Content Bridges

Finally, the Times Moves to Re-Brand the IHT (In Part)

The Times’ move to bring the International Herald Tribune website into the brand fold certainly makes sense. The change will add about 7 million uniques to NYTimes.com's 58 million, a nice 12% boost.

One question is why it took so long – the Times arm-wrestled the Washington Post out of its IHT stake back in 2002. The IHT is not a spectacular business, but it has a good foothold in Europe. That foothold is key to the Times’ biggest hope for a stable, prosperous future – making The New York Times a truly global, multi-platform brand.

The other question is why it is leaving the IHT brand on the paper, which is in midst of redesign. Certainly that brand has much history and resonance for its English language, European readership, but it's the Times brand that says "future," while "IHT" speaks much more to tradition, and therefore the past. Would IHT readers leave the paper if it were Times-branded; I doubt it. Would the paper attract new readers, and offer even more congruent multi-platform promotion, with a Times brand; I think so.

It is a Times-branded, global presence that is, at this point, the sole promise that fosters hope at and about the Times. It is a hope that most local and regional US dailies cannot share. The 1500+ dailies’ drive to the future is local --- hyperlocal in many cases. But for the Times – and the Journal – it’s a different game.
Both are newspapers, but they increasingly have less and less in common with their newspaper brethren. Scale and reach define their business strategies. How can they get to the almost one billion English-speaking news readers out there? How can they become a top-three, go-to source for readers on every continent?

It’s the Night Before Christmas Strategy. On paper. On desktop. On cellphone. On cable. On satellite. On social net. To the top of the porch! To the top of the (digital) wall!

No one’s close to getting the strategy done yet. CNN and MSNBC have the labeling right  --  TV, Web and Mobile fronting their TV branding, but curiously absent at the top of their websites. 

The BBC and Guardian have crossed the pond, understanding the value of new business colonization in the states.  News Corp gets it and is moving on its master plan, in part noted by the recent announcement of a single, multimedia platform for Journal, Marketwatch and Barrons properties, signing up with EidosMedia. Thomson Reuters, AP and even ABC are making their plays.

So the Times’ IHT web move makes a lot of synergistic sense. NYT Europe needs to build the same kind of momentum that the Times periodically shows, embracing and integrating multimedia, bringing high-end civilian bloggers under the Times brand, and better packaging content. Its Politics panel, for example, combines video, news, live blogging and contextual news into one easy-to-take-in whole. (Memo to NYT: now take this panel, consider it a giant, endlessly configurable widget and syndicate the hell out of it.) Its European product needs to build on the same mojo, while maintaining the IHT's Eurocentricity. Getting it done right is high-end nuance.This appears to be one step.

The Times says it is still working through various internal issues before making the change.  Certainly those issues existed – slow internal decision-making has bedeviled the newspaper industry even as layoffs and buyouts burgeon. My bet, though, is that finally it is the hot breath of Rupert that will end up closing the deal. Rupert hasn’t wasted a minute in going for the Times’ head. Anything – and everything – the Times can do to meet the threat and build the same kind of primacy in cyberspace that it has in print must be done now.

The IHT move is a small one in the scheme of Times' ones. A bigger one is what to do about the Times' local papers -- a business that makes increasingly less sense for the company to stay in, as I wrote in Februrary. Today there's an item about what will happen to the Times' ownership in the Boston Globe, with Arthur Sulzberger saying he "can't get into the whole thing." It is complex - trying finding buyers out there now amid news of default -- but more urgent a matter each day.

More NYT Coverage, here

Bloomberg's Next Push: Consumer, Advertising and Global

If you've seen a bit of Bloomberg TV or heard Bloomberg Radio or been in front of one of its terminals, you may have recently wondered: Why isn't it doing more with what it has?

Its reporters are some of the fastest moving on the web, and know data better than most covering the news industry.

So what might today's announcement that news industry veteran Norm Pearlstine is becoming "chief content officer" of Bloomberg mean?

My quick take:

* Right now, Bloomberg derives almost all its revenues from Corporate markets. With Pearlstine at the hub, it plainly will look at leveraging its assets beyond Corporate, most directly to B2C markets. I hear that has made recent forays into Legal markets as well, competing with Reed Elsevier's LexisNexis and Thomson Reuters' West Publishing.
* Key question is one familiar to all legacy news companies. Can it keep its grip on stable (in this case, installed terminal) revenue, while competing in markets new to it. It faces risk of commoditizing its core business, unless it executes a Free Web B2C strategy smartly.
* Business advertising draws among the highest CPM rates, more than $100 CPM for business news video and above $50 CPM for graphical ads, for high-branded content. But the overall pie of online business news ad revenue is still small -- that's why News Corp decided against eliminating wsj.com subscription wall. There's simply not enough money in web business news advertising to make up its online sub revenue loss.
* Pearlstine's experience tells us that this is all about leveraging the content assets across all modern media platforms. So expect Bloomberg to go where the growth is -- advertising. Web advertising is still growing around a 20 per cent rate, and Bloomberg should cash in there.
* The new Bloomberg view should be more global. According to Outsell research numbers, it drives 47% of its revenues from the US, 38% from EMEA and only 10% from Asia. Asia should be bigger. So look for Bloomberg to become a more global player, both through acquisition and greater use of partner distribution channels.

In sum, I think there are three words that define the Pearlstine announcement:
---Consumer
---Advertising
---Global

Bloomberg sees a similar opportunity as Rupert Murdoch saw in buying Dow Jones -- the global business news opportunity leveraged over all platforms. Today's announcement means more competition for Dow Jones -- and Time Warner's business magazines, McGraw Hill's Business Week, Forbes, the New York Times and the Financial Times.

Let the new business games begin.

Can Cablevision Turn a Triple Play into a Newsday Home Run?

It's easy to get lost in the current era of Big Man in Town Journalism. Zell. Singleton, Murdoch. Tierney. Harte. So much of the recent drama in newspaper ownership change has been driven by personality, as keep-it-in-road, rationale profit-seeking companies turn up their noses at the prospects of buying newspaper companies. It takes an outsized ego, an outsized wallet (your own maybe, but preferably someone else's) and a perhaps outlandish optimism to grab onto the horns of the bull and take off for a wild ride.

One current installment of that drama is playing out in Long Island, home of once-proud Newsday, a paper that innovated ahead of its day and then saw its fortunes cascade through the Times Mirror and Tribune funhouses. As Sam Zell stares down his first balloon debt payment, Newsday's hit the block, and an unusually crowded one it is. Isn't it great to see a bidding war for a newspaper company? It is highly enjoyable, if unique to market circumstance. With Murdoch's Post and Mort Zuckerman's New York Daily News in lethal competition, both have a hard time imagining the other getting Newsday and using it as cudgel in the war.

The weapon for each in that case is, of course, cost reduction -- a relentless streaming of cost in all departments -- ad, circ, production and printing and finance, not to speak of how newsroom synergies might be achieved. It's the other bidder in this case -- currently the high one -- that I think paints a more interesting picture of what the local "press" may become.

Cablevision has offered $70 million more than either Mort or Rupert, currently at $650 million, $150 million above its original offer. With Rupert and Sam increasingly better buddies (formally on AP board and informally, we can only guess), I would have put my money on that deal (and agree with Alan Mutter's notion of a potential Murdoch/Zell endgame, here). But $70 million is quite a differential, and for now, Rupert is saying he isn't going up. Further the potential of FCC review of his increasingly entangling NYC-area cross-ownership (the Post, WWOR-TV and WNYW-TV, Dow Jones and Newsday) would at least slow down and bring uncertainty to the deal. Sam Zell's bankers don't like uncertainty.

So that may leave us with a new attempt at....synergy. In fact, it could turn the emergent idea of Triple Play -- TV cable service, Internet service, local phone service -- into a Home Run, adding "newspaper" to the diamond.

In this new synergistic interpretation, we'd observe what new owners would see as complementary in combining Cable News -- including News12 Interactive.com (its cringe-worthy tagline -- "only in cable  not on phone company tv or anywhere else"; you need a password to get in unless you are a local cable subscriber) -- with Newsday. It's been done before you say, and you're right. In fact, Cablevision and Newsday themselves jointly produced a one-hour cable news program years ago. But it was too early and didn't pencil out. It's been done elsewhere as well, with mixed results.

What's changing now, I think, is that the time is coming back around to do it right and to make it pay. Is it a "TV-centric" time, as someone close to the Dolan family, who control Cablevision, said? TV-centric misses the point. It's more video-forward than TV-centric. News video is now here to stay. More than half of the US population has watched video within the last month; already in Britain, that number is now more than 90%. We're getting used to seeing video first, on our time, time-shifted, Apple TV-enabled, and through the Internet. The much-maligned pre-rolls and their children, "in-video" ads, are still highly sought after and fetching $25-35 CPMs, on average. We do like to watch. 

Look at most newspaper sites, and you see dabbling. The AP Online Video Network is so far populated on about 1800 sites, newspaper and broadcast. On too many, though, it's relegated downpage, and seems like an after-thought.

So what happens, in this new, coming age of convergence -- in which easily watchable video marries quick-read text and always-on opinion -- if you combine the resources of a Newsday and a Cablevision, which, too, counts hundreds of journalists in its newsrooms that span from northern New Jersey to southern Connecticut.

Charlie and Phil's Excellent Global Adventure

Call it physics. Call it Zen. Call it journalism.

As I cover the waning fortunes of legacy media and rising fortunes of start-up journalism sites, I can't help but think of equilibrium. Maybe it's being back on the Left Coast too long, but somehow the scales seem to be balancing. Recall that Americans still read news 62 minutes a day, just as they did 10 years ago. But of course they spend less time with newspapers, TV and radio, stealing some of those minutes for the web.

It's certainly not a gainly equilibrium, but the announcement that Charlie Sennott is joining Global News Enterprises as executive editor is just one more sign that it's happening.

Sennott, award-winning and industry-esteemed, swings out the Boston Globe door, taking the increasingly familiar buyout route after 15 years there, and busts open the portals of Global News.  The site is the first embrace the (lower-case) globe as its reporting assignment. The plan: launch in early 2009, with a complement of 70 corresponents, reporting in from all corners of the world. The correspondents won't be full-time staff, but rather stringers drawing stipends for a weekly report. The site will be staffed initially by 10 full-timers, with the editorial operation headed by Sennott. Over his time at the Globe, he served as Middle East bureau chief in Jerusalem,  as European bureau chief in London and then worked on the Globe's special-projects team, doing year-long work in both  Iraq and Afghanistan. His recent work has tracked the Iraqi war, including this piece -- "New England's Own" -- on veterans returning home from Iraq. It's an impressive multimedia package, one which Sennott says is a "raw prototype of what the in-depth reports might look like on GlobalNews".

Of course, Global News is just one of many new news sites emerging, from its national cousins Politico and ProPublica to its regional kin, MinnPost, PegasusNews, CrossCut, Voice of  San Diego, the New Haven Independent, VillageSoup and more. Their business models vary, from profit-seeking to non-profit, with differing views on advertising, sponsorship, membership and angel funding. But I'm beginning to believe their most important business model is one that's been sucked out of the newspaper industry: enthusiasm.

It is one of the common denominators of all these site founders, and the 45-year-old Sennott's got a good case of it:

"I leave the Globe April 4. I start [on Global News] on April 7....I want to be in the revolution. I want to jump the barricades... Global News will be a dream team of reporters who are at places they don't have to be, ready to commit themselves..."

Sennott was just back from Baghdad, from an embed assignment in a patrolling Humvee, when we talked. He can talk traditional Ernie Pyle war correspondent lingo and the language of 2008. "It used to be you took a brick of notepads," he remembers. Now it's Kevlar, Marantz (as in digital recorders) and a host of audio/video gear to get the whole story. "And I've learned Final Cut Pro."

The site has got more than enthusiasm going for it. It's got almost $8 million to start (intending to raise $2 million more pre-launch), and Phil Balboni as a co-founder. Balboni founded New England Cable News, and he's pulled in as investors former Globe publisher Benjamin Taylor,  Akamai president Paul Sagan and Continental Cablevision co-founder Amos Hostetter, Jr. Balboni, whose business and journalistic acumen is well-regarded, will be CEO.

Charlie and Phil's Excellent Global Adventure is one to watch. They put it together as both had separately noodled on the idea. Sennott has been working on the notion for a couple of years, thinking "non-profit", and seeking funds from the Knight Foundation, among others. When they came together, they decided that a profit-seeking model was better, better at raising capital and in providing some skin in the game to the fledgling correspondent corps, who will get options.

Rupert and Jerry Could Mean More than "Our Space"

Okay, I've pulled myself away from the larger American drama of Barack and Hillary, and her coming "Alamo Firewall." Which brings me to another reality show. Maybe we could call it "Rupert and Jerry's Our Space." (You know "Our Space is a very, very, very nice, place, with.......")

At the core of the proposition we know is a MySpace for 20% of Yahoo swap, providing a News Corp tentacle into the web's largest aggregator. We can debate relative values of that swap every which way. What's the real value of Yahoo; Microsoft's current or next offer? Jerry's $40 number? A real break-up number? The future value of MySpace itself? That's a big number if you look at the out-sized duration and frequency numbers of MySpace and Facebook. That's a smaller number if you absorb the lessons of Facebook's Beacon -- it's hard to find socially acceptable ways to monetize a social site.

But beyond that path, I think News Corp's further interest in Yahoo has all kinds of interesting angles. We can talk gaming (News Corp's IGN/Yahoo Games), movies (News Corp's Rotten Tomatoes/a struggling Yahoo Movies) and endless potential for sports (News Corp's highly successful regional sports networks and Yahoo Sports. That's just a few of them. You can play your own mix and match; just check out News Corp's "Other Assets."

All those have interesting potential, but let me focus on two others, both of which seem like naturals of this moment in web time.

First consider business news.

Remember the justification for Rupert's 60+% premium for Dow Jones? It was global domination of business news, in print, online and on cable/satellite (in addition to mobile, no doubt, as it develops). Sure, Rupert's pulled back from a free wsj.com -- apparently accepting the advice of his execs that the market for business advertising on the web, while lucrative, just wasn't ready to support a free product. But that doesn't mean he won't relentlessly seek new audiences to monetize that costly content.

So put together the Dow Jones brands with the considerable power of Yahoo Finance. For Yahoo, the semi-exclusive ability to display DJ content would help Yahoo Finance break away from the pack of too-indistinguishable Google Finance, MSN Money and AOL Money and Finance.  It could integrate lots of Marketwatch and selective WSJ and Barron's content. Then there's the fledgling Fox Business Network, which produces lots of content, but, oh, doesn't really have an audience yet.

For Dow Jones, Yahoo brings many more eyeballs to the content and the parties can figure out how to sell and share the advertising. Wouldn't that make a lot of sense for both companies, especially if Rupert has an equity piece of Yahoo as well?

Second, consider news video. One of the first areas that News Corp has moved on in achieving synergy out of the DJ deal is in video. Remember, Fox produces lots of news video and it is gearing up to produce even more with the web now firmly in mind. So just recently we've seen (check the brand) lots of Fox video showing up at wsj.com Video Center and the Marketwatch Multimedia (the two now offering the same videos).

Already, those in and around the industry tell me that $25 is the average CPM for news video, with top-branded business video selling out at $90 and now surpassing $100 CPMs. So if News Corp can gain preference on the web's largest news audience, it can make a lot of money fast. Preference, you know, like Yahoo newspaper consortium members are getting on Yahoo Local pages. Preference works, creating new pages views and new monetization.

How well-equipped is Fox video to compete? Well, let's think about what we watch.

Of the breaking news we watch, how closely do you watch and know whether the breaking news video is coming from? Whether it's coming from Reuters or AP -- now in fierce competition and producing more than 1000 news videos a month -- or CNN or....Fox. If Fox can gain greater access to audience -- beyond the newly bought Dow Jones properties, the monetization of that video can skyrocket.

Yahoo itself, as in so many other areas, has been behind the curve on video, with Comscore assigning a 3.4% of the video market to the company. Hence, its Maven purchase.

What's news video worth? 2007 revenue totals weren't huge -- $500-750 million is the range of estimates -- but it grew 40% YOY. It's expected to grow 40% again this year and credible estimates put 2011 market size at about $4 billion. So yes, a News Corp/Yahoo video play could yield big and growing dividends as well.

If, against Microsoft odds, Jerry and Rupert do team up, expect a scorecard that goes well beyond social networking.

 

MSFT + YHOO = BALL(MER) & CHAIN? -- Special Newspaper Consortium Edition

Well now. Yahoo's been piling up its own set of endorsements from newspapers over the last year. It has convinced newspaper chains of two things: 1) they needed a big brother with a big network of readers and the latest in search/ad technology; 2) that big brother is Yahoo. With the newly ascendant Dean Singleton leading the charge, a core group of eight entered the Sunnyvale castle. Since then Yahoo has talked, literally, to every one of the rest and now 22 American newspaper chains (with more than 500 of the 1500+ American dailies) are within the gates.

So when Microsoft stormed those gates, formally and officially, Friday, among those parsing the hot breath of Redmond is the news industry.

Microsoft is a familiar, though often distant character, in the newspaper/Web saga. Publishers have made many a pilgrimage north, and Microsoft has offered uneven diplomacy of its own. Overall, the takeaway -- from those Sidewalk/Netscape origins -- has been one of suspicion. It's been hard to walk away from Microsoft meetings without the sense your pocket has just been picked, or its hand is still in it as you depart town. Microsoft earned its early reputation as a "partner" who would pick your strategy clean, taking your experience into its IP, and then decide to go another way. It may have lived down some of that reputation more recently, but the sense persists.

So the news of the Microsoft $44 billion bid for Yahoo sent some shock waves through news industry corporate suites. Here they are, in the first year of marriage, and someone may have switched the groom. The signs that the groom may have been distressed were clear, my "Be Careful Who You Consort With" post of late January was among those that pointed that out. But still when the possible switch is announced, everyone finally takes the new seriously.

Much more's to come, beginning this week, in this takeover (See "MSFT + YHOO = BALL(MER) & CHAIN?"), but here's my beginning list of nine questions. What's yours?

Do you hear the echoes of the Sidewalk era? Sidewalk was Microsoft's push to get into local media in the mid-'90s. Its vision was right-on: becoming the dominant local online events site. Microsoft sent an early scare through the news industry, picking off some top talent, but it was too early in the game. Microsoft folded too soon, selling the remnants of the business to City Search. And don't think Steve Ballmer hasn't kept the foray in mind. Quoted in the New York Times last January:

“But Sidewalk was really aimed at what we now call local search,” Mr. Ballmer says. “Sidewalk is one we should not have gotten out of.”

In its heart, Microsoft still harbors dreams of being a media heavyweight.

Does the deal set back the clock? The newspaper industry hears the ticking of the clock louder each year, with each new year less friendly than the old. The increasing volume has been one prime reason the companies ceded some autonomy to get at Yahoo eyeballs and technology. But given that this deal would take 6-12 months to get finalized and integrated -- and that's really optimistic -- the payoff to publishers in traffic and revenue would only be further set back. Alan Mutter agrees on that point and discusses the consortium angle here.

How will newspapers exercise any change-of-control clause they have in the consortium contracts? At least some of the players have them, giving them a bit of leverage to renegotiate with Microsoft/Yahoo and/or Google.

Would the newspapers like to buy or buy into the HotJobs business to get equity as well as shared functionality and network scale? If Microsoft would be serious in redefining its technology provider/media owner equation, such a deal for equity could further cement relationships with these publishers around a still-essential vertical going forward.

Doesn't the deal open up a new opportunity for the 22 newspaper consortium members to re-think, re-negotiate and reckon its deal with Yahoo? The consortium members have gotten somewhat more comfortable over the last year working with each other. Can they now step back and decide how better to share costs of marketing, sales and technology, working with one of the behemoths or contracting centrally -- oh, Lord, is it finally time -- to create the universal forward-reaching publishing platform all can use and grow on.

Won't this deal help push further rationalization in the recruitment marketplace? Yahoo HotJobs has had the mojo over the last year. Monster's been struggling along with the Gannett-Tribune-McClatchy-owned CareerBuilder. Yes, that CareerBuilder -- in which Microsoft took a 4% stake last June. So the would-be tangled ownership stakes cry out for rationalization.

As recruitment becomes less and less a listings business and more and more a tech-driven matching business, it might make sense for tech/ad company -- Google certainly comes to mind -- to roll up Hot Jobs competition. Monster's got to be available, and each of  now-struggling Gannett, the New Tribune and a seeking-to-reduce-debt McClatchy all have reasons to sell. If they could sell a majority of the company, perhaps, retain some equity and preference in the product, we could see a new duopoly recruitment duopoly born.

Doing the Media Mash: CNBC, Jon Stewart and Newsweek!

Confused about the state of modern mass media? Join the club.

You could see the current landscape nicely displayed within a few minutes on CNBC's Fast Money stock talk fest, which I took in courtesy of Jet Blue yesterday.

First the panel wowed itself with its own press clippings, or rather video clippings of the day -- where the Fast Money crew had appeared on....TV. Among the clips, one of Jon Stewart's Daily Show. It was the one in which Stewart interviewed CNN personal finance editor Gerri Willis, and used Fast Money clips, among others, to skewer money program jargon. (As Motley Fool picked up, there was irony within irony here as Willis, asked to interpret the jargon, got it exactly backwards.)

Media eating media eating media.

And then the Fast Money crew moved on to the newsmagazines, laughing about their collective obsolescence and holding up the current Newsweek cover: "The Road to Recession."

Well, when Newsweek reports a recession, it may be the bottom of the economy and the start of the way back up, the panel joked. The newsmagazines, they were saying, are so yesterday and so financially illiterate. Elements of truth in both.

More media eating media.

Of course, you've got your NBC and your CNBC and your MSNBC, long-time home of Newsweek. Media madness indeed.

Sam Zell: FCC-Anointed Prince of "Multi-Media" City

Think of FCC Chairman Kevin Martin's blazing-guns Tribune (TRB) waiver in two ways. In one way, it's a celebration of feudalism, as the new Sam Zell-led Tribune gets an unexpected prize, principality status in Chicagoland. In another, it's Martin's own way to propel the local newspaper and broadcast industries fully into the 21st Century, opening the door to singular, city-based companies producing multi-platform journalism and selling multi-platform ads.

By itself, today's ruling just gives the Tribune the ability to go private, keeping its portfolio intact for awhile, pending other FCC actions and court appeals. In FCC Commissioner Jonathan Adelstein's words opposing the waiver, "The Order employs certain novel, ill-advised and back-breaking legal gymnastics that will surely leave observers with their heads spinning." That's certainly true, but I'll leave those gymnastics to other observers, focusing instead on the media and journalism implications of what we're seeing.

The ruling -- allowing the company to keep its broadcast stations and newspapers in key markets for now -- should be enough to finally allow the Tribune deal to go through and for Sam Zell to begin his restructuring of company. The work of his teams of analysts roaming the Tribune building will take effect, and 2008 won't be much like 2007. The share price has been snaking up towards the $34 offer price expected, today closing at $31.04. A little more confidence-building as CEO Dennis Fitzsimons re-re-re-affirms that the bank financing will hold and Sam Zell affirms he's ready to roll, and the price, like it did in the News Corp/Dow Jones buyout, will move toward its target.

On the decision, the feudal part is the easiest to understand. The language:

64. IT IS FURTHER ORDERED, that a permanent waiver of the newspaper/broadcast cross-ownership rule, 47 CF.R. Sec. 73.3555, to permit the common ownership of WGN, WGN-TV and the Chicago Tribune by Sam Zell, The Tribune Employee Stock Ownership Plan, as implemented through the Tribune Employee Stock Ownership Trust, and EGI-TRB, LLC IS GRANTED.

The "permanent" is the shocker, putting into good Tribune Tower granite, the long-time domination of the Chicago media landscape.

Why? According to the ruling:

"Here, we find that the nature of the market involved combined with the uniquely long-term symbiotic relationship between the broadcast stations and the newspaper warrants a permanent waiver.  In this regard, our examination of the record confirms “the myriad public interest benefits that have resulted over the almost 60 years of Tribune’s common ownership of WGN-TV, WGN(AM), and the Chicago Tribune in the Chicago DMA.” 

It's hard to know whether the FCC is enshrining the near-monopoly or just re-enforcing another longtime Chicago tradition -- of course, a Daley will be mayor, and Tribune will run the media.

For Zell, though, this is probably the best prize he can get. He's now becoming the new Media Mayor of Chicago, a role he'll savor -- and can afford to subsidize.

It's the 21st Century part of the ruling that's really quite ironic.

I take you back to the year 2000. Newspaper valuations were good, and the Tribune company pulled off its blockbuster deal, buying Times Mirror for $8 billion, gaining properties in L.A., New York, Baltimore, Hartford (all subject to today's waiver granting) and a couple of others. On the foundation of that deal, Tribune, uniquely in the newspaper industry, set off on a strategy of grabbing more ad share and higher ad pricing by its ownership of newspaper, broadcast and, then, quickly, Internet sites in each site. It was a big strategy, at odds with many of its newspaper brethren. Long story short, it didn't work.

FCC Rule Changes Pave Way for Roll-Ups and Mergers

Against the background of FCC Chairman Kevin Martin’s blitzkrieg effort to change long-standing rules on multiple media property ownership in American cities, we see what seems to be a confusing crazy-quilt of response from the big daily chains.

Tribune’s telling the FCC that unless it gets clearance (permanent or temporary waiver) to grandfather its newspaper/TV properties (in New York, Chicago, Los Angeles, Hartford and South Florida) its sale to Sam Zell won’t go through. Meanwhile, Scripps is busy splitting dividing its diversified company assets in two, creating a new “Local” company, comprising newspaper and broadcast TV assets, while separating out national/global cable and Internet. At the same time, Belo is tearing itself in two, separating out broadcast and newspaper assets, a notion Gannett is mulling as well.

So what’s happening here? What exactly is the commercial value of having multiple properties in a single metro area?

The answers are simple and complex. Long story short, though, I think, if the FCC changes are passed and stick, we’ll see a greater push of roll-up and merger, as print and broadcast assets inevitably come together, and in the hands of fewer, big players.

The answer is simple in that it’s better for those owning media properties to have maximum flexibility in keeping – or selling – properties. With government placing fewer fetters on who can own, merge and trade properties, perceived value increases. Would Sam Zell sell the L.A. Times and KTLA-TV? If so, buyers may well value them higher together than apart. And the same can be said for various other sets of assets and combos. If the FCC decision goes through, and makes it through the courts, expect an unprecedented level of sales and swaps.

But the complexity is more interesting – and raises the big questions about overarching news Internet strategy going forward.

The Tribune’s recent plaint is part of that complexity, and there’s an irony in it as well. You may remember that when Tribune bought Times Mirror in 2000, it distinguished its play with a big-city, newspaper/TV station, bundled-ad-buy-we’ll-get-more-market share strategy. That stood against the national network strategies of the day, including Knight Ridder’s Real Cities Network.

The Tribune said, no, the money’s in the market, and leveraging TV and newspaper (daily and niche), and in some cases radio, to get it would bring in lots of new revenue. The strategy didn’t work, many of those involved with it will tell you. Why? Even five-plus years ago, different ad buyers bought broadcast and print separately, and Tribune managed little pick-up of market share, eventually all-but-publicly acknowledging it had overpaid for the Times Mirror.

Flash forward to the brink of 2008, and we see an even greater change in ad buying. Almost $20 billion a year has moved to the web, but most significantly, web-based advertising is leading the revolution affecting all parts of the estimated $275 billion U.S. industry. Ad buyers have multiplying tools at their fingertips to measure effectiveness, and as those tools ravage all traditional ad selling models, the power’s moving from ad sellers to ad buyers.

So does owning both TV and newspaper properties in a single market provide ad advantage? Probably, not much, though owning two TV stations – a duopoly (which Martin’s rule relaxation might allow as well) may be marginally more valuable, same ad buyers at least.

What then might be the other advantages of owning a TV station and a newspaper in Chicago, Dallas or L.A.?

Certainly, we’d think there would be a certain promotional benefit. You know, “for more on this story” TV voice-overs pointing to print, for instance. But newspapers and broadcasters – usually by agreement, not common ownership -- have engaged in cross-promo deals for more than a decade now, and you can find few enthusiastic supporters of the results. Whether it’s been a matter of too little energy put into the relationship – as partners inevitably wrangle about leveling the relationship – or just the fact that the promo doesn’t really introduce customers to products they don’t already know about, the value’s been minor.

So, if ad bundling and cross-promo are minor, what about editorial sharing?

Here’s where it may get interesting. Sure, early on, newspaper sites tried to do video-sharing deals with local news stations (usually as part of cross-promo deals), but those deals faltered. They often fell apart, again in partner suspicion of inequality or just for lack of care and feeding. In addition, broadcasters have had a hard time exporting their news video in a timely, segmented way – the way online news readers want it.

So looking back, you’d say, there’s not much here, not much to recommend owning print and broadcast assets in the same market. But think again. Clearly as we approach the next decade, the local media model is pixel-clear. Local media companies based on singular, multi-media producing newsrooms – use the medium (video, audio, text) best for the storytelling, produce once, distribute many. That’s the model newspaper companies from Gannett (Seven Desks) to Lee (Lee University) to Scripps (check out the new multimedia SIDS report) are slowly adopting, and it’s one that fledging companies from Pegasus News to MinnPost to The Politico must embrace as their funding allows.

If this world existed fully today, it would only take fast-charging operators (think Rupert Murdoch and Dean Singleton) to quickly dis-assemble the old pieces and re-assemble the new ones, with far fewer layers of management and overhead. It’s the newspaper clustering approach (put together lots of print properties in a single region) applied more broadly.

 

9 Questions on the Launch of Fox Business Network

Ah, we're into the week of The Wiles and Wails of Roger Ailes. Fox Business Channel launches Monday, all industry eyes glued to the story, the first demonstrable play associated with Rupert Murdoch's Dow Jones putsch. That sale is due to close in November, but this FBN launch is a first act in Murdoch's quest for global domination of the business news and information business.

Ailes has long been a character of Rovian dimension, and he gets to see if he can put the same fright into CNBC that he put into CNN. His confident swagger was on glorious display in -- naturally -- the Wall Street Journal last week, as he gave an interview.

A little trash talk, a few war metaphors, and tomorrow, we'll be off to the races:

WSJ: How has the network changed since you left?

MR. AILES: It's gone down in ratings dramatically. I checked the numbers of the fourth calendar quarter in 95, my last year there. Their total day is down 5 percent and their demographic is down 15 percent. Prime time is down 61 percent and prime time demo is down 53 percent. So, it's changed quite a bit since I was there.

And leave it to Ailes to use war metaphors to make his point:

MR. AILES: I never predict offensive goals. I think that was Israel's problem in Lebanon. Look, there are too many variables: is there gonna be a recession? Will that affect the ratings on either channel? Will CNBC suddenly get better? Will something work out with The Wall Street Journal? Will we be better than expected? Is it gonna rain? There are just too many variables. So you don't go out there and say: I'm gonna do this.

But the wiles of the man are well-earned. Here are nine questions for News Corp upon launch:

1. What’s the attitude of FBN going to be? Ailes’ Fox News Channel is all about attitude. It’s news with a scowl, the face of Bill O’Reilly. That won’t work as easily with FBN. Will it be business news with a knowing insider’s wink? No, we don’t expect the Fox News spin here (two well-coiffed, super-carnivorous Irish-Americans vs. a single bespectacled, nice-guy (on nice-gal) weakling du jour from NPR).

Plenty of Americans like spin with their politics, but they won’t want it with their pocketbooks. “Free Markets, Free People” – the cry of the largely discredited neocons – only goes so far. Already, we’ve heard from FBN managing editor Neil Cavuto that other media over-covered Wall Street’s recent spate of company scandals, for which incidentally the soon-to-be-Foxed WSJ has won accolades. But investors have been outraged by the dealings, and they know they were getting screwed. Money is money, and FBN’s viewers will want the network to help get them get more of it.

So Fox’s moves here will have to be more nuanced. It will be tricky getting this formula right, but it did take FNC 4 years to overtake CNN.

2) How many more Carly Fiorinas are going to come out of the woodwork? Hey cable TV and the web have proven anyone can be an analyst. Fiorina – short on recent success, but a name that will be a shiny lure as FBN fishes in CNBC’s big pond and beyond – will get viewers to look. Expect more names to line up for the FBN show.  Forget Scott Boras and A-Rod, this is a great time to be an agent for the likes of Suze Orman, Jane Bryant Quinn, Jim Cramer, Andrew Tobias and James B. Stewart.

3. How Main Street will FBN go? Organic, a San Francisco-based ad agency, defined four potential targets from Nest Egg Newbie to Middle American Main Streeter, as it suggested FBN broaden its scope beyond CNBC’s narrow focus. Advantage to FBN: Getting beyond the narrow CNBC Investing-oriented reader, reaching more money-oriented viewers, in two huge personal finance categories: Spending and Saving.  Disadvantage to FBN: Going mid-market reduces the demographics FBN has to sell ads against. CNBC’s viewers have average net worths of $2.7 million, says the company.

Remember the current market is all about niche. While the potential audience of CNBC is 90 million households, most of us find it way too boring compared to the Top Chefs, the Survivors and the Discovery specials. In August, CNBC’s average audience numbered only 87,000 people, aged 25-54, according to Nielsen.

So, yes, FBN is on to a big idea here. There may well be a market vacuum. But it exists for a reason. Most Main Streeters don’t look at stopping by the bank as fun, they’d rather spend money and leave the strategies to others.

Consequently, expect this Main Street approach to take on lots of the per fi magazine evergreens – Retire Rich! (yes, yet again this month from Time Inc.’s Money). You know the 24-hour TV cycle can endlessly run “How to Save for Your Kids’ Education,” “Top 10 Places to Retire,” and “Picking the Right Financial Advisor for YOU.”

4. How will FBN leverage the reporting and personality assets it is buying (in November) as it closes the Dow Jones purchase? We do know that CNBC has a fairly tight exclusive to use WSJ reporters on air into 2012. Murdoch has publicly made the point that the deal applies to “hard news”.  It would be fun seeing a court apply a hard/soft scale to stories. Look at Murdoch’s posturing as setting up the argument that all those personal finance writers and columnists, all those contributors to the Journal’s expanding Weekend (arts, leisure, spending) and Pursuits sections plus all those Marketwatch and Barron’s writers aren’t covered by the deal.

5) How much will FBN be a TV play, and how much will it be a well-coordinated multi-channel play? Let’s recall that Rupert bought Dow Jones for $5 billion – at a 67% premium – because he sees its global multi-channel value. He’s named this initiative the Fox Business Network, unlike the 10-year-old Fox News Channel. First off, we’ll have to check out how FBN’s website evolves, how it connects to interactive financial advances of Marketwatch (nice customizable portfolio recently launched in beta) and how it connects to the company’s other online brands – wsj.com, barrons.com and Marketwatch.com. Those sites offer FBN a big leg-up over CNBC – never a leader in the online money space – if connected smartly. Is there a growing online money space? Yes, such ventures like FNN and CNNfn were too early, but that was then, and money, like other top categories benefits from the maturing of web business.

Though most everyone is pitching the launch as a TV battle, it’s clear that video, audio, text and photo assets are all merging – yes, finally converging – on websites near and far, with a fast-growing base of Internet-based advertising under them. Make no mistake this is not just a TV battle.

One useful data point: check out Comscore’s top 20 news websites, and you’ll see that the Fox News Channel leads all of them in duration – number of minutes spent on the site monthly – now at an eye-popping 48 minutes per unique visitor, in the September numbers just released. Fox has figured something out better than the competition here, or at least how to make its numbers look bigger.