At Trinity Mirror’s nationals, the worst recession in living memory feels like a blip

Posted by Peter Kirwan on 4 March 2010 at 13:08
Tags: Associated Newspapers, News International, Trinity Mirror

Some news organisations have had a half-decent recession. Trinity Mirror’s nationals rank among them.

This morning, Trinity Mirror released its final results for the year to December 2009. Ad revenues at the Daily Mirror and its stablemates fell by 8% during 2009. That’s far less than the chunky double-digit percentage declines that afflicted many broadsheets.

But at tabloids like the Mirror, circulation is more important than advertising. At Trinity Mirror’s nationals, for example, circulation comprises almost two-thirds of overall revenues. During 2009, these revenues held steady at the Mirror and its stablemates, declining by a mere 0.5%.

Add it all up, and Trinity Mirror’s nationals have emerged relatively unscathed from the worst recession in living memory. Overall, revenues declined by just 3.2% YOY to £460m. On the bottom line, operating margins were barely disturbed. In 2009, these declined to 18.2% from 18.7% during the previous year.

It’s hard to call this a recession: it feels more like a blip.

Sly Bailey and her management team will feel good about this performance. The comparison with the Mail and the Mail On Sunday is suggestive.

At Associated Newspapers, home to the Mail and the Mail On Sunday, like-for-like ad revenues fell by 15% during the year to October 2009, and then by a further 11% during Q409. Although it’s hard to make a direct comparison, circulation revenues seem to have fallen more rapidly at Associated, too.

As always, however, there’s a sting in the tail. Readers have stopped buying newspapers during this recession in big numbers.

Between July and December alone, the number of national newspapers sold by Trinity Mirror declined by up to 10%.

Trinity Mirror mitigated these big declines by hiking cover prices. During 2009, the Daily Mirror rose from 40p to 45p, and the Daily Record from 60p to 65p.

But if readers’ willingness to buy newspapers continues to decline at the current rate, an awkward question presents itself.

In a world where the Daily Mail costs 50p and the Sun costs anywhere between 20p and 35p, what’s the most that Sly Bailey can charge for a copy of the Daily Mirror?

Times Online: Supporting the big profits of pay TV

Posted by Peter Kirwan on 2 February 2010 at 23:49
Tags: BSkyB, Media, News International

So Times Newspapers has just hired Paul Gilshan from BSkyB as marketing director. Gilshan was previously head of marketing for Sky Movies and Sky Box Office. At Wapping, Media Week notes, Gilshan will be reunited with his former boss Alex Lewis, who was a director of marketing at BSkyB before moving across to Times Newspapers last year.

Another significant (and much-noted) arrival at Wapping: Gurtej Sandhu, who is joining as director of Times Digital from News Corp-owned Star TV.

Down under, the trends seem similar: Richard Freudenstein, whose CV includes a seven year stint at BSkyB, has just been made chief executive of The Australian.

The influx of pay-TV types is striking. Of course, there’s an existing line of thought which suggests that paywalls around the Times and the Sunday Times will be engineered to boost print sales as much as anything else. (Buy a newsprint subscription and get access on t’internet for free.)

But what if the cordon was thrown wider? Peter Preston may have a point when he suggests that BSkyB could be brought into equation.

Now watch closely as 12 million Sky subscribers get an offer they can’t reasonably refuse. How about beyond-the-wall access to four big British papers (plus an array of tempting other goodies) for as little as 50p extra a month? £6m a month for that is £72m – in a trice the losses on Wapping’s more upmarket offerings are turned to profit. . .

This is an interesting idea. It would certainly enhance the attractiveness of Sky for subscribers who might be lured away soon by cheaper footie elsewhere. In addition, News Corp could bolt on newspaper subscriptions for a triple-play subscription offer (Sky/newspapers/online access).

Sky has been selling consumers a triple-play of its own (broadband/telephony/pay TV) for quite a while: the executives making the switch to Wapping know all about the fiddly mechanics of maximising profits in this kind of environment.

But if News International goes down this route, what price the coalition of national newspapers that Murdoch wanted to assemble last year?

That plan is dead in the water. It’s no coincidence that Murdoch’s thinly-veiled appeals for a concerted uprising against the free web have died away.

The Guardian can’t see how the economics stack up (no surprises there, if the missing ingredient is 12m viewers). The Telegraph has all but ruled itself out. DMGT has maintained a studied silence. Trinity Mirror might follow News International, but only if convinced by results on the ground.

A subscription link between Sky and News International would be designed to limit the risks of a go-it-alone policy. Harnessing the huge popularity of Sky might well make the unpalatable idea of paid content acceptable to the general public. (And for rivals, doing deals with Virgin Media or BT Vision really wouldn’t be the same).

But 50p a month: surely that’s too little? Selling online access to the Times and the Sunday Times at something like that price would cannibalize print copy sales just as rapidly as free access on the web.

Perhaps the low price point owes something to Preston’s inspiration: Newsday, owned by the same company that sells cable TV and broadband to 75% of Long Island’s subscribers. Late last year, Newsday erected a $5-a-week paywall. But it offered free access to customers of the parent company’s cable and broadband operations.

The parallel isn’t straightforward, though. Newsday’s paywall might as well have been accompanied by a suicide note declaring that the paper had no value other than as a gimmick intended to sell something else. Times Newspapers Ltd may be losing north of £1m a week, but its position is slightly different.

Still, leveraging what you’ve got makes sense. Cross-selling TV and news subscriptions would involve giving Murdoch’s newspapers – unloved by investors – a new purpose in life: to support the profitability of pay TV.

Circle the wagons and find some new and unexpected synergy: it’s a classic media conglomerate tactic. If successful, It might even help to convince News Corp’s investors that owning both newspapers and a pay TV platform remains a sensible idea.

Which newspaper bosses will oppose safe harbour for search engines?

Posted by Peter Kirwan on 12 January 2010 at 16:13
Tags: Media, News International, Telegraph Media Group

Our unelected upper chamber is going to work on Lord Mandelson’s Digital Economy Bill, which resumed its second reading in the House of Lords today.

Ralph Palmer, the 12th Baron Lucas and 8th Lord Dingwall (a.k.a. Lord Lucas) has tabled a string of amendments to the Bill. Cumulatively, they suggest ambitions that stretch beyond this peer’s day job as editor and proprietor of The Good Schools Guide.

Most of Lord Lucas’s amendments (and there are a few of them) sound like sensible attempts to blunt the more extreme impulses of the music business.

Lord Lucas has described the major labels as a “powerful, monopolistic” industry that “seeks to punish [consumers] before thinking of how to serve them better”.

Interestingly, the Tory peer is also proposing what sounds like a British equivalent of the “safe harbour” rules that protect search engines from news organisations launching copyright lawsuits in the US.

Specifically, Lucas proposes “a standing and non-exclusive license” that would protect search engines when they “copy of some or all of the content” on web sites and display them in search results.

Here, too, Lucas seems to be siding with the independent little man (in the shape of Google and the web surfing public) against “powerful” (if not quite monopolistic) media barons like Rupert Murdoch and Gavin O’Reilly.

On this basis, we were intrigued to see that the Lords’ Register of Interests lists Lord Lucas as a “significant shareholder” in Archant.

Can we therefore expect that Adrian Jeakings, the recently-appointed chief executive of Archant, will become the first British newspaper boss to state publicly that Google’s use of extracts in search results really isn’t a problem, after all?

Perhaps Murdoch MacLennan, the chief executive of Telegraph Media Group, will emerge to support him.

Certainly, Lucas’s amendment seems to have gone down well at the Telegraph Media Group, which remains famously friendly with Google.

Ian Douglas, the paper’s head of digital production, calls Lucas’s amendment “brilliant”, arguing that it will save “ill-advised newspapers” from spending millions of pounds on suing Messrs Brin, Page and Schmidt.

Equally, if Lucas’s amendment is approved, it remains unlikely that Google-hating newspaper bosses will remain above the fray. The chances of a lawsuit materialising has always been small: but the threat of launching one remains useful.

No doubt this thought has already occurred to lobbyists who ply their trade on behalf of Rupert Murdoch in and around the Palace of Westminster.

Freud vs. Ailes: A battle for the soul of News Corp

Posted by Peter Kirwan on 12 January 2010 at 14:18
Tags: News Corp

So here’s the sequence of events. In February last year, Peter Chernin, the boss of film and broadcast operations at Fox, quits News Corporation after 12 years.

This was followed by Roger Ailes, the newly-liberated chairman of Fox News, making a move against News Corp’s top PR man, Gary Ginsberg, who was an ally of Chernin.

Ginsberg and Chernin, we’re told by Michael Wolff, “saw themselves fighting the good fight” as “News Corp reformers” with a liberal bias.

Now we’ve got Matthew Freud, husband to Elisabeth, redressing the balance. Freud tells the New York Times that the Murdoch family is “ashamed and sickened” by Roger Ailes and his “horrendous and sustained disregard [for] journalistic standards” at Fox News.

The Daily Beast suggests that Freud “often maneuvers behind the scenes” on behalf of James Murdoch, chairman and chief executive of News Corp in Europe and Asia.

Wolff tells us that Freud’s statement was “a declaration of war”. Apparently Wendi, Rupert Murdoch’s wife, hates Ailes, too.

There’s only one problem with all of this, of course: Fox News currently brings home the vast majority of profits inside News Corp.

Last year, Ailes’ baby generated a reported $700m in operating profit. The Times speculates that Fox is more profitable than “CNN, MSNBC and the evening newscasts of NBC, ABC and CBS combined”.

Happily, News Corporation has $8bn of cash in the bank. For now, that’s a blessing: It would be enough to pay off every call a banker could make between now and 2015. But those cash reserves are piling up rapidly.

A recent analyst report from Deutsche Bank described the company’s “refusal to return capital to shareholders” as a “major hindrance”. Big decisions loom. In any kind of recovery, the company will be expected to put its dollars to work.

Most shareholders would prefer if these didn’t include an effort to buy the New York Times. Hence, no doubt, James Murdoch’s recent speech suggesting that broadcast entertainment is a “vastly more profitable and bigger opportunity” than news journalism.

The minimalist explanation for all of this politicking suggests that News Corporation is still struggling to re-establish equilibrium in the wake of Peter Chernin’s departure.

The maximum scenario involves something different: a struggle for the soul of News Corporation, post-Rupert.

With this many factors in play, Murdoch himself, who will be 79 in March, would be well advised to avoid walking under a bus at any point in the near future.

UPDATE: 14/01/2009: More from the excellent Michael Wolff:

There are four Murdoch adult children—representing the four votes that, after Murdoch himself, control the Murdoch family trust, which controls News Corp. While the four have their own divisions, they are as insular and tribal as any family can be—Kennedy-like, or mafia-like.

Wolff adds that the Murdochs view Roger Ailes as “a comic figure, a gargoyle, a crazy uncle. . . a burden, even a disease in the family, something to be dealt with”.

The clan, he argues, will have regarded as “untenable” the original suggestion by the New York Times that Ailes and Fox have become the profit-generating core of News Corp.

Wolff suspects that Murdoch himself gave the order to respond to Ailes by “blow[ing] a rocket up his ass”. Matthew Freud’s quote was that rocket.

Wolff’s observations on the Murdoch clan are fine-grained. Best of all, there’s this description of what happens when you fall out of favour with the clan:

The process of losing your job at News Corp. takes about a year. They talk about you, and isolate you, and then you understand that you’ve been exiled from the tribe.

Wham, bam, thank you mam: according to Wolff, the fate of Roger Ailes has been sealed.

Google + publishers: Push me, pull you

Posted by Peter Kirwan on 10 December 2009 at 19:59
Tags: Google, Media, News Corp

Alternatives to Murdoch’s Google strategy are emerging. The New York Times reports that Christoph Keese, head of public affairs and “architect of online strategy” at Springer wants to work with “Internet companies” to build a “one-click marketplace solution” for paid content.

Google or other Internet gateways would display links to newspaper articles, videos and other content from a variety of providers, as search engines do now. But some of the items would include something new: a price tag.

Meh: not terribly exciting at first glance. But this seems slightly more interesting:

Josh Cohen, senior business product manager at Google, said an online marketplace like the one envisioned by Mr. Keese was an “obvious extension” of the company’s previously announced plans to create an Internet store for digital books.

Google Books? Springer books? Google News? Paid content? Are we talking about content hosted and sold by Google on behalf of publishers? Google as a retail channel?

Surely not. But in the end, there’s no clarity: Josh Cohen, the overlord of Google News, brings down the shutters quickly, offering up the usual boilerplate: “It’s safe to say it’s a global discussion going on with a number of publishers. Publishers are still in the exploratory stages of this.”

We don’t know what News Corporation is up to behind the scenes. Yet Springer appears to be both collaborating with Google and kicking its ass.

For one thing, German publishers seem unafraid of playing the anti-competition card (something that News Corporation has chosen not to emphasise in its campaign against Google):

Publishers say pulling their contents out of Google News, or the search engine, is not a fair choice because of the company’s powerful position on the Internet, leaving them with nowhere else to go; in Germany, Google accounts for roughly 80 percent of Internet searches.

In addition, Angela Merkel’s government has promised an extension of copyright law that would prevent search engines from using text snippets in search results without paying royalties. According to the Times, the proposal has “broad support” among German publishers. No wonder.

In the end, we’re looking at the music royalties model. The Times reports that aggregators and search engines “might be required to buy licenses, much as restaurants, nightclubs or hair salons now need licenses to play recorded music”. A new rights body — much like Performing Rights Society — would carve up the euros and dollars.

Unworkable? Who knows? Deliverable? Probably not. Techdirt is deeply sceptical, suggesting that the proposal was “really designed to gain the current ruling party a bit of support from the mainstream press in Germany”.

Which seems to me to be the point. Google excels at flattering politicians. But newspaper publishers excel at frightening them. The latter technique is far superior.

In all of this, the level of emerging collaboration between rival media organisations is intriguing. The Wall Street Journal reports that Springer is going it alone, but the FT suggests that many others are working together:

Some of the nation’s largest print houses - such as Axel Springer, M. DuMont Schauberg, Verlagsgruppe Georg Von Holtzbrinck and WAZ Mediengruppe - are in initial talks about how to sell content on the web.

For English-speakers, there’s the (still somewhat mysterious) JV involving Conde Nast, Hearst, News Corp, Time Inc and Meredith.

Interesting times. Is the lay of the land shifting beneath Google’s feet? On certain days, it almost feels that way. . .

News Corp vs. Google: What is Murdoch’s endgame?

Posted by Peter Kirwan on 3 December 2009 at 12:43
Tags: Media, News Corp

As News Corporation’s public campaign against Google rolls on, the newspaper executives I’ve encountered find themselves rooting for Murdoch from the sidelines. Like 16^th century ambassadors trying to anticipate the motives of a warrior king, they remain intensely curious about where all of this might lead.

What seems certain is that News Corporation didn’t start out down this route nine months ago without specific objectives in mind.

Murdoch’s logic seems obvious enough. Anti-trust authorities in Europe and the US aren’t willing to take on Google. The alternative of a frontal assault involving copyright law seems to have limited chances of success (although that’s not to say that lawsuits won’t emerge next year as part of a long term effort to build a case).

Accordingly, News Corporation has attacked the only remaining target: something extremely significant, which is prized by Google’s shareholders: the company’s reputation. By trashing Google in public, News Corporation aims to force its adversary to come to the negotiating table.

In speech after interview after speech, News Corporation has lined up a fearsome series of either/or propositions, none of which flatters Google. Roughly speaking, these alternatives have emerged as follows:

Creators vs exploiters

Value vs. free

Payment vs theft

Quality vs quantity

Culture vs. philistines

Brand loyalty vs, promiscuity

Humans vs. vampires

Real business vs. shady dot.com ad sales folk

Baghdad bureau vs. The Blogosphere

Early on, some of this felt like slapstick. But the tone has grown more serious. Murdoch and his henchmen know how to run a campaign in print. They know how to do it in real time, too. Repetition establishes a world view that becomes more and more credible with each iteration. This is corporate realpolitik, delivered with brute force on the public stage.

So what does Google make of all this?

One of Google’s biggest difficulties is that News Corporation has yet to articulate what it wants (at least in public). Instead, Murdoch has devoted his energies to changing the balance of debate. He is bent on making it progressively more difficult for Google to live in its comfort zone.

Google could choose to remain silent, hoping that News Corporation’s bombardment cannot continue indefinitely. But this seems unlikely. If Murdoch starts to turn the tide, a significant, and public, response will be required.

Statements from the PR department aren’t enough. And Google can only depend on third-party defences from the likes of Ariana Huffington for so long.

Yet the territory is uncertain: the corporate PR rulebook doesn’t say much about how Google should react to a global jihad proclaimed by a competitor on this scale. Potentially, the picture is complicated by discussions that may be taking place in the background.

Perhaps Rachel Whetstone, Google’s vice-president for public policy and communications, will draw upon lessons learned during her time as a spin doctor in Westminster. But there’s a problem here, too. The lesson of the Blair years (and the Kinnock era) is that you don’t mess with News Corporation.

Increasingly, Rupert Murdoch’s attack on Google feels like a defining moment for Big Media. News Corporation’s rhetoric implies lofty ambitions. But sheer volume of abuse carries risks, too. If the results generated by Murdoch’s rhetoric fall short of the intensity with which that rhetoric has been delivered, News Corporation will find itself in difficulties.

News Corp vs. Google: Another day, another bombshell

Posted by Peter Kirwan on 3 December 2009 at 12:43
Tags: Google, Media, News Corp

News Corporation’s offensive against Google keeps growing in scale and intensity. Already, the aggro feels much more significant than anything Murdoch has doled out to the BBC in the past.

This week, the sabre-rattling reached new heights, with Murdoch himself, Les Hinton and Robert Thomson all participating in assaults.

So far, News Corporation executives have delivered coruscating anti-Google diatribes in the UK, the US, China, India and Australia. This is a global effort.

In an accompanying post, I try to work out some of implications. For now, here’s a quick summary of how News Corporation’s campaign has developed:

1 December: Rupert Murdoch in Washington D.C.:

“There are those who think they have a right to take our news content and use it for their own purposes without contributing a penny to its production.” More here.

1 December: Les Hinton in Hyderabad:

“We are allowing our journalism – billions of dollars worth of it every year – to leak onto the internet. We are surrendering our hard-earned rights to the search engines and aggregators, and the out and out thieves of the digital age.” More here.

1 December: Robert Thomson in Washington D.C.:

According to Paid Content, Thomson describes Eric Schmidt, the chief executive of Google as the man who put the “dis” into “disintermediation”. (The problem, it seems, is Schmidt’s alleged criticism of media executives.) More here.

18 November: James Harding, editor of the Times, in London:

“We are going to confront those people who we think represent a serious threat to the future of independent journalism. This means having a conversation with the likes of Google, which extracts far more value from content sites than they give in return.” More here.

9 November: Rupert Murdoch, interviewed by Sky News Australia:

“The people who just simply pick up everything and run with it - steal our stories … without payment.” More here.

1 November: Robert Thomson in San Francisco:

“Marissa unintentionally encourages promiscuity. . . The whole Google model is based on digital disloyalty. It’s about disloyalty to creators.” More here.

12th October: Rupert Murdoch in Beijing:

“The Philistine phase of the digital age is almost over. The aggregators and the plagiarists will soon have to pay a price for the co-opting of our content.” More here.

24 June 2009: Les Hinton in New York

“There is a charitable view of the history of Google. [It] didn’t actually begin life in a cave as a digital vampire per se. The charitable view of Google is that the news business itself fed Google’s taste for this kind of blood.” More here.

6 April 2009: Robert Thomson, interviewed by The Australian

“Google argues they drive traffic to sites, but the whole Google sensibility is inimical to traditional brand loyalty.

“Google encourages promiscuity - and shamelessly so - and therefore a significant proportion of their users don’t necessarily associate that content with the creator.

“There is no doubt that certain websites are best described as parasites or tech tapeworms in the intestines of the internet.” More here.

12 February 2009: Robert Thomson in New York:

“Google — I mean, the harsh way of just defining it, Google devalues everything it touches. Google is great for Google, but it’s terrible for content providers, because it divides that content quantitatively rather than qualitatively.” More here.

Where is all of this leading? What does News Corporation want? How can Google stop the pain? In an accompanying post, I try to tease out the implications.

Deal or no deal: DMGT emerges £20m ahead after freesheet wars

Posted by Peter Kirwan on 29 October 2009 at 14:11
Tags: Associated Newspapers, Daily Mail & General Trust, News Corp

Unlikely as it might seem, the disappearance of The London Paper, the pending closure of London Lite and the Evening Standard’s switch to free distribution represents a enviable trio of victories for Daily Mail & General Trust.

Compare DMGT’s current situation with its context a year ago:

• The Evening Standard is no longer costing DMGT’s shareholders £10m a year in losses. . .

• . . . but DMGT retains a 25% stake in the Standard, and will therefore benefit if its free distribution model succeeds.

• Following the closure of The London Paper, News Corporation is no longer a tiresome irritant in London.

• DMGT’s London Lite will soon be gone, taking annual losses of £10m with it.

• DMGT should now be able to nurse Metro — rumoured to have made profits of £8m a year when times were good — through the rest of the recession. Cutting losses elsewhere should allow DMGT to bid handsomely for a renewed distribution deal with Transport for London.

• Presumably, the future also looks slightly brighter for the Mail and the Mail On Sunday.

DMGT’s hold on London continues to look reasonably strong, and the balance of risks has improved. For good measure, DMGT has improved the annualised profit potential of Associated Newspapers by £20m or so.

This is important. The speed with which newspaper owners can cut costs remains the only factor that differentiates them from one another in the eyes of short-termist investors. It will take Trinity Mirror’s bean-counters months to grind out the same kind of savings at Fort Dunlop and elsewhere.

No wonder some see this sequence of events as too good to be true. Hence the nods and winks delivered by Steve Busfield at Media Guardian this week:

Was a deal done to end the ear-bleedingly expensive London freesheet wars? Will DMGT now offer a shared ownership or printing deal to News International for Metro? I’m sure that such a deal, were it to have been done, would breach some kind of anti-competitive rules.

No doubt. But consider the risks of an anti-competitive side-deal. If discovered, it would provoke a huge outcry. With good reason, the chief executives of quoted companies (and their lawyers) tend to be very worried about the risk of discovery.

In any event, the rough equivalence in terms of the outcome for DMGT and News Corporation suggests that there was limited room for a stitch up.

In the year to June 2008, The London Paper lost £12.9m on News Corporation’s behalf. This year’s losses will have been larger. They might even have approached £20m — roughly the amount that DMGT has saved on an annual basis by selling the Standard and shutting Lite.

If News Corporation wanted a side-deal, its only bargaining chip would have been the nuisance value of continuing to publish The London Paper. With News Corporation under pressure from investors to bolster margins within its newspaper division, that threat had lost much of its credibility.

If DMGT and News Corporation agreed something on the side, no doubt we’ll find out soon enough. But the numbers suggest that it really wasn’t necessary.

Forget Murdoch in Edinburgh: Let’s have a real fight about TV’s “dinosaur bosses”

Posted by Peter Kirwan on 4 September 2009 at 12:27
Tags: BBC, BSkyB, ITV, Media

Obviously, it’s a pity that Robert Peston and James Murdoch didn’t come to blows at the Edinburgh TV festival last week.

It’s also a pity that the vast murmuration caused by Murdoch’s speech overhadowed another, equally important, theme at Edinburgh: the impending clash of civilisations between the broadcast establishment and web video.

In this debate, Ashley Highfield of Microsoft (and formerly of the BBC) delivered the provocation, with his suggestion that broadcasters have just two years to create “credible, truly digital, brands” before facing what he described as an “iTunes moment”. (The parallel is with the music industry, which failed to create a digital business, leaving the way open for Apple to do it instead.)

The organisers of the Media Guardian Edinburgh International Television Festival seemed to take a different view. They chose to kick off proceedings with a feel-good survey written up by Deloitte and researched by YouGov.

Quite clearly, the first line of the accompanying press release was designed to smite the digerati: “New report reveals television advertising still packs the greatest punch”. As for the findings, well, if Lord Grade has daydreams, they presumably go something like this:

• 64% of respondents ranked TV advertising as the format “with most impact”
• Three-quarters of 18-24 year-olds ranked TV ads top for impact
• Only 12% chose search as one of their top three ad formats (again in terms of “impact”)
• 44% researched a company, product or service online in response to a TV ad.

The accompanying quotes from Howard Davies, media partner at Deloitte, left little doubt that the survey had been an exercise designed to deliver good news:

“Online advertising’s poor showing relative to television may surprise given that the former has often been portrayed as television’s nemesis.

“However, what television does best – display and brand building is what online struggles with. Online advertising is best at search, which previously newspapers, had excelled at, particularly for classified.”

At which point, it’s worth turning to marketing academic Mark Ritson’s demolition of the survey. In a blog post, Ritson — who currently teaches at the MIT Sloan Management School in Boston – modestly described Deloitte’s findings as “absolute and total crap”.

First, Ritson criticised the methodology:

“It’s not that consumers lie when asked a question like this. Rather, they simply do not know the answer. Self-reporting data has been proven to be invalid for questions as basic as estimating a consumer’s household income.”

Next, he criticised the survey’s relevance:

“For the past 15 years, no one has cared about comparing one media with another in this binary way. . . Comparing apples with oranges is an irrelevant endeavour in the age of the fruit salad.”

Finally, Ritson lambasted the idea of measuring “impact” without taking into account the cost of rival media and the “effective frequencies” required to yield an impact:

The last time I looked at a rate card, the price of a 30-second spot was wildly different from that of an outdoor ad. . . In the study, TV advertising was reported to have four times the impact of outdoor advertising. What if an out-door ad costs 20% that of a TV ad, and needs only two, rather than three, exposures to deliver its impact? It would work out to be a superior medium even with a lower reported ‘impact’ score.

The TV industry is in trouble, wrote Ritson, partly because it is “run by the kind of dinosaurs who think these kind of reports are good for business”.

Ouch. Perhaps MGEITVF should invite the good professor along to speak next year. He’d stand a better chance of inciting fisticuffs than the ever-so-polite James Murdoch.

Footnote: Mark Ritson (see comments) suggests that Tess Alps of Thinkbox has written a “completely toothless” response to his critique of Deloitte’s research. IMHO it’s anything but that.

We at Thinkbox prefer not to rely on claimed behaviour research, in fact, and instead use rigorous and impartial econometrics to prove that, pound for pound, TV advertising delivers more incremental profit than any other form of advertising, 4.5 times the investment according to PricewaterhouseCoopers.

Decide your yourself.

Newspapers & live events: There’s money in affinity

Posted by Peter Kirwan on 21 August 2009 at 15:02
Tags: BBC Worldwide, Daily Mail & General Trust, Guardian Media Group, Media, News International

Simon Jenkins went to four festivals this year: Glastonbury, The Hay Festival, the Welsh Eisteddfod and the CLA Game Fair.

(The CLA Game Fair? For metropolitan types among you, the CLA bit stands for Country Land & Business Association, and its Game Fair is a three-day festival of country pursuits.)

Last week, Jenkins found himself marvelling at the vast crowds that attended each of these events — vast crowds “being parted from considerable sums of money in the cause of affinity”.

Sensibly, Jenkins went on to argue that newspapers should emulate the music industry, which has “cast off its enslavement to recording studios and recast itself, almost in Victorian mode, as a mass movement for live audiences”.

At EMI, Guy Hands wouldn’t recognise this description of an industry “casting off enslavement”, but one thing’s for sure: if it doesn’t already, the music industry as a whole will soon generate more revenue from live performance than it does from the sale of CDs and MP3 files.

The increase in performance revenues is compensating for the decline in physical music sales. The lessons for publishers are obvious.

As our lives become more virtual, as the number of shared national moments on telly dwindles, we crave live experience more than ever. It’s partly a tribal thing: attending Glastonbury or Glyndebourne says a lot about who you are.

It’s also partly about the increasing importance of experiences as opposed to products. Not for nothing does an entire sub-sector of the marketing industry devote itself to experiential marketing. In an increasingly digital world, retailers need to find more ways of getting their products in front of us so that we can look at them, touch them, smell and taste them.

Broadcasters have been quicker than newspapers to satisfy this craving. Apparently, the public’s taste for Top Gear has been sufficient to sustain “a £20m world tour”, produced in associated with Clarion Events.

Like Top Gear, Kevin McCloud’s Grand Designs started out as a reviews-based show, only to become a vehicle for all sorts of collectively-held aspirations. The original TV programme (produced by Fremantle Media and broadcast on Channel 4) has given birth into a huge exhibition (organised by Media 10).

Along the way, there’s been a massive expansion of focus. On telly, Grand Designs concerns itself with self-build homes. At the NEC, in October, it promises to interest “anyone who has an interest in design, build, interiors, shopping, home wares, gardens, kitchens & bathrooms, and innovation”.

Who’s to say that the Mail, the Guardian or the Times or the Telegraph can’t mobilise similar numbers of fans? Grand Designs is watched by around 5m viewers eight times a year, with repeats driving up reach. But the whitetops reach several million readers every day, and their brands have been around a lot longer.

Intrigued, I decided to look up the financial performance of the four festivals that Jenkins mentions in his column. The results were interesting:

Glastonbury: As the great-grandaddy of them all, Glasto is an exception to the rules in terms of size. But its size hasn’t restricted growth: even this well-established event is growing rapidly. In 2005, revenues were £16.3m. As you might recall, there was no event in 2006. But in 2007, revenue shot up to £22.3m. The numbers make me wonder whether Glastonbury broke through the £40m barrier this year.

The Hay Festival: Here, too, there’s significant growth. In 2005, Hay Festival of Literature and the Arts Limited generated £1.2m in revenues. Revenues grew by 22% in 2006, and by a further 26% in 2007. But 2008 was the breakthrough year, with revenue expanding by 53% to £2.9m – probably due to international expansion. Whatever the reason, the company behind The Hay Festival has more than doubled in size in the space of three years.

The National Eisteddfod Of Wales: The only registered charity on the list, and the only one that describes itself as “a process rather than an event”. Eisteddfod has reputedly been dogged by financial problems. But its topline looks healthy enough. In 2008, it generated revenues of £3.8m.

The CLA Game Fair: According to the most recent set of accounts at Companies House, the Game Fair generated revenues of £3.2m in 2006. The event was called off in 2007 “due to the appalling weather”. But in 2008, it generated £3.8m. Once again, the growth rate is impressive: 18%.

The story is consistent and obvious. Simon Jenkins is correct: there’s money in live events. Investing in them should be a no-brainer for newspapers.