As more and more companies and organizations merge their newspaper, radio, TV and online interests, it’s incumbent on us to focus on the many more things these operations have in common than set them apart. The future, it seems, portends a shifting away from traditional media silos with a focus on providing the best product and return on investment.
Wednesday afternoon’s breaking news included an article about Cox’s realignment which puts its TV, radio, and newspaper divisions into a single unit. This follows a similar move by Scripps, another company with a rich media history.
It appears with our merging of INFE — Interactive Newsmedia & Financial Executives — under the MFM umbrella, we are on the cutting edge of an industry trend. Our industries’ history documents the expansion of newspaper companies into radio, television, cable and interactive, with some divisive issues separating the individual forms of media.
The future, it seems, portends a shifting away from traditional media silos with a focus on providing the best product and ROI.
Perhaps, as a professional association for the industry’s finance executives, MFM has an easier time focusing on the mutual needs and interests shared by media companies. In addition to having business accounting as a common language for our members, their companies are subject to many of the same financial and tax regulations, including the emerging international accounting standards.
However, as we meet with our corporate controllers and CFOs to talk about 2010 budgets, we also are reminded that they have an in-depth appreciation for the unique line items in our individual operations that can represent revenues for some media companies and expenses for others. And they are equally committed to having next year’s P&L in the black.
Media convergence has also helped us to share the same perspectives more often than we would have in the past. Broadcasters can trace their concerns about retransmission by cable system operators to landmark cases from over 40 years ago. Today, many will argue that retransmission consent serves to provide stations with the dual revenue streams that less-viewed cable programming networks appearing alongside them on local cable channel lineups have enjoyed for decades. It is also helping stations to make up for lost network compensation revenues which, in some cases, are being replaced by a reverse compensation expense.
However, many stations today also operate as multichannel video programming distributors in their communities. Using some of their DTV bandwidth for multicasting, including national programming networks, has local broadcasters examining new revenue streams that are considered old hat when viewed from the perspective of cable system operators’ transaction-based business lines.
Conversely, advertising revenues have become very important to the P&L statements for the local cable system operator.
A column by Backchannel media founder Michael Kokernak that appeared on TVNewsCheck earlier this week reinforces the view that this new common ground between local broadcasters and cable system operators represents a ripe opportunity for generating new media revenues. Kokernak describes how the “EBIF” iTV platform supported by local cable systems would allow a station to embed EBIF triggers into programming and commercials to generate as many as 5,760 on screen “links” from its broadcasts to sponsors’ Web sites each a day.
“If the broadcaster has 400,000 total daily viewers (watching an average four hours a day), then the potential is there for up to a maximum of 384 million daily clicks for the broadcaster,” Kokernak estimates. In addition, companies like iCueTV are pioneering “t-commerce” applications that ride on cable’s iTV platforms that can bring some of the $140 billion in e-commerce revenues to the TV screen.
We can also learn a lot from the Fourth Estate’s earliest members, the newest members of MFM. Borrell Associates is forecasting newspaper income will be up a total of 8.7 percent over 2009 revenues by 2014, representing slightly more than $39 billion. Borrell says that newspapers will reverse their revenue declines in part by going after smaller local advertisers, something that broadcasting consultants like Fred Jacobs, a presenter at MFM’s 2009 annual conference, have been advocating for some time now.
SNL Kagan‘s recently released TV Station Deals & Finance study is betting that TV stations will follow suit. The report argues that the record drop in 2009 ad revenues “underscores the importance for broadcasters of broadening their revenue base with non-traditional streams, such as retransmission consent fees and the Internet.”
It estimates that online revenues realized by TV station operators will eclipse $1 billion by 2012.
In addition to increasing advertising revenues, newspapers are among the media companies that are looking to charge for their online content. Journalism Online LLC recently reported that it has signed affiliate agreements with publishers representing 506 newspapers and magazines and a Web audience of more than 90 million monthly visitors. The startup founded by former Wall Street Journal publisher Gordon Crovitz and media entrepreneur Steven Brill, provides it affiliates with a variety of options to charge for content, including all-you-can-read or per-article offerings.
Veronis Suhler Stevenson’s (VSS) 2009-2013 Forecast bears out the optimism for subscription-based media. VSS expects subscription television to be among four segments that will generate more than $100 billion in spending by 2013.
“While we have seen consumer media usage remain generally flat over the past year, the way in which consumers are spending their time continues to evolve,” said John Suhler, co-founder, president and general partner of VSS.
“No longer are newspaper and magazine subscription purchases and network prime-time viewing the norm,” he added. “Instead, they are declining and consumers are spending more time with media which they support and pay for as opposed to ad-supported media.”
The latest data from The Nielsen Co. helps to validate those projections. Cable subscriptions climbed to 62.2 percent of homes in July, up from 60.9 percent a year ago, and direct broadcast satellite is now at 28.6 percent of TV households, up from 28.4 percent.
These increases reflected the bump in subscription television that many expected to occur as part of broadcast television’s DTV migration.
We’re also seeing the 18-24 demographic corroborating the projections by VSS concerning the consumers’ preference for media they control. Last month, 30 percent of adults 18-24 watched a full-length movie online, according to market analysis conducted by Ipsos Media CT.
In addition, over half (51 percent) streamed a full-length TV show in the same time period. Overall, the firm found that 26 percent of Americans have streamed an online television show in the last 30 days, and 14 percent have streamed a full-length movie, more than double the numbers for online streaming last September.
Of course, there is also speculation concerning the impact of Internet-enabled televisions on the business of television, which the Yankee Group predicts will reach 50 million people by 2013. Another 30 million, it says, will have Web-connected Blu-ray players and 11 million consumers will have purchased media adaptors, giving nearly 100 million people Web video on their TVs without hooking up a PC, according to a report in Variety. TV, the Web and Blu-ray; paired with an interactive TV remote. Talk about convergence.
With all these changes in the wind, MFM has decided to devote its fall 2009 Regional Seminar to a “Media Outlook 2010.” The seminar will be held on Tuesday, Nov. 17, at the McGraw-Hill Building in New York in association with Federation of Credit and Financial Professionals.
It’s clear that we are indeed going to see convergence continue. We know that it’s going to continue to be disruptive to our traditional business models; that we are going to have to continue adapting our services in order to remain valuable to our customers. That’s a lot of ground to hold in common with our peers in other segments of the media industry. And at MFM, we’re looking forward to supporting the type of inter-media collaboration that can help to ensure that we see the necessary ROI as we all work to remain a vital part of that Fourth Estate.
Mary Collins is the president and CEO of the Media Financial Management Association, a professional society addressing the diverse needs of the industry’s financial and business professionals. Her column appears here every other Friday.