For all the talk about “synergy” and “vertical integration” in Comcast’s $13.75 billion cash and assets deal for NBC Universal, I think something far more fundamental is at play: fear.

Networks like NBC Universal’s USA Networks and Bravo are chafing under the control of cable operators like Comcast. Comcast always has the upper hand in negotiations: if you don’t like our terms, find another cable network for your programming.

When an operator controls more than 13 million subscribers, like Comcast, that means you’re giving up a big chunk of change if you leave its network. And if you don’t think Comcast would dump a big TV programmer, how about when Time Warner pulled Disney’s ABC network out of 3.5 million cable homes over a fees dispute in 2000?

So programmers seek every opportunity to find new sources of revenue other than cable. They’re not unhappy at all about a raft of new a la carte services emerging from the Internet, such as iTunes, Netflix or ZillionTV. As long as they get paid for each download or stream.

Comcast, whose life blood is lucrative cable subscriptions, hates the idea of consumers buying one-off services. But if it owns the programmers, it gets to make the rules. It gets the leverage to make networks’ content available online exclusively to its cable subscribers, not the public at large. Or if the programmer sells its content a piece at a time, at least Comcast gets a cut.

Comcast gets far greater control over what’s flowing down its pipe.  And that, not synergy, is what’s behind this deal — and all those other mega-media mergers.

Posted under Michael's Blog

I’m no big fan of Rupert Murdoch, but I think he’s right about Google and newspapers. Something has to be done about the fact that search engines get a completely free ride sourcing millions of articles on the Web…and then taking most of the advertising revenue.

Murdoch called Google’s actions “theft” at a Washington forum on the future of newspapers. That’s true, although it’s akin to leaving your trunk open and then bitching when your laptop is taken.

The question is how to fix the problem.

Murdoch’s own Wall Street Journal may have part of the solution, although it predated Murdoch’s acquisition of the newspaper.  The Journal is the only mass market newspaper I know of that gets away with charging for its product on the Web. If you want to read the full text of the newspaper online, you need to either have a subscription or pay $50 a year.

You can get away with that if you have a product so valuable people are willing to pay for it. But not if your competitors are willing to provide the same news when you start charging for it.

So one piece of the solution will undoubtedly be a consortium of publications willing to band together to charge — say, accessing all the articles from the L.A. Times, New York Times and San Francisco Chronicle for a set monthly fee.  That, and pressuring Google to give up a small piece of the billions of dollars it makes off newspapers’ backs.

Posted under Michael's Blog

If anyone doubted the smartphones are the future, iPhone profits should set those doubts to rest.  Apple became the most profitable handset vendor in the world in the third quarter of 2009, surpassing Nokia for the first time, according to Strategy Analytics.

Apple logged an estimated $1.6 billion in iPhone sales, compared with $1.2 billion for Nokia.

The figures validate two points: first, consumers are clearly willing to pay premiums on their phones if they feel they’re getting value (Nokia typically services the lower-end market); second, that value derives from the ability to run hundreds of data apps on their phones, just as they can on their computers.

We’re not yet at the point where voice is just one of many applications the average consumer looks for in a phone. But you can see it coming.

Posted under Michael's Blog

Some of us still remember ten years ago, when then-Los Angeles Times publisher Mark Willes (aka “the cereal killer” ) had the Staples Center pay for the paper’s reporting about said center’s launch. Happily, Willes is no longer at the newspaper, and this time, the L.A. Times’ special section advertising writers penned articles about Staples’ 10 year anniversary. The L.A. Times is still suffering financially, but it’s no longer sacrificing journalistic ethics to survive.

Posted under Michael's Blog

This guy came shimmying down to my 27th floor window within minutes of my arriving in my hotel in China. One small misstep would send him hurtling to his death. You can see Beijing’s Western business district behind him. A good metaphor for the widening chasm between China’s upper class and the low-paid workers who are creating the wealth.

Posted under Michael's Blog, iHollywood China

Kind of bizarre that Vampire Diaries promotes the Red Cross one week, and Jamie Lee Curtis another. Seems like I should be able to spy a trend here, but damned if I can figure it out.

Posted under Michael's Blog

CW’s teen vampire play “Vampire Diaries”  appears off to a decent start, scoring the network’s best season premiere ever: 4.84 million screaming young women. Whether the show can hold on to them remains to be seen. The network’s launch of sophomore show 90210 this week attracted nearly 2 million less than last year’s premiere of about 2.6 million viewers. And Diaries also runs the risk of giving viewers vampire diarrhea as ”True Blood”, the “Twilight” movie series, and reanimated “Buffy the Vampire Slayer” and “Dark Shadows” walk again.

Posted under Michael's Blog

Just because you can do something doesn’t mean you should. Analyst Jason Bazinet of Citigroup estimates in a new report that combining Comcast with Time Warner Cable could achieve $1.6 billion in programming savings and could add something like $7.1 billion, or $2.46 a share, to Comcast’s value.  That mega-company would control about 37% of the U.S. cable market — permittable now that rules barring cable companies from controlling more than 30% of the U.S. cable market have been overturned

The analyst’s assumption is that regulators would cast a blind eye to this oligopoly because new TV entrants like AT&T, Verizon, Dish Network and DirecTV redraw the traditional definition of what constitutes the pay TV market. But he’s conveniently forgetting these giants’ move into telephones, Internet and wireless, and their growing ability to dictate the terms of content distribution.

Wall Street might get richer from such a scheme, but consumers would be poorer as rates rise and programming choices fall.

Posted under Michael's Blog

Here’s my take on the top 5 benefits of a Disney-Marvel combination:

1) Access to capital. In today’s strained economic times, Marvel was being forced to self-fund a chunk of its movie slate, leaving it with less cash to develop its products on other platforms. Disney is cash-rich.

2) Merchandising. Disney is the entertainment industry’s best merchandiser. Marvel’s characters are made to merchandise.

3) Spinoffs. The possibilities for spinning off Marvel characters on other platforms — games, Internet, theme parks, mobile phones — is endless.

4) Boys. Disney’s much better known with girls. This gives the Mouse House greater strength in its core demographic.

5) Untapped characters. Thor, Captain America and the Sub-Mariner and other Marvel staples haven’t been exploited for TV, movies and games — at least not in the 21st Century.

Posted under Michael's Blog

Hard to believe that 10 years or so ago, Marvel was a mess. Spider-Man was caught in a web of lawsuits, and seemed destined for the scrap heap. Stan Lee, his inventor, was frustrated and isolated. Marvel’s few ventures onto the movie screen were less than successful.

Now Disney’s willing to pay $4 billion for the assets — “a full price but a fair price”, according to CEO Bob Iger.

Now, the question is whether Disney knows how to manage its acquisition. A big measure will be how much independence it gives Marvel. The charm of its characters has always been their idiosyncracies. When you think of Disney’s home-grown characters in recent years, the first word that comes to mind is “bland”.

Posted under Michael's Blog