Consolidate and operate, back again on media managers’ dance card

Take Mediaset, for example, a big media bellwether. When releasing first half 2007 financial results last week, the company just casually mentioned deals with both Warner Bros (Time Warner) and NBC/Universal for all-platform rights packages worth €800 million ($1.1 billion).

Earlier this summer Mediaset, John de Mol’s investment vehicle Cyrte and Goldman Sachs finalized the buyout of Endemol from Telefonica. Endemol, founded by John de Mol, has created over 100 non-scripted TV show formats per year for the last five years and continues to be one of the major actors in television content production. Also this summer Mediaset absorbed the Berlusconi family owned production and distribution company Medusa Films.

The inscrutable advertising market – here today, gone tomorrow – was cited by Mediaset Deputy Chairman Piersilvio Berlusconi as the significant reason to consolidate the company’s business around content rights holding and management. Digital Multimedia Technologies (DMT) recently made an unsolicited offer of €500 million (US$680 million) to buy Mediaset’s tower and transmitter division Elettronica Industriale. If accepted spinning off a non-core business will help off-set more valuable strategic investments. Company financial results released September 12 showed first half 2007 net revenue at €2.1 billion (US$2.9 billion), up 4% year on year.

Mediaset owns three free-to-air television channels in Italy plus two digital TV channels and it’s rolling out a mobile TV (DVB-H) offering. It also owns Telecinco in Spain.

ftm background

CME Fights for Czech Digital TV; Lauder Wins Klimt
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.

Publicis’ CEO Warns The Advertising Industry that The Playing Field Has Changed – Consumers Are Now In Charge Of When and How They Receive The Message -- And The Only Three Ways For Agencies To Survive In This New Media World Are “Change, Change, and Change”
Consumers now have so many different ways, empowered by technology, to obtain the news, information and entertainment they want when they want it that they have become “enlightened despots” according to Maurice Levy, Publicis Groupe CEO. And while he thinks television will remain a preferred medium for some time to reach those consumers, he does question whether print can continue to charge on a long-term basis.

“How Can Traditional Media Continue to Charge More For Less?” – Martin Sorrell, CEO of WPP; Heineken Pulls TV Ads in the UK Because of Cost And Other Negative Factors
Traditional media can’t say it is not getting warned. Martin Sorrell, ceo of the world’s second largest advertising agency, has warned that costs cannot continue to grow while audiences delivered are going down.

After Asia-Pacific, Europe Is The World’s Second Largest Broadband Market With More and More Video Programming Being Streamed
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.

Murdoch Takes a Pragmatic View of the European Media Scene: The Satellite TV Business is Good and Free Tabloids Hurt Paid-For Newspapers
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.

RTL Group released its half-year 2007 financial results at the end of August with CEO Gerhard Zeiler noting audience growth in Germany and France but also the profit contribution of production house FreemantleMedia, up over 8%. RTL operates 39 TV channels and 29 radio stations in 10 countries. Barely mentioned in the press flak was RTL’s €120 million (£83 million) write-down of the value of UK’s Channel Five.

RTL recently did an asset deal with Talpa Media, owned by John de Mol, transferring Radio 538 to RTL Netherlands and shutting down Talpa’s TV channel Tien and moving the most successful programs to the four RTL channels. That name – John de Mol – it just keeps popping up.

ITV’s Chairman Michael Grade made the rounds last week telling media analysts that he plans to invest $200 million in new and improved programming – added to the existing €1.4 billion (£1 billion) budget - to double content revenue by 2012 to €1.7 billion (£1.2 billion). Sir Michael wants a blockbuster drama series or two – the most expensive kind of television - both for the home market and sales internationally. Much of the new money for new programming will come from cuts in regional programs and, of course, news. With news of bodies soon flying out the door one might think the stock traders would reward ITV. Alas, they did not.

Meanwhile, over in ad-land, the message is digital delivery and the internet. Publicis Group announced its acquisition of Wcube, an internet ad agency, last week, folding it into the worlds’ largest ad complex as Publicis Modem France. UK’s WPP Group wrapped up its purchase of Los Angeles interactive agency Schematic last week. Oh, WPP also bought 49.9% of a Ukraine PR agency. A year ago WPP antied up €500 million ($649 million) for interactive ad shop 24/7 Real Media. Havas, the other ad-land biggie, struck a joint venture deal with Chalhoub Group, a Middle East marketing and communications firm specializing luxury brand marketing.

All media trends have an underpinning in basic economics. Advertising and consumer spending are locked in a dance with the feel of Danse Macabre in the US (note that TNS Global reported Friday September 14 that ad spending in the US dropped for the second quarter in a row…for the first time since 2001), the ‘twist’ in Western Europe and breakdancing everywhere East. Strategic investors are today’s buyers, looking ever so carefully for the “Waltz of the Flowers.”

Flying Through Turbulence – Media in the New EU Member States

Consolidate and operate, back again on media managers’ dance card