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Ad decline brings pay cuts
Saves jobs, though…
All salaried employees at the five Communicorp owned radio stations in Ireland will take a pay cut from next month, reported RTE, the Irish Times and Irish Independent (July 29). The company cited significant declines in ad revenue on announcing the salary reductions (July 28). Stations affected are national channels Newstalk and Today FM, Dublin stations 98FM and Spin 103.8 and Spin South West.
Earlier this week (July 27) the Broadcasting Council of Ireland (BCI) cleared Communicorp principal owner Denis O’Brien after a media concentration investigation. In addition to Communicorp, Mr. O’Brien holds a 26% stake in Independent News & Media (IN&M), publisher of newspapers in Ireland and the UK. (JMH)
Vertical organizing at CME
Keeping all the card on the table
The CEO job at Central European Media Enterprises (CME) was finally given to President and COO Adrian Sarbu, announced CME Chairman Ronald Lauder (July 29). Sarbu’s elevation was kept in abeyance until details were finalized over outside interests in the media sector. (See more about CME here)
In that agreement, announced simultaneously, Mr. Sarbu will transfer most of the remaining assets of Media Pro Entertainment, the Romanian and Czech production companies, to CME for cash, stock and stock warrants. Merrill Lynch, which advised CME on the transaction, valued the deal at US$97.6 million. Part of the agreement returns to Mr. Sarbu 8.75% of Media Pro Management, owner of a publishing house, print house, media buyer and telecom.
CME also reported (July 29) second quarter revenues and earnings, a continuing to suffer from declines in ad spending. “This has been a painful process for us and our shareholders,” said Mr. Sarbu, who received US$10 million for Media Pro Entertainment.
Mr. Sarbu continues to hold 5% of CME’s Romanian television operation Pro TV, which CME invested then acquired in 2007. CME’s in-house production units will be consolidated under as Media Pro Entertainment.
Complexity is one of the hallmarks of media companies doing business in Eastern Europe. The interlocking weave of insiders and outsiders, partners and cronies has kept Western investors wary. CME picked up a major strategic and financial investor in Time Warner earlier this year. Shortly thereafter CME spun off its Ukrainian assets to another shareholder and effectively moved its head office from London to Prague. (JMH)
Will Circulation Revenue Exceed Advertising Revenue?
According to the Columbia Journalism Review (CJR) circulation revenue will surpass advertising revenue at the New York Times some time this quarter, if current trends continue. Newspapers usually assume that circulation revenue should make up about 20% of total revenues, but here is a case where The Times is experiencing a 30% decline in ad revenues yet it has been successful in keeping its readers even as it has substantially increased its newsstand and subscription prices.
Other newspaper groups like Gannett and McClatchy have also been reporting their circulation revenue is on the up – about the only revenue stream that is – and these days every penny helps. It goes to show that newspapers have probably been underpricing themselves, but when they had all that advertising it made sense to sell low so they could boast high circulation. Today, newspapers will tell you they’re not into circulation -- it’s readership – so up goes the price.
The CJR report, using figures from The Times, says that in Q2 the newspaper brought in $185 million in advertising revenue whereas its circulation revenue was $166 million. Three years ago it was $316 million in advertising and $156 million in circulation.
So, yes, circulation revenue is up, but what those figures really is just how much advertising has slumped.
If You Can’t Beat Them, Buy Them
Newspaper executives have been decrying for some time the gloom and doom spread by financial analysts working for the various credit ratings agencies, so perhaps there is some justice in Hearst increasing its stake in the French ratings agency Fitch to 40% with possibly more on offer in the years to come.
The credit agencies have themselves been taking a bashing for not warning of the huge subprime default risk that was just waiting to happen, but for Hearst increasing its current 20% stake to 40% is an indication the company is looking for revenue from non-publishing entities – in other words it’s spreading the risk.
Business news dropped for good songs
Things change
A few months ago Russian businessman Alexander Lebedev bought two Moscow radio stations licenses. In itself the deal was something of a surprise as commercial radio licenses in Russia have rarely changed hands in recent years. And, too, Mr. Lebedev is something of a maverick on the media scene as part-owner of outspoken newspaper Novaya Gazeta. He also owns one-third of the airline Aeroflot. In January he bought the UK newspaper Evening Standard.
On one frequency (94.4 FM) would be a business news station, he said. It would compete with Business FM, a fairly well established though not highly rated station. Things change.
Instead, according to Kommersant (July 24), Mr. Ledebev’s company has contracted with Russian Media Group (RMG) to migrate its ‘Good Songs’ station from the OIRT band (66.86 FM) to the 94.4 FM frequency. ‘Good Songs’ would then compete with market leader Chansons. (See recent Moscow audience ratings here)
Mr. Ledebev’s other frequency, 94.0 FM, broadcasts Yunost FM, developed by State broadcaster VGTRK. (JMH)
No points, no audience, no show
Czechs cut Eurovision and more
Public broadcasters make the best with the budgets they have, generally one year at a time. Some have tax income, some direct government support and some ad revenue, often a mix of all. All revenue sources today are held closely.
Czech public television (Ceské Televize – CT) General Director Jiri Janecek was re-elected (July 16) to a six year term, facing a €70 million budget shortfall this year. In his previous term Janecek launched all-news channel CT 24 and sports channel CT 4. The Czech Parliament continues to debate CT’s funding, including the possibility of raising the TV license fee tax.
All costs are being reviewed, sports rights particularly questioned. “We will cover the most attractive things as much as possible, but only at a reasonable price,” Janecek said to Hospodarsky Noviny (July 17). I will not buy anything when it is overpriced just because it is wonderful.”
One program sacrificed will be the Eurovision Song Contest (ESC), said Czech public television program director Katerina Fricova to iHNed.cz (July 22). In three years of participation Czech audiences hadn’t warmed to ESC as local entries failed to score big points. Ms Fricova said CT would be investing more in local original programming.
CT paid €200,000 to broadcast last years’ event, before production costs, said spokesperson Ladislav Sticha. “To be honest the response from journalists writing in the media was fairly harsh,” said Sticha to Radio Prague, which confused Helsinki for Oslo as the venue for the 2010 ESC. (JMH)
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