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.

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.

The good news from News Corp: Profits hold steady at Wapping and start to flow at Sky

Posted by Peter Kirwan on 6 February 2009 at 13:47
Tags: BSkyB, News Corp, News International

The coverage of today’s News Corporation results for Q408 is awash with apocalyptic intimations.

But forget about the $8.4bn write-off in asset values for a minute. That’s not a trading loss. It’s a balance sheet phenomenon, triggered by declining share prices and extruded on to the P&L by accounting rules.

Instead, focus on real profits. Here’s what happened YOY to News Corp’s operating income (profit) for the quarter ending 31^st December 2008:

• Filmed entertainment: down 72%
• Television: down 92%
• Cable & Satellite: Up 10%
• Magazines: Flat
• Newspapers & information services: Down 10%
• Books: Down 65%

The real trouble inside Murdoch’s empire isn’t yet newspapers (only down 10% in terms of profit) or books (despite the steep decline, it’s a small component of News Corp’s overall business). 

Contrary to what you might expect, the real difficulties exist in Hollywood and at Fox Broadcast Network.

News Corp’s operating profit nearly halved YOY during Q4, falling by $600m. Between them, Hollywood and Fox accounted for 85% of the real-world damage to operating profits.

Buried deep inside the release are a few more facts for which Murdoch’s UK employees might be grateful.

BSkyB — 39% owned by News Corp — is swinging emphatically from loss to profit. In 2H08, News Corporation made a profit of $109m on its investment. That’s a lot better than the $129m loss it sustained in 2H07.

Meanwhile, profits at News Corp’s UK operations during Q4 were actually flat YOY in sterling terms.

How come? Circulation revenues were up slightly. Not having to make further investments in print plants also lifted performance.

On the downside, we’re told that ad revenues declined by 10% at the Sun, News of the World, the Times and the Sunday Times.

In the current market, that’s not bad.

By comparison with Fox, where ad revenues are declining by up to 40%, News International looks like a corporate choirboy.

This won’t stop the planned job cuts. But hopefully, it might blunt their worst effects. 

Digital Britain: Gordon Brown and Lord Carter begin dance of the seven veils

Posted by Peter Kirwan on 6 January 2009 at 15:02
Tags: BSkyB, Daily Mail & General Trust, Media, News Corp, News International

Lord Carter’s Digital Britain report — due out in a few weeks’ time — appears to be moving up the political agenda rapidly.

Stealing some of Carter’s thunder at the weekend, Gordon Brown told Gaby Hinsliff of the Observer that he’d like super-fast broadband access to become the latter-day equivalent of FDR’s public works programme.

“When we talk about the roads and the bridges and the railways that were built in previous times — and those were anti-recession measures taken to help people through difficult times — you could [by comparison] talk about the digital infrastructure and that form of communications revolution at a period when we want to stimulate the economy. It’s a very important thing.”

The Observer positioned broadband as part of Brown’s plan to “ease the pain of recession” by creating “up to 100,000 new jobs”. Since then, the broadband theme has started to resonate with political commentators.

Coincidentally, the widespread deployment of fibre networks would also do a lot to secure the long-term future of media organisations. 

I pointed to this possibility back in November after reading about Lord Carter’s enthusiasm for France Numerique 2012 — the Sarkozy government’s effort to guide the creation of digital infrastructure, services and content for the greater glory of France.

In the UK, deployment of so-called super-fast broadband should enable print-based publishers to diversify aggressively into video.

Theoretically, we’re talking about the Daily Mail competing directly with ITV for ad budgets. At News Corp., those estranged cousins BSkyB and News International may find that they have a lot more in common than they thought.

More formats, more competition: it’s all positive.

Also doing the rounds is the prediction that Lord Carter will recommend a relaxation of the 2003 Communications Act. This could allow regional newspaper publishers to acquire TV and radio stations more easily.

Last year, the regional press was cowed by now-abandoned BBC plans to beef up video content on the Corporation’s local web sites.

In 2009 and beyond, the regional press may yet end up on the front foot, emboldened by relaxed cross-media ownership rules and an infrastructure shift that allows them to take the fight to Auntie.

Naturally, until we get to see Lord Carter’s report in a few weeks’ time, this is all speculation.

But interestingly, it looks as if the Tories are reacting. Today, it emerged that David Cameron is ready to offer “a review into how to give every home ultra-fast broadband within a decade”.

Of course, it would be deeply cynical of me to suggest that Brown and Cameron are vying to curry favour with news organisations whose coverage will influence the outcome of a bitterly-fought election within the next 18 months.

Deeply cynical. . .

Big Brother boss says: Kill off TV news to fund my Chirac-style folly

Posted by Peter Kirwan on 23 April 2008 at 17:18
Tags: BBC, BBC Worldwide, BSkyB, Google

Whatever happened to David Elstein?

Once upon a time, Elstein was head of programmes at Sky. As part of his job, he regularly called for the abolition of the licence fee.

In the market for ideas, Elstein’s purpose was to say the unthinkable — and get it incorporated into debate, to his employer’s advantage.

These days, Peter Bazalgette, the former public school boy responsible for a raft of trash TV, including Big Brother, seems to have taken Elstein’s place.

There’s only one slight problem. Like a lot of blokes in their mid-50s who have made lots of money from Big Media, the founder of Endemol hasn’t got much of a clue about the emerging digital universe.

At a Royal Television Society dinner last night, Bazalgette blithely called (among other things) for the government to abolish the news and current affairs obligations of both Five and Channel 4

By doing this, both channels would (presumably) become cheaper to produce and more popular.

HM Government, Bazalgette suggested, could then cream off some of the resulting expansion in profits by charging both channels for their use of digital (Freeview) spectrum.

In addition, Bazalgette proposed the privatization of BBC Worldwide, BBC Radio 1 and 2 and Channel 4.

After raising £3bn+ from such ruses, Bazalgette wants the government to launch something called, er, Boggle.

What Bazalgette has in mind is a “public service distribution platform and search engine”.

And its purpose? As Bazelgette sketchily framed it, Boggle would “link the existing online offerings of museums, galleries, theatre companies, opera houses and concert halls”.

It would also give all of these venues “seedcorn monies” to “improve” their “content offerings”.

But that’s not all. Boggle would also allow the “next generation of comedy talent” to post videos. The most popular would attract “some Boggle funding”. Last but not least, Boggle would create “a search engine to market it all”.

Confronted with this dim-witted slew of half-baked concepts, it’s hard to know where to start.

“Seedcorn monies” for museums? Fine. A few hundred million wouldn’t go amiss. But do we need a new quango to distribute it? What does the Arts Council do for a living?

Hasn’t Bazalgette heard of YouTube? Remarkably enough, young comics already use it to post videos of their gags. And then there’s Google, which owns a perfectly good search engine already. . .

In his haste to embrace a broadband future that he patently doesn’t understand, Bazalgette — the free market provocateur — actually ends up sounding like former President Chirac, who decided that French taxpayers should foot the bill for a French language search engine designed for French people.

A blizzard of straight-faced reports accompanied Bazalgette’s speech. Somewhere in them, I read that Ofcom will “study” this plan for a new quangocracy whose birth requires the death of much of what remains of news and current affairs on independent television.

Toss it into the nearest litter bin, more like. If this reflects the standard of debate within the TV industry, Big Media is in more trouble than we thought it was.

Come back David Elstein; all is forgiven.

PS: According to his biography on the Royal Television Society web site, Peter Bazalgette is currently “building a portfolio of investments in digital growth companies”. On the evidence of last night’s speech, widows and orphans would be well advised to invest their money elsewhere.

Sky’s crowdsourcing experiment: not so bad

Posted by Peter Kirwan on 29 November 2007 at 12:00
Tags: BSkyB, Media

At Journalism.co.uk, Oliver Luft protests about Sky News’s efforts to crowdsource innovative RSS applications.

Sky is planning to award a prize of at least �1,000 (possibly more) to the winner of its competition. In return, Luft suggests that the company plans to “take quite a bit”. Specifically

– an exclusive royalty free worldwide license in all media in the Finalist�s Contribution for a period of 3 months from the date of the submission

and

– after that 3 month period, Sky shall have a non-exclusive royalty free worldwide license in perpetuity in all media in the Finalist�s Contribution.

Here’s how Luft sees it:

So the position is a news company owned by a billionaire is asking for someone else to design it a cutting edge technological development, for it to use for free, forever?

Well, not exactly for free. There is the prize money. And the chance of selling your genius code to other media companies after the three-month exclusivity period — with an all-important reference customer (Sky) under your belt.

Sky’s terms don’t seem too onerous if you assume that the winner is going to be a teenaged code jockey operating out of his or her bedroom in Croydon. Which is probably a fair assumption.

The way in which Sky will license the winning software leaves copyright with the original coder. This appears to follow the rules laid down by this week’s Pact framework. Two years in the making, Pact lays out a framework of rights for digital content producers who code, or content, for broadcasters.

Luft says it’s similar to the T&Cs offered by Channel 4 in a separate contest. If so, both are a lot better than the terms offered to budding geniuses by The Big What Adventure. This is an attempt at crowdsourcing creative advertising ideas staged by TBWA, the achingly hip ad agency that works for Apple amongst others.

Here are the T&Cs from that effort:

In submitting your user content you understand that TBWA and its clients will be able to use, reproduce, develop, implement, adapt, distribute and promote all user content in any form and in all media, anywhere in the world, for any purpose, without payment to you.

And as if that wasn’t enough:

All intellectual property rights in the content available on thebigwhatadventure belong to TBWA or its licensors. All rights are reserved. No such content may be reproduced without TBWA�s prior written permission.

All of which is rather hilarious given the advertising industry’s long history of plagiarizing other people’s work. In this respect, TBWA’s track record is less than spotless.

As things go, Sky’s offer ain’t so bad. Yes, they could have gussied it up by taking an open source approach to licensing. But in the end, that’s going to be a decision for the code jockey, not Sky News.

More candidates for top job at GCap

Posted by Peter Kirwan on 27 November 2007 at 10:56
Tags: BSkyB, GCAP PLC, Google, United Business Media, emap

At the Guardian, Caitlin Fitzsimmons and John Plunkett have been chatting to headhunters. They’ve come up with a few more candidates for the vacant chief executive’s role at GCap. All are very long shots.

Malcolm Wall, chief executive of Virgin Media’s content division, is one of them. Perhaps this isn�t so surprising, since Virgin Media now seems more interested in super-fast broadband provision than competing head-on with BSkyB.

But Wall looks increasingly like an almost-man. He almost succeeded Clive Hollick at United Business Media. He almost became chief executive of ITV. And he almost got the top job at EMAP when that still meant something. Too many almosts, we think.

Then there’s Shaun Gregory, the former EMAP radio exec who is now UK chief executive of pan-European free mobile operator Blyk (a long shot, given that Blyk only launched a few months ago).

They’re also suggesting Mark Howe, the country sales director at Google UK. (He’d have to be insane, right?)