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Week ending December 13, 2014

MDIF - State monopoly threatens closure of independent Russian TV station - December 11, 2014
from Peter Whitehead/MDIF

The pioneer Russian broadcast company TV-2, one of the country’s first independent commercial stations, may have to put its plans to celebrate its 25th anniversary next year on hold if the local state monopoly goes through with plans to turn off its transmitters for what TV-2 believes are political reasons.

On November 30, the Tomsk-based company was notified by the Russian Television and Radio Broadcasting Network (RTRS), a local division of the state monopoly that owns broadcasting facilities, that it would not be renewing TV-2’s contract when it ends in December. If implemented, the decision will turn off the station’s signal on 1 January 2015, silencing yet another independent Russian media outlet.

This is not the first time that TV-2 has been involved in a conflict with RTRS. Earlier this year, TV-2 was not able to broadcast its signal because of repair works at RTRS' facilities that lasted an unexpectedly long time. “About a month after we had been switched off the air, because of the long repairs, we started to actively speak out in the press. There were rallies in support of us. Maybe, RTRS perceived that as political pressure and got offended,” Viktor Muchnik, TV-2 Editor-in-Chief told the BBC Russian Service.

Muchnik may have good reason to be suspicious about RTRS’s motives, as the state monopoly claims that TV-2’s actions in publicizing the switch-off "went beyond the bounds of the relationship between business partners".

Muchnik believes that politics is behind the threatened switch-off. “We can presume that some people do not like some of our reports. For example, the governor [of the Tomsk region]. But I cannot bluntly say that he is in charge of the termination of our broadcasts. I have no proof. I know that the local government often discusses our reports. And many of the reports on everyday issues are considered political. I cannot say who exactly is annoyed with our reports but certain law enforcement agencies send letters about us to the top,” Muchnik said in an interview with the BBC Russian service.

During the 24 years of its existence TV-2 has been on the verge of closure many times. Last spring, when the broadcasts were suspended, the station’s licence was nearly terminated by Roscomnadzor, the federal authority for information technologies and communications. But the company admits that never has the threat been so grave or so imminent.

TV and Radio company TV-2 was founded in November 1990 and its first broadcast was on May 15, 1991. The company is the major asset of the Tomsk Media Group holding company which also runs cable channels, an advertising agency and a number of radio stations. Four of the TV-2 team are members of the Russian TV Academy. The company has a reputation for providing accurate and independent news reporting on important political and social issues. It has been awarded 22 TEFI awards by the Russian TV Academy.

RTRS (Russian Television and Radio Broadcasting Network) is a Russian state monopoly, providing terrestrial air transmission of TV and Radio channels over the whole of the Russian Federation.

Strategy Analytics - CHINA ERODING US DOMINANCE OF WORLD’S BIGGEST DIGITAL MEDIA CO’S - December 8, 2014
from Jaime Gavin for Strategy Analytics

China accounts for two of the six companies with the highest online media revenues and four of the 10 fastest-growing, according to the latest Digital Media Index from global research and advisory firm Strategy Analytics which analyzes revenue trends across 44 public digital media companies.

Google tops the list with $31.4 billion in digital media revenues in the first half of 2014 (up 12% year-on-year), over three times that of nearest rival Amazon at $10.3bn (up 9% y-o-y). Facebook is third with $5.4bn (up 66%), narrowly ahead of Chinese internet service portal Tencent at $5.4bn (up 43%). Web services company Baidu ($3.4bn, up 56%) is the other Chinese firm in the world’s top six, behind Apple’s iTunes ($5.2bn).

Yahoo is the only one of the world’s top 10 to see digital media revenues decline year-on-year (down 3%).

Google’s online media revenues was $31.4 billion in first half of 2014, Qihoo and Twitter fastest growers

Between them, the 44 companies generated $85.9 billion in digital media revenues in the first half of 2014 – 17% more than the same period in 2013. Among the 44, Chinese internet security software firm Qihoo saw the largest year-on-year rise in revenues (up 123% to $582 million), just ahead of Twitter (up 122% to $562m). Facebook (up 66%) grew third fastest.

Alongside Baidu and Tencent, online media company Sina (up 36%) is the fourth Chinese company among the 10 fastest-growers. US companies Pandora, Blizzard Entertainment, Disney and LinkedIn complete the 10.

“A red-hot Chinese Internet market is challenging the historical dominance of US companies,” said Michael Goodman, Director, Digital Media for Strategy Analytics. “The fact that there are about 2.5x more Chinese than Americans online is a big factor so they’ve been able to hit such heights solely in a domestic market. The big question, and the key threat to US global dominance, is whether they can translate this success outside China.”

Advertising dominates media revenues

Among the 44 companies that publicly provide revenues by category, advertising accounts for 77% of digital media revenues, followed by online games (15%) and video (5%). Music and content delivery networks (the latter such as Akamai and Limelight who serve content on behalf of publishers) split the remaining 3%.

Games experienced the largest year-on-year revenue growth (up 26%) followed by advertising and video (both 24%) and content delivery networks (21%). Music experienced least growth at 9%.

Advertising revenues grew 24% year-on-year in the first half of 2014 to account for 77% of online media revenues

Revenue splits between the companies differ dramatically; 100% of Baidu’s and Microsoft’s Online Services revenue comes from advertising, compared to 91% for Facebook, 90% for Google, 80% for Yahoo and 60% for Yahoo Japan. In contrast, 100% of Netflix revenue is from online video while 90% of Tencent’s is from online games. Music streamer Pandora also relies heavily on advertising (accounting for over three-quarters (77%) of revenues) whilst user subscriptions, its original business model, accounts for just 23%.

“The Chinese companies have been particularly adept at generating revenues across a variety of services. The fastest mover, Qihoo, for example has done well in both advertising and Internet value-added services, driven by expansion into search and mobile. Ultimately, this increases revenue per customer, a vital component of sustained growth – Baidu, for instance, has upped ARPU 50% over the last year.” said Goodman.