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From management consultants to corporate raiders the message is the same: Execution is everything. Ideas, wonderful as they are, spring up everywhere. Only a few attract listeners, viewers, readers or, best of all, money. Leaders may be credited for grand plans but putting them in motion is the real skill.
With short attention spans and an anxious nature investors don’t need a lot of input for buy-sell decisions. The digital era has given them many tools. And they certainly like betting on change. They only need be right 51% of the time so the slightest nudge sets them off.
Almost everybody likes a surprise, children in particular and television viewers. Accountants do not. The TV world thrives on the serendipity of something new intersecting with something known. Creating that surprise is the art attracting viewers and, now, subscribers. There is no formula.
Media luminaries through most of this century have taken every opportunity to belittle the online “culture of free,” customers disregarding traditional pathways of commerce for the cornucopia that is the internet. A legal bit torrent was unleashed against those defying the will of content masters. The result has been much as expected; threats bore no fruit, the internet adapted. Consumers aplenty have decided which items on the media menu they will and will not pay for.
Famous executives, media and otherwise, are easily quotable. Their careers depend on invigorating board meetings and shareholders, insight notwithstanding. Those chosen to lead the most prominent in today’s media sector know very well the importance of the right words at the right time and memories can be quite short. For that they are thankful.
Reordering the media world is taking a pace, if not dimension, only a few saw coming. Opportunity is created in all this disruption, certainly for the few most nimble or most lucky. Unease is palpable among those trying to make ends meet or trying to meet the end. The spotlight follows the most important actors, at least until the curtain falls.
If there was one single take-away from the MIPTV market show in Cannes last week “Game of Thrones” was it. Selling to TV buyers means competing with high-quality - and quite expensive - shows that viewers everywhere know, have seen and talk about. Big shows are in demand; the rest just fills time.
The meteoric rise of media executives always attracts considerable attention, adding to the enduring narrative of success in this highly visible arena. Big ideas, working hard or having the right connections most often illustrates the careers of these winners. That light is also visible, however briefly, when media stars fall back to earth.
Pressure on media executives is often insurmountable. Even those with impeccable records of service are called to painful duty. Rising to that call can be hugely rewarding. Failing, quite often, is the road to perdition.
The media world attracts the most interesting people, often quite colorful, sometimes rather dark. Where that dark-side takes hold, cleansing is a long process accomplished by repeated hand-washing, hampered by hand-wringing. There is merit in feeling clean, more, perhaps than being clean.
Major events always offer journalists vast opportunities to explore a host country, seeking color and controversy. Editors demand new stories, reporters comply. Media business writers have, generally, three themes to chase: money, digital and weirdness.
Last year was generally good to big media companies. Distribution companies, largely satellite and pay-TV, benefited greatly but content companies, largely TV and film producers, held their own. The web is evermore powerful and publishing only starting to recover.
Supply and distribution disputes, however ugly, are common and, largely, the usual means by which companies align and realign their relationships. Negotiations can either be strategic or tactical, gain an advantage or apply pain. The biggest or most powerful aren’t always the victors. The smartest are.
The television environment is changing so fast only the fans, it seems, can keep up with it all. First, they wanted to control the schedule. Now they’ve given up the entire idea of schedule. The digital dividend has given more than new channels and new shows. There’s a new kid in town.
The appetite for live news has never been greater. Drama in progress is an audience magnet. The news business is also a magnet, commercially attractive and highly competitive. The digital dividend has made this possible and very challenging.
Russian media is, if anything, full of intrigue. From Western eyes, it’s also full of controversy. This certainly extends to the rather vibrant new media scene. Color it complicated.
Companies move through stages, entirely predictable. Financial investors also have their phases. Circumstances, certainly, dictate much of the flow but, like the sun rises and sets, investors move on to newer opportunities. Companies either evolve or fade away.
Video portal YouTube just had an anniversary. The undisputed global market leader is nine-years old, almost qualifying as an old dog in the media-tech world. What YouTube did for the web, it’s now doing for television. Competitors would like to breath the same air.
Broadcasters can fall foul of regulators, even public opinion, for touching sensitive subjects. There can be fines and worse. Where broadcasting is under one thumb or another viewers search high and low for anything interesting, maybe controversial, sometimes annoying. But bland TV is never threatening.
Opportunity and cash are charting the ebb and flow of recent media transactions. With most developed markets, strategic investors are buyers and financial investors are sellers as valuations continue to rise. In developing markets, media asset values have plummeted to historic low levels, changing the equation. Speculators are having a field day.
Despite choruses from the highly quoted media thinkers of our day, traditional media – publishing and broadcasting – continues to have the one thing hard to buy at any price but that the rich and powerful want more than anything. Influence is brighter than gold. Quite hot to the touch, too.
Consolidation is a matter of course. In market economies, tough times force companies to expand cash-flow by acquisition. Better times encourage new entrants and new ideas. But where the media sector is viewed through a different prism consolidation is simply a matter of control.
It’s the season for change agents. Helicoptered in from the home office, turn-around specialists are single-minded and short on patience. They prefer core businesses, preferably with fewer employees. Competitors, though, are happy to see them.
Big media houses are finishing 2013 with a sense of renewal. The financial picture for most isn’t getting much better but it isn’t getting much worse. Digital transition is a foregone conclusion but the end result remains hazy. Possibilities, once so numerous, all lead one direction.
Shifting financial winds continue to deposit sand in the doorways of major media groups. Some shareholders maintain faith in the media sector, albeit with conditions. Others are less sanguine. Consolidations, mergers, break-ups and more turmoil may have a cathartic effect.
There are some who believe online media is a bubble about to burst, a house of cards so to speak. With the advertising model under constant repair, paywalls and subscriptions seem the most reliable revenue streams. Media consumers are evermore enticed by unique content so long as the price doesn’t wreck the household budget and broadband speed is sufficiently high. Staying in the middle of it all is the emerging business model.
Television is in big trouble. Media buyers under the internet’s spell are pushing ad rates lower. At the same time new digital choices cannibalize audience and revenue streams. The result is painful and may send free to air TV the way of newspapers.
Challenging times call for decisive action. Some media operators choose to stay the course, albeit with fewer resources. Others take the opportunity to cut and run. Shareholders like that if buyers can be found. The other option is to wait and maybe that ship will come in.
The marketing geniuses in every field have worshiped at the premium offer temple for as long as sellers have been selling. Customers are told that for just a tiny bit more a whole new world of fun can be theirs. It’s popular because it works. Loss-leaders work, too.
Only so much internal austerity can hold together a media company facing external austerity, advertising retreat and digital quandary. Off-loading assets – and people – only goes so far when debt burden is compounded by inertia. Restructuring is often the best strategy but only when it goes far enough.
Broadcasters in search of all the nice things that come from increased market share often stare down competitors at every opportunity. Earning market share is costly and time consuming, developing the digital dividend even more so. Acquisitions are either hard to come by or very expensive. Then there’s cooperation.
Free-to-air television is inextricably tied to the fickle fates of advertising. And when media buyers place their bets on the media best to attract anxious consumers reach matters less than price. Viewers have many screens on at once, after all, and seem to like everything.
Investment strategies for media houses are as diverse as the sector. There is the endless search for new opportunities through new markets or new technologies. Simply moving cash is also a major consideration. Insecurity abounds within the media world making good investments very tricky.
For commercial broadcasters in stagnant ad markets, increasing spot inventory is one strategy. Between regulation and market pressure simply adding more commercials is difficult if not impossible. One alternative is launching branded digital and web channels. There are other ideas.
Media investment strategies have certainly shifted. Private equity and venture money goes where it always does, straight for the door as soon as it can. There’s a time for it. And a time for operators to take their place.
The pain has moved to the television business. Between second screens and diminished ad revenues, big TV companies are cutting costs further, shedding assets and generally restructuring. Publishers went through this exercise and several emerged with only light haircuts. When ad and subscription revenues held on broadcasters thought they would avoid the barber: maybe not.
Tipping past the growth phase of the business cycle to the mature phase brings on new challenges for an organization, media, technology or otherwise. As it happens when a company matures the profit growth rate levels out, the cost of doing business rises. Smart organizations don’t panic, embrace the change, keep focused and avoid all the jumping up and down.
Whether they’re hawking airplanes, air-hammers or television shows, good salespeople love nothing more than having new customers to pitch. New buyers often arrive without the bias of tradition and carrying bags of money. In this converged digital world, the threshold between content and distribution blurring, successful selling requires a special language.
Whether rules are meant to be followed or broken is more than a simple debate about economic theory. Media proprietors with competitive marketplace challenges regularly walk right up to the line. Even wiggling toes over the line is considered acceptable. There are consequences, usually, for plunging in.
For commercial businesses, say free-market absolutists, no single principle carries more weight than profit. To a standard more lofty than puerile pennies comes the media sector, wearing public service, interest and values proudly. Virtue is in the beholding.
With barely a fortnight passing since the news that News Corporation will split into two, one for entertainment and one for publishing, media watchers continue to look for the tsunami that often follows an earthquake. It hasn’t materialized. Stock traders welcomed the news while newspaper people lamented, all quite expected if somewhat rehearsed. As always, there’s more to follow and veritable industry has sprung up to take the challenge.
Times are such when media companies are assessing their portfolios, shedding non-core assets and concentrating on the meat of their business. Shareholders like this. Big media companies, though, find themselves forced to discard the favorite parts.
Tough times can be opportunities for savvy investors. The secret, often, is waiting for the right moment. But patience is rarely an executive virtue, punishment being swift. Sometimes having a pile of cash helps.
Social media gives millions – tens of millions – their moment. Andy Warhol’s fifteen-minute rule is so last century and such an eternity. Now fifteen seconds is all you get, even with the ad.
Being a media mogul is getting tougher these days. Big competitors rally opinion against them as lesser competitors fall away. That digital dividend keeps getting more expensive. So too the politicians, now more than ever worried about opinions they might shape and money they might make.
There is an obsession in many circles with that select set of individuals who principally own big media companies. Some are reclusive and others thrive on attention. Few are at a loss for opinion on the way the world works and, certainly, the way it affects their business. And they do like things to be the way they want them.
Media owners tend to come in two distinct types. There are the hopelessly boring accountant-types, usually found in old-school companies. Then there are those who really, really like the show biz. It’s a quick guess to decide which get the most attention.
Media people continue searching for that oft promised digital dividend. So far, the major beneficiaries have been techies, telecoms and, of course, investment bankers. In the real world the difference between analogue euros and digital pennies is well understood. There is, though, a digital strategy.
The great financial crisis has caused considerable pain in the media sector. And, too, there’s been the hysteria as new media takes more and more attention space. Buy the rumor, sell the facts, say the traders.
The turns and twists continue apace from last year’s last weeks into this for media companies. New bosses are in. Old one’s out. Sometimes old one’s are back. If anything, there’s lots of shuffling, occasionally with lots of money and always with great connections.
Major media companies invest where opportunity exceeds cost. Patience, say the sages, is a virtue. But these are special times and “you’ve got to know when to fold ‘em.”
It’s a new golden age for commercial television broadcasters. The TV ad share is robust, running away from nearly all other sectors. Digital TV arrived and people are watching more, anywhere, all the time. So why all the long faces?
There are, we know, no final exams for aspiring CEO’s. We take a test before driving an automobile and several before flying a jet aircraft. There’s even, usually, an examination required to become an accountant, lawyer or brain surgeon. Those chosen to lead organizations employing and serving tens of thousands, millions arguably, arrive at the corner office by other means.
News media distinguishes itself from other enterprises with claims of a greater ethic. Bank shareholders, we’ve learned, expect and get big profits, dividends and no silly chit-chat. Are we so different?
It’s far from uncommon for politicians to call meetings with key media executives, particularly with elections on the horizon. It’s different in the UK, as we’ve seen, where Rupert Murdoch calls in the politicians. This meeting was a bit different, some witnesses calling it "strange."
Institutions take to aging much like the people who direct them. Few are content riding off into the sunset, warmed by fulfillment and humbled by knowledge. The quest, the game, becomes the elixir. Would that it be so easy.
Investors in television companies come in all sizes and styles. Some become operators, others players. The money in the television business just keeps on growing, which keeps investors on their toes lest one or two get broken.
There is no thrill greater than walking right up to that edge, wiggling your toes over it. Some people feel it when jumping out of a perfectly good airplane. Landing, intact, is reward of the metaphysical kind. Worrying about bad things and consequences are for wimps and little people.
The hourly revelations, charges and retorts about News Corporation have rapt the media world. Rupert Murdoch is facing, arguably, his greatest challenge. The seeds run deep and, as is said, one reaps what one sows.
Facebook frenzy erupted again. A spring 2012 IPO could be worth USD 100 billion even if growth has stalled. And the name is easier to pronounce than Icelandic volcanoes Eyjafjoell and Grimsvotn.
A great revival in media mergers and acquisitions seems ever so much closer. Financial markets are still fat with cash as are the big global media groups. Yet huge deals, big enough to rearrange the dinner table, remain just a shout away.
When a private equity firm invests in a company a clock, genetic certainly, starts ticking. Nobody hears it at first, the sound drowned out by plaudits and arriving cash. The volume increases gradually until nothing else can be heard.
Beginning in the late 20th Century, after ‘management by objectives’ and ‘in search of excellence’ had fallen away, private sector organizations uncovered new value – and new values – in serving up well-turned phrases for two increasingly important stakeholders: investors and governments. The corporate communications industry – something between lobbying and advertising – could, it said, not only add value but create it. There are, of course, limits.
Television people are masters of creativity. New shows spring up like mushrooms after a rain. But is the show the thing or is it new media distribution? It’s enough to rain on your parade.
If not exactly celebrating, media companies in many countries are breathing a sigh of relief as 2011 starts on a more positive financial note. There are evil signs out there, to be sure, as austerity programs batter consumer confidence. For many markets, East and West, the worst could be over. And then there are the others.
With media buyers spending on television like wild people and new channels blooming like spring flowers, the television business has drawn a sigh of relief from the bad days still fresh in the memory. Business is good. New media has been put in its place. Caution remains.
Positive, even stunning, year-end financial results continue to roll in from television broadcasters. Yes, ad revenues are recovering. Cost control and restructuring have their benefits but does this create a dangerous blind-spot?
It was a dreadful week. All that stirred was a constant buzz inside the head. There’d been no Murdoch news. Not a Tweet. Then, just as the drugs kicked in, a torrent.
Of all content producers, the music industry faced the digital revolution first. It has been the proverbial canary in the mineshaft. Music executives responded by fighting the Web, consumers and everybody else. The result is unsurprising.
Rupert Murdoch will reportedly fly to London this week to rally his generals for the next skirmish in a war he cannot lose. The war to gain decisive competitive advantage for News Corporation in the UK media market is one he did not expect to fight on open terrain. Battles are very hard to control.
iPad collects 30% of the revenue earned from the many media publishing apps out there but when a newspaper gives away iPad usage to a print customer then Apple loses out. So it has told some European publishers to quit the practice by April 1. Apple also has told them that all sales must be made via its iTunes store and the Europeans aren’t happy about that either, so Europe is near to declaring war on Cupertino with the first skirmish already underway.
Storytelling never really goes out of fashion. All media captivates listeners, viewers and readers with a mix of reality and fantasy spun in story form. While new media seems to reinvent that form television continues to thrive on great stories and storytellers.
Ah, the BRICs: Brazil, Russia, India and China. For several years these countries have come to symbolize rapidly developing economies. Not surprising, radio broadcasting is rapidly developing there, too.
New business models are emerging that turn newspaper companies into what they need to become -- news media companies -- with the bottom line that print becomes just one of several content platforms, with pricing to support all platforms while enabling print to maintain its niche.
The flash-bang of digital television was meant to bring more than new technology to broadcasting. More, possibly interesting channels would entice viewers and, overall, broadcasting would continue to thrive and innovate much along the same lines it had at the end of the last century. Hello, content; meet distribution.
Rupert Murdoch wants nothing more than universal acceptance of his media power. From competitors to kings, sultans to lesser politicians Clan Murdoch demands the quid pro quo for its favors. Even when it gets bigger and bigger it’s rarely rejected.
The TV battle In Italy between two titans – Prime Minister Silvia Berlusconi who is also said to be the country’s richest man – and Rupert Murdoch, said to be the world’s most influential media mogul – has heated up again.
The opening of Eastern Europe to private, commercial broadcasting was met with massive investment. In those two decades consumers have changed their habits. Advertisers have changed their spending. Broadcasters have responded with totally new strategies.
The British media and some of the Establishment have put Rupert Murdoch under enormous pressure lately for offering to buy all of BSkyB that he doesn’t already own, and for alleged telephone hacking by his News of the World tabloid. He had a golden opportunity at the inaugural Thatcher Lecture to throw some daggers of his own but, regretfully, it was Rupert the Diplomat choosing his words very carefully.
No business stays in business when the cost of doing business exceeds what the customers will pay. Accounting tricks notwithstanding, bottom line management is the norm. But unlike in the restaurant business, media operators can’t eat their mistakes.
Getting British media to agree on anything is near impossible, but now newspapers ranging from the far right to the far left are united against a common enemy – Rupert Murdoch. And the referee in this fight is a decidedly uncomfortable coalition government that probably wishes the whole thing would just go away.
Big media deals come together for many reasons. Usually it’s the money, sometimes it’s the power. Almost always it’s the trill of the really big deal.
A world record for street singing made the headlines during the German music industry trade fair Popkomm. Singing for ones supper, literally or figuratively, may be the norm for the lesser known artists and performers. Music industry executives and their lawyers have a different tune.
Jimmy Wales, founder of Wikipedia, says the Murdoch paywall at the Times and Sunday Times in the UK is a “foolish experiment” mainly because their readership online has dropped so drastically diminishing those newspapers’ influence in today’s social media digital world. But to Rupert Murdoch it’s all about the bottom line, knowing precisely who your readers are, and making them pay. Who has it right?
Yet more evidence pours in; that nasty recession is over. Or maybe it’s mostly over. In any case, television – advertising included – is still hot.
It’s great military theater when two media barons go at it and the artillery fire between Silvio Berlusconi, Italian Prime Minister and head of Mediaset, and Rupert Murdoch, whose News. Corp owns the Sky Italia satellite TV service, has just heated up a notch or two.
Television news is an everyday challenge. Everybody wants more, better, faster yet there’s considerable cost. As new media makes everything available to anyone business plans constantly change. And competitors want to eat you.
For media companies, foreign development carries risk and reward. Expansion opportunities beyond home borders advance on business models well-honed by experience. The best plans, though, can be laid to waste by changing local politics.
The bid by Rupert Murdoch’s News International for the 60.9% of British satellite TV BSkyB that it doesn’t own for a price that could well end up close to $8 billion – about what the company now has in the bank – is opening hornet nests on both sides of the Atlantic.
Corporate strategies among the biggest media companies are remarkably consistent. Those traded publicly, or significantly so, trade on a stony conservatism that resists risk. News Corporation has always been different.
Behind the scenes the dialogue is getting downright personal over Thomson Reuters CEO Tom Glocer’s public blog defense of major client Goldman Sachs, and also over complaints by former staff of the perceived lackluster company response to the leaked military footage showing two Reuters people shot dead in Iraq by the US military.
Buzz, buzz, buzz; it’s MIPTV. With so much buzzing and twittering how can there be enough time or energy for the PR parties. Television luminaries are buzzing about adapting to converging realities.
Media organizations always follow the money. Even with advertising shifting and the internet looming large the business model always remains true to attracting audience. Television in Slovenia has talent.
Television series come and go with a predictable frequency. Viewers grow weary, ratings slip, actors call their agents, sponsors blink. Broadcasters wield the axe. All move on. Television loves winners and doesn’t tolerate the rest.
Austerity cost cutting and a little creative accounting saved media giant Bertelsmann from the revenue demons of 2009. Dividends were cut in half but things will “significantly improve” this year. The “course for growth” is digital.
In the first truly welcome sign of economic recovery, Forbes magazine says there are now more billionaires than ever. And billionaires like the media business. Spread the word. The boys are back… with cash.
Few weeks pass without some major media entity announcing major expansion in the Arabian Gulf region. Last week it was Rupert Murdoch saying News Corp. was centering various Middle East operations in Abu Dhabi, CNN has opened what it calls a state-of-the-art regional center there and already broadcasts a daily news program plus various weekly programs, CNBC has announced it is creating a regional editorial hub in Bahrain and don’t forget the gleaming Dubai Media City that opened its doors in 2001 hosting various international media entities in a tax free zone.
When Rupert Murdoch speaks, people usually listen. They may not necessarily agree, but they listen. So when Murdoch opened a Middle East media summit this week by telling Arab states they if they wish to be seen as embracing modern media, which they do, then they must also accept press freedom no matter how “inconvenient or unwelcome” some stories may be.
Rupert Murdoch caused a stir this week when he said he doubted the rumors that the Sulzbergers might sell The New York Times to Mexican billionaire Carlos Slim. “I don’t believe it,” Murdoch said, “The family treats it as a great heritage,” and if the family were to sell, he added, it would be “least of all to a Mexican.”
The business of big-time television has never been without drama, on and off the screen. Add the tensions of disappearing ad revenue, audiences scattering and competitors on the Web and mobile phones and it’s a war out there. And, perhaps, it’s a good time to keep the fighting outside the building.
UK satellite broadcaster BSkyB has given up most of its stake in terrestrial television broadcaster ITV.
The candidate taking Ukraine’s presidency will face a changed country. Before the 2004 Orange Revolution Ukraine’s media reflected the country’s dull, post-Soviet persona. That has changed.
Avatar and the TV business helped News Corporation blast a 66% earnings per share improvement in Q2 over a year ago, but not very much was said about the contribution by newspapers that actually did 30% better but only because of a strong Australian dollar, continuing savage cost-cutting, and some ad growth at The Wall Street Journal. And as if Murdoch the elder doesn’t have enough hours in the day figuring out how to boost print revenues he now has to deal with his kids and sons-in-law causing a ruckus.
A year and a half ago News Corp Premier Rupert Murdoch said he’d be clearing out of Russia and other Eastern European holdings. He’s found it easier said than done.
Ah, the first decade of the 21st century is now a memory, mostly a bad memory. Let’s reflect on the state of affairs, look for the ‘silver lining’ or just enjoy the Holidays. 2010 will be here soon enough!
That politicians seek to control media is the single, universal truth in the relationship between politicians and media. The most authoritarian politicians demand absolute authority over media. More often than not the politicians win. There are no exceptions.
News has an almost scared place on television channels. Games shows and comedies may rake in the ratings but news programs have been essential to television channel branding. That may be ending.
Carlo de Benedetti chose the very public foreign forum of an Oxford University lecture to let Italian Prime Minister Silvio Berlusconi have It, verbally speaking, right between the eyes while at home Rupert Murdoch’s Sky Italia, after announcing it will launch a free digital terrestrial station in December, is distributing a USB key that will allow Sky desktops to access Mediaset’s free digital terrestrial channels – and without those Sky subscribers having a Mediaset desktop how can it sell its pay platforms?
A tie up between News Corporation and Microsoft Corporation is in the air. Sure, it’s insane. But credit both Murdoch and Ballmer for previewing the first truly post-modern publisher.
Privately owned commercial broadcasting has come into its own during the last two decades. There have been struggles, successes and more struggles. Public sector competitors can be tough, governments might not understand and advertisers are, today, hard to find. Programming, decisive and unique, continues to draw audiences.
Every turn and twist for the media world in this century has seemed like a game-changer. Between playing ‘chicken’ or running from one idea to the next like a headless chicken the great new media business model is still hiding. Maybe we’re missing the obvious.
A bit of restructuring at two of Russia’s television channels looks to some like the cloud of Soviet times descending. All things Russian appear mysterious, not the least being its media. When times are tough, the tough make plans.
Suddenly it’s not all going Silvio Berlusconi’s way. He lost immunity from prosecution when Italy’s highest court ruled his own law protecting him wasn’t valid; his Finninvest company lost big-time in a civil suit to arch-foe Carlo de Benedetti (Finninvest order to pay up €750 million), and there are reports that de Benedetti may be a key to get Rupert Murdoch, Berlusconi’s public villain number 1, into terrestrial digital broadcasting which is the last place that Berlusconi wants him. The war is still very much on.
Television’s future is not in doubt. There are channels and there are viewers. The way they connect is in the throws of change. And so is the stuff in between.
Tight economics forces broadcasters to squeeze everything and everybody. What once might have been advantageous synergy quickly becomes opportunity for competition. News is a business, too.
There’s a problem at ITV. There’s also a problem surrounding ITV. The shareholders need to solve both. That might mean the nuclear option.
The urge to merge is more powerful than ever for media companies in Europe. Of course, there are the inevitable synergies. While regulators take a very hard look, the economics favor more consolidation.
The collapse of investment bank Lehman Brothers a year ago this week spawned panic across much of the media world. The jolt that rattled global finance tore into broadcasters and publishers, advertisers and consumers. Everything changed, or so it seemed.
Troubled times need clear minds. It’s proving increasingly clear that the media world’s blur about what’s new and what’s old – and what works and what doesn’t - is just as wrong today as it was two years ago or twenty.
Commercial television investors enter markets based on several factors. Most certainly, the leading decision point is cost of entry. Revenue potential is a close second. Next is strength of competitors.
Few now believe business conditions for media in Russia and other former Soviet States will ‘normalize’ in any acceptable time frame. Media investors who arrived over the last two decades expecting surges in consumer industries to overpower entrenched divisions are fleeing.
Media mergers and acquisitions may rise in the second half of the year. Financial investors are prowling as big companies try to get out from under debt. Always illusive synergies are still hard to grasp.
Without doubt every stock-trader, News Corp shareholder and most of its employees sit up straight in the chair at each of Mr. Murdoch’s pronouncements. Last week very sour financial results were overwhelmed by his final verdict on the news business and the Web. They will pay, he says.
The big shots of media got together last weekend at a retreat and the number one question they discussed was how they can make money off the Internet. The end result: they knew the general answer – charge for content – but they still haven’t figured out how and for what.
Not long ago Eastern Europe had the reputation as a major growth region for commercial media. Well-financed investors – strategic and financial – moved in. With revenue projections returning from the stratosphere a tougher look at means a smaller portfolio.
With media entities financially in pain, are news agency subscriptions sacrosanct? The AP has resorted to major rate decreases in the US to stop a cancellation revolution and in Germany DPA lost its second biggest newspaper group client for a far less expensive news source. Which raises the question of whether current news agency business models are running past their due date?
Some investors see complicated markets and ask ‘Why?’ Others, with a twinkle, say ‘Why not?’ Eastern Europe attracts the bold, the brave and, maybe, the crazy.
Since the dot.com bubble burst as this century began financial modelers have moved from irrational exuberance to caution to fear. With the dramatic unhinging of worldwide financial markets forecasters maintained a shred of optimism about the media and entertainment industries. Improvement would come, they said even into this years’ first quarter, in a year or so. The shred of optimism is being shredded.
One of life’s great joys is watching two media barons battle it out using all the weapons at their command (Murdoch is getting real close to the waistline on personal issues; Berlusconi got too close to the waistline on business issues) but at the end of the day while Murdoch may be embarrassing Berlusconi outside of Italy inside the country the prime minister is doing just fine.
Ireland’s fall from economic grace is taking a toll. The tide may be turning but it’s a screw too tight to keep the country’s media sector from pain. Things add up and there’s no bail out in sight.
Trade publications have a special role within any business sector. At their very best they tell the stories within an industry or trade, giving voice to insiders in their own language and sometimes fighting their fights. As a business trade press is generally considered reasonably recession proof. That’s not enough when an entire industry moves to the other side of the curve.
The scariest word in the media lexicon is change. Old guys hate it, often because young guys preach it. Business practices change. Words change. People change. There’s no need for an anxiety attack.
Few, if any, media companies are escaping the ad slump. Directors and stock traders are showing little patience. Cut costs, dump non-core investments and change the CEO, they say.
Last week was slow for media news. That gave plenty of attention to the “malfunctioning” of media’s business model, according to Rupert Murdoch. Everything The Elder says is staged, just like Janet Jackson’s wardrobe “malfunction.”
In the front lines of the media world there’s no need for another expert reporting the obvious. Each week brings another irritatingly real story of causalities where media and money intersect. Big media is still big, says a new study; just a bit less so.
There is mounting recognition across the UK media spectrum that regional television news production in competition with the BBC has hit the financial wall. The UKs private sector media has, largely, been operated like an automobile on ice in a tunnel driven at high speed by a drunk on a suicide mission. The solution, they say, is jet fuel.
Big television operators swamped by huge debt and overwhelmed by lower ad revenues are feeling considerable pain. Pressure, certainly, is on top executives. Last week saw ITVs chief executive Michael Grade and ProSiebenSat.1 Media COO Patrick Tillieux announce their departures.
Before the end of this year Michael Grade will relinquish his role as ITV chief executive. He never meant to remain the day-to-day executive and the announcements timing set twits twittering and clocks ticking. The mark of a true showman is knowing when to leave the stage.
What is it the financial experts know that the rest of us don’t as they make their multi-million dollar investments in the newspaper industry, this time with the news that Aerial Capital of Chicago now owns 28.8 million Gannett shares, giving it about a 12.5% ownership compared to a 4.9% ownership before?
Recession hit media executives are hearing from their bankers, regulators and even family members. The big question: ‘What are you going to do and when?’ Everybody, it seems, wants to rearrange the landscape.
Unfolding before our eyes is a television future for those who want more, easier and, perhaps, smaller. Broadcasters have no choice but to experiment with new media. Viewers are adapting the medium to the times as well as their interests.
Some corners of British media are gasping for air. Others are holding their breath. The oxygen is being sucked out.
Watching two media billionaires fight it out for broadcast supremacy in Italy reminds one of the fight to the death of the ancient gladiators, but this fight is not just in the Colisseum – it covers the whole country and right now the crowds are showing “thumbs up” for both.
Top rank executive shuffling can have a range of meanings. Although large organizations are notoriously resistant to change, one enduring management lesson is “change the people or they change you.”
The drumbeat pounds louder and more frantic for a new business model for media. Nothing really new or really healthy has come of it. Addictions are tough to break and advertising is the toughest. But present day economics is calling the tune. It’s time to sing along.
Besides the bonus that the McClatchy board says CEO and chairman Gary Pruitt won’t get this year, he still draws a $1.1 million salary which the Guild at his flagship Sacramento Bee suggested should be cut by half, to the $500,000 limit the Obama administration is placing on banking top executive salaries who take government money. Instead, Pruitt gave up just 15% and still earns $935,000.
In all of the announcements in the US and British press about Reuters launching a new financial TV service in June, there wasn’t one word that the company actually had a very successful financial TV service which current management killed off seven years ago as a cost savings. Just goes to show, what goes around, comes around!
The power of powerful media organizations is in gaming financial and strategic investments for maximum value. Turbulence only makes the game more interesting. News Corporation may set adrift investments, even good ones, but rarely does it scuttle one it believes in.
News Corp. has enough cash in the bank to pay off its debt for the next seven years, so Rupert Murdoch probably doesn’t dwell too much on how much he paid for Dow Jones, that he has just written down that investment by half --$2.8 billion -- and that hard times have now meant journalistic cuts at his beloved Wall Street Journal and his four UK national newspapers, but the Bancroft family must consider him an absolute savior.
Everyone knows 2008 was a media disaster, for newspapers in particular, but it really hits home now that the analysts have translated the raw data and have proclaimed that one in 11 US newspaper jobs disappeared last year.
Location, of course, plays to the advantage of the World Economic Forum being in Davos, Switzerland. It’s tough getting there. Ten hours by train from Geneva when the helicopters are all booked. Even at that the WEF seems a million miles from anywhere, which is, of course, the point.
Students of management and almost anyone who has worked for a large organization know about the proximity effect. Results decrease proportionate to geographical distance from headquarters. Tantalizing evidence piles up showing far-flung divisions outperform those nearest the boss.
Even the high and mighty are being economically squeezed and that means that Google is cutting out what it considers superfluous projects and concentrating on its core revenue producers. So promises of the past – even two week old promises – no longer hold water.
There’s little doubt 2009 will be a year of plenty, plenty of pain. Media, big and otherwise, mirrors their audience in risk aversion. For many, survival will be the reward.
These are dark days to be making newspaper deals, but they are still getting done, albeit in the small to mid-size markets. A buyer has come forward for the two newspapers in Connecticut that the Journal-Register Company had threatened to close down, and in Maine the Blethen family has a deal for their three dailies, but had to extend the deadline while the buyers continued to try and come up with the financing. No one said that even at very low prices it was going to be easy.
Multi-national publisher Mecom Group has become the most recent poster child for debt rattled publicly traded media companies. Once – and not long ago – the darling of rapturous financial projections it now can’t meet debt covenants exceeding €600 million, a figure that has increased more than ten-fold since the rapture. Media companies are becoming sub-prime, er, toxic.
In the great scheme of things, Moldova gets very little attention except from wine fans and the occasional political observer. Big media operators, however, have been rather active. Is Moldova the next media hot spot?
Big media is moving on. It’s the one constant even in times of turmoil. Broadcasters change, renew, adapt, fall flat, try again, win some, lose some. Executives take this change in stride. Recent corner office changes at big league broadcasters show just how much change is in the air.
A question posed by an ftm reader is simple enough. What real world examples are out there of financially sustainable news websites? Opportunity abounds on the internet domains. Cold hard cash is harder to find.
That media is going through significant transition is a given. Old media will ride off into the sunset. If history gives any clue media is entering the best of times. And it will be a wild ride.
The German economy passed an unfortunate threshold, officially entering the recession zone. German media companies noticed, worried as ever, and moved into deeper restructuring. Some of it has been long in the planning and some not.
As the financial world restructures with public guarantees media providers scramble for their own. It will be two steps backward as people with the money tidy up their accounts. Write offs in the tech sector may bring the digital dreams back to earth.
Anybody who is anybody in the television business is in Cannes this week. There are people to see. There are deals to be made.
TV 2 Radio has become Nova FM. It’s the second time in two years a national commercial radio channel in Denmark failed financially and had to be taken over by somebody braver than the last. And the Culture Minister is proposing more national FM channels. Danes, you know, are the happiest people in the world but confusion doesn’t bring smiles.
Southeast Europe is vitamin-rich and may have the nourishment big media companies need. RTL Group just bought a majority of a Greek radio and TV company. Bulgaria, Romania, Turkey and the Balkans are enticing strategic and financial media investors as other markets brace for winters’ chill.
The media has been rushing the past few years to put all its breaking news on the Internet for free, and while at it, might as well put the features, investigative pieces, in fact just about everything there! And by golly, Internet readership shot up while print circulation fell. Why buy the newspaper when that news is on the Internet for free? So what that Internet ads are bringing in only 12% of what a print ad does? Could it be that the free news on the internet business model isn’t all it’s cracked up to be, or put another way, is that mirror cracked?
There was a day last week when Media General’s shares actually closed up 111.3% higher than the day before ($8.66/$18.30) all because it announced that while its August results were still rotten, and no reason to believe the rest of the year will be any better, it was still the best month so far this year. Over at the New York Times, where they announced Internet revenue was up even though print revenues were awful, there was a 12% jump. So is everything all better now in newspaperland? Don’t you believe it!
Television can be compared to a zoo. Build a park, bring in the animals and the curious line up to pay their €10. The animals are fed, ticket-takers are paid and the curious return to the real world after a nice afternoon. But the animals are demanding holidays, pensions and open cages, the ticket-takers are telecoms, zoo-keepers investment bankers. Will the curious be trampled when the elephants start dancing?
In comes News Corps pick for CEO at German pay-TV channel Premiere. It “came unexpectedly,” said the new guy. Also unexpectedly came prosecutors to News Outdoor’s Moscow office. So JCDecaux could sweep away that problem. Expect the unexpected, no?
Trend spotting is a delicate art. Whether consumer trends or financial trends, waves of the future appear to the truly gifted. And today, there’s always a press release. Somebody always finds good news in any trend.
A certain coolness is flowing across the Northern Hemisphere, even as summer keeps its tentative grip. The tough vice of economic chill and advertiser wariness (or weariness) is clamping hard on media companies big and small.
The controversy over satellite operator Eutelsat cutting off a broadcaster beaming into China continues to simmer. EC Info Society and Media Commissioner Viviane Reding wants to know “what exactly is going on,” said a spokesperson. Suspicions of the suspicious are that Eutelsat was pressured to cut off Chinese-language NTDTV.
Three years after becoming the first foreign owner in UK broadcasting the venerable Canadian CanWest packed up the hockey sticks and headed back to land-locked Winnipeg. Is this a trend, a wave or a ripple?
Central and Eastern Europe continue to draw in strategic investors. Two major broadcasters announced acquisitions last week in Bulgaria. More could be brewing... or stewing.
News Corporation is beating a hasty retreat from the Russian market, says Kommersant. It’s outdoor advertising arm, News Outdoor Group, may have found a buyer for the Russian business. The usually credible Moscow business daily suggested (August 8) JCDecaux is the only bidder remaining, and at a substantially marked-down price.
Maybe it escaped your notice but Mick Jagger just turned 65. Two days later the Rolling Stones ditched label EMI for Universal. Jagger has made no other comment on becoming eligible for a free bus pass in the UK. EMI said they were sad. Universal said they were glad.
Established media companies venture into developing regions, looking for quick a turn-around or a good trading card. When turn-arounds take too long or cost too much it’s time to trade. With few traders in sight there’s always the panic button.
Everybody in the satellite radio business is an innovator. Investors will endure innovators and their endless requests for cash only so long. Consumers like innovators until the next innovator comes along.
Google Finance and CNBC have agreed to pay the New York Stock Exchange up to $100,000 monthly for the right to display realtime NYSE share prices, and coupled with a similar deal earlier this month with NASDAQ this is really big news for investors relying on web, television or mobile news sources to make their financial decisions.
Gannett made headlines twice this week and neither were good news items. It first announced a $2.3 billion (yes, billion) non-cash assets write-down, primarily the declining value of its Newsquest UK regional newspaper group, and later it shocked employees by messing with their pension plans resulting in the company saving around $30 million next year.
Newspaper people seem absolutely panicked over the arrival of radio people in their midst. The Tribune Company in the US is now filled with radio people. NextRadioTV owner Alain Weill took over Le Tribune in France. Now it’s Denis O’Brien, owner of two Irish national channels and dozens more in Europe, going after the O’Reilly clan’s Independent News & Media.
The riotous charge into online, web-based media has broadcasters and publishers falling all over themselves. Actually, they are falling all over the bags of money necessary to change strategies. Those strategies are getting smarter.
It’s no secret that some US and European banks were soaked in the US sub-prime credit crunch mess and gave up equity stakes in return for huge cash inflows from Asia and The Middle East. It’s no secret, too, that newspapers are suffering major advertising revenue declines and for some that means making debt repayments might be in jeopardy, so can Asian and Middle East money be a savior there, too. Yes, according to the UK’s Johnston Press that has made such a deal.
The spin on Tribune’s sale of Newsday to Cablevision for some $32 Million more than Rupert Murdoch offered is what a fantastic negotiator Sam Zell is and how he fooled Murdoch into thinking the newspaper was his when in fact he was being used to get Cablevision to offer more. The truth more likely is that Zell really wanted to sell to Murdoch and establish a good long-term News Corp working relationship, but Tribune newspaper cash flow is falling so rapidly, the outlook is even more bleak than current results, so Zell cannot afford the luxury of leaving money on the table – he needs every penny he can get for big debt payments due this year and next.
Oh, but, there’s so much to take seriously in the media world today. It’s just a mess. So when those meetings and reports are endlessly dour it’s time to bring in the guy with the funny hat.
When McClatchy sold the Minneapolis Star Tribune to New York’s Avista Capital Partners and others for some $530 million last year the buzz was what a great deal the private equity company got and what an embarrassment for McClatchy selling a newspaper at a firesale price that it had paid $1.2 billion for some nine years earlier.
Global warming and the environment are hot topics for broadcasters. And broadcasters are taking environmental issues personally, adopting carbon-neutral initiatives, joining the rush within many business sectors to embrace an issue deemed increasingly important by listeners.
The business model you choose depends on where your product/service is on the product life cycle. Media business models by nature must interact with other business models, which are also moving. New business models are rare and disruptive.
The Murdoch Watch rhythm has pitched up a few beats, now louder than car radios in a Paris traffic jam. Fortunately most of it is in America where we don’t have to hear it. A British columnist, however, is asking if not enough attention is paid to the dealings of Mr. Murdoch, The Elder.
News Corp raised its stake in German pay TV channel Premiere to 22.7% triggering speculation that Mr. Murdoch is up to something.
Clear Channel Communications stock price fell 20% on the revelation that banks are unwilling to finance a leveraged buyout. America’s largest radio broadcaster by leaps is falling to a reality of its own creation. Consolidation fails. And UK broadcasters want to follow the same path.
Getting into new businesses is costly. Both NRJ Group and NextRadioTV reported losses in the final accounting for 2007. Both companies have had wrenching experiences developing television products.
With the dollar down as much as it is, where is the foreign money coming in to buy up US newspaper properties at bargain prices? Foreigners seem to be buying everything in sight in the US as the dollar crumbles, but apparently newspapers are not on the shopping list. Wonder why?
TRK Ukraina received a $65.5 million loan from SCM Limited, the investment vehicle owned by billionaire Rinat Akhmetov. Proceeds, according to the TRK Ukraina statement, will be used for loan repayments and continuing operations. Akhmetov is the principal owner of TRK Ukraina, which operates television and radio channels.
The surest way to upgrade a languishing media market is to entice experience from afar. Sometimes money helps but in the Middle East, benefiting from record oil prices, that’s no object. A special expertise is most wanted.
When a large publicly traded company decides to dissolve itself, without the assistance of the bankruptcy courts, we are left to watch and wonder what could possibly have gone wrong. It’s an assumption mistaking longevity for success.
New results are in. Stock traders and their dutiful analysts have worked overtime. CEOs are taking bows.
The stock market liked the idea so much that when Belo announced October 1 last year it was splitting itself into two separate companies, basically isolating the poorly producing newspapers from the rest of the company, that the shares got a massive 18.7% boost on the day. Investors seem to think it was a great initiative, never before done, to boost shareholder value. But time has shown it was the smart investor who actually saw that October day as a selling opportunity who really cleaned up.
Shareholders of two big Russian broadcasting companies merged their interests into a bigger broadcasting company. Consolidation can have a negative effect on media companies, not to forget media markets. But in Russia, it’s the only way to go.
Bruce Sherman, the man running Private Capital Management (PCM) really believed in the newspaper industry. He was the largest owner of US newspaper shares --- at one time his holdings in the New York Times Company was second only to the Ochs-Sulzberger families -- and his 100m shares spread across most newspaper publicly traded companies were worth in excess of $4 billion.
Broadcast outlets in Eastern Europe were a magnet for venture capital investment before the 2004 EU accession. Media deals in Hungary, Poland and the Czech Republic attracted first or second round financing from specialized investment funds. The tide is turning.
When they announced in late January that they owned 4.9% of the New York Times Company, Harbinger Capital Partners and Firebrand Partners recommended a slate of four independent directors they wanted elected to the board of the New York Times Company. The basic answer then from Arthur Sulzberger was “We like our board, but we’ll take a look” – in other words “thanks, but no thanks”. Two weeks later and the equity funds have raised the ante.
After a year trying to shed its Russian subsidiary Axel Springer AG has decided to hold… for now. Axel Springer publishes Russian editions of Newsweek, Forbes, OK! and ComputerBild. The German publisher informed prospective buyers of its decision last week.
Microsoft’s unsolicited €30.2 billion ($44.6 billion) offer for search engine Yahoo grants bragging rights to CEO Steve Ballmer for ‘big deal’ of the week, or month, or year. If nothing else, it’s audacious. And it speaks volumes of the desperation to rejoin the club it invented.
With so many investors running, not walking, away from media deals at least one media giant still has an appetite.
Just as the old guard newspaper people digested Rupert Murdoch’s take over of Dow Jones and the Wall Street Journal, populating both with old guard newspaper people, the radio people slipped in the back door of the Tribune Company in the United States and La Tribune in France.
The day Emmis International announced its Bulgarian expansion exercise the big news in Sofia was not about radio, TV, new media or even a left over corruption story. EasyJet, the Greek Santa Claus, is comin’ to town. From Riga to Prague, Tallinn to Budapest the sight of the orange 737’s and A319’s’s means the arrival of that EU benefit.
A media analyst for Credit Suisse put the cat among the pigeons last week by suggesting the deep malaise in the newspaper business was just cyclical giving public newspaper shares a big up day on that. But then as investors thought about it they were soon back to again dumping newspaper shares.
The final billion euro media deal of the year is very likely German publisher/broadcaster Heinrich Bauer Verlag buying UK publisher/broadcaster Emap. UK and German media wags view it quite differently, either an end or a beginning. The whole story is far more interesting because it’s very real.
German publishing and media house Bauer picked up most of the remaining Emap UK media assets for a cool €1.58 billion. The deal hits several new marks, not the least of which is the biggest investment in UK media by a foreign company… or any company. Emap can now slide off into the night with its business to business businesses.
Not to worry, Denis O’Brien has places to go and people to see. Last week he increased holdings in Independent News and Media, becoming its second largest shareholder, and executive recruitment firm Imprint PLC. His mobile phone company Digicel, spanning the Caribbean to the South Pacific, bought the GSM operator in Tonga. And there’s even a possible radio venture in Jordan.
Just a week has passed since the UK’s largest commercial broadcaster posted another loss and its chief executive walked the plank. Now Macquarie Bank returned a local radio license before ever going on the air. Are investors finally giving up?
A few weeks ago the Turkish government put its second largest media company up for bid. All the great and grand were to descend with carts of cash. When the application deadline closed the Citation X’s of Rupert Murdoch, Ron Lauder, Guillaume de Posch and Minos Kyriakou had not touched down. That US$1.1 billion minimum bid, in these gossamer times, shouldn’t raise eyeshades back in the accountants’ quarry.
The news that Ralph Bernard, chief executive of the UK’s biggest publicly traded radio company, would step down was met with no shock and no joy. GCap Media had just turned in a lower revenue and pre-tax profit report for the six months ending with September. Immediately afterward, Mr. Bernard announced his retirement.
City AM is a free business newspaper with a near 100,000 daily circulation to the main financial centers in London. So how come it had a cover-wrap on Monday promoting the business coverage of the Times of London?
McClatchy has filed papers with the Securities & Exchange Commission that it is writing down the value of the company by some $1.52 billion ($1.38 billion after tax considerations) reflecting the huge drop in its share price and the diminished value of the newspapers it kept from Knight-Ridder.
The good news coming out of a media conference this week featuring private equity executives is that even with the current credit crunch there is still plenty of equity funding available, but the likelihood is that valuations will be lower and that European emerging markets will be the main targets.
For Chief Yahoo Jerry Yang his 39th birthday was one of mixed emotions. At a Washington Congressional hearing it was mea culpas for Yahoo’s role in outing a dissident to Chinese authorities, and a low bow to the dissident’s mother as he apologized personally, yet half a world away Yahoo was making a financial killing on the Hong Kong stock market because of its Chinese business.
It’s a classic capitalistic battle – the supplier wants at least as much if not more for a product, and the customer values it at much less than had previously been paid. The supplier in this case is CNN and the customer is HOT, Israel’s largest cable company, and the stalemate that even saw Parliament getting in the act as moderator saw CNN dumped Thursday.
Investment bankers softly skewer traditional media companies - November 1, 2007
The report issued by investment bankers Dresdner Kleinwort opened softly: “Six years of sector underperformance fueled by the disruptive impact of digitization on traditional business models shows no end.” That tone continued throughout.
Sam Zell, the Chicago billionaire who hopes to take Tribune private by the end of the year in his $8.2 billion deal, has been elaborating on what he thinks about the newspaper business, on the one hand saying the industry must accept a lot of the blame for allowing other media to pull ahead, but also how important it is that a private Tribune can make long-term decisions rather than having to worry about the conflicting short term goals of Wall Street.
When Rupert Murdoch first hit American shores in 1973 buying the tabloid San Antonio Express the American media establishment considered him no more than a sleazy tabloid publisher, a pariah to whom they wouldn’t give the time of day. His name was not often mentioned in polite conversation, if it was then it was with a smirk. What a difference 34 years of success can make! America still embraces winners.
With New York Times Company shares hitting a 12-year low Thursday and the general outlook being that Morgan Stanley’s sale of its 7.3% of the company merely solidifies the view of no speedy shares recovery, along comes Rupert Murdoch with his clearest words yet on how he wants the Wall Street Journal to knock the Times off its pedestal as America’s most influential read.
Morgan Stanley finally gave up its New York Times ghost. It could not budge the Ochs-Sulzberger families to give up their controlling dual class share ownership and meanwhile the company’s shares kept sinking and sinking and sinking. The Wall Street adage is that if the boat has that many holes then it’s time to get off and that’s what Morgan Stanley did Wednesday, selling its 10-year holding, some 7.3% of the company, with around 10 million shares going at about $18.30 a share – it has been a good 10 years since they were that low.
The television in Central and Eastern Europe is a team sport. Winning is a matter of percentages. Those percentages improve with power hitters.
More billionaires have been created in Eastern Europe since 1990 than you can put on a football pitch. Using good political connections to snap up State assets in those helter-skelter days Eastern businessmen took full advantage of the new free markets and became very rich. Some certainly like football and more than a few like media.
British Newspaper Group Trinity-Mirror (TM) said last December it would sell 138 of its 240 regional newspapers and shareholders could expect around £500 million - £600 million ($1.02 billion – $1.2 billion, €720 million - €865 million) returned to them. But that was then, the reality nine months later is that prices came in far lower than expected, not everything got sold, and the gross totaled only £263 million ($536 million, €378 million).
Dean Singleton paid a cool $1 billion cash last year for four Knight-Ridder newspapers he bought from McClatchy. Standard & Poors now says his Media News is in negotiations to ease loan financial covenants that require a certain ratio of debt to earnings and it has put the company on credit watch because revenue declines have exceeded even 'Lean Dean’s' cost cutting exercises. That, therefore, prompts the question that if he had to do it all over again would he?
From Gannett, America’s largest newspaper group, to the BBC, the UK’s public broadcaster, media groups are continually on the lookout for new ways to save money and sometimes it means going back to past savings ideas and doing it all over again.
Ear-splitting, multi-billion euro media deals will likely become quite rare over the next 18 months. A few are in the pipe-line, now slowed to a crawl as lenders and private equity managers, literally and figuratively, take stock. Inside the media sector the cycle is shifting from the financial to the strategic.
The one thing that the financial ratings agencies and financial analysts seem to have in common these days is that none of them have anything nice to say about the US newspaper industry. Debt continues to be downgraded and the analysts claim the worst is not over, one even saying he believes there will be another 20% slide in newspaper share prices within the next 18 months.
In the TV news agency business there is a common expression – “dropping one’s pants” -- and it refers to the spirited competition between Reuters Televsion and AP Television News over which one will drop its pants lower financially than the other in order to win new business or retain an existing customer who says “We’re going down to one agency” and then lets the two financially fight it out.
Russian/Swedish television giant CTC Media reached into Kazakhstan for its latest venture. The investment, said company CEO Alexander Rodnyansky, is “an attractive opportunity.”
Focus is an indispensable attribute for broadcast management. CME’s management has focused on Ukraine where the television market is expanding furiously. As with all Eastern Europe media markets the dance starts slowly.
Billionaire banker Igor Kolomoisky joins the Central European Media Enterprises (CME) Board of Directors after making a $110 million investment in the company, according to CME’s statement. A bit more than a year ago a Ukrainian court awarded him financial control over CME’s Studio 1+1 license, which the company vowed to fight. Things change.
NBC/Universal picked up Sparrowhawk Media for a mere $350 million. The acquisition significantly improves global distribution for NBC/Universal product and adds the venerable Hallmark brand name to its cable offerings outside the US. Competitors will be scrambling to find other illusive Sparrowhawks.
Within weeks Austrian television will be fully digital. The change-over arrives as ProSiebenSat takes over a local Vienna channel and the only privately held national commercial channel goes up for bids, with big broadcasters first in line. Competing for viewers, subscribers and advertisers at this level will shake Austria’s conservative media and the rattle might be felt in Brussels.
Don’t you just love those stories where the CEO abruptly quits for personal and family reasons, getting a huge payoff including a non-compete clause, and then the media defines “personal” as meaning the man was absolutely fed up with his chairman and vice-versa. That it should happen as the company is trying to sell itself is not exactly what one would call good timing.
Some 97% of Tribune shareholders approved the Sam Zell takeover which puts the company into junk debt to the tune of some $13 billion, but with the share price around $6 less than the agreed purchase price there still seems a fair amount of doubt that Tribune is doing well enough financially these days to support the repayment schedule.
Some 70 of the more powerful names in media, information and politics gathered in Aspen, Colorado this week to discuss how old and new media can improve our lives, and the main point of agreement seemed to be that platform-centric is out and new business models must adapt to new technologies in providing news and information as quickly as possible on all platforms.
The television business has never been better in Central and Eastern Europe. From the Baltics to the Balkans with every country in between these are the best of times for commercial media. CME’s second quarter financial results contain rich insight into the present and future for the region.
The Bancroft family apparently has seen the light – mostly with $ signs in their eyes – and Rupert Murdoch has won his $60 a share battle for Dow Jones. There are still “and” and “buts” that might cause last-minute problems, but it appears the deal is basically done.
It’s all well and good for Tribune to say it has all the financing in place for the Sam Zell privatization, but with the company’s dismal results thus far this year the main question is whether the group will be able to earn enough money to pay off the debt, and there is a growing feeling among the money people that right now it’s about 50-50.
If regulators concur, Emap’s three Irish radio stations will join the Communicorp family. The purchase agreement signed over the weekend and announced to the London Stock Exchange this morning ends month long bidding for another part of Emap’s broadcast holdings it wants to shed. Communicorp, Denis O’Brien’s radio company, will pay about €200 million (£135 million, US$275 million).
Media moguls, tycoons and barons lead a charmed life. Being one means never having to carry your own suitcase. Former Hollinger International Chairman Conrad Black never knew excess he couldn’t exceed. For him, those days are over.
It’s a year ago that the high-flying McClatchy Company ended up buying Knight-Ridder for what was a pretty lowball price of $6.5 billion including assuming $2 billion of Knight Ridder debt. It sold 12 of those newspapers for a combined $2.078 billion so at the end of the day it ended up with 20 of Knight Ridder’s best for $4.5 billion. So, with the passage of time, was it a good deal?
Poland’s TVN adds a business channel to its bouquet in cooperation with US network CNBC. TVN CNBC Biznes will launch this autumn…about the same time News Corp launches Fox TV in Poland.
Around 18 months ago the UK’s Northcliffe Regional Newspapers were put up for sale by its owner Daily Mail & General Trust (DMGT) looking for around £1.5 billion. The bids came in around £1.2 billion to £1.3 billion so DMGT said “no sale.” Since then it has been cutting costs viciously and selling a couple of titles (Aberdeen Press & Journal) and the general thinking was that Northcliffe would try and do the best it could with what it had. No one expected it would actually expand its empire but it has just gone and done exactly that.
ITV, the UK’s largest commercial network presented what it called good news this week – ratings at its prime network were down only 5.6% for the first half of the year. The reason the network is so happy is because for the same period last year the ratings were down 9.1%, so the situation is at least stabilizing and given the massacres in the UK television advertising economy one has to look for silver linings, no matter how meager.
As it looks more and more likely that Rupert Murdoch will succeed in his quest for Dow Jones two points are becoming abundantly clear – it’s utter nonsense that Murdoch wants to decimate the Wall Street Journal’s journalism – indeed, the opposite is true, and one of his prime targets is to have the Journal eventually surpass the New York Times as America’s premier newspaper.
Complicated media ownership structures are common in Europe. There’s usually no problem with regulators or operators until one of the partners decides to sell.
It seems no one has to persuade the Australians that small market newspapers in the US are a good investment. Macquarie Media Group (MMG) has just bought another 23 to go with the 40 it bought a few months back giving it a stable of 63 local newspapers.
Rupert Murdoch met with Bancroft family members Monday in a five-hour meeting that he later told reporters was “constructive”, so at least he’s still in the ballgame to purchase Dow Jones. His bid on the table is $5 billion ($60 a share).
When a government doesn’t like what it sees as a tax dodge one can usually expect that government to act – it might be slow but it does act. And so is the case in Canada when the government announced last year it was going to tax income trusts.
Conventional wisdom holds that big media companies are interested only in media deals in the biggest markets. Merger and acquisition lawyers and advisors say the paperwork, big deal or small, is the same. But there is no surprise at News Corps recently acquiring two television companies in Latvia, one of Europe’s newest and smallest countries with a hot media market.
Clear Channel Communications Board of Directors approved (Friday, May 18) a private equity buy-out taking the company off the public stock exchange. A shareholder vote originally scheduled for Tuesday (May 22) was cancelled to give the Board more time to sell the plan.
Ratings are bad. Ad revenue limps. EMAP CEO Tom Moloney “suddenly” resigns. Chrysalis posts a loss.
Some US oil analysts believe that by the Memorial Day weekend at the end of the month that US gasoline prices may reach $4 a gallon. Most economists say that is the benchmark that will force Americans to change their spending and travel habits, and that in turn could well mean a catastrophe for media advertising revenues.
Assuming the government regulators on both sides of the Atlantic agree, the Thomson buyout of Reuters is pretty much a done deal. Rupert Murdoch continues, little by little, to make nice to the Bancroft family in hopes of getting his hands on Dow Jones, and although this is only May there have been already 372 traditional media mergers globally this year.
One of the safest media investments is not in media at all. Infrastructure providers – the tower and transmitter companies – collect fees from broadcasters, mobile network companies and government services. All they have to do is keep the lights on.
For those who thought silly our idea of starting a new global news agency covering all of the world’s news via the Internet from a country where labor and communications costs are very low, apparently it’s not such a bad idea after all.
It really should not come as any surprise that Reuters and Dow Jones, two of the biggest producers of the world’s most valuable commodity – the news that drives global financial markets -- should be in play for large premiums. These organizations produce products on which millions of whatever currency you care to name can be made or lost in a matter of seconds. For in the financial markets world, he or she who has the news first is all-powerful; he or she who gets it second is often powerless. It’s really impossible to put a true value on their product.
In an absolutely astonishing, but an extremely savvy move, Rupert Murdoch has made the Bancroft family an offer for Dow Jones that if considered on financial grounds alone is going to be hard to refuse. It boils down to whether the family is more interested in retaining legacy, no matter the financial enrichment the family would earn from the deal, or is it time to take the money and run?
Here is a partial unofficial transcript of a fascinating interview that Rupert Murdoch gave Tuesday to his Fox News Cable Channel which goes into much of the reasoning behind his $60 a share bid for Dow Jones.
Media consumers are dancing, en masse, to the new digital beat, awaited, predicted for a generation. Or, so it seems. Media people, those disposed to listen to their customers, have heard the patter turn to rumble and now stampede. Before the gathering dust cloud stifles their offices and golf courses many hope for an early escape to a Caribbean island. Very sorry: there is no buggy, car, airplane or rocket fast enough.
Polish competition office suspends approval process
Chicago, Los Angeles, and Baltimore All Report Looking For Layoffs
Sly Matt, and ProSiebenSat
Knight-Ridder is gone, Tribune is going private under a Chicago billionaire, and the investor knives are now out more than ever at the New York Times. Investors understand they have little power given the two-tier share system which gives controlling power to the Ochs Sulzberger family, but they are going to make life for its family management as uncomfortable as possible.
If someone is now going to beat Chicago billionaire Sam Zell out of taking control of Tribune it will cost the company a mere $25 million, so anything is possible, but whatever the final deal it looks like Tribune staffers – those who will be left – will be paying back debt for the rest of their lives and praying their pension funds will remain okay. But chairman Dennis FitzSimons and President Scott Smith won’t have such worries – Fitzsimons will be able to cash in shares worth close to $24 million and Smith a bit more than $10 million.
It was long ago, deep in the last century when any local media outlet reported doubling its ad sales. This is the age of Google and YouTube. And the rage. Traditional media – meaning all media other than websites and mobile phones – can’t, according to conventional wisdom, compete for advertising. “Passion” shows all that is wrong.
When Big Media turns to the courts and the regulators to arbitrate business negotiations it’s clear that the consolidation cycle is turning down.
For more than 30 years if a journalist wanted an opinion on what was happening in the American newspaper world more likely than not that opinion came from John Morton. To spread his word he’s been publishing a newsletter for some 30 years but no more – with independent newspaper executives an endangered species he says “the financial reward from publishing the newsletter is not worth the effort.”
Viacom filed a huge law-suit against YouTube, and thereby Google, charging copyright infringement. Billion dollar law-suits make headlines not unlike an 80 year old buying his first red Ferrari. Customers and investors – literally and figuratively – beware.
For the past 15 years Warren Buffet has condemned newspapers as a business with declining growth potential, while at the same time his investments elsewhere have made him the world’s second richest man behind Bill Gates. Buffet added another $10 billion to his wallet in 2006 alone but in his annual letter to his Berkshire Hathaway shareholders he took the opportunity to lay it square on the line that the most newspaper management can hope for these days is to stem the rate of decline.
Gas and oil billionaire Leonard Blavatnik is but the latest serious investor in Russian media
How many journalists out there remember when there were two really great American news agencies – The AP co-operative and the supposedly for profit UPI run by an E.W. Scripps trust. The rivalry between the two was legendary and their journalism the best. But American newspapers decided in the 1980s they didn’t want to pay for two news agencies so they let UPI die. Shame on them!
Throughout 2006 changes have been afoot with Switzerland’s broadcasters. The pace quickened as the year ended with consolidations and new concessions tendered. Provisions in new Swiss broadcasting rules, effective in April 2007, jogged broadcasters into action.
The European Commission quickly blessed the €billion buy-out of ProSiebenSat by buy-out behemoths Permira and Kohlberg, Kravis, Roberts (KKR). Quickly, too, will come the merger with SBS Broadcasting and, possibly, more.
There are two “leads” to the China media story. On the commercial side advertising revenue jumped 18 - 22% last year depending on the source, and huge investments are planned for a new 3G mobile network. But when it comes to press freedom, while authorities have made it easy now, because of next year’s Olympic Games, for foreign correspondents to move around China, they seem to be clamping down ever harder on their domestic journalists.
The reaction by Hutchison Telecom shareholders to the company’s sale of Hutchison Essar, its mobile business in India, for a $9.6 billion profit tells the story of India’s media today. Most analysts agree Hutchison received a premium price yet its shares fell 15% on the Hong Kong market on news it was out of India.
It’s lonely at the top; all that authority and so little control. Top media managers in America and Britain have suffered dismal fates of late. On those very bad days, when all you hear are the footsteps in the hallway bringing the platter to carry your head, remember one thing: there is an answer. Fire the DJs.
A strange thing happened on Wall Street Wednesday. The New York Times’ shares that have been languishing near yearly lows suddenly jumped some 7% during the trading day, and by the close had held onto a 3.8% increase. All it took to get the shares moving were two words “Warren Buffet”
It reminds one of a kindergarten spat, but the stakes are far higher than that. Morgan Stanley Investment Management has been pressing for months that the New York Times Company’s management either shape up or ship out, but since the newspaper’s two-tier share ownership system gives the Sulzberger and Ochs families control over the board, therefore management of the company, the money fund is basically whistling in the wind. Change the two-tier system, the fund cries out, and it is told politely to go take a running jump.
Rupert Murdoch had one big complaint back in the 1970s when he began buying into US media, starting with the racy San Antonio (Texas) Express tabloid, “I don’t get respect.” Thirty years later he is probably the most respected of all the American media barons. Today when Rupert Murdoch speaks, people everywhere listen and follow!
“You’re living in exciting times. So move faster!”
Dow Jones is on a continuing binge to save costs wherever it can. It narrowed the width of its newsprint to save some $18 million annually, it fired 97 employees in reorganizing its enterprise media group, and it’s studying how it can further outsource jobs. So with that environment is it really right to issue a couple of million dollars worth of bonuses to top executives? It must have done wonders for staff morale.
Maybe Virgin Mobile didn’t go about it the right way – it could only offer one expensive mobile model that receives its DAB Digital Radio signals and customers seem to think it’s a bit old-fashioned and clunky -- but whatever the reason its mobile TV platform launched last October with none other than Pamela Anderson leading the £2.5 million ($5 million, €3.97 million) pitch has done miserably.
Dogan Yayin Holdings subsidiary buys Trader Media East for €377.5 million.
McClatchy stunned the US newspaper world as 2006 drew to a close by selling The Minneapolis Star Tribune to a private equity firm, Avista Capital Partners, for $530 million -- less than half what it paid the Cowles family just six years ago. Even with a $160 million tax loss the inevitable question is why sell so low and now, and what does that mean to newspaper valuations?
Big media companies discovered Bulgaria and Romania a half-decade or more before the accession treaty was drafted. Both countries quickly liberalized media and commercial laws confirming, if not precisely conforming to Western European practice. As if to keep one foot in the past, governments and their partners continued to see State broadcasters as State, and political, assets.
The one thing a media employee does not want to hear is that the company is being bought by private equity firms. That usually translates into massive layoffs as the company is restructured to be made ready within, say, five years or less, for further sale at a mighty profit. Case in point – take a look at what is happening at VNU.
Strategically timed after stock exchange closing times, ProSiebenSat.1 and its new owner announced that the ink was officially dry on an agreement, drawing to a close another big – no, huge – media deal. Bavarian Prime Minister Edmund Stoiber, in his excitement, broke the news much earlier in the day, ecstatic that the broadcaster will stay in Munich.
That huge dull thud heard in London Thursday was just about everyone’s reaction to Trinity-Mirror’s decision to keep its lame national newspapers, and sell, instead, 138 of its 240 regional newspapers plus The Racing Post. The stock market tumbled the shares 5.07% and no financial analyst seemed to have a good thing to say. The Times’ online headline summed up the basic media view: “Selling the family silver.”
In a deal that changes several dynamics of the Russian media market, Prof-Media announced its acquisition of Independent Network Television Holding (INTH), owner of the TV3 television network. The sale price is estimated at about €410 million.
Whinging among UK commercial broadcasters reached such a painful jangle in the last few months that almost no one could stand to hear it…literally and figuratively. Now, in one stunning move, the radio and television broadcasters who provide their service by selling ads have been shown the golden path. All Hail, Michael Grade.
Europe is a heavy brief for Google media lawyers – arguing copyright issues in a Belgian court, negotiating with Danish publishers whether it should be “opt-in” or “opt-out”, settling with Belgian journalists, negotiating with Norwegian journalists, confronting a video copyright issue in France, and if that wasn’t enough there is now a criminal investigation in Italy on the search engine’s editorial responsibility.
James Murdoch, son of Rupert, showed over the weekend how his father’s blood runs through his veins, shocking the British television establishment as his BSkyB, the country’s main satellite TV operator, bought a 17.9% share in ITV, the country’s top commercial terrestrial network, basically putting an end to any ITV buyout ideas by RTL or NTL.
In just the past few days Russia’s Prof-Media announced it had bought Rambler TV in Moscow, and then it launched a bid for all of Rambler because of its digital activities, and, oh yes, it also bought TV3 for around $500 million. Then there’s Bauer Media Invest that purchased a 56% stake in Broker FM Group, Poland’s largest radio group, and SBS Broadcasting has announced the completion of its acquisition of the Radio Express network in Bulgaria.
The problem with newspapers today is not that they are losing money, far from it. The problem is that is getting increasingly more difficult to maintain the type of margins they are used to and for publicly quoted companies that’s a real pain.
If there was any good news for Getty Images this week after it announced it failed to meet its third quarter profits forecasts, and said the fourth quarter didn’t look too bright, it was that its share price fell just 8.68% on the day. When it made a similar announcement on its second quarter earnings the shares took a 13.75% bath and on July 26 they sank 18%.
McClatchy was the only newspaper group willing to buy the 32 Knight Ridder newspapers in one deal and didn’t really have to pay a premium. What McClatchy didn’t tell Knight-Ridder executives or their bankers, however, was that they were going to onward sell 12 of those newspapers considered to be in poor performing markets.
After months of contentious lobbying, Australia’s Parliament has approved a new media ownership laws that invites more foreign investment and also liberalizes cross-media holdings, although not as much as the media barons had hoped.
US television network NBC saw its advertising revenues drop by $800 million two years ago and that money has not come running back, so the network has decided that relying on being just a traditional media analog player is no longer its future – digital is the name of the game and it has embarked on a massive reorganization including huge cost cuts to free up investment funds.
Yahoo’s 3rd quarter revenue was 20% higher than last year, but its net profit was down 37.5%, and its CEO is going on the warpath.
There is no more scarier corporate scenario for employees than seeing consultants running around the building looking for ways to make things run better. After all, the consultants have to produce a report in which the forecast savings makes the consultancy fee look like a mere pittance. Worst of all is when consultants ask for an interview and the first question is, “What do you do and how do you go about doing it?”
Newspapers for the most part make 20% plus margins. YouTube doesn’t even have an established revenue stream yet, but Google went and spent $1.65 billion to buy YouTube, yet it never has bid on established traditional media properties. Doesn’t take a born genius to figure out why
The media has given blanket coverage to Tribune’s firing of its Los Angeles Times publisher last week for publicly supporting his editor who had refused Chicago’s demand to fire more reporters, but the editor failed to back his publisher and did not fall on his sword. Much more important, however, are the new CW television network ratings, for the future of the broadcast division may rest on how well the 15 Tribune CW affiliates do.
The New York Times’ Broadcast Media Division currently produces around 4% of the company’s total revenues. Digital is already responsible for more than 8% of total revenues and that number keeps growing by the month. Where do you think the smart investment money should go
After buying 9 million shares of P4 Radio Hele Norge from institutional investors (September 11) Modern Times Group (MTG) triggered a condition of the shareholders agreement forcing it to purchase all outstanding shares. MTG started the week holding 39%. The purchase of 9 million shares at NOK 30 (€3.58) brought its holding to 68%, triggering the mandatory buy-out of other shareholders.
Viacom Chairman Sumner Redstone let the entire media world know, once again, who is in charge.
A Ukraine court dealt a blow to Central European Media Enterprises (CME) ruling on a long- standing case to determine just how much of Studio 1+1 the company can own.
Announcements from Central European Media Enterprises (CME) point to the ever-present challenges for television operators and their investors.
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Trinity Mirror, the UKs largest national and regional newspaper group, has reduced the value of its 240 regional newspapers by £250 million, after pre-tax first half profits dove 12.8% caused, a company statement said, by “a weak advertising environment with falling GDP growth, sluggish consumer spending and rising unemployment.”
It has to be one of the strangest newspaper purchase deals of all-time. David Montgomery had trouble coming up with all the financing necessary to buy the Orkla group of newspapers, so Orkla lent him what he couldn’t come up with himself in order to close the deal.
July, 2006, is a month the management at German media conglomerate Bertelsmann will not forget in a hurry. Having achieved their goal of buying out its minority shareholder for €4.5 billion it stayed a private company – good news – only a few days later to have its 2004 merger with Sony Music struck down by Europe’s second highest court – bad news because it was thought that business was top of the list to be sold-off to help pay off the buy-out bridge loan.
In spending $2 billion to buy up some 75 million of its own shares the Tribune Company said it would pay off the junk debt load from reoccurring revenues, cost savings, and asset sales. But having just announced an absolutely horrid second quarter earnings report it’s becoming more questionable whether that is going to work.
That Slovenia became the first of the newest European Union Member States adopting the Euro currency surprised no body. Nor is it a surprise that big television operators are circling around south-east Europe.
It’s July, the temperature hovers around 30c (86f) and we are in the midst of those lazy, hazy, crazy days of summer where the media news flow is, frankly, a bit light with vacations already in full swing. So it gives ftm a great opportunity to place a few items of interest before you that don’t merit their own long story, but taken separately they are of genuine interest.
Like a bolt out of nowhere, David Montgomery’s Mecom Group has within less than a year established itself as a major European newspaper player. It’s newest target in what really looks like a reverse takeover, is buying Norway’s Orkla media empire for some €900 million in a deal set to close this month, assuming the politicians don’t get involved, and that could still happen since the Norwegian Culture Minister says he is not happy.
Tony Ridder broke down and cried as he announced shareholders had approved the sale of the company he had run for 20 years, fearing for every one of those days that this was how his beloved Knight-Ridder would end up. Mind you, don’t shed too many tears for Mr. Ridder – he does walk away with a $9.4 million severance packet and a position on the McClatchy board!
At the end of the day McClatchy’s purchase of Knight-Ridder, already considered a cheap deal at $6.1 billion including debt assumption when it was announced March 13 actually was completed this week for $400 million less. McClatchy is paying partly with stock and its shares have crashed 20% in value since the deal was announced. So, why are newspaper companies still being slammed?
Once again Central European Media Enterprises (CME) takes on Czech authorities. Three years ago the Czech government lost in arbitration and paid the company $350 million. Now CME is challenging an unfavorable digital licensing decision. When Chairman Ron Lauder goes after something – as the art world discovered this week – he can reach into very deep pockets.
Gary Pruitt, McClatchy CEO, and Dean Singleton, CEO of the privately held MediaNews Group, were participating in a panel discussion a few weeks ago when the conversation got around to newspaper evaluations. This was at a time that McClatchy had made its deal for Knight-Ridder and was now trying to offload 12 newspapers it didn’t want.
The New York Times in May posted its highest monthly growth increase so far this year, 4.4% compared with last May and online ad revenue was up 27%. The Wall Street Journal reported its May advertising was up 10.1%, but for all that Wall Street analysts say they want to see more than one month of good figures before giving any thumbs-up for the industry.
As Communicorp finalized its acquisition of two more radio stations, the Bulgarian media market is set for a unique battle. Nowhere in Europe have so many big multinational media companies engaged in a fight in one market. And it’s not about the money…
Ireland’s Broadcasting Commission granted “quasi-national” authorization to Newstalk 106, a Dublin local radio station majority owned by Communicorp. The ten-year license with “strong emphasis” on news and talk will bring certain competition to private channel Today FM and public broadcaster RTE.
At least Tribune Chairman, President, and CEO Dennis J. FitzSimons didn’t have to take his media group the way of Knight-Ridder and put it on the block as some had feared with the share price hovering around eight-year lows. But the company is now taking on about $2 billion additional debt, and making $500 million in asset sales to buy back some 75 million shares – about 25% of the company – in order to boost the share price and keep investors happy.
Gary Pruitt is fond of telling people that he made a great financial deal in buying Knight-Ridder’s 32 newspapers for “only” $6.3 billion including debt assumption – such a low price would not have been possible just a few years ago when newspapers were in favor with Wall Street. But Wall Street has its final say – the money would have been better spent on McClatchy buying its own shares.
Tribune, based in Chicago, announced its Internet traffic increased 28% in April over a year ago but that didn’t stop Moody’s from downgrading its long-term debt rating. In the UK, ITV1 has some of the best kick-off times for the upcoming World Cup and yet its advertising revenue for June and July is forecast to be well below a year ago. It is desperately looking at digital solutions to account for 50% of its total revenue by 2010.
Further consolidating and restructuring his varied businesses, Polish millionaire Ryszard Krause moved Mediabank SA, owner of radio station PiN 102 FM, from Softbank SA – of which he is CEO – to Prokom Investments – of which he is CEO. Finishing that in late April, Krauze then moved to the bigger plan: merging Softbank with Asseco and creating Poland’s biggest IT company.
With all the headlines about how print is hurting, East Europe is thriving, and the Internet is THE Business to be In, how does all of that pan out when looking at some representative European media financial results? A study of the year’s results thus far for Schibsted, Sanoma WSOY, Tiscali, and European results for News Corp. indicates the business is taking some twists and turns.
Barely one month after News Corporation expanded its broadcast holdings in Bulgaria, SBS Broadcasting bought national radio channel Vitosha FM and 2 local stations. Both follow Emmis International and Communicorp into the country, short-listed for European Union entry in 2007.
Maybe newspapers aren’t such a bad buy after all? One big hedge fund with significant newspaper holdings has disclosed it has just taken a 5.2% position in McClatchy that is in the process of buying Knight-Ridder. And that same hedge fund, Highfields Capital Management (HCM) also has a $142 million (3.3% stake) stake in Knight-Ridder.
Business newspapers are counting on increased advertising for luxury goods to pull them out of their revenue doldrums of the past four years and the indications are they may just be right.
The financial geniuses who have long invested in newspaper companies because of their 20% plus operating margins, but who apparently held on too long and didn’t sell when shares were high, are growing increasingly weary of seeing newspaper stock market values at multi-year lows, and after their victory in forcing Knight-Ridder to sell itself they now have their sites on the New York Times Company.
CanWest completed its deal to buy four radio stations in Turkey, paying €49.9 million for minority stakes with options for more and certain “operating” agreements. To put this into perspective, GCap Media – the UK’s biggest radio company – let bids on nine of its smaller – but profitable – UK stations but withdrew them from bidding in March because the best offer was about €40 million, considerably less than the €70 million expected.
Media companies continue to throw millions of dollars, pounds, euros, kroner – you name it -- into a stock market bottomless pit in a bid to boost their share values. Financial analysts say buybacks are “A gift to shareholders that keep on giving” but the media’s experience is that it is just throwing good money after bad. So its time to call “Time” and invest that shareholder value where it will do the most good – the Internet.
Newspapers are a business that on average still produce operating profit margins of around 19% in the US – some countries even more -- and that kind of figure is the envy of many other business sectors. But the margin has been dropping through the years and the main question Wall Street is asking is where does it stop?
Bill Gates is well known as the founder of Microsoft, the business that according to Forbes Magazine has made him the richest man in the world for the past 12 years. Not so well known is that Gates is also the owner, separate from Microsoft, of Corbis, a pictures archive owning some 80 million images of which 4.2 million are available for sale via the Internet.
About once every year Rupert Murdoch makes a prominent speech outlining his vision of the media’s future. Last year he told American newspaper editors that they needed to embrace the Internet – and then he spent close to $1 billion buying web sites proving his point – and this year he has told media magnates that if their empires do not encompass multi-channels to pass on news and information then their business will die.
That someone, it happened to be McClatchy, paid about $67.25 a share for Knight-Ridder -- some $4.5 billion plus absorbing K-R’s $2 billion of debt -- was about what the markets expected. But where was Gannett and all those private equity companies that were expected to put in bids? The word is they dropped out, which gives as good an indication as any that newspaper valuations are not what they used to be.
After giving a fairly bullish presentation on Google’s future financial prospects the words that came next from the company’s chief financial officer at an investor’s conference almost seemed like throwaway lines: “Clearly our growth rates are slowing,” George Reyes said. “We are going to have to find new ways to monetize the business.”
Last November, the largest shareholder in US newspaper shares shocked Wall Street by demanding that Knight-Ridder (K-R) put itself up for sale to enhance shareholder value. The next two largest shareholders joined in and the die was cast. Shares in K-R and most other publicly quoted companies rose strongly and immediately on the hope this was just the start of improving shareholder value for that market sector.
The scene was a US Congressional hearing room. Trying to explain their business practices in penetrating the huge Internet business opportunities in China, but gaining very little sympathy, were American web giants Google, Yahoo, Cisco and Microsoft. Lashing out at them was Representative Tom Lantos of California. “Your abhorrent actions in China are a disgrace. I don’t understand how your corporate leadership sleeps at night.”
There are two major newspaper group sales on offer internationally – the Northcliffe regional newspapers in the UK, and Knight-Ridder in the US, and both make a lot of sense for Gannett, the largest US publisher. But some $2.1 billion for the UK group and perhaps $4 billion plus for the US group could cause some financial indigestion, and not everything in the US purchase fits Gannett’s needs. Indications are it is leaning towards the British buy but it might team up with another group in the US for Knight-Ridder (K-R).
It was a bad week for Google. It started when Yahoo’s fourth quarter earnings, although good, came in just under what Wall Street expected. So Yahoo got dumped on and in Wall Street’s natural way it also sold off its prime competitor. And then the week ended with a double whammy – news broke that Google was fighting a US Justice Department subpoena to hand over one week’s worth of search requests and Wall Street on Friday suffered its worst loss in almost three years.
Tony Ridder didn’t have much choice. His three largest shareholders said they wanted to see Knight-Ridder sold to achieve shareholder value and there wasn’t much he could do about it and the sales process is in full swing. But Dow Jones is another matter. While a public company it is still controlled by the Bancroft family and the family really hasn’t been that active in pushing for a better performance. Until now. In one swoop the company ceo is out come February 1 -- kicked upstairs as chairman until he retires in a year -- and his wife, the Wall Street Journal (WSJ) publisher, has been given two months to pack up her office.
It wasn’t so much doom and gloom for newspapers at the Media Week meetings last week as much as it was that with a few exceptions things don’t look like getting much better in the short-term, and while their Internet activities are doing very well indeed, when seen as part of the overall revenue picture, those activities, for now, contribute a mere pittance.
After REN TV bars the studio door, TV anchor Olga Romanova quits and vows to sue owners, including RTL Group. The station’s news director also quit and others might follow. This is not social dialogue.
When the major US publishing companies give their various reports to the 33rd annual UBS Media Week Conference and to the Credit Suisse First Boston media meeting this week the shadow of who is not there will be overwhelming. Knight-Ridder’s prognosis is already known – its three main shareholders want it sold to gain shareholder value, and many of those other newspaper companies – especially those without family protection on their shareholdings – fear they could soon be in the same boat.
It’s the kind of deal that, when announced, seemed such a natural, and it propels Sir Richard Branson yet again into the limelight, this time as the biggest shareholder in a company that will deliver broadband to 2.5 million customers, that already has 4.3 million fixed-line accounts, more than five million mobile customers and 3.3 million cable TV subscribers.
Just being “in talks with the European Union” is good enough to send media investors cruising the streets looking for deals. As countries turn themselves up-side-down conforming to EU accession demands, big media companies bring cash and expertise intent on cornering the markets early…but not too early. So far, this strategy works. But, how far east can it go?
The decision by the Daily Mail and General Trust (DMGT) to put its Northcliffe regional group of 112 titles up for sale is for exactly the opposite reason why Knight-Ridder in the US is looking to sell itself.
In a mighty coup for Michael Ringier, chairman of the Swiss publishing empire that carries his name, and at the same time delivering as good a blow as any at his arch-rival, Germany’s Axel Springer, former German Chancellor Gerhard Schoeder has agreed to advise Ringier on international political affairs and spend one or two days a week at Ringier headquarters in Zurich starting in January.
With so many deals announced recently selling first-run network programming via Internet on-demand delivery, even offering the nightly news for free, an even more monumental event may have been missed. Computer network giant Cisco is paying some $7 billion (cash) for Scientific-Atlanta, America’s second largest producer of video set-tops.
There can be no doubt that Getty Images is an absolutely incredible media success story. In just 10 years it has established itself as not only the world’s leading image company owning the world’s largest collection of still and moving images, but at the same time it is recognized by the world’s leading media as a major player in the daily news pictures business.
In a very large white house on the outskirts of Ljubljana sits RadioHit, the top rated privately owned station in Slovenia. Recently, after operating three months in the basement, they started moving into new but not quite finished studios. Today they’re still busy.
Everyone was expecting US newspaper circulation numbers for the past six months to be bad. But very few expected them to be THAT bad. At the San Francisco Chronicle, for instance, nearly one in five subscribers quit. Overall, the country lost 1.2 million subscribers, 2.6% of its base.
Knight-Ridder didn’t have much choice. With its three largest shareholders representing some 36% of the shares telling the company to explore ways of selling itself and threatening board changes if it didn’t, it hired Goldman Sachs to scout out the market.
There is an old music industry expression - Too Not Not to Cool Down. It’s meant as a warning to those hotter than hot new stars. It’s a concept not lost on media people in Poland. And the effect is being felt throughout the sector.
Three trends are now apparent for traditional media to retrieve lost profits: their own branded web sites are the most popular news destinations for local news, they must invest heavily in new media, and new media doesn’t mean just news and information -- as long as enough unique visitors flock to a site, buy it!
In what must be considered a very gloomy assessment of the US newspaper business, one of its largest institutional investors has seemingly lost patience with the industry being able to turn itself around, and has now urged Knight-Ridder (K-R), the country’s second largest newspaper chain, to put itself up for sale.
Budapest is busy. The buzz is all about the film industry, although skeptical. A major sound stage development has been announced, with Hollywood backing. The Hungarian film industry says more major productions want to come here but there's a lack of capacity. With so many "big ideas" announced in the last decade, Hungarians have adopted a "wait and see" attitude toward plans trumpeted about Budapest becoming the European Hollywood.
As the third quarter earnings reporting period approaches expect nothing but bad news for the US newspaper industry. Even worse, don’t expect to see even a glimmer of hope that Happy Days may soon be back again. The numbers are bad and expected to get even worse.
With many major newspapers suffering large circulation declines over the past few years, but still increasing their advertising rates, it seems only natural they no longer want to talk about circulation. No, the spin now is that advertisers should factor in how many people actually read a newspaper and whether they are the “right” people.
Just what a newspaper publisher doesn’t want to hear: “The consistent growth in overall Internet advertising shows marketers may be shifting more of their total advertising budgets online,”, according to David Silverman, a partner with PriceWaterhouseCoopers.
It was only last May that the New York Times Company announced 195 layoffs so another internal “Arthur” and “Janet” note this week so soon afterwards announcing another 500 employees are to go – 4% of its workforce -- has rocked the US newspaper establishment. “Arthur” is Arthur Sulzberger Jr, chairman of the New York Times Company and publisher of the New York Times, and “Janet” is Janet Robinson, president and CEO. When they talk of hard times ahead the whole industry shudders.
Thus ends the short, five-month run of UK radio broadcastings dynamic duo: David Mansfield and Ralph Bernard. The announcement was made Monday (September 19) by Sir Ralph. David remains a company director until January but, yes, he’s a goner.
Newspapers on both sides of the Atlantic continue to make large investments in their print products, giving the clearest answer possible to those who believe the industry should be put into care and maintenance while all attention is turned to digital media.
Bertelsmann, the world’s fourth largest media company, has been busy this year investing its €2 billion war chest on such diverse entities as an automobile magazine publisher in Europe to CD direct seller Columbia House in the US, while at the same time getting out of the US magazine business, but it is its investments in the European television market that attract the most attention.
The UKs first foreign-owned radio broadcast license is awarded to CanWest, the Canadian media giant. Will ice-hockey be forced on unsuspecting British listeners?
PanAmSat Holding Corp. agreed to be acquired by Intelsat Ltd in a $3.2 billion deal creating the largest private satellite operator on the planet.
After fifteen years, 16 television stations and 11 radio networks Harry Sloan delivered for SBS Broadcasting (SBS) investors, selling the company to leveraged buy out firms Kohlberg, Kravis & Roberts (KKR) and Permira Advisors Ltd for an estimated €1.7 billion.
Rupert Murdoch, chairman and CEO of News International, described the problem to a meeting of American editors in the spring, “The threat of losing print advertising dollars to online media is very real. In fact, it’s already happening, particularly in classifieds. No one in this room is oblivious to it.” This week he presented his solution – he is setting aside another $1 billion plus to purchase Internet sites.
There can be no question that when it comes to online advertising that search revenue is on a roll, and the latest estimates from Jupiter Research says it will outpace even display advertising by 2010. Overall US Internet advertising is forecast to more than double the $9.3 billion at the end of 2004 to reach $18.9 billion by 2010.
All was happiness in Munich when the long negotiated deal was announced bringing Germany’s most profitable television operator under the wing of Germany’s biggest newspaper publisher.
The London bombings brought home the power of amateur photography, still and video. Some of the most dramatic pictures of the bombings themselves came from people on the trains using their mobile phone cameras. The arrest of two suspects was captured on amateur video.
First it was Reuters that decided there was much more money to be had by being in the media news retail business rather than just being the news wholesaler supplying products to those news organizations that deal directly with the public. Now CNN and ABC are turning the tables and making video available via a third party, Yahoo, in addition to their own web sites.
Europe is witnessing the death of dial-up Internet with some countries probably eliminating it completely within five years, according to a new study by Strategic Analytics. And as broadband grows, so, too, are the video streaming programs on offer, whether from new start-ups or major players like the BBC and BSkyB.
WorldSpace raised the target price for its initial public offering (IPO) as XM Satellite Radio (XM) bought stock for US$25 million. Both companies anticipate that first profitable quarter.
For Reuters Television and Associated Press Television News (APTN) the growing use of broadband and its increased demand for on-the-spot video is a need come true. Both companies have suffered severe loses over the years on their television video activities and new outlets were desperately needed. And it seems they are now here.
The New York Times and Dow Jones both made large Internet investments this year, and already they are successfully impacting the bottom line, with online ad revenue increasing for each company in excess of 25%, according to the Q2 earnings reports. Print, on the other hand, showed a low single digit increase at the Times and a decline for Dow Jones.
A couple of years ago a European national news and pictures agency wanted to spread its international wings by establishing an international news service. But it became quite apparent in the early worldwide sales efforts that there was little interest by global prospects in the agency’s text, but what they were interested in, and were willing to pay good money for, was the news pictures output.
Hungarian broadcast services company Antenna Hungária (AH) moved another step closer to privatization as the number of bidders was pared down to three.
The really good news is that mobile phones usage in Europe Is around 80% with the UK and Italy at saturation point. The bad news for media vendors and phone operators is that customers don’t seem very interested in the premium services on offer. What they really want their phones for are to, well, talk and communicate with one another.
And while it has always been said in Reuters that information is power, and from that flows profit, the real truth is that hosting the world to your poker table where you get a cut of the pot would appear to be a whole lot more profitable.
State controlled companies and state friendly billionaires have picked more ripe media outlets. REN-TV was sold to steel maker Severstal and RTL. Moscow News sold to Media International Group.
The Hungarian terrestrial transmission company has launched an upgrade of its services for radio broadcasters, including DAB and DRM.
Could the average 15% drop In newspaper 2005 share prices have something to do with that?
For months Vivendi and Lagardère have been meeting to restructure Canal Plus Groupe. The negotiations restarted in earnest earlier in June when the two media giants agreed on structures.
Even though newspaper industry shares have underperformed the US markets by some 10%, looking like a buy bargain, Merrill Lynch has issued a report that says the shares basically have only one direction to travel and that’s down.
Viacom’s Board OKs splitting the company into the “growth” business and, well, the rest. The 1990’s are finally over. Media consolidation is dead in the US, but not in Europe.
When Google’s shares hit $290 each this week (they launched at $85 in August, 2004) it propelled the search engine, Internet advertising giant into the world’s most valuable media company. And while the Wall Street bears fear that its bubble could break any time now, the bulls are predicting the shares will surpass $300 each in short order.
French pharmaceuticals company Pierre Fabre was a major participant in privatizing French radio broadcasting in the 1980’s.
Vladimir Potanin gives up his majority stake in daily newspaper Izvestia. Financial analysts say it isn’t worth the trouble. Political analysts say it certainly isn’t worth the trouble.
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John de Mol’s Talpa Media expands radio holdings, purchasing Netherlands’ station Radio 538.
In announcing its sale of Family Circle, Parents, Fitness, and Child to Meredith Corporation for $350 million – about half of what they should have gotten if the magazines had been well looked after -- Gruner +Jarhr has finally given up the ghost of its US magazine operation. If it can’t sell its two remaining properties, Inc. and Fast Company, by June 30 then Meredith will take them on and sell them probably in an auction.
Endemol churns out reality TV shows like Nestlé churns out chocolate bars. Mediaset’s chairman is “very interested”
UK media consolidation took another step forward this month as The Wireless Group (TWG) shareholders and Ulster TV (UTV) agree on a price. And the GWR-Capital Group merger – GCap Media - becomes official.
...and When It’s John Malone Saying That The Industry Had Better Listen.
There are few American investors more respected than Warren Buffett, the world’s second most wealthy man behind Bill Gates.
The announcement by the Associated Press (AP) that is going to start charging its traditional media subscribers to use AP material on the Internet has had at least one startling result -- one of America’s largest media organizations has asked out loud whether the AP, in its current format, is past its sell-by date.
Google Is now worth some $US60 billion, Yahoo around $US50 billion. Compare with Dow Jones at about $US3 billion or Tribune, with all their big city newspapers and TV stations, at around $US15 billion
Through the heady decade of the late ‘80’s and ‘90’s Hundert, 6 thrived. Competition and catastrophic ownership changes were more than it could survive.
The bidding for NOP World is over and GfK pays cash: €550 million.
What Rupert Murdoch told a Meeting of American Editors in Washington This Week Should Be Required Reading for Every Publisher and Editor
A loud and contentious battle for control of Biel radio station Canal 3 ended as Swiss regulator BAKOM approved the concession transfer to Espace Media Groupe of Berne.
Google has suffered several setbacks against its trademark advertising policies in French court decisions, including losing a recent appeals court ruling, but now AFP, the French news agency, has sued in a US court to stop the search engine from displaying its news and photographs within its news section without permission.
By any standard, the 2004 performance of the entire Bertelsmann Group – with major properties in Europe and the United States – would be the envy of any global media group. But with its RTL television group, Europe’s largest TV broadcaster, turning in profits dwarfing those of its other units there are indications that the company is returning to its European geographical roots.
Look Soon for Big Changes in How a French National Newspaper Gets Marketed
SBS Broadcasting re-takes its stake in Prima TV and acquires two radio stations in Romania, citing benefits expected from 2007 EU entry.
Lagardère is a French media company on the move. Its radio, television and books divisions are doing better than most analysts had predicted, magazines are still a bit soft because of weak advertising...
Say whatever you like about Rupert Murdoch but one thing is clear – he understands the traditional newspaper/broadcast/satellite business better than anyone else, so when he passes judgment on the European media scene, as he has just done, media professionals should take note.
The world’s first pay-per-football-match digital terrestrial television system, owned by Italy’s billionaire Prime Minister Silvio Berlusconi, has gotten off to a rousing start, and that’s bad news for Rupert Murdoch’s Sky Italia satellite service.
Arnaldo Mondadori Editore finalized its purchase of all or parts of three Italian radio channels through its new subsidiary Monradio.
The announcement by SanomaWSOY of its €142 million takeover of Dutch-owned Independent Media, Russia’s largest publisher of consumer magazines, marks yet another continuing step by Europe’s leading publishing houses to become dominant players on the East European media scene.
Privately held radio broadcasting and transmission facilities company D.EXPRES has been sold to Emmis Communications Corporations for €11m ($US14m)
The old adage goes, “If you can’t beat them, join them,” and that is exactly what the New York Times Company has done in Boston in a novel experiment to see if it cannot yet still hook the youth market.
The Italian television business is stranger than fiction
The largest and most profitable television operation in central and eastern Europe was returned to Ron Lauder for a mere $642m.
Despite extremely generous state subsidies for the written press estimated at some €278 million for 2005 alone, running a national newspaper in France is synonymous with burning money. And who better situated to do that than the country’s richest industrialists and bankers. And they’re lining up to do exactly that.
Ringier CEO Martin Werfell told a Zurich media conference that 2004 may be the company’s most successful. Just three weeks earlier Ringier closed down the well-respected, but heavily loss-making 36-year-old Hungarian newspaper, Magyar Hirlap.
Speaking to the NAB/Europe Radio conference Mel Karmazin gave no hints he was taking Sirius seriously.
Tg5 director and anchorman Enrico Mentana ended the evening newscast saying that it was his last.
In the UK when one talks about the “quality” press it is synonymous with the broadsheets. Does that mean the 216-year-old Times is no longer a quality newspaper? Rupert Murdoch, who made his newspaper fortune with tabloids, now has one more in his stable. He has turned The Times “compact” (that’s tabloid to you and me!)
New York Attorney General Eliot Spitzer is investigating whether payola is again rampant on US radio
The Associated Press declared a 2.3% increase for US subscribers to its general news and pictures services and increased rates specialized non-newspaper services, AP Television News (APTN) and audio, by 4.4%.
UK radio giants GWR Group and Capital Radio announced a merger creating a billion euro radio company.
Station ownership continues to shuffle in Scandinavia as NRJ Groupe acquires easy listening network KLEM FM.
Eastern European transmission service operators are attracting investors attention. Deutsche Bank unit Bivideon increased its stake in the Czech telecom. Reports say Antenna Hungaria will be privatized by the end of the year.
Metromedia International Group (MIG) announced in July the sale of substantially all its radio holding company, Metromedia International Inc. (MMI) in the Baltics and Eastern Europe to Communicorp Group.
NRJ Groupes Denmark operation, two frequencies in Copenhagen and the smallest of its Nordic investments, shuts down in June.