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

There are two ways to view the WTO’s ruling today that China is violating free trade rules by restricting imports of books, newspapers and movies. One is a slap at China for unfair trade practices. The other is an opportunity to do deals with China.

The Chinese government has a strong incentive to find ways to mollify international sentiment on its restrictive import policies and its laxity toward pirates . It would prefer to do so through joint ventures, rather than straight-out imports. Nationalistic, yes. But it’s the reality on the ground right now. If you’re willing to cede a degree of control, you’ll get a lot farther faster than if you insist on going it on your own, selling directly to the Chinese public.

This September, I’m traveling to Shenyang, a North-Eastern Chinese city, to speak at an international multimedia conference. The city wants to create a media park, and is prepared (along with Beijing) to fund it. We’ll be joined by Chinese venture capitalists seeking to invest in Western digital media startups.

I’m not saying the U.S. and Western countries shouldn’t be pushing to open up the Chinese media market as quickly as possible. But it seems to me there’s a lot of low-hanging fruit they can grab along the way, too.

Posted under Michael's Blog

Adult actress Savannah Stern eats crow, according to L.A. Times

The L.A. Times’ expose (sorry) of porn’s woes capsulizes the dilemma the Internet poses for all content: consumers are willing to settle for less-than-stellar products on the Internet rather than shell out money for higher production values in DVDs, CDs, etc.  The availability of free porn on sites like YouPorn, PornHub and RedTube is apparently eating deeply into the porn industry’s profits, providing a glimpse of the mainstream DVD market’s future. “Today, instead of leading the way up (in technology adoption), porn appears to be leading the way down,” the L.A. Times’ Ben Fritz writes.

The irony, of course, is that the L.A. Times is itself getting killed by free content on the Internet. Why subscribe when you can get everything you want from the paper for free on the Internet? And no one can pretend that all those banner ads on the Internet pay more than a fraction of what the paper’s display ads pay.

But porn may still have some upside lessons for media companies. Free porn video sites get huge traffic, and the marketing manager for PornoTube told the L.A. Times the site’s real value was in driving customers to paid video-on-demand. No reason why the L.A. Times can’t put up a story on porn, but charge for access to videos of their reporters interviewing porn stars, research reports on the DVD business or discounted movie tickets.  See, you can still learn something from porn.

Posted under Michael's Blog, Video

You know things are bad in the newspaper business when you wonder whether you should resubscribe to your favorite newspaper as a charity gesture.

Times are hard, and I’m still questioning whether I should renew my subscription, when I get everything I want online.

Then I read that my favorite newspaper’s revenue dropped 13.9% and, most worrisome, that its Internet revenue slid along with it. As Forbes notes, “those online revenues continued to account for a bigger and bigger piece of a smaller and smaller pie.”

I still remain convinced that the digital future of newspapers is strong. New technologies (successors to the Kindle and the iPhone) will bring serious readers back into the fold, even as paper dies. I just hope the New York Times and other newspapers can survive until then.

Posted under Michael's Blog

Print Media in Digital Age Discussed at Milken Global Conference

Former Wall Street Journal Publisher Gordon Crovitz  phrased the problem facing newspapers succinctly: "Print revenue has declined much faster than online can be built up," he told the audience at the Milken Global Conference. "We’re trading newspaper dollars for online nickels."

The newspaper business is a microcosm of the dilemma faced by all traditional media: How do you move to a new medium you know is your future, when the financial model isn’t worked out?

Philadelphia Inquirer Publisher Brian Tierney, for example, told how he traded a $700 two-day ad in the newspaper ad for a $300 online spread for a week — and explained that it was the right decision because the client and readers were better served.

So how will he stay in business?

First, "focus like a laser beam" on costs. He’s cut 40 or 50 journalists from the staff as well as a number of ill-defined positions, eliminating about $40 million in costs along the way. (I wonder, though, if that’s an example of curing the problem and killing the patient).

Second, know his market and push it aggressively online. "When you read about Philly, we want to dominate that market," he said.

By being that kind of local resource, he estimated, the Los Angeles Times has generated more than $100 million in ad revenue. It’s "not a pipe dream" to push the Inquirer’s online ad revenue from $25 million to $75 million.

See Also

• The Future of Print Media: How to Adapt to the Digital Age

Posted under Uncategorized

Marc Esper is NBC Universal’s Vice President of Search.

Five years ago, such a title at a major broadcast network would have been unthinkable. Today, it’s indispensable.

Esper, recruited a year and a half ago from AOL’s brand marketing team, is charged with making sure that NBC Universal’s 40 websites – including properties like Sci Fi Channel, NBC and Universal Pictures  — show up properly in Google and Yahoo!, blogs, YouTube, discussion boards and the myriad other ways users discover content online.

“My view of search is that of a programmer looking at a sea of content,” said Dmitri Ponomarev, Vice President of On Demand, TV Guide Television Group.

 About 60 percent of TV Guide Broadband’s customers come from search engines, including channels on AOL Video, Google Video and YouTube.

Then there’s the brouhaha around a mysterious trailer inserted before a recent Transformers screening in Los Angeles. Surprised audience members saw the handycam-captured destruction of New York, with no title or distinguishing element other than the name of its producer J.J. Abrams. Type JJ Abrams  and Transformers and you get….well, see for yourself.

Posted under Uncategorized

When I first started iHollywood Forum with my wife six years ago, my Uncle Irv from Castro Valley was skeptical about the idea of public conversations about digitized Hollywood content.

“Hollywood just makes crap for TV and movies,” he groused, showing a proper Bay Area disdain for all things L.A. “What’s there to talk about?”

“We’re not really talking about what’s in the programming,” I protested. “We’re talking about the new technologies for distributing and monetizing it: the Internet, cellphones and so forth.”

Technology, after all, makes Silicon Valley run, so Irv was satisfied. And so was I, going on to produce dozens of seminars and conferences about distributing and monetizing content.

But, coming off a 10-day meditation retreat, I find the content issue niggling at me. Here we have all this media consolidation happening: with News Corp (Charts, Fortune 500) bidding $5 billion for Dow Jones (Charts); Thomson chasing Reuters in a possible $17.5 billion merger; and Clear Channel Communications, Cablevision and Tribune in private equity firms’ crosshairs. These guys all want to put exabytes of TV shows, movies, games, newspapers, video footage, newspapers and other content on the Web, cellphones, XBoxes, home networks, portable DVRs, and every other imaginable platform and monetize it every conceivable way.

The problem is that the vast majority of the stuff is junk. At the risk of alienating my core audience (and my kids): most of the material on TV is mindless; most movies are designed to maximize studio cash flow, not enlighten audiences;  most cellphone games are inane (bowling, anyone?); most news outlets toady to their readers’ basest leanings — to say nothing of gambling, sex and more dangerous “content” accompanying it all.

If this content is king, let me out of the kingdom.

Admittedly, there’s plenty of great content out there, too. I love what’s happening with music, although — ironically, from the column’s standpoint — it’s being monetized the worst. There’s news on the Internet from great outlets like the Wall Street Journal (at least until you-know-who buys it), the New York Times and Reuters. And some TV shows, chat rooms, games (the massively social networking kind), virtual worlds,  movies and other content deserve to be on as many platforms as possible.

But if this is all about catering, as we do today, to the lowest common denominator to maximize cash flow on as many platforms as possible, what are we creating? What does constant exposure to junk and worse do to the minds of our children and our communities? What legacy are we leaving the world? Do we really aspire to make lots of money and nothing more of our lives?

For years, I’ve dreamed about doing a conference exploring these issues. The problem is, no one would come. There’s no money to be made.

See Also

• The return of media merger madness
• My recent musings about media

Posted under Uncategorized

As a young reporter, I was slipped a copy of the Wall Street Journal’s stylebook by a friend and former Journal employee.  I spent weeks studying how to build their famous "A-head" articles (those daffy articles in the middle of the front page), ledes for stories (yes, it is spelled that way), nut graphs and, most important, its rules for attribution and fairness.

If Rupert Murdoch succeeds in his bid for the Wall Street Journal, the Journal as we know it could disappear. In its place, we may find the biggest blogging platform ever launched for one man’s right-wing views.

Now, I’ll be the first to admit I’m liberal. (Don’t get me started on Iraq). And yes, this blog is biased. But I’m not telling you it’s news. It’s commentary.

Fox News is supposedly news. But anyone who’s spent any significant time watching it knows it has a significant right-wing bias.

Puh-lease don’t talk to me about the liberal media bias. Let’s say it exists. But any self-respecting newspaper or news source doesn’t present opinion as fact, doesn’t leave out the other point of view, doesn’t launch diatribes in the middle of a news program.

Those are all offenses I’ve seen committed on Fox News in the happily few times I’ve viewed it. I’ve only in the rarest instances seen blatant disregard for commonly accepted journalistic practices in the New York Times, the Los Angeles Times and the Wall Street Journal, which I read every day (Plagiarism aside, of course. That’s not as important, right? Just kidding).

Pardon me? You say the Wall Street Journal is well-known for its conservative views? Well, yes. The Journal’s editorials are somewhere to the right of the late Barry Goldwater. In fact, when you Google "Rupert Murdoch Wall Street Journal”, one of the first things you come up with is a 2004 article by Murdoch in the Wall Street Journal praising our dear President.

But Murdoch’s article appeared in the Opinion section, where it belongs.  Until now, the Wall Street Journal has  known the difference between opinion pieces (those are blogs on paper, youngsters) and objective reporting.

I’m not sure Murdoch does.

See Also

• Murdoch’s 2004 Wall Street Journal opinion piece
• Rupert Murdoch Built Global Media Empire with Bold Moves
• My recent blogs about media

Posted under Uncategorized

Chicago real estate tycoon Sam Zell — flush from buying Tribune Co. — made a fascinating hint yesterday in a Bay Area speech.

"If all the newspapers in America did not allow Google to steal their content for nothing, what would Google do, and how profitable would Google be?" he’s quoted by the Tribune-owned L.A. Times as saying.

Now remove the word "newspapers" from his statement and insert "record companies" or "TV programmers". See why it’s fascinating?

Google, of course, would never outright steal music or TV programs from their august owners. But if pirated music videos end up on YouTube, hey, that’s showbiz.

Now, on to newspapers. So far, the Fourth Estate has made nary a peep about Google getting all that good news copy for free. Nor has it filed suit, like Viacom did last month against YouTube to punish it for letting users upload clips from The Colbert Report, South Park and other Viacom-owned material.

Could Zell, the consummate dealmaker, be considering a middle course? One that let’s him have his cake and eat some of Google’s, too?

Let’s suppose Zell went to Google and said, "Look, guys. It’s been a good run. But we’re being eaten alive. You need to cough up some of the revenue you’re taking from all those little ads on the side of the L.A. Times stories in Google searches.”

And he might just cough politely and mutter "Viacom" under his breath. They’re smart in Silicon Valley. They know a veiled threat when they hear one.

Google, in its own way, is a content pipe –just as T-Mobile and Vodafone are content pipes for the dozens of so-called "off deck” companies who use mobile operators’ air waves to sell everything from sex to silk slippers.

Except T-Mobile and Vodafone are smart enough to recognize a paradigm shift when they see one. They make those off-deck companies pay freight. And they make a fortune in the process.

So I’ll be fascinated to find out if Zell was indeed hinting at  a middle path for reinvigorating newspapers. Google him in a few months and check it out. That’s what I did.

See Also

• Papers, Web firms need ‘a new deal,’ Zell says
• Can rich Americans save newspapers?
• Is Google Too Powerful?

Posted under Uncategorized

The Role of `Citizen Journalists’

Citizen journalists are creating quite a stir. Leonard Brody, CEO of NowPublic, says his network of thousands of amateurs around the world represent the biggest news gathering team in the world.

My friend Andrew Keen, meanwhile, believes that many of these people are hacks who give journalism a bad name.

"If we keep up this pace, there will be over five hundred million blogs by 2010, collectively corrupting and confusing popular opinion about everything from politics to commerce, to arts and culture," he writes in his book scheduled for release this spring, "The Cult of the Amateur: How the Democratization of the Digital World Is Assaulting Our Economy, Our Culture and Our Values."

I disagree with both. I think these amateurs are an entirely new animal. Call it the Fifth Estate.

Recall (from high school U.S. gov class) that there are four "estates" that serve to maintain a balance of power in the American democracy: the executive branch, the legislative branch, the judicial branch and, more informally, journalists. Congress nails the President, the President vetos bills, the Supreme Court overturns Congressional votes and the news guys  turn up dirt on everybody. (If they go too far, they get nailed by the courts, too).

Amateurs reporting on events or writing blogs are no more "journalists" than civics teachers are congressmen or Bush critics are Presidents. They’re something else. But they serve as a great check on the other four estates, as the growing influence of blogs suggests.

The reason people get away with calling amateurs "citizen journalists" is because there’s no licensing board to create journalists, as there is for the lawyers who dominate the first three estates. But most of these citizens could no more become reporters for the New York Times than I could practice law. At its best, journalism has clearly defined standards of impartiality, writing style and reporting — scandals and Fox News not withstanding.

Anyone who was at Digital Media Summit last week probably thinks I’m a hypocrite. I moderated a panel called "Confronting the Citizen Journalist" that included Brody and an exercised Keen in the audience.

Hey, a guy’s allowed to change his mind.

Exactly what to call the Fifth Estate I don’t know. CBS MarketWatch columnist Bambi Francisco, who also sat on the panel, has a blog (which this week also focused on confronting citizen journalists), and she’s certainly no amateur. So what do we call these citizen bloggers? I vote for cloggers.

See Also

• Bambi’s column
• Digital Media Summit
• Now Public
• Andrew’s website

Posted under Uncategorized