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May 1, 2001  •  Post A Comment

AOL TW’s Pittman: Back to bottom line

The economy may have slowed in the past two quarters, but Robert Pittman, co-chief operating officer of AOL Time Warner, the world’s largest media company, doesn’t consider this the worst of times. “I don’t view these quarters as being the toughest quarters I’ve lived through,” he said Tuesday in his keynote speech at the first annual Upfront Television Advertising Summit, sponsored by Electronic Media and sister publication Advertising Age.

“The tough quarters were about 18 months ago to two years ago, when there was helium in the world,” Mr. Pittman said, “and people were not abiding by laws of business. You know, at AOL we were charging $21.95 for our service. We had [competitors] giving it away for free. … Today at least everybody’s on the same page, whether a buyer or seller.”

The traditional bottom-line laws of business may once again be in force, but that doesn’t mean the landscape isn’t changing. At AOL Time Warner, for example, Mr. Pittman said, the smallest revenue stream comes from advertising; the largest is from subscriptions.

Asked whether consolidation means fewer voices will be heard in the media, he recalled the situation a quarter-century ago when TV was dominated by just three networks and there were only one or two newspapers in a city. “There were no other ways to get to the consumer,” he said. “[Today] there are a lot of ways to get to the consumer. And by the way, if you’ve got an important message, you can just go right on the Internet yourself.”

In terms of news, he added, the challenge is to better analyze the “tremendous diversity of voices and points of view” and the greatly increased amount of “raw data” available to the news consumer. That means that, today, the interpretation function of news organizations such as Time magazine and CNN, both AOL Time Warner units, is a lot more important, Mr. Pittman said.

To describe the future media landscape, Mr. Pittman pointed to the world of 30 years ago, when hemlines went up and down in lockstep with the dictates of a few designers. “Today it’s very fragmented [with] lots of personal style.”

Today’s consumers are more demanding and more impatient, and they have access to many more media choices. To reach them, Mr. Pittman said, the “key is going to be coordination.”

Advertising, in Mr. Pittman’s definition, is all about “renting consumer relationships to a third party.”

Companies that don’t have all the elements necessary to reach the new breed of consumers and gain their trust may need to merge with companies that do have that capacity to be wherever the consumer wants to go throughout the media spectrum.

“You’re going to find companies that don’t merge at least doing alliances with companies, because at the end of the day, for everybody who markets a product, you need that kind of coordination. Otherwise you don’t have efficiency.”

Twenty years ago, marketing was considerably less complex, Mr. Pittman said. “Today we’re in a very competitive world. All of you who are public companies, who deal with shareholders, know the kind of pressure we’re all under to deliver ever-continuing growth. There’s a focus on goals, and they’d better be clear.”

Coordinating among their own elements to deliver on an advertiser’s plan is key to “multivehicle media companies” like AOL Time Warner, Mr. Pittman said. “In my mind this is the model of what’s moving forward for the future.”

Felony charges for Sorkin: Aaron Sorkin, the Emmy-winning creator and executive producer of NBC’s “The West Wing,” is now facing felony charges in connection with his April 15 arrest at Burbank (Calif.) Airport. The Los Angeles County District Attorney’s Office, according to wire reports, said Mr. Sorkin was charged Monday with one count each of possession of a cocaine base (rock cocaine) and psilocybin (hallucinogenic mushrooms), both of which are felony counts. Mr. Sorkin was also charged with one misdemeanor count of possession of marijuana.

At the time of Mr. Sorkin’s arrest, he was going through a routine preflight inspection just before a scheduled trip to Las Vegas. Airport authorities were prompted to inspect his carry-on luggage after an X-ray scan reportedly turned up a package containing hallucinogenic mushrooms. Shortly after his arrest, airport spokesman Victor Gill told the Los Angeles Times that Mr. Sorkin, 39, had suffered a “fainting spell after his initial encounter with police.”

In the past, Mr. Sorkin has acknowledged he was a cocaine freebase addict, having entered into the Hazelden Institute in Minnesota for treatment in 1995. In 1999, he told The Los Angeles Times: “I’m the same as any other addict. I’m only a phone call away from getting loaded again.”

Mr. Sorkin, who was released on $10,000 bail after his arrest, is due in court Wednesday for an arraignment hearing.

“West Wing” series producer Warner Bros. Television, which issued no additional statement on the felony charges, had previously issued a joint release with NBC stating their “utmost respect” for Mr. Sorkin and his family, pledging to “fully support them in this difficult time.”

After his arrest Mr. Sorkin released a statement saying he was “prepared to proceed as directed by my attorney and in the best interest of my family.” The prospect of a trial for Mr. Sorkin not interfere with this month’s season wrap up of original “West Wing” episodes, which were all written or co-written by Mr. Sorkin this season.

NCTA convention attendance falls: The number of exhibitors and overall registration for the National Cable & Telecommunications Association’s convention in Chicago from June 10-13 is down about 15 percent from last year, primarily due to economic concerns, according to Robert Sachs, NCTA president and CEO.

“It’s directly attributable to what’s happening in the economy, particularly in the technology sector,” Mr. Sachs said at a news conference Tuesday in Washington. Mr. Sachs said that among the heavy hitters to pull out in recent weeks was Cisco, which had slotted 3,000 feet on the exhibition floor.

“There were some dot-coms at last year’s show that are no more,” Mr. Sachs said. Still, Mr. Sachs said the association had signed up 248 exhibitors who are using 282,000 square feet of space. He also said the association is projecting overall attendance of about 30,000 — down from the just under 33,000 on hand for last year’s event.

Unusual ‘Dharma’ renewal: ABC has negotiated a novel series renewal for 9 p.m. Tuesday sitcom “Dharma & Greg,” which gives the network options on paying two different license fee structures depending on whether it stays in the time period next season.

In a deal carved out with series producer 20th Century Fox Television, ABC worked out a deal that would have it paying $2.4 million to $2.6 million per episode to stay in the 9 p.m. Tuesday slot — opposite NBC’s hit “Frasier” sitcom — over a two-year term. But if ABC decides to move “Dharma” to another time period, sources say it could pay about $2 million per episode over a reduced one-year term for the 4-year-old sitcom.

Sources close to ABC, which had right of first refusal on the Jenna Elfman- and Thomas Gibson-led sitcom, said the “Dharma” renewal was essentially the same terms that NBC had laid out in its bid just before ABC exercising its right to match the licensing terms.

Representatives for 20th Century Fox Television and “Dharma & Greg’s” creator/executive producer, Chuck Lorre, could not be reached to comment on the terms of the pact.

“Dharma & Greg” has typically been a top-ranked adult 18-to-49 demo performer during its first three seasons but has found the going tougher against NBC’s “Frasier.”

The season, “Dharma” has averaged a 5.3 rating in adults 18 to 49, down 23 percent compared with its 6.9 rating in the key demo last season. Its 12.4 million total-viewer average is also down 18 percent from last season’s 15.2 million total-viewer average.

Motorola, SONICblue ink deal: Motorola and SONICblue’s ReplayTV have signed a licensing agreement to develop software with digital video recording capabilities for Motorola’s DCT5000 set-t
op boxes. The boxes are expected to be available in the fourth quarter of this year. It’s the first licensing deal signed under Replay’s new licensing model, which was crafted by SONICblue.

SONICblue, maker of the Rio digital audio players, signed a definitive agreement to acquire ReplayTV last month. ReplayTV software technologies are also available at retail on Panasonic’s ShowStoppers.

‘Link’ sinks in ratings: The bloom may have come off the rose for NBC’s midseason game show hit “Weakest Link” Monday night as the show dropped by 20 percent-plus week to week in the key younger-adult demos.

In the opening 8 p.m. (ET) hour, “Weakest Link’s” 4.2 rating/13 share in adults 18 to 49 marked a 26 percent drop compared with its previous week’s average in the time period (5.7/16), according to comparable Nielsen Media Research fast affiliate returns. Possibly because of stiffer competition from original series airing on the fifth night of May sweeps (April 26-May 23), “Link” also dropped 28 percent in adults 18 to 34 (4.6/14), 20 percent in adults 25 to 54 (4.7/13) and 16 percent in adults 55-plus (6.3/12).

“Weakest Link’s” 7.9/13 in households represented a 16 percent dip from the week-ago average (9.4/15). The imported British game show, hosted by Anne Robinson, also saw its total viewer count slide by 3 million viewers, or 28 percent, to 11.0 million total viewers last night.

Still, NBC, once a perennial last-place finisher among the Big 4 networks on Monday nights, still came in a close third at a 4.5/12 average in adults 18 to 49 — down 10 percent from week-ago levels.

ABC came up the big winner Monday night, with its three-hour presentation of the 1999 theatrical “Armageddon” (4.8/13) giving the network a 100 percent boost in adults 18 to 49 compared with last week’s “Kiss My Act” presentation (2.4/6). But Fox again claimed the top rank in adults 18 to 49 (5.5/15), with “Boston Public” (4.8/14) down only 2 percent and “Ally McBeal” (6.3/16) holding even as both won their hours.

CBS’s stalwart comedies “King of Queens” (4.1/13) and “Yes, Dear” (4.0/11) each tallied 14 percent week-to-week increases in the 8 p.m.-to-9 p.m. slots. “Everybody Loves Raymond” (5.6/14) and “Becker” (4.8/13) were down 8 percent and 10 percent from similar week-ago original episodes. “Family Law” (3.6/9) closed out the 10 p.m. hour down 10 percent from last week’s special airing of newsmagazine “48 Hours” (4.0/10).

For the evening, CBS’s fourth-ranked 4.3/11 in adults 18 to 49 was off 2 percent week-to-week, but it won the evening in households (9.1/15) and total viewers (12.9 million) with 6 percent and 3 percent increases, respectively.

Kent: Offer sports on untiered basis: In an effort to keep a lid on cable rates, Congress should approve legislation that would let cable operators offer sports networks on an untiered, a la carte basis.

That was the surprise pitch tossed by Jerry Kent, Charter Communications president and CEO, at a news conference today in Washington to promote the National Cable & Telecommunications Association’s upcoming convention.

“You can’t just continue to have these kinds of rate increases [from the sports networks] day in and day out and maintain reasonable rates for our subscribers,” Mr. Kent said. According to Mr. Kent, more than half of Charter’s double-digit annual programming cost increases are due to sports networks, at a time Charter and other cable operators are attempting to keep rate increases for subscribers below four to six percent per year.

Mr. Kent also said that under his proposal, sports networks that don’t agree to the a la carte scheme would lose the antitrust exemptions that they now get from the federal government to organize themselves and negotiate media packages.

In response, M.C. Antil, an ESPN spokesman, said, “ESPN’s business model has been based on broad distribution. It has been proven that the vast majority of Americans both want and will watch sports.”

Warner Bros. launches new cartoon site: Just months after shutting down its failed Entertaindom cartoon site, Warner Bros.’ online division has launched a new ‘toon destination, LooneyTunes.com.

Unlike Entertaindom, which showcased Warner Bros.’ library of classic cartoons on the Web, LooneyTunes.com features new series, such as the new “Toon Marooned.” The Web destination also offers new games, including one based on the classic cartoon “Friar Duck Quarterstaff Challenge.”

‘Street Smarts’ on AOLTV: AOLTV subscribers can now contend online with on-air contestants on “Street Smarts,” a nationally syndicated pop-culture comedy game show in which winners successfully prove how much they know by predicting how much other people don’t know. The interactive offering is a joint effort by AOLTV, Warner Bros. New Media, Telepictures Productions and Mixed Signals.

Group to FCC: Crack down on media indecency: In a recent letter to Congress, Morality in Media urged lawmakers to win commitments from pending nominees to the Federal Communications Commission to make the agency more aggressive about fighting on-air smut.

“The commission appears so averse to indecency cases, and has erected so many barriers to complaints from members of the public, that indecency enforcement has becomes almost nonexistent,” the group said. “It is time for Congress to exercise oversight of the FCC before the transformation of broadcasting is complete — from a medium that should be serving the public interest into one that is polluting the public airwaves and endangering the welfare of children.”

Site offers online betting for Kentucky Derby: Racing aficionados will be able to wager online on the Kentucky Derby for the first time Saturday using www.tvgnetwork.com. “We’re expecting as many as 50 to 60 percent of our subscriber base to access the system at the same time,” TVG spokesman John Hindman said.

Last fall the TV Guide-owned TVG network claimed more than 5.2 million households tuned in to its horse racing programming via EchoStar’s DISH Network, C-Band Satellite Groups (Turner Vision, Superstar and Netlink) or Louisville, Ky.’s, Inside Cable. However, the ability to wager via TV is restricted to customers in four National Thoroughbred Racing Association-sanctioned states: Louisiana, Kentucky, Maryland and Oregon.

Prospects for expanding the TV betting service continue to be mired in politics. California Gov. Gray Davis vetoed a bill last fall that would have permitted account wagering. Back East, the sale of New York City’s Off-Track Betting Corp. is down to two contenders.

TVG, Churchill Downs and the New York Racing Association form one bidding contingent; Magna Entertainment, Greenwood Racing and two individuals form the other. A decision is expected soon.

Group forms partnership: Forming Associated Media Partners LLC are Nick Evans, former president and CEO of Spartan Communications; Barry Thurston, president of Thurston Group and former president of Columbia TriStar Television Distribution; and Jack West and Steve Castellaw.

The new firm will offer multiple services to station and group owners such as brokerage, appraisal, management and consulting services. “We see our role as identifying good marketplace opportunities for buyers and sellers alike and facilitating successful execution of these transactions,” Mr. Evans said.

Crown opens facility: Crown Media Holdings inaugurated its Network Operations Center in Denver on Tuesday. The new, 6,000-square-foot, state-of-the-art facility will distribute programming for Hallmark Channel’s international edition to more than 100 countries with nearly 38 million subscribers via fiber technology to London, where it will be uplinked to a satellite feed.

Promotional duet: BET Interactive and 360hiphop.com have developed an interactive marketing and promotional vehicle to generate early buzz and consumer demand for major-label releases. The program includes music downloads, exclusive content, animation, contests, chats, reviews, e-mail blasts and viral marketing.

The company reported that BMG Entertainment and Elektra Records have already signed on for its brand of interactive buzz.

ionwide adds Internet TV: U.K. mortgage lender Nationwide has added Internet TV to its range of access channels. Initially, users with a suitable TV or set-top box will be able to view product information. A full online banking service will be added this summer so members can carry out transactions from the comfort of their living room sofa. The company is also developing a wireless application protocol phone banking service due for launch this year. The company claims it was the first retail bank to offer online services (May 1997) and the first European company to offer PocketPC mobile banking services (last December).

(c) Copyright 2001 by Crain Communications