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Media trends digest – November 2006

Web the way though big papers will stay (28 Nov)
From a piece in the Guardian online, which is well worth reading: “Although its editor-in-chief Jacob Weisberg is not the type to go in for unseemly crowing, 2006 has been something of a breakthrough year for Slate, the trail-blazing internet magazine launched by Microsoft but now published by the Washington Post.
“Not only has the publication marked its 10th anniversary in ruder-than-ever health -- as an increasingly viable business with a readership of up to 10 million a month, making it one of the most influential political magazines in the US -- but according to Weisberg, its recent success also represents a tipping-point for new media at the expense of the old-fashioned, ink-on-paper variety.”
Click here for the full story

Pay TV & web to join $100 million club (27 Nov)
PBL boss James Packer has predicted that pay TV and web businesses will join the $100 million earners club in a year’s time. In recent years the members of that group have included the free-to-air TV networks, News, Fairfax, West Australian Newspapers and Independent Newspapers.
In a year’s time, Packer expects Foxtel, Fox Sports (pictured), Google, Seek and Ebay to join that club.

Learn to sub (27 Nov)
The Media Alliance and the Walkley Foundation are running an intensive two-day, hands-on sub-editing course on 24 Feb and 4 Mar 2007, 9.30am to 5.30pm, at the Alliance Sydney office. The course will cover grammar, punctuation, liaison with writers and designers, career advice and more. There will be practical lessons in subbing raw copy and fitting copy to layout, with individual feedback. The course will be conducted by Kerrie Lee, who has nearly 40 years' experience in print journalism, much of it as a sub. Participants will receive a certificate, acknowledging their attendance. Cost is $550 and includes morning and afternoon tea. To book, contact Danielle Crofts on (02) 9333 0956 or danielle.crofts@walkleys.com
See alliance.org.au

Equity fund sales a global trend (24 Nov)
The recent sale of half of PBL’s media interests (to form PBL Media) and a similar percentage of the Channel 7 group to private equity firms is part of a worldwide trend.
The New York Times, via Benton, reports: Some of the largest broadcasters and publishers are being swept into the arms of private equity firms, which are drawn to the rich cash flows these businesses generate and are undaunted by their slowing growth. The trend could raise new regulatory concerns, however, as some of the big private equity firms start to weave a complex web of cross-ownerships in the industry. As the audiences for traditional media companies have shrank, advertisers have responded by moving more dollars to the Internet. As a result, the growth rates at many media companies have slowed sharply, making them undesirable to many investors. But many of these same businesses throw off a great deal of cash that can be used to support a debt-financed buyout. There are plenty of banks willing to lend money for such deals, and interest rates are relatively low. Private equity firms believe they can unlock value by selling off pieces or making drastic operational changes.
NY Times report; Benton

And here’s an example…
The Reader’s Digest Association, the company responsible for publishing some of the world’s best-read magazines, agreed to a US$1.6 billion takeover offer from investors led by Ripplewood Holdings. The investor group, which includes Merrill Lynch Capital and the J Rothschild Group, will also assume $800 million in debt, bringing the total purchase to US$2.4 billion. Ripplewood hopes to cut costs at Reader’s Digest and expand sales by marketing to customers who already subscribe to publications sold by Ripplewood’s other media companies. Those titles include the Time Life series, The Weekly Reader and The World Almanac. Readers Digest is the world’s largest publication by circulation, selling 18 million copies a month and collecting 2006 revenue of $2.38 billion.
NY Times report

Media industry shake-up continues (20 November)
The media industry shake-up, in anticipation of new federal ownership rules being given the final okay early next year, continues at a frantic pace.
In the latest development, the Channel 7 group, which has been challenging PBL’s 9 network for TV audience supremacy, has announced a $4 billion joint venture with equity firm Kohlberg Kravis Roberts, saying it will now pursue opportunities in Australia and New Zealand across TV, internet and print. Chairman Kerry Stokes retains a 47% interest.
The deal has a familiar ring to it – PBL recently announced a similar joint venture with UK equity firm CVC, forming PBL Media in the process and retaining a 50% stake.
The two announcements mean there is now a lot of cash floating about in the media arena and suggests the take-overs will be happening thick and fast in coming months.
Several have already happened. For example News Corp recently bought magazine stable Federal Publishing, and will formally take over its newspaper interests (including the Wentworth Courier) the minute the new federal legislation is signed in 2007.
PBL has just bought Australian Geographic, while the Macquarie Bank media arm has recently bought a 14.9% stake in Southern Cross Broadcasting, which owns 2UE and 3AW along with numerous rural radio outlets.
Channel 7; PBL; News Corp;

Can a community buyout give papers new life? -- 16 Nov
There has been talk in recent times about a community buy-out of the Los Angeles Times and some other high-profile newspapers. Here’s some recent commentary from the CS Monitor, via Benton: News consumers in Los Angeles, Baltimore, Boston, and other parts of the country may have heard that local investors are interested in buying their main newspaper. They might think this is purely a business matter. Actually, it's more about them -- and the future of journalism that informs their daily lives. The potential buyers, some with very deep pockets, are aiming to 'rescue' these newspapers from the maw of publicly owned corporations. Several of the buyers believe Wall Street's profit interest is trumping Main Street's public interest -- cutting newsroom staffs to the point that journalism's watchdog role is in danger. Private and local ownership has its advantages. The monkey of excessive profits is off the back of owners, who also have a natural stake in their community. But conversely, local owners may be more inclined to interfere with the editorial independence necessary to maintain a paper's credibility, or suddenly find their pockets for investing in the future aren't as deep as they need to be. No matter who owns newspapers, they still must find a new business model to survive an age where text, audio, and video are all converging in cyberspace. Fortunately, they're awake, and working on it. Keeping them hopeful is the knowledge that the public still needs a news organization's basic function as information diggers, sifters, and watchdogs. Private, local ownership has its risks. But if it can give newspapers breathing room to find their way, it seems worth it -- for the sake of journalism and an informed public.
Full story

News Corp turns to Oz web -- 16 Nov
News Corp’s ongoing expansion into internet has reached Australia, with the establishment of a local end of Fox Interactive Media. The company reports that the Australian version of MySpace was in the black within three months and the new division will include the IGN gaming portal and film site Rotten Tomatoes, among others.
Meanwhile Chairman Rupert Murdoch has blasted the local telco industry for our pathetically slow broadband speeds, which are around a 20th of what is expected overseas.
He told a meeting of shareholders, “When you have broadband – real broadband, not the type they’re talking about here – where you get, say, 20Mbps of data into your home, it changes everything. People then spend a lot of time with their laptops and computers.
“In Australia…they don’t even get 1mb. I think it’s a disgrace.”

Media gossip – 16 Nov
Network 10 has signed up to take content from CBS in the USA, which has traditionally been a content partner with Network 9. The deal includes the American version of 60 Minutes.
The Melbourne Cup won the latest round of TV ratings for channel 7, with 2.27 million viewers. Followed by Thank God You’re Here (10 -- 1.85 million) and Dancing with the Stars (7 -- 1.78 million).
Microsoft has launched a competitor to the iPod called the Zune. In addition to the iPod’s features, it offers wireless networking and FM radio.

Googtube struggles with copyright mess – 15 Nov
From the Online Publishers Assn: If only Google could make a few licensing deals with rights holders to popular music and video material that gets uploaded umpteen times to its recent acquisition YouTube, and make the legal issues go away. If only. Instead, YouTube has struggled mightily to find all the rights holders, and hope the lawsuits don't come in droves. The Financial Times says GoogTube is in a "frantic round of negotiations" with many media companies to stave off the legal threat.
The Wall Street Journal reports that YouTube simply making a deal with a record company for a song's rights is not enough, and that there's also deals to be made with music publishers, video producers, and even particular actors for TV shows.
"We're trying to have everyone be happy and get everyone their cut of what they own," YouTube exec Chris Maxcy told the Journal. "If you could solve the rights issue, you'd turbocharge your effort to get your content everywhere. It's going to be a lot of hard work to get from here to there."
One recent incident shows how complex the licensing deals are. Viacom asked that YouTube pull down many of its clips from Comedy Central shows such as The Daily Show and The Colbert Report, which upset fans that saw the clips as promotional vehicles. The media swarmed, first saying Viacom clips were all removed (they weren't all gone), and then saying the clips were all back (many were still gone).
Mark Cuban, on his blog, ran an anonymous take from an insider on the YouTube/Google deal, saying they had put aside $500 million for media company payments, and had given record companies a stake in YouTube as payment. Google CEO Eric Schmidt denied the $500 million set-aside, but said they were working hard to cut deals. If Google thinks it has problems, it can rest assured others will have it bad too: TVU Networks lets people share live TV streams online, and could suffer the same fate as Napster, News.com reports.

Al Jazeerah to switch on world network -- 14 Nov
Arab news company Al Jazeerah is on the verge of throwing the switch on its new world English language network, realising a long-held ambition for the 10-year-old media organisation.
Starting tomorrow, the outlet will begin transmission from hubs in Qatar, London, Washington and Kuala Lumpur, Malaysia. It will also be running expanded websites plus a network of newspapers.
The outlet, which has been the target of severe political and potential physical attacks from the West, began an international recruiting campaign over a year ago and has signed up some high-profile names, such as veteran English presenter David Frost.
Aljazeera home; New York Times story

The world according to Google -- 13 Nov
Despite setbacks in the lucrative China market earlier this year, the Internet search engine company Google continues to grow and grow. So what exactly is its game plan? And why is it being referred to as a future Microsoft rival? Click here to see this ABC Media Report feature.

BBC web ads cause debate -- 13 Nov
Lately, the BBC has considered selling advertisements on its international websites. While that might not be radical for a commercial enterprise, it's a bit of a departure for a public media entity that receives huge funding through taxes in Britain. But BBC World, which is broadcast outside the UK, and its magazines do currently carry ads, so management had Accenture do a study on how much online ads would bring in. The Guardian reported that Accenture found that BBC could net from 105 million pounds annually with a more ad-laden version versus 48 million pounds for a ‘lite’ version with less ads. But employees have protested the move, according to the New York Times, with 170 employees signing a petition against online ads, saying it would make the BBC more commercial. Management has taken a slower approach since the protest and is hoping to start the ads by March.
Source: Online Publishers Association

News buys FPC Magazines -- 10 Nov
News Limited has bought 25 magazines from the FPC stable, which holds about 5% of the local magazine market. Titles include lifestyle magazines such as Vogue and Delicious plus a number of motoring related titles.
The deal, said to be worth around $150 million, is reportedly due for completion by the end of this year.

Web passes 100 million -- 8 Nov
There are now more than 100 million web sites, according to internet service Netcraft.
The 100 million site milestone caps an extraordinary year in which the Internet has already added 27.4 million sites, easily topping the previous full-year growth record of 17 million from 2005. It has doubled in size since May 2004, when the survey hit 50 million.
Blogs and small business web sites have driven the explosive growth this year, with huge increases at free blogging services at Google and Microsoft. The first Netcraft survey in August 1995 found 18,957 hosts.
Previous milestones in the survey were reached in April 1997 (1 million sites), February 2000 (10 million), September 2000 (20 million), July 2001 (30 million), April 2003 (40 million), May 2004 (50 million), March 2005 (60 million), August 2005 (70 million). April 2006 (80 million ) and August 2006 (90 million).
Netcraft

Media gossip -- 7 Nov
Search engine and growing media company Google is once again trying its hand at selling print advertising, this time by assisting around 100 of its customers in booking newspaper space. The company tried auctioning print magazine space around a year ago, but did not persist with the plan.
Rival Yahoo is beginning trials of internet-delivered banner ads for mobile phones in the USA.
News Limited is about to launch a MySpace service in Japan, its first major play in that market for around 10 years.
Meanwhile MySpace co-founder Brad Greenspan is taking legal action against News Corp, complaining it is censoring users who mention rival social networking sites and is therefore indulging in anti-competitive behaviour. He said, "If News Corp is able to continue its censorship and mass gagging techniques today, then tomorrow it should surprise no one when News Corp deletes mentions of competitive news organizations to their own Fox News by preventing users from typing CNN.com or ABCNEWS.com in their Myspace blogs."
Australia’s internet advertising market is tipped to break the $1 billion mark this year, according to net ad company Real Media 24/7.

Which way for newsrooms? -- 4 Nov
Commentary from the Financial Times (USA), via Benton: The traditional news media in the US is in a state of turmoil. Some of the biggest newspaper chains – first Knight Ridder and now Tribune Company – have put themselves up for sale. Network news broadcasters are slashing their budgets, the latest and most savage example being the cuts heralded by NBC Universal two weeks ago. No wonder there is a siege mentality in newsrooms around the land. Investors seem to be concluding that this is an industry with no future. As is often the case, though, the mood swing has gone too far -- these are still very profitable businesses. The US newspaper industry boasts daily sales of 55m copies, profit margins well into double digits and strong cash flows. There are indications that the long-term decline in readership may have stabilized in recent years and most people use the Internet as a supplement, rather than a substitute, for newsprint. So the big question is not whether the traditional news media will continue to exist in the foreseeable future. Most of them clearly will. But what kind of service will they provide to the public as they adapt their business model -- and with it their editorial content -- to a much more competitive environment? In today’s competitive environment, what commercial interest would a news publisher have in seeking to interest a poorly educated and uninterested person in what is happening in the world? And will market forces, left to themselves, be enough to support that vital component of democracy -- an informed citizenry?
Financial Times home; Full article (requires subscription)

Industry gossip -- 3 Nov
Incomplete novels, letters and other papers from Nobel Prize-winning novelist Patrick White have been unearthed and sold to the National Library, years after they were thought to have been destroyed. White’s literary executor, Barbara Mobbs, followed a fine tradition of people in such a position by finding it impossible to follow White’s instructions to destroy the material after his death.
Federal Publishing, which owns a string of magazines that hold about 5% of the overall market, is likely to be sold to News Limited, according to reports from The Australian newspaper.
Jonestown, the book written by ABC journalist Chris Masters has hit the top-seller list and has grossed over $600,000 so far. Written about Sydney radio broadcaster Alan Jones, the book was rejected by the ABC’s publishing wing -- after it had invested $100,000 in the project -– in part because it doubted the title would make money. Current publisher Allen & Unwin has sold nearly 13,000 copies in the first week and appears to be on track to make a decent profit.
Senate hearings this  week revealed that the Federal Government has spent 208.5 million on advertising in the last financial year – up by over 50%.

US Newspaper sales drop sharply -- 1 Nov
From the New York Times, via Benton: The circulation of the nation’s daily newspapers plunged during the latest reporting period in one of the sharpest declines in recent history, according to data released yesterday. The slide continues a decades-long trend and adds to the woes of a mature industry already struggling with layoffs and facing the potential sale of some of its flagships. Over all, average daily circulation dropped by 2.8 percent during the six-month period ended 30 Sept, compared with the period last year, according to an industry analysis of data released by the Audit Bureau of Circulations. Circulation for Sunday papers fell by 3.4 percent. The figures appear to be the steepest in any comparable six-month period in at least 15 years. Newspaper executives also attribute some of the decline to deliberate strategies to eliminate so-called bulk sales to third-party sponsors that offer papers free in places like hotels. Advertisers view them as having little value because the readers getting them did not pay for them.
NY Times home; Story; Benton news service

YouTube & Myspace pull down copyrighted content -- 1 Nov
From CNet via Benton: YouTube is removing from its site all copyrighted content from the Comedy Central Network after receiving a request to do so. Meanwhile News Corp.'s MySpace.com on Monday said it had licensed a new technology to stop users from posting unauthorized copyrighted music on the social networking Web site and oust frequent violators of its policy.
CNet home; Story

In the blink of an ad -- 1 Nov
From the Wall Street Journal, via Benton: Commercials lasting only five seconds -- and some two-second ads called "blinks" -- are in demand by marketers. Clear Channel stations are also offering blinks that are just one-second long, but they haven't found any takers -- yet. Clear Channel started offering the super-short spots in hopes of bringing in more ad dollars, part of a broader effort to revive ad sales in an industry hurt by competition from other media and listener fatigue with commercial overload. CBS Corp.'s CBS Radio, the No. 2 radio company after Clear Channel, has sold five-second ads as well, including some this year for TV networks. Unlike traditional radio ads, which tend to run 60 seconds in minutes-long commercial breaks, the minimessages can be tucked in between individual songs in a series. Marketers hope that positioning gives them a better chance of being heard, since listeners often change channels when a commercial break starts. Of course, the brevity of the spots also makes them easier to miss. Clear Channel is pricing the five-second spots, called "adlets," at 18% to 21% of a standard 60-second ad, which in a top-10 station in a major market can go for about $800, media buyers say. Two-second ads cost even less -- 10% of a 60-second ad, or roughly $80. So far, Clear Channel has sold adlets to about 12 national advertisers, along with a slew of local marketers.
Wall Street Journal home; Story (requires paid subscription); Clear Channel

Plus…
From Business Week via Benton: As TV viewing habits change, media companies -- and advertisers -- are looking elsewhere: They've set their sights on a new breed of startups. While the value of each company clearly depends on its particular performance, the factors that are proving important for Net video players are quite different from those of traditional media companies. In traditional TV, more viewers mean more money. The correlation is direct, although advertisers pay a bit more for younger viewers. That's not necessarily so online. A smaller audience may be more valuable than a big one, if the small one does the sorts of things that advertisers like -- such as clicking on ads, buying products, or visiting related content. The bottom line is that Net video companies can be judged on a wider range of factors than traditional media companies, which makes some of them worth more and some worth less.
Business Week home; Story

The million dollar comma -- 1 Nov
From the New York Times, via Benton: Our friends at York University know that it pays to pay attention to your grammar. dispute between Rogers Communications of Toronto, Canada’s largest cable television provider, and a telephone company in Atlantic Canada, Bell Aliant, is over the phone company’s attempt to cancel a contract governing Rogers’ use of telephone poles. But the argument turns on a single comma in the 14-page contract. The answer is worth 1 million Canadian dollars (or 888,000 real American dollars). Citing the “rules of punctuation,” Canada’s telecommunications regulator recently ruled that the comma allowed Bell Aliant to end its five-year agreement with Rogers at any time with notice. Rogers argues that pole contracts run for five years and automatically renew for another five years, unless a telephone company cancels the agreement before the start of the final 12 months. The contract is a standard one for the use of utility poles, negotiated between a cable television trade association and an alliance of telephone companies. French and English versions were approved by a government regulator about six years ago. The dispute is over this sentence: “This agreement shall be effective from the date it is made and shall continue in force for a period of five (5) years from the date it is made, and thereafter for successive five (5) year terms, unless and until terminated by one year prior notice in writing by either party.”
NY Times home; Story

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