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Jun 11, 2001  •  Post A Comment

Karmazin has eyes for NBC

Acquisition-minded Viacom President Mel Karmazin would “definitely” be interested in acquiring NBC — provided, of course, it was for sale, which its corporate parent General Electric says is not the case, and that the Federal Communications Commission repealed regulations prohibiting two major networks from being owned by the same company.

Mr. Karmazin told an appreciative audience at Cable 2001, the NCTA convention now under way in Chicago, that lately he’d come to feel like NBC’s “stalker.” Nonetheless, behind the joke there was a serious message: the old regulations have to go.

“If GE decided that it wanted to hire an investment banker and … sell NBC,” he said, “we would absolutely love to receive one of the [prospectus] books and to sit there and make a bid. But in order to do that, the dual network rule has to go, the rule about duopoly within a market has to go as well.”

Mr. Karmazin also expressed an interest in acquiring CNN, though later he told a reporter that both the NBC and the CNN remarks had been theoretical only.

He also told a reporter that two more Viacom Plus advertising deals — as large or larger than the recent $300 million cross-platform deal with Procter & Gamble — were in the works, but he declined to offer specifics.

On other subjects, the always quotable Mr. Karmazin told his cable audience that video on demand was something that Paramount, owned by Viacom, was interested in exploring as a new revenue stream to offset the high cost of making and marketing theatrical motion pictures but that VOD could not go forward if it simply displaced existing revenue — a remark that many interpreted as meaning that VOD couldn’t cut into the video rental revenue stream that Viacom enjoys from its Blockbuster division.

He also repeated his familiar contrarian position about the soft advertising market, declaring, “It’s not a terrible ad market,” and adding that Viacom had had the best first quarter in the company’s history this year and that it expected the second quarter to be the best in its history as well.

As for the dot-com debacle that many regard as the first domino in the declining ad market, Mr. Karmazin said: “Our Internet strategy was brilliant. It was to take as much money as we could [from the dot-coms].”

Looking ahead, he offered a humorous what’s-best-for Viacom-is-best-for-the-country vision of the $300 rebate coming to taxpayers: “What’s the best way to stimulate the economy?” he asked rhetorically. “It’s to get as much of that $300 into Viacom’s coffers as possible,” he said to gales of laughter and applause.

Ad rebound seen at NCTA: Cable ad sales may be down in this troubled year, but that’s only compared with the 20 percent annual compounded growth rate of the past eight years or so.

That was the message from Patrick Esser, executive vice president, operations, Cox Communications, and one of the panelists at Deep Dish, the wide-ranging National Cable & Telecommunications Association general session, moderated by CTAM President and CEO Char Beales, that opened Cable 2001, the annual industry convention now under way in Chicago.

Those double-digit growth rates will be back. “Slump is a short-term definition,” said Mr. Esser, whom Ms. Beales credited as being one of the people most responsible for turning ad sales into a key revenue source for Cox. Viewership continues to move toward cable, Mr. Esser said, and the advertising dollar “follows the eyeballs.”

“We still don’t get our fair share compared to the eyeballs we are delivering,” added Kim Kelly, pointing to the disparity between cable and broadcasting costs per thousand. Ms. Kelly is the executive vice president, chief financial officer and chief operating officer of Insight Communications, as well as the vice chairwoman of the Cable Advertising Bureau. Margins have been “squeezed” in the past few years, she said.

Nonetheless, bright times are coming, the panelists generally agreed, as the industry becomes ever more digital and broadband, and as it “converges” with the Internet.

Finally, after 30 years, the industry will be “cash-flow positive,” said Steve Burke, president of Comcast Cable Communications, the nation’s third-largest multiple system operator, which employs more than 20,000 people and has 8.4 million customers.

The biggest technological change, just over the horizon, and potentially an Amazon of a new revenue stream for cable, is video on demand. “2002 is the year of VOD,” Mr. Esser predicted, adding that it would come even earlier if not for scalability and content rights issues than need to be settled.

Digital will bring not only VOD, but also new niche network opportunities. Those opportunities are necessary for cable operators, because when it comes to adding new channels to analog systems, “There’s no room at the inn,” as Mr. Esser put it.

Several of the panelists professed not to be worried about either the DBS or the DSL competition, saying it had spurred the cable industry to accelerate its own digital conversion, and that ultimately digitial cable could deliver more services than either DSL or DBS.

DBS, however, has captured 18 percent market share, accounting for some $12 billion in revenues, in just “five or six years,” said Ms. Kelly.

Mr. Burke said that Comcast, spurred by the DBS competition, now has converted 25 percent of its customers to digital set-top boxes. That percentage, he said, represents about two-thirds of Comcast’s “best,” i.e., its premium pay, customers. Within the next 12 to 18 months, Mr. Burke said, Comcast will move to launch VOD “pretty aggressively.”

One potential threat to cable’s future dominance of the high-tech media future could come from Rupert Murdoch’s possible acquisition of DirecTV, to add to his own existing international satellite operations. “If Rupert Murdoch gets DirecTV, he will not have the ability to do what he has done in England,” Mr. Burke said, in effect drawing the battle lines to come.

“I don’t think the U.S. government will allow him to do massive amounts of exclusive sports programming. It doesn’t make any sense in my mind that he would be allowed to own the Fox network and the Fox broadcast stations, and DirecTV, when a cable company such as Comcast or Cox or Insight can’t own a local broadcast chain of stations. Whatever happens, there will be a regulatory/legislative response to it.”

News the bottom line for Kellner: If Jamie Kellner, the chairman and CEO of Turner Broadcasting, had a tattoo on his posterior it would read “CNN.”

So declared Mr. Kellner Sunday night in Chicago, at what has become an annual NCTA tradition, the “on-background” dinner attended by the top executives of the Turner cable media empire, from the Cartoon Network to TCM, and the reporters who cover them.

Mr. Kellner and his top lieutenants have experience on the entertainment side of the business, not with TV news, and perhaps because of that they have repeatedly expressed their belief that CNN is an important asset with significance that transcends mere show business, and that they know that this news asset has been entrusted to them to preserve.

The post-dinner tattoo remark, which was greeted by good-natured laughter from both his senior colleagues and the assembled reporters, was arguably Mr. Kellner’s most definitive statement of support for CNN yet. But given the elegant, convivial evening’s ground rules, would it remain off the public record?

“That was the other side of my brain and a wine [talking],” Mr. Kellner explained when the laughter died down.

Later, a reporter asked Mr. Kellner whether he really expected the remark to remain off the record. “Go ahead, I don’t care,” Mr. Kellner replied, issuing a friendly challenge. “We’ll see if you’re real journalists.”

About that, as about Mr. Kellner’s commitment to CNN, there should be no doubt.

Viacom’s international strategy: Viacom plans to go international by going local, and its MTV brand will lead the way.

That’s the strategy that company chief Sumner Redstone unveiled Sunday at the NCTA convention in Chicago.

“Over the next decade, MTV will conti
nue to exploit three major arenas in the international marketplace,” Mr. Redstone said. They are:

— Increase penetration in key emerging markets like China, India and Brazil. China, for example, is expected to become the fourth-largest advertising market by 2010.

— Give individual international audiences content that is local and “resonates with their cultural tastes and sensibilities.” That means not only local content but also more international acquisitions for Viacom.

— Create new content for new interactive media, including cellphones, personal digital assistants and the PC. “Our viewers watch more television than their parents,” Mr. Redstone said. “As they do so, they are multitasking. They are surfing the Web, chatting with friends, receiving text messages on their cellphones, as well as watching their favorite shows. MTV intends to get its brand in front of them wherever they may be.”

Next month, Mr. Redstone added, MTV will launch MTV Live, a dedicated broadband service, while cellphone-based live interactive video-request shows are already on MTV channels in India, Asia and the United Kingdom.

Consumers Union urges FTC probe: The watchdog Consumers Union said it will urge the Federal Trade Commission this week to investigate the refusal by AOL Time Warner and other major cable operators to carry ads for the broadband Internet access services of industry competitors. There’s no law saying media companies can’t refuse the ads of competitors. But the Consumers Union is alleging that the cable industry practice is anti-competitive. Said Mike Luftman, a Time Warner Cable spokesman, “The decisions are made on a market-by-market basis.”

Daniels to step down at The WB: Susanne Daniels will be leaving her post as co-president of The WB and is likely to work out a more “entrepreneurial” role within parent company AOL Time Warner, moving toward a position that would allow her to keep a hand in The WB and have more time with her family.

Jordan Levin, who was promoted to co-president of entertainment last winter, is expected to lead the programming effort alone.

Meanwhile, Jed Petrick, president and CEO of The WB, is expected to move from New York to the West Coast this summer.

CNN shuffle: A round of musical chairs within CNN’s business-news unit will send correspondent Bill Dorman to “Lou Dobbs Moneyline” as executive producer; his predecessor, Jenny Harris, to CNNfn as executive producer of afternoons; and her predecessor, Conway Cliff, to oversight of CNNfn’s prime-time lineup.

In addition, after 20 years of covering everything from action in Grenada and Panama to the White House and Supreme Court for CNN, Washington-based correspondent Charles Bierbauer will retire at the end of the current session of the high court this summer.

“He literally led the way with real-time global reporting as we learned that a speech or a comment from the White House could rocket around the world and provoke action and reaction literally within minutes,” D.C. bureau chief Frank Sesno said in an internal note about Mr. Bierbauer’s intent to move to “less well-charted waters.”

NBA ‘Link’ works: Shameless promotion or not, “Weakest Link’s” special 20-minute exposures during halftime of Sunday night’s and last Friday’s NBA Finals games helped the three-month-old game show score a personal-best 7.7 rating/20 share in the key adults 18 to 49 demo coming out the basketball game for its regular airing at 10 p.m. to 11 p.m. (ET) Sunday.

According to Nielsen Media Research fast national data, the first half-hour of “Weakest Link” topped out at a 9.6/24 in adults 18 to 49 and 20.6 million total viewers from 10 to 10:30 p.m.

However, the second half-hour of “Weakest” weakened considerably, dropping 39 percent in adults 18 to 49 (5.8/15) and 38 percent in total viewers (12.8 million) during its closing frame.

For the hour, “Weakest Link” still won adults 18 to 49 (7.7/20) by comfortable margins over CBS’s second half of the movie “Something to Talk About” (3.9/10) and ABC’s repeat of the “The Practice” (3.4/9), the perennial winner of the 10 p.m. slot.

NBC, largely fueled by Sunday’s NBA Game 3 household (9.7/17) and total viewer counts (15.2 million), won the evening in households (10.0/18), total viewers (15.5 million) and adults 18 to 49 (7.3/21) by comfortable margins. CBS came in second in households (8.1/14) and third in adults 18 to 49 (3.0/8), while ABC came in third in households (5.7/10) and fourth in adults 18 to 49 (2.6/7) and Fox came in second in adults 18 to 49 (3.0/9) and fourth in households (3.6/6).

Justice studying Gemstar-TV Guide: Gemstar-TV Guide International is the subject of an ongoing Department of Justice probe, Reuters reported late Friday. The companies declined comment. The DOJ is investigating whether the company violated U.S. antitrust laws in its effort to dominate the evolving interactive television program guide market. The investigation began shortly after the Justice Department approved the $14 billion merger of Gemstar and TV Guide nearly a year ago. Since then, EchoStar Communciations and Scientific-Atlanta are among the companies that have have filed lawsuits accusing Gemstar-TV Guide of anticompetitive practices

Green joins 40 Acres: Spike Lee’s production company, 40 Acres and a Mule Film Works, which had recently entered into an overall TV development arrangement with Barry Diller’s Studios USA television division, has named Robin Green president of the independent’s TV production arm. Ms. Green will be based out of 40 Acres’ Los Angeles production offices.

Ms. Green was previously senior vice president of television production at Castle Rock Entertainment from 1989-2001.

Changes ahead for partnership: The Partnership for a Drug-Free America is making management changes this fall. Chairman James E. Burke announced that Richard D. Bonnette will become co-chairman (along with William Bennett, the Empower America co-director, and former New York Gov. Mario Cuomo). Also effective Oct. 1, Stephen J. Pasierb will be promoted to president and CEO. Mr. Pasierb has been executive vice president and director of nationwide media operations and alliances.

(c) Copyright 2001 by Crain Communications