is still needed to allow these products to run for much longer periods without a recharge, is to me a very valuable investment.
Twitter and Facebook and other social network apps should be enabled to easily integrate with other programs - photos, music, videos, etc. That can happen regardless of a deep financial investment. That Apple products remain a deeply integrated part of our lives, in our communication among family members as well as with our social circles, and the must have device from when we wake up to when we fall asleep remains the top priority.
Ask Facebook that question and the stock price today says no. Trading below its IPO, Facebook is yet a runaway financial success. Twitter is only as successful as the ads that run on it; but those ads, like the ones on Facebook's timeline have started to become intrusive and unwanted. And should Twitter fall out of favor, there are other sites eager to take a lead. A financial investment in Twitter may be a defensive move, but Apple's success has been in being an innovative company.
Where I would like to see more investment is in products that improve and differentiate the security of their products. And in products that enable more e-commerce and wallet applications. For me, that could mean investments in PayPal and Square. These companies and others are changing our purchase behaviors and improving the ease in which we transact business. Apple's push to better security over our devices will also be an important differentiator. And lastly, the battery that runs our devices and the quantum leap that is still needed to allow these products to run for much longer periods without a recharge, is to me a very valuable investment.
Twitter and Facebook and other social network apps should be enabled to easily integrate with other programs - photos, music, videos, etc. That can happen regardless of a deep financial investment. That Apple products remain a deeply integrated part of our lives, in our communication among family members as well as with our social circles, and the must have device from when we wake up to when we fall asleep remains the top priority.
Friday, July 27, 2012
Could Google Overbuild The Cable Operators
Kansas City is a buzz over Google Fiber and cable operators may be concerned that a new rival is in town. "Google Fiber makes the cable-based ISPs look pathetic. It promises to offer speeds up to 1,000Mbps downstream and upstream, for only $70 a month." Bring audiences in at a faster and cheap rate and win them over. "For Google, the main business purpose of Fiber is to give people faster Internet access, so they'll spend more time online -- where they're more likely to use a Google product and click a Google-sold ad. But just like Gmail unlocked an enterprise business, Fiber could unlock a whole new business as an ISP and TV provider."
And according to a Multichannel article, Google is also in talks with some large programmers, including Disney, Turner, and Fox. How Google Fiber tests in Kansas City could demonstrate the value to Google of rolling out this service across other cities. Still the infrastructure to support such a rollout and manage the pipeline must be enormous, but if anyone has the deep pockets, it is Google.
And according to a Multichannel article, Google is also in talks with some large programmers, including Disney, Turner, and Fox. How Google Fiber tests in Kansas City could demonstrate the value to Google of rolling out this service across other cities. Still the infrastructure to support such a rollout and manage the pipeline must be enormous, but if anyone has the deep pockets, it is Google.
Xfinity Means What To You
Branding is a tough game. A new brand can cause quite a bit of confusion until consumers can understand its identity and value. For Verizon, it was trying to explain how it was better than staying with Bell Atlantic or NYNEX as a brand. For Radio Shack, it is wondering whether the name should be changed to reflect a changing technological environment. And for Comcast, it means explaining why Xfinity best represents its bundle of products.
So far, consumers may still be unsure what Xfinity is, what it stands for, and why Comcast has introduced a new name. "Comcast Corp. is launching a marketing campaign costing at least $170 million, to fix what Chief Executive Brian Roberts has acknowledged has been a less-than-successful two-old corporate rebranding effort." Xfinity is meant to be far more than just cable, phone, and data. It is how consumers live their lives in and out of the home. "The new advertisements aim to show what an integrated Xfinity 'experience' feels like to a customer." That the products actually work seamlessly together.
It may be the expectation, but I am unsure if it is yet the reality. Do consumers know how to use the Xfinity apps to integrate devices? Do they see the synergy yet? And most important how can Comcast get current customers to take full advantage of what they offer in order to unlock the value and improve customer satisfaction. It is clearly a work in progress.
So far, consumers may still be unsure what Xfinity is, what it stands for, and why Comcast has introduced a new name. "Comcast Corp. is launching a marketing campaign costing at least $170 million, to fix what Chief Executive Brian Roberts has acknowledged has been a less-than-successful two-old corporate rebranding effort." Xfinity is meant to be far more than just cable, phone, and data. It is how consumers live their lives in and out of the home. "The new advertisements aim to show what an integrated Xfinity 'experience' feels like to a customer." That the products actually work seamlessly together.
It may be the expectation, but I am unsure if it is yet the reality. Do consumers know how to use the Xfinity apps to integrate devices? Do they see the synergy yet? And most important how can Comcast get current customers to take full advantage of what they offer in order to unlock the value and improve customer satisfaction. It is clearly a work in progress.
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