Tribune Follows Others on Path To Split Print From Video

Tribune has emerged from bankruptcy with a plan eerily similar to others before it, separating the video business from print.  Following on Fox and Time Warner, Tribune sees more growth potential concentrating on the video platform and selling off the print one.  "The company offers familiar justifications for the spin off of its assets in the weakening print business to create a new company called Tribune Publishing".  Fox, Time Warner, and now Tribune all see more revenue growth in the video media side of the business, while print suffers through digital conversion. 

What is sad that none of these companies wish to use internal synergies to help the print business build out a new multi-media model to reflect the rise of digital distribution through the tablet and other mobile devices.  Unfortunately, as I have said before, Tribune's focus on broadcast and acquisition of the Local TV affiliates is based on the assumption of growing affiliate fees from cable subscribers.  Disruptive companies like Aereo and the rise of cord cutting could dampen that growth and limit profitability.  Ultimately, I am sure, those factors have been discussed by their senior management.

So we are seeing media companies splitting their platforms to focus more fully on video content and distribution.  Print companies will have to go it alone but perhaps open themselves to new partnership opportunities that will enhance the digital print business. 

Sirius Stays Strong

Sirius continues to grow as both the economy and car sales are rebounding.  Almost 750,000 new subscribers joined Sirius for the latest quarter, bringing their total subscriber base to over 25 million customers.  In a word, impressive. "In comparison, Netflix ended the first quarter with 29.17 million U.S. subscribers, and cable giant Comcast reported 21.94 million video and 51.9 million total customers."

Can this trend continue?  Sirius thinks so and is raising their year end numbers to match this growth.  Given that some of this quarterly growth reflects customers signing on with free trials, Sirius must continue to push to convert and keep subscribers paying their monthly bills.  For customers unhappy with the current variety of content on terrestrial radio, Sirius does indeed provide a wide range of programming for all to enjoy. 

Job Posting: CEO of Barnes & Noble

It seems that the CEO seat was too hot for William Lynch who resigned as Chief Executive Officer of Barnes & Noble.  "The board of directors tapped Michael Huseby as CEO of NOOK Media LLC and president of Barnes & Noble; Lynch’s title has not been filled, while the NOOK CEO post is newly created."  Why a CEO of Nook when they have scrapped the their tablet is questionable, but maybe to help with the plans to close the business.

What B&N needs is a leader that sees the potential that I believe B&N still possesses, a visionary to guide their business into the next generation of book seller and digital aggregator.  It will not be an easy road and success depends on building a brick and mortar business that adapts to a digital business while diversifying and managing a retail presence.  Others before them have failed;  Borders already with books, Tower Records and others with music.  But B&N still has a chance to defy those odds and stay a competitive threat.  Unfortunately, a change at the top was most likely necessary to start to adapt.  I wish them luck.

Boxee Cloud DVR Going Away

With the Samsung purchase of Boxee, the Cloud DVR feature will become a thing of the past.  According to the company, "Cloud DVR functionality we provided to certain Boxee TV users will be discontinued on July 10th".  Sad news for current Boxee owners that have saved content on their cloud DVR.  But it also got me thinking, if we don't physically own digital content, but save it in the cloud, then we don't really own it. 

Some might say that the DVR is a rental type service and we don't control it, but I think that you can still take the concept to the next level.  To truly own digital content, we must maintain our own physical storage for it; if we choose to keep it purely in the cloud, then should that company business go away, just like Boxee, we could lose our ownership of it. 

But back to Boxee, I must say I am surprised to read that Samsung doesn't want to keep the cloud DVR business alive and well.  For consumers seeking a TV Everywhere approach with their DVR content, the cloud provides it and more.  While Samsung might want to support the hardware DVR approach, there should seem no problem to offer the cloud as a software complement service.

Who Will Own Hulu?

With final bids due tomorrow, July 5, we should know shortly afterwards who will be buying Hulu.  Along with hedge fund and investment groups, companies like DirecTv, Time Warner Cable, and Yahoo are still interested in owning this streaming video aggregator.  "The big question is how much bidders will offer for Hulu.  Fox and Disney want about $1B."  Samsung's purchase of Boxee, on the other hand, is a tiny $30 million.  Hulu's value certainly depends on the length of the content deals, especially from the soon to be former owners of Hulu.  Once free of the shackles of distribution, they are free to charge whatever and to whoever they choose.  So once the current content deals expire, Hulu could just be an empty vessel.  Hopefully, the content deals include a long term life.

Who will the winner of Hulu be?  We shall know soon enough.

Apple TV Box Seeks Content Deals

Apple  may finally be putting more emphasis into its Apple TV box rather than building its own smart TV.  It seems they are ramping up their content deals and thinking more about working with cable operators than against them.  Adding authenticated cable subscription content like HBO GO and WatchESPN was the first step, negotiating with Time Warner Cable to enable the Apple TV device to receive authenticated access of its lineup is the next leap.  "Bloomberg said the companies expect to announce the deal 'within a few months,' adding that Apple has likewise hired Pete Distad from Hulu to help Apple strike deals with media and cable companies. " 

I believe that Apple TV can represent an import revenue stream for Apple and make the device an indispensable device for any home that also is an iTunes customer.  Connectivity and ease of use with iPads, iPods, and iPhones to search and watch lay the ground work for an improved experience, one that cable operators, like Time Warner Cable, desperately need.  Their current cable boxes are clunky and outdated; an Apple TV box with a cloud DVR and on demand access could be the ideal arrangement. 

Is The iWatch Coming?

Are we one step closer to Apple delivering an iWatch to consumers?  According to the report, "Apple Inc has applied for a trademark for "iWatch" in Japan, a patent official said on Monday, signaling the iPhone maker may be moving ahead with plans for a watch-like device as gadget makers turn their attention to wearable computers."  So what about a US patent?  I admit to ignorance to the trademark and patent game but find it interesting that it was in Japan unless a patent was already submitted in the US.  No announcements yet but I would love to see this product made available for this holiday season.

Media Merger Mania - Scale Matters

Small is nice, but large matters.  Small is hands on, large requires all the parts working in a coordinated fashion to achieve efficiency and economies of scale.  And while we start small, large always seems to be the goal, at least in business.

In the world of media and entertainment, survival of the fittest requires an eat or be eaten mentality.  And the more we eat, the larger we get.  Lately, we are hearing more and more stories of growth threw merger and acquisition.  Most recently, the desire by John Malone and his ownership stake in Charter, wanting to merge with Time Warner Cable and/or Cablevision to gain scale.  In book publishing, Penguin has merged with Random House to increase its penetration of the marketplace.  And today's news we hear that Tribune plans to acquire more local broadcast stations.  "The deal will add 19 television stations in 16 markets to Tribune Co.'s portfolio, making it the largest commercial television station owner in the U.S., with 42 properties across the country, reaching 50 million homes."  Again scale matters. 

This natural evolution of growth and scale is not without its pitfalls.  Many large companies have fallen to their knees and gone bankrupt because of both internal and external forces, from leadership issues to environmental and technological changes.  For cable operators, large does matter as long as their wired approach remains valuable to consumers.  They make their money on cable, broadband and telephone subscriptions.  Cord cutting already is starting to affect one stream.  Should consumers become more untethered and devoted to wireless, cable operators must adapt to remain competitive.  For Tribune, their hope is pinned on revenue in retransmission fees, the license fees cable operators pay for carriage of broadcast networks.  But companies like Aereo are disrupting the model and proving that there are no guarantees.  Cable operators could balk paying fees; if Aereo can create farms to capture signals, cable might consider the same approach to avoid paying fees.

Media mergers have and will continue to happen throughout history.  Size may matter initially but disruptive influences prove that nothing is for certain.  For Malone and Charter, for Tribune, and for others seeking partnerships to gain economies of scale and increased profitability, don't stop innovating.  It may be harder to change directions in a big ship than a small boat, but change matters.  Keep adapting to your environment.  Otherwise, as the story goes, David will beat Goliath. 

Saving Barnes & Noble

Today's Wall Street Journal poses the same question that I have already been trying to answer, "How to Rescue Barnes & Noble".  The article asked 5 experts and the answers included diversification of merchandise, deeper inventory, discounting, downsizing, and localization as a means to drive profitability.   So what is the secret sauce that can invigorate B&N to improve earnings and stockholder value?

I agree that B&N is a destination and a place for discovery, although searching for titles takes a keen eye, their local database, and sometimes their employees.  Activities and events that encourage adults and children to come visit is always an asset, provided that they reach into their pocket and buy something before leaving.  And more diversification of merchandise could help.  My idea, a partnership or merger with Learning Express to reach families. 

Encourage consumers to bring their Nook e-reader and iPads to the store for exclusive downloads and other digital downloads.  Buy the hard copy book and get the digital download at the store.  Or partner with Audible, a Microsoft company, to offer a free audio download with a hard cover purchase.  Giving extra value for in-store customers could be a great incentive to keep coming back to retail. 

As I have said in the past, I am a fan of B&N and only wish to see them transition successfully into a brighter future where hardbound and digital books are both available.