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The Intellectual Leap You Can Believe InThe 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.“Monetizing is hard,” said Liberty Media founder and CEO John Malone to another new media conference. “Advertising may not do it. Hulu has ads but they’re not significant. How do you spend enough money to produce high-quality programming with advertising?” Hulu is the American IPTV service, a joint venture of News Corp and NBCUniversal. Malone isn’t the first big media person to roll his eyes at the decades old and quite rusty advertising model. His business for 30 years has been cable TV, which he arguably invented. That company was called TCI. He sold it to AT&T in 1999 for €43.5 billion, when that was still real money. Before that John Malone was an engineer. At heart he’s still an engineer. Very few from that discipline attach themselves intellectually to the idea of selling air. It’s “a big intellectual jump,” he warned, getting people paying for content they’ve been getting for free. “A lot of it has to do with changing the public. It takes the public a long time to change their behavior patterns.” The leap too far for many media people is putting people back into the equation. Liberty Media is the US holding company, operated as three companies; Liberty Capital, Liberty Entertainment and Liberty Interactive. A separate company, Liberty Global is a content distributor – cable and satellite – and content producer. The European footprint covers 11 countries and serves 18 million subscribers. The production company Chellomedia owns 26 thematic channels. Liberty Global is the largest single subscription television provider in Europe. Television is and has been John Malone’s main game. In the early days of TCI he and partner Bob Magness literally drove the American highways looking for customers. That, in its self, is an experience unique to most big media types…of any age, anywhere. “In five years, old guys like me will still call it television, but it will come from anywhere, in many formats, via many distribution channels. Anything anywhere in increasing quality and quantity and decreasing costs. That’s the trend.” And it’s a change media people had better believe in. Revenue from advertising won’t pay the cost of content. "The world is evolving," said Malone at the Dow Jones/WSJ D conference (may 27). "Whether it's fast enough or big enough to save CBS, I don't know. Clearly, advertising is insufficient." “By and large, most broadcasters don’t view broadcast as core anymore. They’re all moving to cable networks and their dual income streams.” Malone told the conference "the idea of channels has already broken down," not exactly a new thought. Channels have become merely distribution vehicles, advantage going to channel aggregators. Viewers look for programs. “We'd love to be the aggregator; so would the cable industry," he told the assembled. “You try to use your distribution leverage to take advantage.” “The economic bets are increasingly going to big events," he added. “This is putting enormous pressure on traditional TV.” Channeling News Corp’s Rupert Murdoch, Malone is game for sports on television. DirecTV, majority owned by Liberty Media, is rechanneling for sports content though Malone is ready to sell it to the highest bidder. After becoming fabulously rich, Malone famously refused to relocate from the US State of Colorado. On the side of the conference he mentioned to CNBC (May 27) that he considered investing in his hometown Denver Post newspaper “to keep it alive.” The Rocky Mountain News, the other Denver daily, closed recently. But, alas, newspapers are too dependent on advertising for John Malone. “Obviously, print will go away.” Malone has invested recently in higher entertainment, spending US$530 million in February to bailout Sirius XM Sirius Satellite Radio. It is an intellectual leap to visualize the meeting between the notoriously soft-spoken Malone and Sirius XM CEO Mel “I just love to sell advertising” Karmazin.
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