29 January 2010

Mobile-Ad M & A to Continue

Business Week

Michael Bayle has been fielding a lot of phone calls in the two months since Google bought mobile-ad company AdMob for $750 million. Bayle is a vice-president at Amobee, also in the business of placing ads on wireless handsets. "Our phone has been ring-ringing off the hook," Bayle says. "We are speaking to a number of parties."
Startups that specialize in mobile advertising are getting a lot of phone calls these days. Possible acquirers are gunning for a slice of an industry that according to ABI Research may generate $1.14 billion in sales this year, almost four times the $297 million spent in 2008. "Mobile ads are [one of] the hottest areas in technology right now," says M&A expert Tom Taulli.

There's especially high demand for so-called mobile-ad networks, such as Amobee, which act as middlemen between advertisers and wireless service providers to broker the placement of ads in games, videos, and other mobile content. Then there are mobile-ad exchanges, such as RingRing, which often get involved earlier in the process, helping connect advertisers with mobile-ad networks.

On Jan. 20, mobile Web browser software provider Opera bought ad exchange AdMarvel. Earlier this month, Apple snapped up mobile-ad network Quattro Wireless for $275 million to $300 million, according to published reports. AdMob was Google's third-biggest acquisition to date. Other mobile-ad companies may fetch far less than $250 million, Taulli speculates. Still, the dealmaking is far from over.

Analysts say potential targets include ad networks Millennial Media, Jumptap, Greystripe, and Tapjoy, and ad exchanges such as Mobclix. "The AdMob acquisition blew the roof off [valuations]," says Sunil Verma, co-founder of Mobclix, which soon expects to close a funding round. "It validates the market size and potential, and that's sparked a trickle-down effect on others." Verma declined to discuss funding details. To date, Mobclix has received $4 million to $5 million in angel funding from investors, including Verma and three other founders.

De Rigueur for Many Advertisers

Millennial Media is the largest of the potential targets. It received a $16 million funding round in November and aims for an initial public share sale in 2011 or later but would consider a buyout sooner for the right price, Millennial Media CEO Paul Palmieri says.

After years of overoptimistic projections, advertisers are finally boosting spending on mobile ads as consumers step up purchases of smartphones that are better-equipped than cell phones for Web surfing. Jumptap's revenue last year increased five times over its 2008 figure, says CEO Dan Olschwang. "More [advertisers] now treat mobile as a must-have component in their media mix," he says.

In November 2009, 61.5 million U.S. users accessed the Internet via mobile devices, up from 46.6 million a year earlier, according to Nielsen Mobile. Within five years, more people will access the Web via mobile devices than personal computers, Morgan Stanley analyst Mary Meeker said in a recent report.

Mobile ads may also be more effective, researchers say. Mobile ads have a higher so-called click-through rate, a measure of the rate at which an ad is clicked on by a person who views it. The rate for mobile ads is 2% to 5%, compared with 0.2% for PC-based online advertising, according to Chetan Sharma, an independent wireless industry analyst. Mobile ads are also less expensive, costing as little as $1 to $6 per 1,000 impressions, while a PC Web banner costs closer to $10, Sharma says.

Exponential Growth

Coca-Cola, Honda, Intel, Motorola, and National Geographic are among companies now advertising on mobile phones. "The number of advertisers doing mobile programs has grown exponentially," says Paul Kultgen, a director at Nielsen. The researcher's November survey showed that more than 1,000 advertisers now put out mobile display ads, a fivefold increase over a year earlier.

AOL, Microsoft, Yahoo!, and Nokia  have acquired mobile-ad companies in the past several years and may make more purchases, analysts say. Representatives of all four companies declined to comment for this story. Handset makers such as Samsung and Motorola may also join the buying, analysts speculated. Representatives of both companies declined to comment. Online retailers Amazon and eBay are also potential acquirers, says Olschwang of Jumptap. An eBay representative declined to comment, while an Amazon representative declined to comment.

Meantime, even potential targets are turning into acquirers. On Jan. 13, Amobee bought London-based RingRing Media for an undisclosed sum. Bayle says Amobee may make other purchases.

NBC's Dick Ebersol Frustrated With Immelt Olympic Remarks

Media Daily News

The Olympics are less than a month away -- and NBC Universal sports chief Dick Ebersol has been speaking about more than the majesty of figure skating or intensity of hockey. There was the much-publicized rebuke of NBC late-night host Conan O'Brien. And now, he's expressed frustration with his ultimate boss, General Electric CEO Jeff Immelt.

In comments published Wednesday in The New York Times, Ebersol suggested Immelt's statements last month that GE would lose $200 million on the Vancouver Olympics has affected the sales process.

Immelt, who runs a company with $17 billion in profits, was somewhat casual in his December prediction, referring to a probable loss of "a couple hundred million bucks."

But Ebersol told the Times: "When you say something like that, advertisers think they'll get a bargain, and we've told them there aren't any." Ebersol added that he wished Immelt had made the revelation at the end of January, "so it didn't cause any disruption of sales." Immelt had said NBCU's sales team would do a good job, "but it's just a more difficult sales environment for a big event."

On Ebersol's end, he is likely to have a new top boss in Comcast CEO Brian Roberts, once the cable operator takes over NBCU in about a year. GE controls NBCU, but will be a minority owner then.

Ebersol's commentary comes from someone known, in part, for diplomacy. His relationships with the oft-recalcitrant International Olympic Committee have led to lengthy rights deals and last summer in Beijing, swimming events being held at times preferable for NBCU.

Ebersol's frustration with Immelt came days after he told the newspaper that O'Brien has been an "astounding failure" as host of "The Tonight Show." Ebersol has experience in late night at NBC, having worked on "Saturday Night Live." He apparently is an advisor in running the daypart.

He added that a reason for O'Brien's lackluster ratings and firing from the 11:30 time slot and "Tonight Show" was a failure to "broaden the appeal of his show." Ebersol said he had advised O'Brien to remember there are viewers in places like Chicago and Des Moines, and not just on the coasts. He was "stubborn," Ebersol added.

The Times noted Ebersol's comments about NBC's late-night imbroglio were intended as a defense against criticism leveled at NBCU CEO Jeff Zucker and O'Brien's replacement, Jay Leno.

28 January 2010

Netflix Spinoff Roku Seeks Cash for 100-Channel Set-Top Service


Roku Inc., the television set-top box maker spun off by Netflix Inc., is planning to raise $30 million in private funding this quarter and may sell shares to the public next year, Chief Executive Officer Anthony Wood said.

The company, which lets customers stream movies from Netflix and Amazon.com Inc. on their TVs, along with music from Pandora Media Inc., has sold more than 500,000 of its devices, Wood said yesterday in an interview in San Francisco. Revenue may almost double to about $75 million this year, he said.

The funds would help Roku expand its engineering and marketing as competition mounts. Sony Corp., Nintendo Co. and Microsoft Corp. stream Netflix and other services on game consoles, and Samsung Electronics Co. does so through Blu-ray DVD players. To win customers, Wood plans to continue cutting the price of his devices, which sold for $115 in May 2008 and now go for as little as $80.

“It gets cheaper and cheaper, and the box will be free at some point in the not-too-distant future,” said Wood, 44, whose ReplayTV was an early seller of digital-video recorders. “We see hardware margins becoming less important over time and subscription content becoming more important.”

Roku’s fund-raising this quarter will include investments from Menlo Ventures and others, Wood said. He declined to provide the company’s market value. Saratoga, California-based Roku isn’t working with an investment bank and doesn’t have a specific IPO date, he said.

“Obviously our goal is to go public,” Wood said. “If things continue on this trajectory, I think it would be viable to go public next year.”

Netflix Sells Stake

Netflix hired Wood in 2007 to help the movie-rental company move from a mail-order to online service. Netflix planned to release its own box until Chief Executive Officer Reed Hastings decided to stay out of the hardware business. Wood created a separate company, and Netflix backed it with $6 million.

Netflix recently sold its stake to Menlo Ventures, Wood said. Steve Swasey, a spokesman for Los Gatos, California-based Netflix, confirmed the sale and said the company may discuss it with fourth-quarter results today. Roku has raised $24 million from Wood, Netflix and Menlo.

Wood is focused on signing partners to offer viewers more choices and expects to reach 1 million boxes sold this year. In November, the company introduced the Roku Channel Store, which includes the Pandora music service and photos from Facebook Inc. Roku also offers Revision3 and Blip.tv, which stream original shows on the Internet.

Roku is recruiting third parties to create channels and offer products including games and submit them for inclusion on the service. The company is devising revenue-sharing agreements for developers who can sell subscriptions on the service or charge per product like Amazon.com.

Revenue Sharing

The terms will be comparable to other media products, Wood said. Developers for Apple Inc.’s iPhone get 70 percent of sales, with the rest going to Apple.

The plan is to have 100 channels this year, Wood said. That will let Roku generate sales from subscriptions and advertisements, much like cable TV channels.

“We’re not far away from the time when you’ll be able to get the same kinds of channels that any cable operator can offer,” he said.

Netflix Adds 1.1 Million Customers

USA Today

Netflix's fourth-quarter performance sparkled as its DVD-by-mail service surpassed 12 million subscribers, and management promised an even shinier sequel to kick off this year. Investors applauded, lifting the company's shares by more than 14% in after-hours trading Wednesday.

The results reflect the growing popularity of Netflix plans that bundle DVD rentals with unlimited video streaming over the Internet for as little as $9 per month.

Netflix (NFLX) added more than 1.1 million customers during the quarter — the most in any three-month period in its history. It took Netflix four years to attract its first 1 million subscribers after launching its rental service in 1999.

Management is expecting an even bigger first quarter. The company projects an additional 1.2 million to 1.5 million customers by the end of March. What's more, Netflix forecast financial results for the first quarter and the full year that exceeded analysts' current estimates.

Netflix shares soared $7.33 in extended trading after finishing Wednesday's regular session at $50.07, up $1.02.

The company earned $30.9 million, or 56 cents per share, in its latest quarter, a 36% increase from $22.7 million, or 38 cents per share, a year earlier. The performance topped the average estimate of 45 cents per share among analysts surveyed by Thomson Reuters.

Fourth-quarter revenue climbed 24% to $444.5 million, falling about $1 million below analyst forecasts.

That minor shortfall in revenue was overshadowed by Netflix's pledge to boost its profit margins to 11% from management's previous target of 10%. The adjustment will translate into additional earnings of 22 cents a share this year, estimated Wedbush Morgan Securities analyst Michael Pachter.

Netflix made the change because it feels more confident after its subscriber count rose 31%, or nearly 3 million customers, in 2009, said Barry McCarthy, the company's chief financial officer. Management expects to add another 3.2 million to 4 million subscribers this year.

The company, based in Los Gatos, Calif., got a big boost in the fourth quarter from Sony's PlayStation 3 video game console, which became an outlet for showing the company's roughly 17,000 streaming titles. The company already had a similar deal with Microsoft's Xbox 360 and in the spring will begin to link up with Nintendo's Wii console.

The streaming technology is being embraced by more Netflix subscribers as they wait for their DVDs to be delivered through the mail. About 48% of the customers streamed at least 15 minutes of Internet video in the fourth quarter, up from 28% in the prior year.

The widening appeal of Netflix's streaming option appears to be causing more people to sign up for rental plans that dole out one or two DVDs at a time. Those packages cost less than those that allow subscribers to rent three or more DVDs at a time.

The trend has lowered Netflix's average revenue per user to $13.04 in the fourth quarter, down 4% from an average of $13.58 per user in the same 2008 period.

Netflix nevertheless wants video streaming to become more prevalent because the company's postal expenses will fall as it mails out fewer DVDs to subscribers. Netflix estimates it will spend about $600 million on postage this year, with the annual cost rising to $800 million within the next few years.

By holding down its mailing expenses, Netflix hopes to be able to spend more money expanding its streaming library.

Comcast CEO Says Law Protects Rivals in NBC Deal


Existing law would prevent Comcast Corp. from denying satellite TV providers and other rivals access to NBC Universal programming on reasonable terms once the cable TV operator takes control of the media company, Comcast's chief executive said Wednesday.

Satellite companies such as DirecTV Inc. and smaller cable companies fear that if regulators approve Comcast's plan to acquire a majority stake in NBC Universal, Comcast would be able to drive up prices for - or even withhold - popular national and local programming, including NBC television broadcasts.

At a conference Wednesday on Internet and telecommunications policy, Comcast CEO Brian Roberts said program access rules established by a 1992 cable law would prohibit the company from abusing its control over NBC Universal to discriminate against competing subscription TV services.

Roberts also said the combination does not raise traditional media consolidation fears because NBC Universal is a media company while Comcast is primarily a content distributor.

Comcast has already offered a handful of pledges in hopes of convincing regulators that the deal wouldn't hurt rivals and consumers. Those include a promise to extend existing program access rules to the local NBC and Telemundo stations it would acquire in the deal.

Those rules, which are enforced by the Federal Communications Commission, require cable companies to make their channels available to rivals on equal terms. But Comcast said they do not automatically apply to local broadcast programming, making its offer to extend the rules significant.

Many rivals, however, say that bringing a complaint to the FCC is slow and costly and that the commission doesn't enforce the rules aggressively.

Comcast is currently seeking regulatory approval to acquire a 51 percent interest in NBC Universal from General Electric Co. The deal must be approved by the Justice Department and the FCC.

Comcast, the nation's largest cable TV operator, has nearly 24 million cable customers and nearly 16 million broadband subscribers. It also owns some cable channels, including E! Entertainment and the Golf Channel.

NBC Universal would give Comcast the NBC and Telemundo broadcast networks; 26 local TV stations; popular cable channels such as CNBC, Bravo and Oxygen; the Universal Pictures movie studio and theme parks; and a stake in Hulu, which distributes TV programming online.

On Monday, Comcast filed paperwork with the Justice Department to comply with the Hart-Scott-Rodino Act, an antitrust law governing mergers and alliances. And on Thursday, it will file a public interest statement with the FCC, which must approve the transfer of NBC's broadcast licenses.

Those filings are intended to give regulators a detailed understanding of the proposed transaction, including a full picture of the assets to be combined and the markets in which the companies operate. The paperwork will also offer a proposed framework for reviewing the merger, including an analysis of similar merger reviews in the past.

27 January 2010

NY Attorney General Alleges Online Fraud

The Wall Street Journal

New York Attorney General Andrew M. Cuomo said Wednesday his office is investigating 22 online businesses for allegedly linking consumers with discount promotions that end up charging them illegal fees.

Online sites of retailers including Staples Inc. (SPLS), Barnes & Noble Inc. (BKS), Avon Products Inc. (AVP), GameStop Corp. (GME), 1-800-Flowers.com Inc. (FLWS) and Orbitz Worldwide Inc. (OWW) "deceptively link" customers to fee-based membership programs, Cuomo said in a call with reporters.

The programs are run by third-party companies that charge unauthorized fees under the guise of discount offers and also receive consumers' credit card numbers, Cuomo said. His office also named the mortgage business of GMAC Financial Services as a participant by offering discounts on mortgage payments.

"Well-known companies are tricking customers into accepting offers from third-party vendors, which then siphon money from consumers' accounts," Cuomo said. "We need them to stop because this is consumer fraud" that extends nationwide.

The charges by the New York Attorney General are believed to be the first by a U.S. state and come as retailers have been adding all sorts of services and promotions to their Internet sites to try and attract business as the recession has caused massive spending pullbacks. Retailers run their Internet programs themselves or work with third-party companies for either parts or all of their Web efforts.

The subpoenas sent by Cuomo's office seek information about retailers' practices of sharing consumers' account information with membership program companies, their knowledge of any deceptive solicitations and what kind of compensation they may be receiving from the membership companies.

All told, Cuomo said his office has sent subpoenas to 22 merchants that have deals with the three major companies that offer these discount programs: Webloyalty, Affinion/Trilegiant and Vertrue.

Eileen Gibson, 66, of Bay Ridge, Brooklyn, said she ordered a book for her son's birthday from Barnes & Noble and after completing her order, a Web page with Barnes & Noble's name appeared and asked if she wanted to receive a $20 "award," which she accepted.

Gibson said she subsequently found out that she was going to be enrolled in a discount membership club and charged $12 a month. She said Barnes & Noble and the membership club weren't responsive to her calls to cancel the arrangement so she contacted the Better Business Bureau.

In a statement, Barnes & Noble said it "does not and has not shared customer debit or credit card information" with the outside companies. "We seek to protect our customers from these types of practices," Barnes & Noble said.

All three of the online discount program companies said they already require customers to provide their full credit card numbers to enroll and that they are cooperating with Cuomo's office.

Calls to other companies named by Cuomo weren't returned.

The subpoenas started going out several months ago, said Richard Bamberger, a spokesman for Cuomo. The Attorney General's office has heard back from most of the companies, Bamberger said, but declined to provide their names.

Cuomo said when consumers shop online from familiar retailers, they are often presented with a discount or cash-back incentive offer as they complete their purchases. By clicking on the discount or incentive banner, they are unknowingly directed to a membership program seller's Web page that is separate from the online retailer's site and recurring charges begin to appear on consumers' credit or debit card bills from unfamiliar companies, Cuomo said. Because the charges are often small they can go unnoticed for some time.

The three membership program sellers being investigated bring in revenue of more than $1 billion per year, much of which is amassed through fraud, Cuomo said.

Many consumers have reported that the companies offering membership programs make it difficult for them to cancel memberships and obtain full refunds of the unauthorized charges.

Cuomo said his office reached an agreement with online movie ticket retailer Fandango to permanently end the practice of sharing customers' credit and debit card information with discount program sellers.

26 January 2010

NBC Will Lose $250 Million on Winter Games

Media Week

Despite increasing demand from advertisers, NBC expects to lose a quarter of a billion dollars with its presentation of the 2010 Winter Olympics.

General Electric vice chairman and chief financial officer Keith Sherin on Friday told investors that NBC anticipates “a loss of somewhere around $250 million on the Olympics,” revising downward the $200 million hit GE chairman and CEO Jeffrey Immelt predicted in mid-December.

Ad dollars have begun pouring in over the last few weeks, Sherin said. “We are seeing pretty good demand for the Olympics. The advertising market is picking up,” Sherin said. While a late flurry of activity has NBC anticipating national ad sales to add up to between $650 million and $700 million, Sherin cautioned that the recent boost in sponsor commitments will not be enough to offset the $820 million rights fee and the costs associated with producing the two-week event.

While NBC acknowledged that it will take a loss on the Games, the network believes that ratings will have nothing to do with the shortfall. Media buyers said the network has set a 14.0 prime-time ratings guarantee for Vancouver, which kicks off on Friday, Feb. 12. The Peacock averaged a 12.2 rating during the 2006 Torino Games, per Nielsen.

In the fourth quarter of 2009, GE’s NBC Universal unit posted a profit of $602 million, down 30 percent from the year-ago period ($865 million). Revenue slipped 3.7 percent to $4.27 billion.

Sherin said the declines could be attributed to the higher rights fees NBC paid for its Sunday Night Football package, as well as disappointing DVD sales at Universal Pictures.

NBCU’s cable TV portfolio continued to shine in Q4 09, as the unit boosted revenue by 8 percent to $1.3 billion, thanks to a strong showing by general-entertainment nets USA Network, Syfy, Bravo and Oxygen. The latter three channels individually lifted profit 20 percent in the quarter, per Sherin.

Ratings momentum and a stronger scatter market helped drive the cable nets. Sherin said Q4 CPMs were “up over 30 percent [from upfront pricing],” adding that the networks continue to command similar premiums in the current quarter.

On the broadcast side of the ledger, which includes the NBC flagship network, local television stations and Spanish-language channel Telemundo, Q4 revenue came in at $1.6 billion, down 2 percent from the year-ago period.

As with cable, scatter was a boon to the broadcast business in the last three months of 2009. “Pricing on scatter for the broadcast network was up low double digits in the fourth quarter, and the outlook for the first quarter is up over 20 percent,” Sherin said.

GE has little to say about its deal to sell a controlling stake of NBCU to cable giant Comcast, a transaction that is expected to face intense scrutiny from federal regulators. “We are working jointly on preparing our regulatory filing and our other notices with the Department of Justice and the FDC to get that under way,” Sherin said.

Sherin also glossed over last week’s resolution of the Jay Leno-Conan O’Brien late-night soap opera. “Everyone is aware of our decision to move Leno back to the Tonight Show and to reset the 10 p.m. lineup after the Olympics.” Sherin said. “I am not sure I could report more than has been written on this subject.”
Despite increasing demand from advertisers, NBC expects to lose a quarter of a billion dollars with its presentation of the 2010 Winter Olympics.

General Electric vice chairman and chief financial officer Keith Sherin on Friday told investors that NBC anticipates “a loss of somewhere around $250 million on the Olympics,” revising downward the $200 million hit GE chairman and CEO Jeffrey Immelt predicted in mid-December.

Ad dollars have begun pouring in over the last few weeks, Sherin said. “We are seeing pretty good demand for the Olympics. The advertising market is picking up,” Sherin said. While a late flurry of activity has NBC anticipating national ad sales to add up to between $650 million and $700 million, Sherin cautioned that the recent boost in sponsor commitments will not be enough to offset the $820 million rights fee and the costs associated with producing the two-week event.

While NBC acknowledged that it will take a loss on the Games, the network believes that ratings will have nothing to do with the shortfall. Media buyers said the network has set a 14.0 prime-time ratings guarantee for Vancouver, which kicks off on Friday, Feb. 12. The Peacock averaged a 12.2 rating during the 2006 Torino Games, per Nielsen.

In the fourth quarter of 2009, GE’s NBC Universal unit posted a profit of $602 million, down 30 percent from the year-ago period ($865 million). Revenue slipped 3.7 percent to $4.27 billion.

Sherin said the declines could be attributed to the higher rights fees NBC paid for its Sunday Night Football package, as well as disappointing DVD sales at Universal Pictures.

NBCU’s cable TV portfolio continued to shine in Q4 09, as the unit boosted revenue by 8 percent to $1.3 billion, thanks to a strong showing by general-entertainment nets USA Network, Syfy, Bravo and Oxygen. The latter three channels individually lifted profit 20 percent in the quarter, per Sherin.

Ratings momentum and a stronger scatter market helped drive the cable nets. Sherin said Q4 CPMs were “up over 30 percent [from upfront pricing],” adding that the networks continue to command similar premiums in the current quarter.

On the broadcast side of the ledger, which includes the NBC flagship network, local television stations and Spanish-language channel Telemundo, Q4 revenue came in at $1.6 billion, down 2 percent from the year-ago period.

As with cable, scatter was a boon to the broadcast business in the last three months of 2009. “Pricing on scatter for the broadcast network was up low double digits in the fourth quarter, and the outlook for the first quarter is up over 20 percent,” Sherin said.

GE has little to say about its deal to sell a controlling stake of NBCU to cable giant Comcast, a transaction that is expected to face intense scrutiny from federal regulators. “We are working jointly on preparing our regulatory filing and our other notices with the Department of Justice and the FDC to get that under way,” Sherin said.

Sherin also glossed over last week’s resolution of the Jay Leno-Conan O’Brien late-night soap opera. “Everyone is aware of our decision to move Leno back to the Tonight Show and to reset the 10 p.m. lineup after the Olympics.” Sherin said. “I am not sure I could report more than has been written on this subject.”

Ticketmaster -- Live Nation Deal Cleared by U.S. With Changes


The U.S. Justice Department approved Ticketmaster Entertainment Inc.’s merger with Live Nation Inc., while imposing conditions on their plan to create a new music- industry power.

Under terms accepted by both companies, Ticketmaster must license its software to AEG Live, its largest customer. Ticketmaster also must sell its Paciolan unit to a Comcast Corp. joint venture or another suitable buyer. The new company also will be banned for 10 years from retaliating against any concert site that signs a ticket-sales contract with a competitor.

The $889 million merger “will change the landscape of the live entertainment business,” said Allen Grubman, a New York- based music industry attorney whose clients include Madonna, Elton John and U2. “Artists are focusing tremendously on live performance because that’s an area where there is still a lot of money to be made.”

The combined company creates a new business model with a presence in almost every segment of live entertainment, including the operation of concert venues and merchandise sales. Worldwide concert ticket sales more than doubled to $4.4 billion in 2009 from $1.7 billion in 2000, while compact disc sales fell 65 percent, according to industry magazine Billboard.

Live Nation is the world’s largest concert promoter, while Ticketmaster is the leader in ticketing and artist management.

“We concluded the transaction as originally proposed was anticompetitive,” Justice Department antitrust chief Christine Varney told reporters today, saying the settlement will be good for consumers. The deal is subject to public comment and requires approval by a federal judge.


Varney said the merged company also will be prohibited from bundling ticketing services with concert promotions. Seventeen states joined in the settlement, and Canada’s Competition Bureau announced a similar resolution.

Ticketmaster Chief Executive Officer Irving Azoff called the resolution “a great win for fans.”

The combined company, to be called Live Nation Entertainment, will be led by Barry Diller as chairman, Michael Rapino as chief executive officer and president, and Azoff, executive chairman and CEO of Front Line artist management.

The companies overcame opposition from U.S. lawmakers, rival concert promoters, consumer groups and artists including Bruce Springsteen, who argued the deal centralizes too much power in concerts and ticketing.

Shares Rise

Ticketmaster, based in West Hollywood, California, rose $2.10, or 16 percent, to $15.40 at 4 p.m. New York time in Nasdaq Stock Market trading. Beverly Hills, California-based Live Nation rose $1.35, or 15 percent, to $10.51 in New York Stock Exchange composite trading.

Based on today’s closing prices, Ticketmaster investors will receive stock in Live Nation valued at $15.49 a share, or a total of $889 million. Following the Justice Department announcement, the companies said they completed the deal and that today marked the final trading of Ticketmaster stock.

“The proposed settlement allows for strong competitors to Ticketmaster, allowing concert venues to have more and better choices for their ticketing needs, and provides for anti- retaliation provisions, which will keep the merged company in check,” Varney said.

The case is the first major antitrust action by President Barack Obama’s administration. Matthew Cantor, a partner at New York law firm Constantine Cannon, said the compulsory licensing provision was unusual and a sign that the Justice Department had serious concerns with the merger.

‘This is a Win’

“Clearly Justice felt that merely having sold assets would not have allowed the potential competitors to be significant players,” Cantor said in a phone interview. “From the Justice Department standpoint this is a win.”

Los Angeles-based AEG said it can abandon the licensing partnership at any time. The company said in a written statement that it intends to “aggressively explore” using a new service to replace Ticketmaster.

Following the merger announcement, AEG had expressed concerns about using a ticketing service controlled by a rival. AEG is the second-largest concert promoter behind Live Nation.

“AEG is already engaged in ongoing discussions,” AEG President and Chief Executive Officer Timothy J. Leiweke said in the statement.

The companies agreed to combine almost a year ago. Under the amended terms announced today, Ticketmaster investors will receive 1.474 shares of Live Nation for each they now own. Live Nation expects to issue 84.6 million shares to Ticketmaster stockholders, according to a statement.

Under the original accord, the exchange rate was set at 1.384 shares of Live Nation for each of Ticketmaster.

25 January 2010

NBC Said to Tell Comcast of Leno Troubles Before Deal


NBC told Comcast Corp. in November that Jay Leno’s ratings had hurt local stations, one of the factors that weighed on the value of the entertainment company, according to people with knowledge of the situation.

The discussion was part of a broad review of NBC Universal by executives of both companies as Comcast negotiated for General Electric Co.’s entertainment unit. NBC also projected a $200 million loss on the Olympics, according to the people, who asked not to be identified because the talks were private.

The review gave Comcast a heads-up that NBC was considering its options at 10 p.m., two months before the New York-based network announced the decision to move Leno out of prime time, the people said. David Bank, an analyst at RBC Capital Markets in New York, estimates NBC will spend $200 million rebuilding its schedule in that time slot.

Allison Gollust, a spokeswoman for NBC Universal, said the company doesn’t comment on closed-door meetings. John Demming, a spokesman for Philadelphia-based Comcast, the largest U.S. cable television service, also declined to comment.

Comcast agreed to acquire control of NBC Universal through a venture with current majority owner GE in a deal announced on Dec. 3. The cable operator will pay $6.5 billion and contribute cable assets worth $7.25 billion, including the Golf Channel.

Those at the briefings included Comcast Chief Executive Officer Brian Roberts and Chief Operating Officer Stephen Burke, as well as NBC Universal CEO Jeffrey Zucker, Jeff Gaspin, head of entertainment for the network, and sports chief Dick Ebersol.

Falling Ratings

Faced with falling prime-time and late-night ratings, along with viewer losses for local news on affiliate stations, NBC said this month it would move Leno back to late night at 11:35 p.m. Gaspin told TV critics this month he made the decision to end the 10 p.m. show in December amid growing protests from the stations, and that Comcast wasn’t involved.

“They have nothing to do with the business decisions we make, and they won’t until there’s regulatory approval,” Gaspin said at the time.

Conan O’Brien, 46, succeeded Leno on “The Tonight Show” in June and refused to host a later program at 12:05 a.m. NBC has negotiated a severance package for him, NBC’s Gollust said today. The exit deal will be announced today, she said.

The agreement may include a payout of about $32 million for O’Brien and about $12 million for his employees, the Wall Street Journal reported today. The newspaper said it didn’t have full details on the final arrangement.

Less Than 10%

The NBC network and its owned stations accounted for less than 10 percent of the $30 billion valuation for NBC Universal when the deal was announced, the people said. The company also owns a film studio, theme parks and cable channels.

GE, based in Fairfield, Connecticut, fell 48 cents to $16.02 at 4:15 p.m. in New York Stock Exchange composite trading. The shares declined 6.6 percent last year. Comcast, which was little changed in 2009, lost 52 cents to $16 on the Nasdaq Stock Market.

The day after the purchase by Comcast was announced, Zucker said in an interview with CNBC that Leno’s 10 p.m. show was performing as the network expected. Lower 10 p.m. ratings were hurting NBC’s local TV stations and the decision to air a talk show in prime time was being assessed, he said.

The sale of NBC Universal is awaiting regulatory approval that may take as many as nine months. Vivendi SA, which will sell its 20 percent stake in NBC Universal as part of the deal, fell 54 cents to 19.89 euros yesterday in Paris.

Ebersol, the chairman of NBC Universal Sports, said on Jan. 10 the network would lose money broadcasting the Winter Olympics in Vancouver because of rising costs for TV rights. He said it was the first such loss on the Olympics since he joined NBC.

NBC, last among the big four broadcast networks in prime- time audience ratings, will produce the most pilots since 2003 to win back viewers, Angela Bromstad, president of prime-time entertainment, said in a Dec. 21 interview.

23 January 2010

Affiliated Media Inc. Files Chapter 11


The owner of The Denver Post, San Jose Mercury News and 52 other daily newspapers filed for bankruptcy protection Friday, joining the procession of publishers choking on too much debt.

The filing by Affiliated Media Inc., the holding company of MediaNews Group, was expected. The privately held company had said Jan. 15 that it would seek to reorganize its finances in bankruptcy court.

MediaNews, based in Denver, says its newspapers and 8,700 employees won't be affected during the bankruptcy proceedings.

Affiliated Media worked with its major lenders and shareholders to hammer out a plan aimed at shortening the company's stay in federal bankruptcy court in Delaware. Affiliated hopes to emerge from bankruptcy protection within a month or two.

The plan calls for Affiliated Media's debt to fall to $179 million from $930 million, according to a person familiar with some of the additional bankruptcy documents expected to be filed late Friday. This person wasn't authorized to discuss them before they were filed.

In exchange for this $751 million concession, a group of lenders led by Bank of America become the company's majority owners with 88 percent of the stock. The remaining 12 percent goes to MediaNews' management team, which is led by William Dean Singleton, who is also chairman of The Associated Press. The MediaNews executives will receive warrants that eventually could boost their combined stakes to 20 percent.

Heading into the bankruptcy filing, Singleton held a roughly 30 percent stake in Affiliated.

Richard Scudder, who co-founded MediaNews with Singleton in 1985, will relinquish his interests in the company to the lenders.

Singleton will also continue to run MediaNews, signaling the lenders remain confident in him despite the company's recent struggles.

The decision probably stems from Singleton's reputation as a hard-nosed businessman who has never shied away from cutting costs, said Alan Mutter, a former newspaper editor who blogs on the media business.

"Who do we know who can go in and run the hell out of a newspaper and make a buck?" he said. "The only answer is William Dean Singleton."

MediaNews spokesman Seth Faison declined to comment Friday.

Despite MediaNews' troubles, Singleton says all but one of the company's newspapers are profitable. He hasn't identified which one is losing money.

"By aggressively facing the challenges of the newspaper business, we will continue to deliver high-quality journalism and will prepare our newspapers for a promising future," Singleton said in a statement Friday.

Apparently, not even Singleton could figure out a way to deal with all the debt that MediaNews took on to expand into new markets. Like other publishers, Singleton borrowed heavily before the Internet and recent recession began to devour the newspaper's main source of income - advertising.

Last year was particularly hard on big newspapers as the industry's print ad sales plunged by nearly 30 percent. Some of the revenue is expected to return as the economy bounces back, but much of it is expected to remain on the Internet, where many marketers are finding they can generate more sales for less money.

At least 14 U.S. newspaper publishers have now filed for bankruptcy protection in the past 13 months.

"What (Singleton) did was what everyone else did - make acquisitions not knowing that in 18 months they'd see a 30 percent decline in advertising and then run out of options," said newspaper analyst Edward Atorino of Benchmark Co.

Affiliated's annual revenue has fallen by $270 million, or 20 percent, during the past two fiscal years. The erosion pared Affiliated's revenue to $1.06 billion in fiscal 2009, which ended June 30.

Another major newspaper publisher, Hearst Corp., is one of the biggest losers in Affiliated's reorganization.

The plan calls for Hearst to lose the roughly 30 percent stake it held in MediaNews' newspapers outside the San Francisco Bay area.

Hearst got its MediaNews stock as part of a complicated deal to acquire The Monterey County Herald and St. Paul Pioneer Press from McClatchy Co. in 2006. Hearst invested $317.3 million in MediaNews, which then bought the two newspapers and the Torrance Daily Breeze from Hearst.

Although the bankruptcy documents don't say it directly, Hearst's holdings clearly weren't worth anywhere close to the $317 million that it paid a few years ago. Affiliated Media estimates the market value of its total enterprise at $190 million to $230 million. The company also said it has $53 million in cash.

As part of the bankruptcy case, Hearst will get warrants that could be converted into MediaNews stock in the future, Faison said.

Hearst spokesman Paul Luthringer declined to comment.

22 January 2010

If You Don't Like the Gore, Change the Channel

The Boston Herald

Lucy Lawless knows some viewers will be offended by her new series “Spartacus: Blood and Sand,” premiering tonight at 10 on Starz.

“I think a lot of people are going to be shocked and they are going to shut off their televisions,” Lawless said in a recent telephone interview from Los Angeles.

“And I absolutely encourage that because if they’re shocked by the first few episodes, it ain’t going to let up. But for the people who have the stomach for it, this is a bloody good yarn.”

Lawless plays the conniving Lucretia, who owns the slave Spartacus (Andy Whitfield) with her husband, Batiatus (John Hannah).

“She does terrible things, but she does them out of desperation and need, which is how most people get involved in criminal activities,” Lawless said. “She is venal, but she is also religious. She is full of contradictions, and my aim is to make her so real and so believable that the audience will say, ‘Yes, you know what? I can see myself doing the same thing if I was in her shoes.’ ”

For the part, the 41-year-old appears topless and in explicit sex scenes.

“Really, I just feel like as long as it’s germane to the scene, it’s not offensive to me,” she said. “If it is relevant and historically accurate, then artistically it makes sense. People in ancient Rome had completely different relationships to people and their bodies and sexuality and the law and religion.”

The former star of “Xena: Warrior Princess” is also happy to not be the one involved in the action sequences. Though some may draw comparisons between “Xena” and “Spartacus,” Lawless thinks they are very different.

“There’s no ‘nudge-nudge, wink-wink’ on this show,” she said. “The conceit of the show is so out there. There’s so much blood. It’s larger than life and very operatic. We had to keep the acting and the characters very real.”

The series also allows her to work with her husband, executive producer Rob Tapert, and film in her native New Zealand.

“For the last few years, we’ve had a lot of separation,” she said. “I was working in Vancouver, he was working in New Zealand. This was a great time for our family to get everybody back under one roof and really enjoy what family means. My home life got so much richer.”

Lawless and the rest of the cast will begin production on season two in April. What can viewers expect as season one unfolds?

“Things get very, very dicey for everybody,” she said. “The stakes just get higher and higher, and you see the frenenemies come out to play. You see that the women are more vicious than the men.”

21 January 2010

Spotify is Making Money for Record Labels

Telegraph UK

Revealing for the first time today how the commercial relationship works between the streaming service and the record labels, Rob Wells, the senior vice-president Digital for Universal Music Group International, declared Spotify a very sustainable financial model which was paying out well to the record labels which it has entered into licensing deals with.

Mr Wells disclosed that Spotify is paying Universal Music Group a royalty per stream in only two of its territories: the UK and Spain.

In its other four territories: Sweden, Norway, Finland and France, Spotify pays the record labels from the money generated by subscriptions and advertising and not on a per stream basis.

“In all its territories bar two, Spotify pays the labels from a mixture of the money it generates from advertising revenues and subscriptions. That to me equates to a sustainable business model,” he said.

According to Mr Wells Spotify only needs to convert approximately 10 to 12 per cent of its user base in any one territory into having subscriptions in order to make enough money to pay the record labels in this way.

Mr Wells said it was “lagging behind” in the UK and Spain because of the extremely high quantity of people using the service for free – meaning it was a more difficult task to convert 10 per cent of a much larger number into subscribers. Spotify has recently re-turned on the ‘invite only’ mechanism in the UK to limit the amount of users on the site.

No official figures have been released to show how many people pay £9.99 a month to subscribe to Spotify’s premium service in the UK, which offers an advert free experience. However, it is still thought to be a low number.

Mr Wells also divulged that Spotify was Universal Music Group International’s (which covers all territories bar America, Canada and Mexico) fourth largest digital partner last year in terms of the amount of revenue it generated for the company. He would not make it known which companies were the top three highest earning digital partners but according to several music industry sources, Apple’s iTunes and Google’s YouTube are thought to feature in the top two.

Up until now, there has only been speculation as to how the financial arrangements work between Spotify and the labels. It was a badly kept secret since the music service launched that not only do the major music labels have equity in Spotify, but so do the major independent labels. However, there are still no details as to how those equity deals were reached – whether the labels invested money or agreed to waive certain royalty fees until the company were in a position to pay out revenues from subscription and advertising.

It has been predicted by senior figures in the music industry that if Spotify continues to keep growing at its same pace, it will be a really significant new revenue stream for the music industry by February 2010, as disclosed by The Telegraph last August.

Currently the largest digital income record labels receive in the UK is from the sale of tracks and albums via iTunes. However, Spotify has already taken over iTunes, in terms of revenue levels, in its native Sweden. Per Sundin, head of Universal Music Group in Sweden, told The Swedish Wire last year: “In five months from the launch Spotify became our largest digital source of income and so passed by iTunes.”

The service is expected to make its US debut in the first half of this year.

Spotify was unavailable for comment.

Digital Music Gains Cannot Offset Declining CD Sales

NY Times

PARIS — Sales of digital music rose 12 percent worldwide last year, but that growth was insufficient to compensate for plunging revenue from compact discs, the music industry’s international trade organization said Thursday.

The group, the International Federation of the Phonographic Industry, used the publication of the figures as an opportunity to renew its calls for a tougher crackdown on digital piracy, which it blames for a 30 percent decline in global music sales from 2004 to 2009.

“We’re all fed up talking about piracy, it’s boring talking about piracy, but it is the problem and we can’t avoid it,” said John Kennedy, chief executive of the trade group.

Critics say music companies have been too slow to embrace new online business models that are attractive enough to lure music fans away from pirate sites.

Over the past year, however, digital streaming services like Spotify, which offer free listening, supported by advertising or subscriptions, have gained a growing following. Revenue from streaming is accelerating, as growth in sales of digital downloads from services like Apple’s iTunes slows.

Over all, sales via the Internet, mobile phones and other digital methods totaled $4.2 billion in 2009 and accounted for 27 percent of music industry revenue, up from 21 percent a year earlier, the trade group said.

But with sales of CDs declining by double-digit percentages, Mr. Kennedy said the record companies’ overall global revenue for 2009 would fall 8 percent or 9 percent from 2008.

Mr. Kennedy said the decline in sales, which has persisted for nearly a decade since a 2001 peak in revenue, was hurting the development of local artists in a number of markets hit hard by piracy. In France, for example, signings of new artists by record labels fell by more than 60 percent from 2002 to 2008.

“Sadly, today we are not at the turning point in the music industry,” Mr. Kennedy said. “I still hope that in a few years’ time, that point will come.”

20 January 2010

Fans Support Conan in Droves

CBS News

"The Tonight Show" host Conan O'Brien led hundreds of his fans down a street to the NBC Building in Los Angeles. O'Brien has been in a much-publicized dispute with the Peacock Network.

19 January 2010

Letterman: Relentlessly Mocking Leno Is 'Just Fun'


Conan Reaps $40M In NBC Exit

NY Post

Conan O'Brien is close to signing a nearly $40 million deal to walk away from his job hosting NBC's "The Tonight Show," in a new move that will also award severance pay to his employees, The Wall Street Journal reported Tuesday.

The deal, which has been fiercely negotiated for the last week, will give O'Brien $32.5 million to go on garden leave until September. This would prevent him from hosting any other TV shows if he pockets the cash, but gives him an option to sign other deals.

The remaining $7.5 million will go in severance pay to about 200 of Conan's "Tonight Show" employees after they expressed outrage about the prospect of going penniless, reports said.

O'Brien decided to leave NBC after executives said they would push his show to a slot after midnight (EST) in favor of the Jay Leno Show.

The exit agreement, which could be completed as early as Tuesday, bars O'Brien from bad-mouthing his former NBC bosses.

News of the deal comes hours after Leno tried to explain his side of the dispute with NBC during the monologue of his soon-to-be cancelled 10 p.m. show.

He said his expected return to 11:35 p.m. could become official today -- and called frenemy Conan O'Brien a "great guy."

His remarks (text below) came on the heels of reports O'Brien was close to signing a $40 million exit deal with NBC after refusing to move his "Tonight Show" to 12:05 a.m.

Jay's remarks

' I thought maybe I should address this. At least give you my view of what has been going on here at NBC.

Oh, let’s start in 2004 — 2004, I’m sitting in my office, an NBC executive comes in and says to me, “Listen, Conan O’Brien has gotten offers from other networks. We don’t want him to go, so we’re going to give him ‘The Tonight Show.’ “ I said, “Well, I’ve been number one for 12 years.” They said, “We know that, but we don’t think you can sustain that.” I said, “OK. How about until I fall to number two, then you fire me?” “No, we made this decision.” I said, “That’s fine.”

Don’t blame Conan O’Brien. Nice guy, good family guy, great guy. He and I have talked and not a problem since then. That’s what managers and people do, they try to get something for their clients. I said, “I’ll retire just to avoid what happened the last time.” OK.

So time goes by, and we stay number one up until the day we leave. We hand — [applause] — no, no. OK, but I’m leaving before my contract is out. About six to eight months early. So before I could go anywhere else, it would be at least a year or 18 months before I could go and do a show somewhere else.

I said to NBC, “Would you release me from my contract?” They said, “We want to keep you here.” OK.

“What are your ideas?” They said, “How about prime time?” I said, “That will never work.” “No, no, we want to put you on at 10. We have done focus groups. People will love you at 10.” . . . Four months go by, we don’t make it. Meanwhile, Conan’s show during the summer — we’re not on — was not doing well. The great hope was that we would help him. Well, we didn’t help him any. OK.

They come and go, “This show isn’t working. We want to let you go.” “Can you let me out of my contract?” “No, you’re still a valuable asset to this company.” How valuable can I be? You fired me twice. How valuable can I be? OK.

So then, the affiliates are not happy. The affiliates are the ones that own the TV stations. They’re the ones that sort of make the decisions. “They’re not happy with your performance, and Conan is not doing well at 11:30.” I said, “What’s your idea?” They said, “Well, look, how about you do a half-hour show at 11:30?” Now, where I come from, when your boss gives you a job and you don’t do it well — I think we did a good job here, but we didn’t get the ratings, so you get humbled. I said, “OK, I’m not crazy about doing a half-hour, but OK. What do you want to do with Conan?” “We’ll put him on at midnight, or 12:05, keeps ‘The Tonight Show’ does all that, he gets the whole hour.” I said, “OK. You think Conan will go for that?” “Yes, yes. [Laughter.] Almost guarantee you.” I said OK. Shake hands, that’s it. I don’t have a manager, I don’t have an agent, that’s my handshake deal.

Next thing, I see Conan . . . saying he doesn’t want to do that. They come back to me and they say, “If he decides to walk and doesn’t want to do it, do you want the show back?” I go, “Yeah, I’ll take the show back. If that’s what he wants to do. This way, we keep our people working, fine.”

So that’s pretty much where we are. It looks like we might be back at 11:30, I’m not sure. I don’t know. [Applause.] I don’t know. But through all of this — through all of this, Conan O’Brien has been a gentleman. He’s a good guy. I have no animosity towards him.

This is all business. If you don’t get the ratings, they take you off the air . . . You can do almost anything. You get ratings, they keep you. I don’t get ratings he wants. That was NBC’s solution. It didn’t work, so we might have an answer for you tomorrow.

So, we’ll see. That’s basically where it is.'

18 January 2010

NBC Needs To Redefine Itself After Leno Experiment

USA Today

PASADENA, Calif. — TV's late shift is shifting again, and in a way that could retool a television institution, The Tonight Show.

On Sunday, NBC confirmed what was Hollywood's hottest rumor all weekend: The network is dropping The Jay Leno Show from its prime-time lineup after his Feb. 11 show. The former Tonight Show host will return to late night on March 1, after NBC's coverage of the Winter Olympics, in a half-hour format in his old perch at 11:35 p.m. ET/PT. The Tonight Show, now hosted by Conan O'Brien, would move from the after-news slot it has occupied since the '60s to after midnight: 12:05 a.m. ET/PT.

NBC's shift marks a quick end to a five-month experiment that the network heralded as a new way to program prime-time television: by positioning Leno's topical, relatively inexpensive-to-produce show as a lead-in to local newscasts. But Leno's mediocre ratings drew complaints from affiliates and helped fuel the latest drama to beset the struggling fourth-place network. The network unraveled a risky move aimed not only at cutting costs but also at keeping Leno from defecting to another network after NBC anointed O'Brien as his successor on The Tonight Show.

Leno's return to late night throws into question the future complexion of the legendary Tonight Show— at 55, one of the longest-running shows on television — as well as the future of its new host, O'Brien.

O'Brien now faces a difficult choice: Does he stay at the network that promised five years ago he'd get the primary late-night slot? Or does he bolt for another network and collect an eight-figure penalty NBC would face for reneging on his Tonight Show deal?

If O'Brien bolts, The Tonight Show would return to a format viewers saw for 17 years: an hour-long show with Leno as host, starting at 11:35 ET/PT.

NBC's move indicates that "viewers want scripted shows at 10 p.m.," says Shari Anne Brill, analyst at big ad firm Carat USA. In prime time, Leno's talk/variety hybrid was "something done at the beginning of television. Networks still need a (big) audience."

NBC Universal TV chief Jeff Gaspin acknowledged Sunday that Leno's prime-time effort didn't measure up and said he made the call to cut bait late last month: "While it was performing at an acceptable level (financially) for the network, it did not meet our affiliates' needs, and we realized we had to make a change."

The main complaint: Stations' late local newscasts, which deliver a big chunk of their profits through TV ads, were hemorrhaging viewers. And O'Brien's late-night ratings were little more than half the total Leno had claimed last season, ending NBC's 15-year run in first place in the late-night time slot.

Gaspin said his goal is to "keep Jay, Conan and Jimmy (Fallon) as part of our late-night lineup." Under the new plan, Late Night With Jimmy Fallon would move from 12:35 a.m. to 1:05. (Carson Daly's talk show, which now follows Fallon, would be canceled, though Daly would remain under contract at the network.)

But "as much as I would like to tell you we have a done deal, we know that's not true," Gaspin said. "The talks are still ongoing."

NBC expects to resolve O'Brien's fate, one way or the other, by the time the Winter Olympics begin Feb. 12. The Olympics are expected to deliver a big audience the network plans to use to promote its rebuilt prime-time and late-night schedules starting March 1.

"What's important to Jay is telling jokes at 11:30, and what was really important to Conan beyond that is having the franchise of The Tonight Show," Gaspin said. "I obviously couldn't satisfy either with 100% of what they wanted; that's why I came up with this compromise."

O'Brien to Fox?

NBC wouldn't discuss terms of O'Brien's contract. If he stays, he'd wind up competing not only with current rival David Letterman on CBS but would face CBS' Craig Ferguson and go head-to-head with ABC's Jimmy Kimmel, who appeals primarily to a similar audience of young men. And O'Brien almost certainly would lose even more viewers by reverting to a later time slot.

Should O'Brien leave the network, Leno would again inherit The Tonight Show, a post he never wanted to leave. O'Brien's most obvious destination would be Fox, which expressed interest in him in 2004 and does not currently program in late night except on Saturdays. (ABC says it does not plan to pursue O'Brien.)

In a statement, Fox said that "we've always been interested in late night, and we're always looking to bring great new talent to Fox."

Many Fox stations, however, earn big profits with syndicated reruns of shows such as Seinfeld and The Simpsons in late night, and they might balk at turning an hour over to the network at 11 p.m. ET/PT. That, coupled with the cost of bringing O'Brien aboard, makes such a move by him anything but a slam dunk.

O'Brien's representatives could not be reached for comment Sunday, but on Friday's show he addressed rumored changes, joking that "NBC is going to throw me and Jay in a pit with sharpened sticks. The one who crawls out alive gets to leave NBC. Trust me, that is an appealing proposition."

Leno, too, joked last week about reports that his prime-time show would be canceled. "I don't think there is any truth to the rumors," he told viewers. "See, it's always been my experience that NBC only cancels you when you're in first place."

While hosting The Tonight Show, O'Brien has shed many of Leno's former late-night viewers. Meanwhile, Leno's prime-time audience (about 5.6 million viewers overall) was 30% lower than the schedule it replaced among NBC's young-adult target audience.

Many of those viewers went to basic cable channels, not to broadcast rivals, according to Nielsen research. During local newscasts, such viewers also often use their DVRs to catch up on recorded shows. It all has contributed to plummeting local newscasts on NBC's affiliates.

Gaspin said about one-third of NBC's 200 or so stations "were really hurt by it and incredibly concerned" by Leno's ratings, warning they'd act if NBC didn't.

"The drumbeat started getting louder and louder, and toward the middle of December they made it very clear they were going to start getting more vocal about their displeasure and were starting to talk about the possibility of pre-emptions," Gaspin said, referring to local affiliates' option to run their own programming rather than that provided by the network. "It was then that I realized this was not going to go well. This was going to be a PR nightmare."

Affiliates sought move

NBC considered several other options, including cutting Leno to fewer nights or keeping the prime-time show until September, but ultimately decided to wipe the slate clean sooner.

"I would have much preferred to concentrate on launching new shows than now trying to explain to people why we have an (entirely) new schedule. I would have much preferred to wait until September," Gaspin said. But "we needed to signal to stations that we were willing to act."

Gaspin denied the move was hastened by cable giant Comcast's agreement last month to acquire a controlling interest in NBC Universal, which faces regulatory hurdles that could be complicated by station unrest.

Many advertisers were dubious about Leno's prime-time prospects in the first place. They questioned why NBC would go through with a plan to unseat the king of late night, a plan put in place by Jeff Zucker, NBC Universal's CEO.

"I was kind of lukewarm to the whole idea," Brill said. "They really hurt themselves by doing this, but they hurt themselves the last two years by cutting back on development" of new series. "There were a lot of forces at work helping to create the situation they're in."

Even Jerry Seinfeld, the Leno Show's first guest, weighed in Sunday, saying it was "the right idea at the wrong time. I'm proud of NBC that they had the guts to try something so original."

Gaspin agreed that other programming failures compounded the debacle. "Had we been stronger (from) 8 to 10 (p.m.), perhaps Jay would have been stronger at 10 and the affiliates wouldn't have had as much an issue," he said in an interview. The network's ability to develop lasting dramas also was limited by turning over five prime-time hours a week to Leno.

Gannett, parent of USA TODAY, owns 11 NBC stations and delivers the most viewers for the network apart from NBC-owned outlets. Dave Lougee, president of Gannett's broadcast group, said bumping Leno back to late night was "a move that needed to take place," since his low ratings "impacted us like everybody. We're very appreciative that Jay is sticking around in his old time slot and very hopeful that Conan will stay with the network as well. They're both great talents."

Michael Fiorile, president of NBC's affiliates board, called Leno's exit from prime time "a great move" for local stations. "We admire their willingness to innovate, and their willingness to change course when it didn't work for us."

It's unclear whether the public profiles of Leno and O'Brien will suffer as a result of NBC's musical chairs. That won't be known until the dust settles and viewers re-embrace the hosts — or don't.

To replace Leno at 10 starting March 1, Gaspin said, NBC is likely to add two more hours of scripted dramas (it can use repeats of Friday Night Lights and Law & Order: Criminal Intent, which now first air on other networks), along with an expanded Dateline NBC. Other current series, such as Law & Order: Special Victims Unit, could shift to later slots.

For fall, NBC ordered seven drama pilots Sunday as potential replacements, including series from high-profile producers David E. Kelley, Jerry Bruckheimer and J.J. Abrams and remakes of Prime Suspect and Rockford Files.

Gaspin said NBC is spending 30% to 35% more on new-program development than in recent seasons and promises viewers will see "high-quality, more traditional NBC programming" next fall with "smart, sophisticated and fun content." After years of audience erosion, "I think we have a shot at actually going up."

Jonathan Littman, who heads Bruckheimer's TV division, welcomed the Leno news.

"Any time you can get more scripted programs on the air, the better," he said, noting that a typical drama employs 200 workers.

"A lot of people really saw this as having a pretty negative impact on our business," said CBS programming chief Nina Tassler, who called Leno's move to prime time "an experiment that obviously did not work."

15 January 2010

Ailes Finds Himself In Murdoch Family Firing Line

Guardian UK

Rotund, bald and ferocious, the Fox television boss Roger Ailes is said to have two speeds – attack and destroy. Every night under his watch, millions of Americans are enthused, engrossed or appalled by a lively diet of angry rightwing rhetoric served up on Fox's rolling news channel. But the heady mix of hectoring, finger-pointing and liberal-bashing may be proving too spicy even for the strong stomachs of his employers, the Murdoch clan.

Rupert Murdoch's family, a close-knit, powerful and discreet dynasty scattered across three continents, prefer to air their dirty washing in private. Rumoured squabbles over inheritance, succession and over Murdoch's choice of wife have generally played out behind closed doors.

But a gaping crack appeared in the edifice of unity this week as Murdoch's son-in-law, Matthew Freud, delivered an astonishingly public broadside against Fox News. Freud, a media-savvy London public relations supremo married to Murdoch's daughter, Elisabeth, told the New York Times that members of the Murdoch family had become embarrassed by Fox's output: "I am by no means alone within the family or the company in being ashamed and sickened by Roger Ailes's horrendous and sustained disregard of the journalistic standards that News Corp, its founder and every other global media business aspires to."

Freud is said to be adamant that he was speaking on his own behalf, but he is also unrepentant. His words were calibrated to exert maximum damage and are a stunning blow to one of Murdoch's longest serving and most successful lieutenants. Their impact was all the more powerful because such moments of indiscretion are anathema to Murdoch, as one high-ranking former employee recalls. "When you are in the inner circle, you are expected to keep your mouth shut. The mafia call it omerta – the code of silence."

On the face of it, Freud's remark indicates a rift within the family. But some Murdoch-watchers believe it may be a more subtle signal. When Freud spoke, it was not his voice but Murdoch's that many media observers in the US and Britain heard. The author Michael Wolff, who recently penned a biography of Murdoch, believes Freud's outburst may be part of an orchestrated attempt to undermine a lieutenant who is getting a little too powerful. He points out that none-too-discreet "whispering campaigns" pre-empted the departure of other top executives.

"In many instances, it takes about a year to fire someone at a high level within News Corp. They kind of marginalise you, stop speaking to you and eventually you get the message that it's over."

A former political strategist who worked on the successful campaigns of three Republican presidents, Ailes was hired by Murdoch in 1996 to launch Fox News, in a widely scorned effort to challenge the broadcast establishment.

Some 14 years later, Fox is by far America's favourite specialist news channel, pulling in 2.1 million prime-time viewers every evening – more than its two main rivals, CNN and MSNBC, combined. In business terms, it is a jewel in the crown of Murdoch's global media empire, tipped to make $700m (£430m) in operating profit in a difficult year for News Corp. Hit by asset writedowns, the parent company made a loss of $3.3bn last year.

"Fox is a star performer, without a doubt," says Edward Atorino, a media analyst at Wall Street stockbroking firm Benchmark, and Ailes is a key piece in the News Corp jigsaw. "There aren't too many Roger Aileses around … If he were to leave, it would leave a huge hole."

With a pay package of $23m in 2009, Ailes made more money than Murdoch himself. Unusually, he has revealed that he personally lobbied Murdoch after hearing that his US papers might endorse Barack Obama. That irritated younger members of the Murdoch dynasty, while Fox's coverage of Obama since has left some of them horrified. Andrew Neil, who edited Murdoch's Sunday Times for over a decade and is also a former News Corp executive, says James Murdoch and Freud's wife Elisabeth both supported Obama, while Elisabeth raised funds for the Democrats. Neither are liberal, he concedes: "They just happen to be marginally more liberal than Rupert. It's a difference of tone."

Neil doesn't buy the theory that Freud was acting with Murdoch's consent, but agrees that "he is reflecting the views of the younger Murdochs". "What better way to let their liberal friends know they are upset about the way Fox News is behaving than on the front page of the New York Times, the liberal journal of record?"

Although promoted under the slogan "fair and balanced", Fox News horrifies political moderates with the hectoring rhetoric of its prime-time evening anchors. One man in particular, Glenn Beck, raises liberal hackles with his furious diatribes against Obama. Advertisers including Procter & Gamble and the insurer Geico withdrew commercials from Beck's nightly show in August when the anchorman accused Obama of being "racist" towards white people. Just this week, Beck used a blackboard and chalk to illustrate the supposed similarities of Obama's policies to those of the Venezuelan president, Hugo Chávez.

Beck is by no means unique. Conservative commentator Bill O'Reilly has used his primetime Fox show to label Mexicans immigrant "wetbacks". A passionate opponent of abortion, he was criticised last year after a Kansas abortion doctor, George Tiller, was murdered. Repeatedly dubbing him "Tiller the baby killer", O'Reilly had eviscerated him for operating a "death mill" and "executing babies" for profit.

Fox's weekend line-up also includes a chatshow hosted by the former Republican presidential candidate Mike Huckabee, while Sarah Palin was signed up this week as a political commentator.

Fox's style was inspired by America's legion of rightwing radio "shock jocks", according to Kerwin Swint, author of Dark Genius, a biography of Ailes. "It's very anti-government, very anti-establishment," he says. "Part of Ailes's philosophy for television is that it should be confrontational. That draws viewers, it's exciting for people and it's always been a staple of talk radio."

Irritated by Fox's partisan coverage, the White House has upped the ante. Obama has described the Fox network as "entirely devoted to attacking my administration" and has repeatedly snubbed its shows. The White House has been accused of failing to call on Fox journalists at press conferences and freezing the channel's reporters out on overseas trips. Obama's officials are unapologetic – Anita Dunn, former White House communications director, described Fox as "the communications arm of the Republican party".

Fox argues that during daylight hours its coverage is objective, drawing a distinction between daytime reporting and opinion-driven evening shows in the same way that newspapers distinguish between news pages and editorials. And Fox has a track record of breaking major stories – including news damaging to Republicans. But clashing with the White House may not help Murdoch's other business interests, and he has faced pressure to tone Fox down.

"He has members of his family riding him hard about this all the time," says Wolff, adding that Murdoch has become increasingly embroiled with the liberal "chattering classes" of Manhattan and Hollywood under the influence of his wife, Wendi Deng. "He spends a lot of time socialising with people who tell him rather constantly that Fox News is contemptible."

News Corporation was quick to dismiss the row this week, portraying Freud as an outsider. A spokeswoman said: "Matthew Freud's opinions are his own and in no way reflect the views of Rupert Murdoch, who is proud of Roger Ailes and Fox News."

Ailes himself sought to defuse any notion of a rift, telling the Los Angeles Times that "the entire Murdoch family" had always been supportive of him: "There is nothing to the idea that I have any problem with the children."

Jack Shafer of the website Slate suspects Ailes is getting too uppity for his boss's liking: "There's only one star in the News Corporation firmament and it's Rupert Murdoch. You succeed there by keeping your head down and working hard. Murdoch despises glory-grabbers." Neil, who was sacked by Murdoch, concurs. "He hates it when the hired hands get above themselves, so Ailes's days are numbered."

Murdoch will be flying to the Swiss ski resort of Davos in two weeks to rub shoulders with the world's business and political elite. Unusually, Freud won't be attending. Murdoch watchers may seize on that as evidence that Freud has been frozen out by Murdoch, at least for now. Ultimately, however, it may be the rumbustious Ailes who is left out in the cold.

13 January 2010

Book Review: 3 New Books Search For The Future Of Media

USA Today

This is an awkward time to write about the media business. We know a lot about the damage that the Internet and other technologies have done to traditional movie, television, music and print companies. It's still unclear, though, whether the familiar pillars of civic and popular culture are merely teetering, or about to collapse — and, if they do fall, what will take their place.

Still, the story is too important to resist. And three books provide useful, but different, perspectives for readers who want to understand the current mess.

The Curse of the Mogul: What's Wrong with the World's Leading Media Companies is the most challenging book in this group. But it's also the most important for anyone who wants a sophisticated analysis of how media businesses work — or, more precisely, how the authors believe they should work.

Jonathan Knee, Bruce Greenwald and Ava Seave deftly and often entertainingly cut a generation of media CEOs down to size. Curse shows that many of them were geniuses at finding ways to stuff their pockets with cash, but pompous lightweights when it came to serving their shareholders or preparing their companies for the digital onslaught.

(Full disclosure: The book grew out of a course the authors teach at the Columbia Business School, which I took in 2004.)

The authors throw their sharpest knives at moguls in hit-driven businesses who think they're hot stuff because they're tight with entertainment stars or have a sixth sense for what TV watchers, moviegoers or music listeners like. That sounds impressive in magazine profiles, or when companies try to justify their CEOs' inflated salaries. But the data show that these creative-friendly executives don't consistently deliver big profits.

The same can be said for moguls who love megamergers, including ones that blend news and entertainment with distribution, such as TV networks and cable systems. They dream that their size will enable them to beat or circumvent all comers.

But the winners in media avoid competition. When companies have competition, the authors say, they should divide the market and fix prices (using code so as not to rouse antitrust officials).

That's great for investors; not so much for consumers.

And it's especially cold comfort for most companies trying to make it in the digital age. How do you create barriers to entry in a medium that enables everyone to reach a worldwide audience?

That's what makes Google so intriguing, and a worthy subject for New Yorker writer Ken Auletta's 11th book, Googled: The End of the World As We Know It. Unlike Curse, which treats moguls with derision, Auletta's more interested in penetrating the often secretive world of the business elite and telling the stories with skill, intelligence and respect.

As the media industry's most inside outsider, Auletta has become its chief storyteller — much as The Making of the President author Theodore White was to presidential campaigns.

That makes Googled a fine guide for people who want to know how the force behind the leading Internet search engine, YouTube and Android phones positioned itself to become the first $100 billion media company.

Unfortunately, the story delves too deeply into Silicon Valley's cool, insular subculture to grip readers who aren't already interested in Google. For all of its importance in contemporary life, this media company is about engineers solving technical and business problems — not entertainers who want to touch people's hearts or journalists who want to engage their minds.

Also, Auletta never seems to get close enough to Google founders Larry Page and Sergey Brin to humanize them.

So the book's detailed accounts of key events in Google's development read more like a series of stories from a trade magazine than a compelling work of literary journalism.

Just as important, it's still too early to say anything that's meaningful about where Google's taking the media business.

Bob Garfield, Advertising Age editor at large and co-host of NPR's On The Media, faces a similar problem in The Chaos Scenario, a sweeping, often provocative and sometimes entertaining series of essays about how the media business is changing.

Unlike Auletta, Garfield seems eager to channel Hunter Thompson. He taps his keen sense for the absurd to riff on social trends and personal experiences as he makes bold predictions about what he thinks will happen to media companies.

But the effort offers too few flashes of brilliant insight, and strains too hard to impress with bluster, anecdotes and shtick.

The bulk of Chaos suggests that the gig is up for traditional media. These companies are wedded to obsolete models and arrogantly fail to listen to their customers.

Garfield, who likes to label things, considers listening so important that he's elevated it to a field of study he calls Listenomics.

Garfield seems OK with the prospect of newsrooms and studios going under: The masses have "aggregated curiosity, IQ to spare, and all the time in the world," he writes, to replace them with their own news and entertainment.

That's a fascinating possibility.

Sadly, Garfield never develops the evidence and arguments that might support his vaguely libertarian faith.

12 January 2010

Conan Rejects NBC Proposal To Follow Leno


Conan O'Brien says he's rejecting NBC's attempt to move "The Tonight Show" to a post-midnight slot to accommodate Jay Leno's return to late-night.

In a statement Tuesday, O'Brien says that NBC has given him a scant seven months to try to establish himself as host of "Tonight."

NBC wants to move "The Jay Leno Show" out of prime-time and to the 11:35 p.m. EST daily slot, bumping "Tonight" to 12:05 p.m. EST.

O'Brien said he hoped he and NBC could resolve the issue quickly so he could do a show of which he and his crew could be proud — "for a company that values our work" — raising the possibility he might go to another network. But he said he has no such offer.

O'Brien released the statement below on Tuesday afternoon:

People of Earth:

In the last few days, I've been getting a lot of sympathy calls, and I want to start by making it clear that no one should waste a second feeling sorry for me. For 17 years, I've been getting paid to do what I love most and, in a world with real problems, I've been absurdly lucky. That said, I've been suddenly put in a very public predicament and my bosses are demanding an immediate decision.

Six years ago, I signed a contract with NBC to take over "The Tonight Show" in June of 2009. Like a lot of us, I grew up watching Johnny Carson every night and the chance to one day sit in that chair has meant everything to me. I worked long and hard to get that opportunity, passed up far more lucrative offers, and since 2004 I have spent literally hundreds of hours thinking of ways to extend the franchise long into the future. It was my mistaken belief that, like my predecessor, I would have the benefit of some time and, just as important, some degree of ratings support from the prime-time schedule. Building a lasting audience at 11:30 is impossible without both.

But sadly, we were never given that chance. After only seven months, with my "Tonight Show" in its infancy, NBC has decided to react to their terrible difficulties in prime-time by making a change in their long-established late night schedule.

Last Thursday, NBC executives told me they intended to move "The Tonight Show" to 12:05 to accommodate "The Jay Leno Show" at 11:35. For 60 years "The Tonight Show" has aired immediately following the late local news. I sincerely believe that delaying the Tonight Show into the next day to accommodate another comedy program will seriously damage what I consider to be the greatest franchise in the history of broadcasting. "The Tonight Show" at 12:05 simply isn't "The Tonight Show." Also, if I accept this move I will be knocking the "Late Night" show, which I inherited from David Letterman and passed on to Jimmy Fallon, out of its long-held time slot. That would hurt the other NBC franchise that I love, and it would be unfair to Jimmy.

So it has come to this: I cannot express in words how much I enjoy hosting this program and what an enormous personal disappointment it is for me to consider losing it. My staff and I have worked unbelievably hard and we are very proud of our contribution to the legacy of "The Tonight Show." But I cannot participate in what I honestly believe is its destruction. Some people will make the argument that with DVRs and the Internet a time slot doesn't matter. But with "The Tonight Show," I believe nothing could matter more.

There has been speculation about my going to another network but, to set the record straight, I currently have no other offer and honestly have no idea what happens next. My hope is that NBC and I can resolve this quickly so that my staff, crew, and I can do a show we can be proud of, for a company that values our work.

Have a great day and, for the record, I am truly sorry about my hair; it's always been that way.