Is Verizon A Good Fit To Acquire AOL?

AOL needs a partner for growth in the mobile space and Verizon needs to embrace digital content; perhaps, that is the reason Verizon decided to buy AOL.  According to numerous reports, the deal will place AOL under new ownership but continue to be run by current CEO Tim Armstrong.  But the question to ask is whether such a combination can produce favorable synergy?  Verizon has certainly tried before but was unsuccessful in growing the Redbox Instant platform to compete with other subscription video companies like Netflix, Hulu, or Amazon Prime.  AOL offers a different set of digital content brands including Huffington Post, TechCrunch, and Engadget.  So how can Verizon help?

Clearly, Verizon is a telecommunications giant with the financial resources to support AOL brands and their growth strategies.  Verizon also brings the largest mobile platform in the US to assist  AOL in extending out its reach and usage stats.  But helping a horse find water doesn't necessarily mean that it will drink from the trough. Verizon must rely on AOL's own expertise with building and growing digital content brands.  And AOL might need to hire from the outside to gain additional help.

Owning more content will enable Verizon to monetize more of its mobile business and to hopefully enhance its data analysis across both its platform and competitor mobile platforms.   And through a better understanding of the mobile space, to create an even more accessible and intuitive expertise.  With content as king, Verizon hopes to do better to capitalize on content this time around.  For AOL, it seems like a huge opportunity to capitalize its strengths with a more powerful financial popular who is also the mobile leader at the moment.  Let's hope that this acquisition is indeed a good synergistic fit.

Can TiVo Build A Better Aereo?

It seems TiVo thinks it has come up with the secret sauce to build an Aereo type product that can't be sued.  And while the Multichannel article couldn't divulge just how it can be done, TiVo syas that it will share more later this Summer. 

Certainly, TiVo has already found some success working with smaller cable operators as an alternative cable box and OTT aggregator.  And the TiVo platform can also work in the home with a personal digital antenna connected to their device.  One can only wonder how they can deliver an Aereo type product without hurting some of the cable operator partnerships they have already created.  Of course the challenge for TiVo is that it needs a broadband provider to capture non OTA (Over The Air) signals and to share content with wired and WIFI devices. 

Broadband access is limited in a community.  One can get either from their franchised cable operator, from their telephone provider who can offer DSL service or from a cellular provider.  It is that limited competitive arena that eventually killed the Comcast Time Warner Cable deal.  TiVo's best strategy has always been to be the better cable box for cable operators willing to share their pipes with both cable programming and OTT programming.  As a stand alone strategy, customers seeking to cut the cord completely can access OTT programming through a number of other boxes like Rovi, Apple TV, Chromecast, Playstation and others.  A more crowded field that TiVo may find less upside. 

Is there an Aereo type strategy that TiVo can deliver?  I guess we will have to wait and see. 

Changes Afoot At ESPN

Is something up internally at ESPN?  Last week, we learned that Sean Bratches, EVP of Sales and Marketing was to leave the company by the end of the year. On Monday ESPN announced that another on Sean's team, David Preschlack, EVP of Affiliate Sales and Marketing, was also resigning.  Could this be fallout from the distribution contract issues between ESPN and Verizon?  The timing seems peculiar. And so one can only wonder what other shoe will drop.

Well, today, we have learned that Bill Simmons, long time veteran writer, will not see his contract renewed when it expires.  While certainly not connected to distribution issues, one can only start to wonder if ESPN is getting ready to clean house both on the distribution and content sides of the company. Should we start to see layoffs or resignations, it will be a more clearer indication that change and trouble is rising inside the sports company.

One thing is for sure, sports content has made sports networks like ESPN and others to charge the highest license fees of any of the basic networks.  Those costs can only be passed on for so long before distributors start to feel the effects of lost subscribers due to cord cutting.  Offering cheaper, more limited packages, that exclude sports content, is how Verizon FIOS is hoping to win back some of those cost conscious consumers.  How iron cloud the ESPN contracts are might be the issue that has resulted in the pending loss of two of their senior employees. 

Yelp Needs Help

Yelp, the local business review company, is not growing as fast as investors and analysts think it should.  As a user generated site of reviews on everything from restaurants to hotels to business services (even services like Photo Booth rentals for events), Yelp offers great search and recommendation for finding what you want near where you are.  But the challenge they face is how to better monetize such a service of loyal users and contributors. 

The Wall Street Journal is reporting that Yelp "is working with investment bankers and has been in touch with potential buyers in recent weeks, some of the people said."  And although traffic to the site is positive, growth may have plateaued.  Still, the company has aggregated a large database of businesses and reviews and has been a useful resource to many, including myself.  As a search engine, it is localized and relevant, and as a recommendation engine, it provides a wide array of reviews, from positive to downright snarky.  Content is king in this regard and they continue to nurture more reviews. 

Perhaps, Yelp needs a partner that can provide them with a larger array of complementary services.  I could see Yahoo and AOL as possible fits, although Google might like to get a hold of them as well. TripAdvisor might also see a strategic fit as well.  With a more strategic partner, Yelp could potentially expand into video content that augments the value of each of the businesses being reviewed.  Currently, Yelp uses photos that are uploaded.  But videos, could open up windows with additional advertising opportunities.  Videos might also encourage more time spent on the site.  In addition, a strategic partner would help drive more efficiencies to both lower costs as well as keep users engaged on more pages across the site. 

Whether Yelp decides to keep going independently or seek a merger to expand remains to be seen.  For now, Yelp has created a must have resource for finding places to eat, shop, and buy. I hope they only continue to grow. 

Will AT&T And DirecTv Merge?

Now that the Comcast and Time Warner Cable deal is kaput, attention turns to the next media merger.  While a merger would create a cable subscription behemoth larger than Comcast is currently, it would not impact the size of their broadband subscriber base.  That factor was the key stumbling block to Comcast getting its deal done.  DirecTv, as a satellite company, does not offer broadband service.  AT&T does.  Is that enough for the FCC to okay this merger?  Netflix doesn't think so.

In today's New York Times, Netflix "argued that a combined AT&T and DirecTV would have the ability and incentive to use its heft to harm online video distributors like Netflix to protect its core TV business." Actually, creating a video entity larger than Comcast might actually enhance competition.  Fundamentally, DirecTv and AT&T bring two different platforms together, satellite and fiber while the Comcast Time Warner Cable deal would have expanded their fiber distribution platform to control more than 50% of the broadband market.   Two very different outcomes.

Still, when looking at the merger of AT&T and DirecTv, the synergies that come into play seem more about negotiating cable content and getting more economies of scale on their contracts.  As to the broadband side of their business, AT&T still must rely completely on their own cellular and U-verse platforms to compete.  Of course should DirecTv satellites someday be able to provide two way broadband access to the internet, then new concerns might arise.  At the same time, Lightsquared and Dish have been currently unsuccessful in this approach.  Once spectrum opens to enable such opportunity, it would open new competition into the marketplace to challenge a merged AT&T - DirecTv entity.  And isn't that what the FCC really hopes happens in the broadband marketplace. 

GE Lights Up With Apple

According to re/code, GE is working with both Qualcomm and Apple to enable their next generation LED lights to work with Apple's HomeKit app.  Intelligent, efficient, and controllable seem to be the new elements of a smart home and GE is reshaping itself to fit this new world.  Beth Comstock, head of GE Business Innovation, says “LEDs plus software, it helps GE continue its Industrial Internet expansion, and I think the lighting business has a big role in GE’s future because of that."   Certainly the space is much larger than lighting and the hope is that GE sees fit to partnering with other manufacturers to assure an integrated experience across all devices in the home.   

Tesla's Battery Revolution Is Starting

Despite all the focus on Apple Watches and missed mergers, Tesla and Elon Musk continues to focus on energy.  Environmentally friendly, useful, and efficient, Tesla Energy looks to be making quantum leaps in energy storage and use.  Their latest announcement yesterday was to the point, "a suite of batteries for homes, businesses, and utilities fostering a clean energy ecosystem and helping wean the world off fossil fuels." Not just for the automobile, but clean energy to power your home and office.  

As a start, it may be viewed as a replacement to a gas-powered generator, useful for blackouts and other emergencies, but with great implications for future use.  Most excitedly, it is designed to use with solar to create a renewable, zero-emission, and ultimately inexpensive power source.  And like any first generation product, it will no doubt see improvements in the coming years.  

Of course adoption and ease of installation remain to be seen but given the risk of brown outs during the hot summer months and full blackouts could make this product a must have for some consumers.  And reducing the demand on our power grid makes this a worthwhile investment. 

Time Warner Cable Still Focused On Results

When a company is up for sale and employees fear losing their jobs, it is easy to expect that work becomes secondary while bitching becoming the top priority.  The same could be true for Time Warner Cable (TWC) who has been dealing with a sale for quite some time.  Yet despite that all blowing up, Time Warner Cable has kept their eye on their business targets and the results seem impressive.

For the first quarter of this year, TWC  has been successful in fighting back against cord cutting, according to Multichannel, "adding 30,000 basic video customers in the first quarter, its first positive basic video quarter since 2009."  In addition, broadband customers grew 315,000 and telephone customers grew 320,000.  These best ever increases demonstrate that the company stayed focus despite the uncertainty of future ownership.  And while that uncertainty continues with Charter Cable interested in a new bid, Time Warner Cable may just start thinking that they can survive and prosper without being acquired. 

Of course, in the long run, the question is can Time Warner Cable as well as the other cable operators figure out how to reverse the trend of cord cutting over the long haul.  It would be interesting to hear from TWC where these new basic subs came from; did they come from formers that were trying to live without cable, new build or new home owners, or from competitor platforms like U-Verse, FIOS, DirecTv or Dish.  A deeper dive of how TWC captured this growth might tell the industry a lot about what lies ahead.  

Can Apple Keep Rising

After reporting yesterday another quarter of results that beat expectations, the news today is whether Apple can continue to grow at such a pace or will it see less growth.  If that question sounds old, it is because it seems to be asked each time Apple releases its financial results.  The truth is that growth depends on innovation and adoption and in both cases, Apple seems to excel.

The focus is on the iPhone, and this past quarter Apple sold more phones than ever before.  Thanks to the international market and the appeal of the iPhone 6, consumers are both upgrading and switching from competing brands.  At the same time, Apple has created a closed universe that achieves simplicity by tying together each of Apple's other products, from the mac to the iPad, from the iPod to the just released Apple Watch.  They all are meant to work seamlessly together.  And they do.

And all these products are tied together by the infrastructure known as iTunes and their App Store.  From software to music, from books to video, users can easily rent or buy.  And it is the content that makes all these devices essential to our daily lives.  The more devices that Apple sells, the more content that needs to be purchased and downloaded. 

As to the future success of Apple, the market worries that iPhone sales will dip.  But history has shown that the longer trend is that sales continue to rise over time.  For as technology improves, so does the next iteration of the iPhone model.  Yesterday it was the 5, today the 6 and next year the 7.  And as the Apple Watch enjoys a greater percentage of adoption, improved models and lower price points, it will grow as well.  And as to the next likely new product, much speculation is that Apple will announce a subscription TV service that will be tied to an improved Apple TV box.  That might just be the next game changer and revenue driver for Apple.