This article featuring an analysis by Wunderlich Securities analyst Matthew Harrigan gives us a first-hand look in to a complicated topic in the media economy--that of valution. Harrigan has analyzed the pending NBC Universal acquisition by Comcast, and provides some amazing insight in to the valuation process--at least how this one analyst conducts such an undertaking.
Two things caught my attention. First, the significant value placed on the NBCU cable channels, specifically ScyFy, CNBC, MSNBCm and Bravo. The second thing that was very interesting was the negative valuation for the NBC broadcast network, which eliminated some $600 million off the total amount. It is the first time I have seen one of the big four broadcast networks valued negatively. The reason? NBC's poor performance since 2007 in prime-time, finishing most seasons in either third or fourth place.
This is a very interesting article for a topic that we find too few stories about. BTW, in case you don't want to read the article in the link, Harrigan values the merged Comcast-NBCU company at just a little over $38.6 billion, making it the world's largest media company.
Thursday, September 30, 2010
Wednesday, September 29, 2010
Mobile Advertising and Future Projections
With the rapid adoption of smart phones and other mobile devices, the projections for mobile advertising is going through the roof. According to the latest estimates by BIA/Kelsey, mobile advertising is expected to top $2 billion by 2014. That may not sound like a lot, but for a category that didn't exist just a few years ago, these are impressive numbers.
With all of the apps being developed for smart phones and tablet devices, more and more consumers are moving to adopt these technologies as their budgets allow. Advertisers recognize this trend and are following suit.
The $2 billion estimate for 2014 is only about 1.4% of the total projected ad pie for that year, according to RBR. But that's still a lot of money. We can expect double-digit growth in mobile advertising for the next decade at least.
Just illustrates the need for any media company operating in the 21st century to have a mobile strategy. It is just too important to ignore mobile in the media economy.
With all of the apps being developed for smart phones and tablet devices, more and more consumers are moving to adopt these technologies as their budgets allow. Advertisers recognize this trend and are following suit.
The $2 billion estimate for 2014 is only about 1.4% of the total projected ad pie for that year, according to RBR. But that's still a lot of money. We can expect double-digit growth in mobile advertising for the next decade at least.
Just illustrates the need for any media company operating in the 21st century to have a mobile strategy. It is just too important to ignore mobile in the media economy.
Monday, September 27, 2010
Passing of Ward Quaal
One of the true leaders of broadcasting has passed away. Ward Quaal was identified with Chicago's WGN for much of his career, but also was a big part of the Broadcast Pioneers now Broadcasters Foundation.
What is not being reported in many of the obits being released the last couple of days is that Ward Quaal was also an author of one of the first books on management. Aptly titled "Broadcast Management," the book was published by Hastings House in 1976 with a second edition following a few years later. The book was co-authored with former Alabama professor James Brown.
It was a classic text, and I was introduced to the book when I took "Broadcast Management and Economics" at Marshall University in a class taught by my late mentor, Dr. C. A. "Ace" Kellner.
Many management texts have followed, including my own (Management of Electronic Media published by Cengage), but Quall's book was the standard by which the rest of us followed.
Ward Quaal was 91 years old.
What is not being reported in many of the obits being released the last couple of days is that Ward Quaal was also an author of one of the first books on management. Aptly titled "Broadcast Management," the book was published by Hastings House in 1976 with a second edition following a few years later. The book was co-authored with former Alabama professor James Brown.
It was a classic text, and I was introduced to the book when I took "Broadcast Management and Economics" at Marshall University in a class taught by my late mentor, Dr. C. A. "Ace" Kellner.
Many management texts have followed, including my own (Management of Electronic Media published by Cengage), but Quall's book was the standard by which the rest of us followed.
Ward Quaal was 91 years old.
Saturday, September 25, 2010
Zucker, Klein on way out at NBCU and CNN. Implications?
On Friday we learned that Jeff Zucker will soon be leaving NBC Universal and that Jon Klein is departing from CNN. This follows on the not-too-distant announcement that David Westin was leaving ABC News. It has been a long time since this many big network jobs have had vacancies.
Zucker's departure is probably not as surprising with Comcast about to take over the company once the merger is approved in Washington. The NBCU cable nets have done great, but NBC as a network has performed poorly the last several years. NBC News has done well, but most of that is attributed to Brian Williams.
Klein's departure at CNN is really interesting. CNN's ratings have been awful for some time, and their prime-time lineup is about to change this fall as the new Elliot Spitzer-Kathleen Parker is set to replace Rick Sanchez who replaced Campbell Brown. And then at year's end Piers Morgan will take over for Larry King. Klein was responsible for both of those changes, but now he is gone.
ABC News has done well under Westin, but the network has suffered so many cutbacks and closings of bureaus that it is now a shell of the powerhouse news organization Peter Jennings led just a few years ago.
What does all of this mean? A few thoughts. These are traditional media jobs, and they must change like the traditional media content to remain viable in the 21st century. They come at a time when audiences are more fragmented than ever, technology and digital platforms are booming, and the economics are even tighter.
This also is a chance to rethink and move in new directions. Perhaps now is the time for CNN and CBS to finally form a partnership that they have danced around ever since Dan Rather was managing editor at CBS. I've said for years it makes no sense to have three networks doing a nightly news show, as well as 4-6 cable news channels. People don't need or want that much information. The economics don't make sense in the 21st century.
Who knows what direction ABC will move in, but a partnership with another network or cable player would make economic sense for their operation as well. Bloomberg might be an interesting option for ABC, despite its heavy business orientation.
All of these moves are further indicative of change and evolution in the media economy. Stay tuned.
Zucker's departure is probably not as surprising with Comcast about to take over the company once the merger is approved in Washington. The NBCU cable nets have done great, but NBC as a network has performed poorly the last several years. NBC News has done well, but most of that is attributed to Brian Williams.
Klein's departure at CNN is really interesting. CNN's ratings have been awful for some time, and their prime-time lineup is about to change this fall as the new Elliot Spitzer-Kathleen Parker is set to replace Rick Sanchez who replaced Campbell Brown. And then at year's end Piers Morgan will take over for Larry King. Klein was responsible for both of those changes, but now he is gone.
ABC News has done well under Westin, but the network has suffered so many cutbacks and closings of bureaus that it is now a shell of the powerhouse news organization Peter Jennings led just a few years ago.
What does all of this mean? A few thoughts. These are traditional media jobs, and they must change like the traditional media content to remain viable in the 21st century. They come at a time when audiences are more fragmented than ever, technology and digital platforms are booming, and the economics are even tighter.
This also is a chance to rethink and move in new directions. Perhaps now is the time for CNN and CBS to finally form a partnership that they have danced around ever since Dan Rather was managing editor at CBS. I've said for years it makes no sense to have three networks doing a nightly news show, as well as 4-6 cable news channels. People don't need or want that much information. The economics don't make sense in the 21st century.
Who knows what direction ABC will move in, but a partnership with another network or cable player would make economic sense for their operation as well. Bloomberg might be an interesting option for ABC, despite its heavy business orientation.
All of these moves are further indicative of change and evolution in the media economy. Stay tuned.
Thursday, September 23, 2010
Blockbuster Files Chapter 11
If ever there was an example of changing media markets Blockbuster and the market for home video represents a classic case study. Early Thursday morning, September 23, 2010, Blockbuster filed for bankruptcy protection or Chapter 11. Once-mighty Blockbuster, which had at its peak somewhere near 4,000 stores, had ruled the home rental market for years after driving out most of the family-owned rental houses and competitors like Hollywood Video and Movie Gallery.
But then the digital revolution hit, and everything came unglued. Rather than recognize the massive technology shifts and changes in consumer tastes, Blockbuster ignored what was happening across society and stayed the course. Only after upstart Netflix started seriously crimping their business model did the company start to make changes. By then it was too little too late.
The revamped Blockbuster that emerges from Chapter 11 will be a shell of its former self. In a world where broadband wireless distribution is becoming the way most people will access content, Blockbuster's brick and mortar stores are irrelevant. The company will try to compete with Netflix via online and mail distribution, but they won't catch the leader. Redbox is also growing across the US for those users who rent on the spur of the moment for $1 a pop.
There's a lot to learn in the media economy about Blockbuster and its demise. For some more information, see today's Wall Street Journal story:
But then the digital revolution hit, and everything came unglued. Rather than recognize the massive technology shifts and changes in consumer tastes, Blockbuster ignored what was happening across society and stayed the course. Only after upstart Netflix started seriously crimping their business model did the company start to make changes. By then it was too little too late.
The revamped Blockbuster that emerges from Chapter 11 will be a shell of its former self. In a world where broadband wireless distribution is becoming the way most people will access content, Blockbuster's brick and mortar stores are irrelevant. The company will try to compete with Netflix via online and mail distribution, but they won't catch the leader. Redbox is also growing across the US for those users who rent on the spur of the moment for $1 a pop.
There's a lot to learn in the media economy about Blockbuster and its demise. For some more information, see today's Wall Street Journal story:
Wednesday, September 22, 2010
The Retransmission Fee Mess
The economics of the broadcast television industry has been under stress since the US rolled in to recession in 2008. That horrible year saw a perfect storm of negative activity as the financial, automotive, and retail sectors all were hit hard by layoffs and tightening of consumer spending, resulting in millions of dollars in lost TV advertising at the local level.
TV stations held on, thanks to the 2008 political races. In 2009 the recovery began, but most GMs will tell you that the situation is nowhere back to 2007 levels. A bright spot in all of this has been an increase in retransmission fee negotiations with cable and satellite operators.
Now, the networks, led by CBS CEO Les Moonves, and Disney CEO Bob Iger, wants a big chunk of that change. (see http://www.broadcastingcable.com/article/457399-Iger_Affiliates_Retrans_Payments_Will_Grow.php for the latest on this story). The networks point is a valid one--their programming is probably one of the main reasons people watch local TV.
But the networks are also discounting the importance of local news and other local programming which of coures is where the value is at in local television. So now, local affiliates have grinding negotiations to deal with at the local level, knowing full well that the networks are going to want a big piece of the action. This is playing out locally in my market as I write this, as Belo is in heavy negotiations with Time Warner regarding carriage of Belo's 18 TV stations. If no deal is reached by Saturday, Belo will pull their signals from TW's cable lineups (see http://www.dallasnews.com/sharedcontent/dws/bus/stories/DN-timewarner_21bus.ART.State.Edition1.270af23.html)
Of course, much of this money being swapped between affiliates, cable/satellite/IPTV providers and now the networks will raise costs for programming that will ultimately be paid for by the consumer. So our bills will rise, with few looking out for the consumer and social policy. Can't afford cable? Too bad. Get an antennae.
It's a lousy system for everyone. It's a system built on greed. Right in line with the return this week of Gordon Gekko, who coined the phrase "greed is good" in the original Wall Street movie starring Michael Douglas.
TV stations held on, thanks to the 2008 political races. In 2009 the recovery began, but most GMs will tell you that the situation is nowhere back to 2007 levels. A bright spot in all of this has been an increase in retransmission fee negotiations with cable and satellite operators.
Now, the networks, led by CBS CEO Les Moonves, and Disney CEO Bob Iger, wants a big chunk of that change. (see http://www.broadcastingcable.com/article/457399-Iger_Affiliates_Retrans_Payments_Will_Grow.php for the latest on this story). The networks point is a valid one--their programming is probably one of the main reasons people watch local TV.
But the networks are also discounting the importance of local news and other local programming which of coures is where the value is at in local television. So now, local affiliates have grinding negotiations to deal with at the local level, knowing full well that the networks are going to want a big piece of the action. This is playing out locally in my market as I write this, as Belo is in heavy negotiations with Time Warner regarding carriage of Belo's 18 TV stations. If no deal is reached by Saturday, Belo will pull their signals from TW's cable lineups (see http://www.dallasnews.com/sharedcontent/dws/bus/stories/DN-timewarner_21bus.ART.State.Edition1.270af23.html)
Of course, much of this money being swapped between affiliates, cable/satellite/IPTV providers and now the networks will raise costs for programming that will ultimately be paid for by the consumer. So our bills will rise, with few looking out for the consumer and social policy. Can't afford cable? Too bad. Get an antennae.
It's a lousy system for everyone. It's a system built on greed. Right in line with the return this week of Gordon Gekko, who coined the phrase "greed is good" in the original Wall Street movie starring Michael Douglas.
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