Moguls Take an Expansionist View

Sep 23, 2007  •  Post A Comment

Talk of expansion and new opportunities peppered comments made by many of the media moguls Tuesday at the 16th annual Goldman Sachs Communacopia state-of-the-industry conference in New York City.
Speakers, including Disney’s Robert Iger, Time Warner’s Richard Parsons, Viacom’s Philippe Dauman and News Corp.’s Rupert Murdoch, put an emphasis on the glass being half full no matter what the economic outlook for the year ahead.
From Disney CEO Robert Iger’s point of view, the company is a blockbuster factory thanks to its ability to produce successes across the board. He pointed to the “creative engines,” the company’s television properties, movie studios and theme parks, as key to protecting investors from dips in ad revenue. According to Mr. Iger, advertising represents only 23 percent of the company’s profits, not enough to sink the corporate ship. Specifically, Mr. Iger cited TV sports giant ESPN as “the poster child” for multiplatform growth, anticipating double-digit gains among its channels, as well as a new “widget center” that will repurpose ESPN content in other venues.
Mr. Iger also had good things to say about Disney.com. He said the Web site had its best month ever in August, and that it is expected to be a platform for pay-per-view video content. However, the site remains by and large a promotional device for the entire Disney product line.
Rupert Murdoch, chairman of News Corp., told the Communacopia conference that his $5 billion acquisition of Dow Jones and the Wall Street Journal would be finalized in late December.
Asked how the Wall Street Journal will affect the Fox Business Network, Mr. Murdoch said, “There’s no reason we can’t have Wall Street Journal coverage, whether it’s political, travel, etc. If it is business news, there will be regular appearances by Wall Street Journal reporters.”
Mr. Murdoch noted that CNBC already has such a relationship with the Journal, but that’s the only similarity between the business networks. “The Fox Business Channel will be as different from CNBC as the Fox News Channel is from CNN,” Murdoch predicted. “CNBC is a business channel for Wall Street. We will be a business channel for Main Street.” Ironically, News Corp. executive and well-known political consultant Roger Ailes was at the helm of CNBC at its launch; he now has the same role at the new Fox channel.
HDTV Looks Big
When Comcast Chief Operating Officer Steve Burke addressed Communacopia, he was asked to assess the cable company’s current mix of assets. Mr. Burke predicted that Comcast, which has more than 24 million subscribers, “will make great hay out of HDTV,” in part to compete with the HDTV efforts of satcasters DirecTV and EchoStar.
Comcast plans an aggressive campaign to attract hi-def consumers in the fourth quarter, launching linear networks that include “the mainline top 20,” as well as increasing the volume of on-demand HD titles.
Comcast has no plans, however, to pick up any additional cable systems. Mr. Burke said the company is allocating more time to build up its video-on-demand and high-speed data businesses.
He said Comcast was interested in acquiring “small Internet companies.” In April the company bought Fandango; it reportedly is interested in acquiring BuddyTV, a Web community devoted to television.
Time Warner CEO Richard Parsons told the Goldman Sachs audience that for now there are no plans for the company to spin off Time Warner Cable. Mr. Parsons said Time Warner is not “closed-minded” to the idea of spinning off cable, aware of its value in the marketplace. In time, he said, Time Warner Cable would need to become more flexible to emerge as a “multifunctional” telecommunications platform. Mr. Parsons added that there are benefits to be had by blending the cable side of the business with the content side.
Glenn Britt, Time Warner Cable CEO, also addressed the Communacopia group. Mr. Britt said in the year ahead, the cable company hopes to increase product penetration, sell the company’s video, data and voice “triple-play” bundle and incorporate the Adelphia Communications systems. According to Mr. Britt, Time Warner’s focus in 2008 will be on customer service. This is especially true in the cable operator’s acquired systems in Dallas and Los Angeles, where the transition from one system to another has been marred by problems. “One of the challenges in these markets is changing the image of cable,” Mr. Britt said.
Philippe Dauman, Viacom CEO, emphasized new business thinking when he spoke to the analysts. “I’m all about monetizing our assets as much as possible, even taking advantage of opportunities people might not even think of,” Mr. Dauman said. He cited the company’s plans to premiere “Rock Band,” an interactive, virtual-reality musical product that’s a pumped-up version of “Guitar Hero.” “We’re using it as another way to reinvigorate the music business. We have some deals with labels and great online applications, and we’re developing capabilities in virtual worlds. For us, it’s a way to get into those areas organically,” Mr. Dauman said.
On the cable front, Mr. Dauman said Viacom is hawkish about promoting MTV, mentioning the ratings success of the recent Video Music Awards. “We’re taking chances to reinvent the brand, make investments for the future. The VMAs were a symbolic event for the whole week and beyond, and the video streams were multiples of what they were last year.” The award show drew more than 7 million viewers. “In the third quarter, we’ve seen some sequential improvement at MTV,” Mr. Dauman said. “September has been looking good, and we hope that that continues.”
The Viacom CEO also was high on VH1 and Nickelodeon. On the former, “Rock of Love” was the second most-watched program among young adults the same night as the VMAs, he said.
Meanwhile, Nickelodeon introduced a new sitcom, “iCarly,” which he said proved a ratings winner over the course of its premiere weekend. “When all of that plays together, we try to develop with a 360-degree approach,” Mr. Dauman said.
DirecTV CEO Chase Carey was asked if the current economic troubles in the housing market would have an adverse effect on the satellite television service provider. “In all honesty, I would not say the housing issues have impacted our business,” Mr. Carey said.
Instead, he noted DirecTV is flourishing in sales of ancillary products, such as hi-def and DVRs. “We’re not seeing a slowdown in advanced products. We’re continuing to see demand that exceeds my expectations. I think once people have DVRs, they’re not going back to a world without it.”
Lionsgate Vice Chairman Michael Burns told the Goldman Sachs attendees that “the big play” his company is backing is video on demand.
“On VOD, we’re getting pretty close to 10 percent of box office net back to us, and as you roll that out across the country, you can see where that would be a very significant contributor, because we don’t have inventory risk and we don’t have duplication costs,” Mr. Burns said.
In addition, the studio is high on the TV front, in particular the success of AMC’s original series “Mad Men.” “We expect this business to be approaching $200 million this year,” Mr. Burns added.
Former TV mogul and current IAC CEO Barry Diller was one of the few speakers to paint a less-than-rosy picture.
He was not optimistic about cable’s prospects for the year ahead. “I don’t think 2008 will be a robust year,” Mr. Diller said. “After that, cable absolutely is going to be a challenged business. It will survive for a while, but more and more will move over to an online model.”


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