Amid mounting advertising pain in the TV business, CBS took a $12.5 billion third-quarter loss yesterday, and Disney is reportedly preparing cost-cutting measures that could include job cuts.

CBS’ loss came after it took a $14.1 billion charge to reflect the lower value of advertising-supported media assets.  According to the Los Angeles Times, Disney executives have been meeting this week to prepare belt-tightening measures.

The news comes two weeks after NBC Universal said it would cut $500 million in spending, or 3% of its budget, because of “unprecedented economic challenges.”

Posted under Michael's Blog

You can bet every network in town will be carefully watching Gossip Girl’s ratings when the show resumes on Monday.

That’s because fifth-ranked CW is doing the unthinkable: pulling the web-spawned show’s free Internet stream for this season’s remaining shows in an attempt to boost the number of viewers.

Behind CW’s move is simple math. The U.S. networks reeled in $42.3 billion in TV ad revenue last year. By contrast, total Internet ad revenue – that means networks, newspapers, dedicated websites and everybody else – was about $21 billion in 2007. Up 25%, yes, but still apparently not enough to counter-balance the cannibalization of TV shows on the web.

Translation: if CW adds a million viewers for Gossip Girl on TV, it will make a lot more money than if it adds a million viewers on the Internet.

The move by CW, a joint venture of Warner Bros. and CBS Corp., comes as the other networks fall over each other to make their fare available for free online. Hulu.com – NBC Universal and Fox’s joint venture that opened to the public last month — brags of offering full-length episodes from more than 50 broadcast networks and more than 250 TV series, from The Simpsons to Miami Vice. Most major TV networks stream at least some prime-time content for free on the Internet.

Whether CW’s move is more than a finger in the dike — or even works at all — is anybody’s guess. But everyone in Hollywood undoubtedly is applauding CW’s noble experiment in reverse logic, and thanking their lucky stars they’re not the ones taking the bullet.

See Also

• CW to stop free streaming of ‘Gossip Girl’
• Online ad revenue over $21B in 2007
• TV ad revenue to grow despite economic woes-report

Posted under Uncategorized

I’m already confused

Okay, so let me get all of this straight. NBC pulled out of iTunes because it couldn’t make enough money over there. Bye, Bye "The Office" downloads. But now,the company announces it will try its own ad-supported download model, NBC Direct, where users can view recent episodes of prime time shows and even download them, and their advertisiong wrappers, to devices. Okay, but then they will still have their streaming shows at NBC.com. And then there is Hulu.com, the partnership with News Corp.com that will syndicate and stream episodes across multiple media companies.

Well, all except CBS, apparently, because that company has its own distribution strategy, which involes scattering its properties far and wide. It declined an early offer from NBC and News Corp. to join the Hulu.com project. And it doesn’t look as if Les Moonves is all too eager to put CBS properties into whatever Hulu is going to be. Meanwhile ABC/Disney, which has been a bit quiet in all of this, announced it would distribute ad-supported prime time episodes initially through AOL’s portal in order to preserve the quality experience.

Who’s on first? What’s on second? I don’t know is on third?

It is understodd that the befuddled networks need to experiment with different distribution paths in order to find when, where and how exactly this famously fragmenting American audience wants its media served to them. But consumers don’t distinguish anymore among the networks. They don’t identify shows with networks, except for highly targeted cable brands. So the consumer comes into this year wondering where are the shows I want? Some are on AOL, some on Hulu, some on this NBC Direct? And whatever happened to all that stuff I was used to getting at iTunes? Heroes is hared enough to follow when I do nail it down on a single screen. Don’t add to the pain by making me hunt for it.

The current state of TV distribution on is dizzyingly inconssitent and it may well leave the consumer and the market more confused than anything else in the short term. You don’t have to turn your TV on a different way to get CBS or NBC or ABC. And we shouldn’t have to unravel the business strategies of major media companies before figuring out how and where to donwload our favorite show.

Posted under Michael's Blog

CBS puts full shows into mobile on-demand distribution

Giving Web users access to full length TV shows was one thing, but when CBS plants complete episodes of David Letterman’s and Craig Ferguson’s late-night shows on Verizon VCast you know that programmers are just tossing things on the walls to see what sticks. I am still waiting for the first sample of this project to show up on my VCast deck, so I will reserve judgment. Apparently, CBS will parse the hour-long programs into segment chunks for handier viewing. This may not be a bad plan, per se, since it gives us access to specific guest interviews and Letterman’s Top Ten, I imagine. But the VCast deck is unresponsive and an eyesore to begin with (at least on the two LG test phones I was leant), so I am not looking forward to drilling for them everyday, let alone remembering they are there. The Silicon Alley Reporter blogger comments that CBS and Verizon shouldn’t hold their breath waiting for audiences.

I beg to differ. Long form programming actually does have a limited audience on mobile when served intelligently. Sprint Movies is a pay-per-view service that provider mSpot has told me is surprisingly popular. It divides a movie into scores of three-minute snippets. Fans of a flick can review a favorite scene or show it to someone else. For the CBS plan, one can imagine the water-cooler query “Did you catch Letterman last night?” turning into “Here, see what happened on Letterman, last night.” Granted, Verizon’s $15 monthly VCast premium is terribly overpriced and screams for the kind of ad subsidization that is helping Sprint move more video into free access. In fact, CBS mobile head Cyriac Roeding told me last week that Sprint is going to let ads run into its deck-based offerings via Rhythm NewMedia’s ad network.

Carriers and media keep talking about hybrid models of fee-based and free mobile content but I think it is all delusional or just designed to placate operator fears. The major brands are starting to invest heavily in mobile not because they feel they need to follow the user here but because they see a familiar model from the Web and the airwaves evolving. Advertising is the only thing that really promises the levels of revenue necessary to fund mobile video programming. Ad support guarantees wider distribution by lowering the barrier of entry. I and millions of other mobile users will be happy to get our Letterman Top Ten on our cell phones and watch an ad in order to do so? Pay for the privilege of seeing on a handset what we just saw for free last night? Not me.

See Also

• CBS Mobile

Posted under Michael's Blog

With carriers inundated with proposals and big media options, direct-to-consumer mobile video may come on strong

With the success of MyWaves.com (1 million subscribers and counting) and CBS’s recent announcement that it was contracting with four mobile ad firms for its on and off-deck mobile media initiatives, the momentum for direct-to-consumer mobile video seems to be building. Getting content onto the mobile deck has become a long and tortuous process, especially for newcomers who don’t bring to Verizon VCast or Sprint TV the marquee value carriers crave. I have tracked companies over the past year that were promised deck placement month after month and ended up launching up to a year after originally scheduled. As well, the carriers still haven’t made up their minds about what video streams from which supplier gets to carry what form of advertising. For major media like the networks, who live and breath ad dollars, the lack of media savvy at the operator level has got to be frustrating. As John Gauntt, analyst for eMarketer told me recently, content merchandising by carriers has been a “disaster.” No wonder we are starting to see companies like MyWaves, MyCorner, 3Guppies, and CellFish emerge as serious players and the likes of CBS start erecting more of an off-portal strategy.

Versaly Entertainment, makers of the free and ad supported Fast Lane channel on Sprint is about to make its small network of mobile video for young men accessible to the wider audience off-deck allows. Versaly is an interesting company, in that it has evolved through all of the available models on decks. It ran for Sprint a fee-based entertainment news channel, but found the pay model limiting. It came back earlier this year with one of the first fully ad-supported and free mobile video products from a major carrier. Its Fast Lane was free to anyone with the Sprint PCS plan and a video-enabled phone. The company says that in about six months of operation it has served over 2 million video streams. What works for them? “Girls, girls, girls,” a company spokesperson tells me. Their channel of bikini-clad women has proven to be the killer content. Also interesting has been the ad model so far. Instead of pre-rolls (which the company will roll out at some point), Fast Lane created branded channels for BMW Mini and others to contain their video mini-series and branded entertainment. Within the context of a Fast Lane service for young men, the “ads” felt and looked more like more interesting content.

By going off-portal Fast Lane and Versaly have the opportunity to reach a cross-carrier audience and market the service more freely through search engines and mobile video portals. This can be as much a challenge as an opportunity, of course, but with some mobile brands like Crush or Flush, MobileSideWalk and MyWaves creating audiences without much help from the carriers one has to wonder if the mobile content economy may pass the Tier-1s by?

Posted under Michael's Blog

Once upon a time, a long, long time ago, television used to be free. Three big broadcasters — NBC, ABC and CBS — gave away all their content for free. Everyone watched it. Advertisers paid billions. And everyone was happy.

Then along came cable and satellite. They introduced pay TV to the masses, who happily paid billions of dollars for subscription television and stole the networks’ market. The poor networks, bereft of viewers and advertisers, withered and died.

I think not.

Today’s deal between NBC Universal and Fox to slap free prime time shows and movies  Yahoo, MSN, AOL and MySpace – reaching hundreds of millions of viewers — is nothing less than a return to broadcast television’s roots.

Most newspapers are suggesting that the main rationale for the deal is to "challenge Google Inc. and its YouTube video-sharing service" and "blunt their incursion into the entertainment business," as the L.A. Times said.

That misses the point. The main rationale for the deal is to reclaim a huge chunk of advertising dollars from advertisers like Cadbury Schweppes, Cisco Systems Inc., Intel Corp., Esurance and General Motors, who will be supporting the venture.

Granted, that Google has slurped up a third of online advertising dollars, as research firm EMarketer says.

But hello. Remember online advertising is still only 10 - 20% of advertisers’ spend. Google has zero percent of the TV advertising market, last I checked. And NBC, CBS, ABC and Fox were doing quite well, even in a fractionalized universe.

Now, if you’re GM, and you want to reach millions of customers, what’s more attractive? A TV audience of tens of millions of people and hundreds of millions more online accessing full-length, rich streaming programming?  Or hundreds of millions of people who snip up pieces of their favorite NBC show and share it with their friends?

Gee, what do you think people who watch those little snippets will do? They’ll either go to the NBC Universal/Fox site or they’ll watch it on TV.

See Also

• L.A. Times story

Posted under Uncategorized