31 May 2010

Sam’s Club Personalizes Discounts for Buyers

NY Times

SECAUCUS, N.J. — For years, hotels, airlines, banks, online retailers and other data-driven businesses have turned to powerful computers to help determine the optimal price for their products, or to find ways to recommend items that groups of customers with similar tastes might want to buy.

The big retail chains have been slower to adapt, in part because of the sheer volume of customers they serve and products they sell.

But now, Sam’s Club, Wal-Mart’s warehouse chain, is offering a program called eValues that strives to offer bargains tailored to each member, based on that member’s buying history.

Industry experts said they expected other retailers to move toward more individualized offers, too. Today, most retailers offer across-the-board discounts or deals aimed at categories of customers.

“This is really the holy grail in a sense, pricing to the individual,” said Willard Bishop, a retail consultant in suburban Chicago who focuses primarily on supermarkets. “Everyone is on the path to doing what you are talking about.”

On a recent evening, for instance, Angela Otero stopped by the Sam’s Club in Secaucus and printed out four pages of eValues offers at a bright green kiosk near the front door, including $50 off a plasma television, $3 off a 30-pack of toilet paper and $2.50 off a box of meatless burgers.

Ms. Otero said she had used eValues since it started in August and found that the discounts covered “the majority of things I want.”

“The detergents, TV dinners once in a while,” she said, scanning through her printout of deals. “There’s a dollar off Bounce. I use that all the time.”

“It’s basically my own grocery list,” she said.

Linda Vytlacil, vice president for member insights and innovation at Sam’s Club, said coupons normally had a response rate of 1 percent or 2 percent. With eValues, she said, as many as 20 percent to 30 percent of eligible customers collect the discount they are offered.

The program is available only to Sam’s Club’s “Plus” members, who pay a higher yearly membership fee than do regular members. They can view the deals by e-mail, on the Sam’s Club Web site or at store kiosks.

“There’s no clipping coupons,” Ms. Vytlacil said, adding that eValues offered “highly individual relevant offers specific to each Plus member. All they have to do is purchase the product, and the savings are automatically applied at checkout.” Like other membership clubs, shoppers must present a card at checkout.

The eValues program is the latest iteration in the fast-growing field known as predictive analytics, which uses vast amounts of data to spot trends and anticipate consumer behavior.

Two of the best-known users of applications of predictive analytics are baseball executives, who scour statistics to find overlooked superstars, and the online DVD rental service Netflix, which suggests movies its customers might like.

The dating service eHarmony also uses the practice to match potential mates, and eLoyalty, which sells customer service technology, uses algorithms to analyze customer calls to make them more effective and efficient.

For instance, based on a day’s worth of calls, eLoyalty can predict which customers are likely to cancel their accounts. Using that information, a company can then call back those customers to try to save their business and can use the initial call to train its employees to do better.

“The goal is to have customer service reps speak to the customer in the way they want to be spoken to,” said Jason Wesbecher, eLoyalty’s vice president for sales and marketing. “We are trying to rescue customers trapped in service hell.”

Of course, retailers have long tried to decode consumer behavior, through surveys or test panels, or by using crude forms of data analysis. During the last decade or so, many retailers have amassed huge amounts of data through loyalty programs or membership cards, like those provided by Sam’s Club and its rival, Costco.

But retailers have generally done little with the information, other than using the cards as a branding opportunity or to offer broad discounts.

“You’ve got hundreds and hundreds of loyalty programs out there, and I would argue that only a handful leverage it like they should,” said Stuart Aitken, chief executive of Dunnhumby USA, which is considered a pioneer in providing analytics to retail stores like Kroger.

Some retailers, however, have used the data to figure out the right product mix and layout for their stores, or to offer discounts to categories of customers. Sam’s Club officials say they are among the first to offer individualized discounts on such a large scale, an assertion supported by several industry experts. CVS Caremark and Kroger are two other retailers that offer individualized discounts.

Melissa Studzinski, director for relationship marketing at CVS, said the analytics used in the stores’ ExtraCare loyalty program was a “stealth way to drive business” that competitors cannot necessarily see. “We’ve credited ExtraCare as one of the linchpins of our sale results,” she said.

Among the advantages, tailoring offers to individual customers makes marketing budgets far more efficient. It also keeps customers happy.

“If you get more relevant to shoppers, you get more loyalty, you get more business,” said Dave Carlson, chief executive of Relevance Partners, which provides software to retailers to glean consumer insight from shopping data.

A major challenge in creating eValues was the scale involved: the permutations of customer, product, location and discount exceeded one trillion possibilities for Plus members alone, officials said.

Working with FICO, the company best known for providing credit scores, Sam’s Club has improved its ability to predict what each customer will buy and the time frame in which that purchase will occur.

For any product discount, Sam’s Club can vary the message and price in the communication received by the customer, said Andrew N. Jennings, FICO’s chief research officer. Aside from the cost savings, tailored messages to consumers can also highlight specific product attributes that a particular consumer typically seeks, like “organic” or “environmentally friendly,” he said.

The messages are aimed at encouraging repeat buys or enticing a first-time purchase, while avoiding conflicting promotions, Mr. Jennings said.

Some privacy advocates worry that customers are becoming too willing to allow corporations to gather and exploit their shopping histories. Most users of the data, Sam’s Club included, insist they have rigorous protocols to protect customer privacy.

And for all of its sophistication, there is no guarantee that eValues will be a hit. Most shoppers observed during several recent visits to the Secaucus store went about their shopping seemingly oblivious to the eValues kiosk.

In several instances, shoppers stopped to use the kiosk, but a scanner failed to read the bar code on their cards, forcing employees to manually type in their membership numbers.

Still, some shoppers said they were impressed by the deals they were receiving using eValues. Ricardo Mayoral printed out four pages of deals at the kiosk, including discounts on orange juice, ice cream sandwiches, televisions and chicken breasts.

“I got like $2 off the bananas, a $1 off the Toasted,” he said, referring to a package of crackers in his cart. Mr. Mayoral, 36, said the best eValues deal yet was $300 off a $1,200 television.

“I remember that day,” he said later. “I came to buy food, and I bought two TVs.”

Brad Bogan, 44, who works near the Secaucus store, said he signed up for a Plus membership during a recent promotion and had more than covered his costs with eValues savings. (Plus members pay $100 a year; regular members pay $40.)

Even so, convenience sometimes trumps value. Mr. Bogan is not renewing his Plus membership because his office is moving farther away from the Secaucus store and there is not a Sam’s Club near his home.

“We use BJ’s more than we do Sam’s,” he said, referring to BJ’s Wholesale Club. “There’s a BJ’s right down the street.”

Detroit Bus System Rejects 'Leaving Islam?' Ads as 'Pure anti-Muslim Hate'

NY Daily News

Motown has no use for the anti-Muslim ads plastered across the sides of buses in New York City.

Detroit's SMART bus system has rejected the button-pushing placards that read "Fatwa on your head? Is your community or family threatening you? Leaving Islam?" - and direct Muslims to a Web site urging them to leave the "falsity of Islam."

"It's a purely anti-Muslim hate issue," Dawud Walid of the Council on American-Islamic Relations told the Detroit News on Friday.

"The SMART bus company, or any bus company, should not be used to marginalize a minority group."

Defenders of the ads, dreamed up by Manhattan-based right wing blogger Pamela Geller and the New York-based Stop the Islamization of America, say it's a free speech issue and they have sued.

"Americans have a right to know the truth; Islam is a religion of intolerance and violence," said Michigan lawyer Richard Thompson, who filed the suit.

"Christians, Jews and other non-Muslim minorities are persecuted in every country where Islam dominates."

The MTA has not tried to remove the 40 ads, which Geller said cost her group $10,000 for a one-month run, because they do not violate agency advertising guidelines.

In April, the Miami bus system at first rejected the ads but relented when Geller's group threatened to sue.

A leader in the fight against the proposed mosque near Ground Zero who has Tea Party ties, Geller has been branded a bigot by CAIR and other groups.

She also caused a stir in the right-wing blogosphere by videotaping a denunciation of Palestinian terrorists - while dressed in a bikini.

In an interview with The Daily News, Geller said she didn't care if Muslims were offended by the ads. "Will it bother Islamic supremacists? Yes," she said.

28 May 2010

Ask a Stupid Question . . .


Fox news anchor asks the internet: 'am I dumb?'

Fox News' Greta Van Susteren received an email from a viewer, "Brian," saying that her "brain is empty." Naturally, she started a poll on her blog: "Who is dumber? Greta, or Brian." Guess who's winning.

Van Susteren, the network's resident weird Scientologist, is an experienced blogger who knows that the best way to deal with personal slights is to blog about them extensively. So when she received an insulting email from viewer "Brian" of "Tahlequah, OK," she posted it without hesitation:

    You got that right, you have a mind like a seive. Your brain is empty.
    Matter of fact, it is so empty, if you put a pea in your skull it would rattle around like a BB in a boxcar. You said it, gal, not me, but I sure do agree with you. A true blonde.
    Brian ***
    Tahlequah, OK
    PS How do you get that cush job, anyway?

What Greta seems to have forgotten is that while the internet is a great place to air grievances, it is not a great place to find personal validation. In fact, it is the actual worst place to find personal validation. Especially in poll form:

Can you guess how this is going for Greta? If you have been on the internet before, even for five minutes, you may have a clue.

Obviously, as a professional blogger, I took the poll very seriously and weighed the evidence carefully: On the one hand, "Brian" doesn't know how to spell the word "sieve." On the other hand, Greta actually made a poll asking if she was dumber than a guy who wrote her an email.

I voted for Greta, in the hopes that they will replace her. I look forward to On the Record with Brian from Tahlequah.

27 May 2010

The End of Golden Coffins?

NY Post

Ad giant Omnicom may end or alter a perk that allows for posthumous payments to the heirs of CEO John Wren and other top executives after a significant portion of its shareholders took a dim view of his $41 million "golden coffin."

The ad conglomerate, which owns creative agencies such as TBWA and BBDO, opposed a shareholder resolution that would have curbed the controversial death-benefit policies for Wren and other officers.

Although the majority of Omnicom shareholders sided with the company, a sizeable block -- about 41 percent -- voted for the proposal submitted by Amalgamated Bank's LongView Funds, which owns around 72,000 shares.

"Golden coffins are contrary to the whole idea of pay for performance," said Con Hitchcock, an outside attorney for Amalgamated Bank. "You're not getting performance from someone who is dead."

Since most shareholder votes at Omnicom tilt heavily in favor of the company's stated position, the results caught the attention of Wren and other executives, according to one Omnicom insider, who predicted they would address the issue before it can be put to a vote again next year.

"They certainly noticed that a number of shareholders didn't approve of it when most shareholder initiatives are slam dunks for them," said the insider. "I think you will see it changed or reduced."

A spokeswoman for Omnicom didn't return a call requesting comment.

Several companies have reduced or changed their death payments after coming under pressure from shareholders. Last year, the board of the Walt Disney Co. decided to end the perk for CEO Bob Iger when his current contract expires.

Omnicom is required to make posthumous payments to Wren, Chief Financial Officer Randall Weisenburger and three other top executives, according to the company's proxy filing.

In the event the 57-year-old Wren dies on the job, his beneficiaries stand to get $1.25 million a year for 15 years, an incentive bonus of $5 million and a stock option award valued at $17.4 million, according to the filing.

"The $40 million is on the high side," Hitchcock said. "Not that many companies have these kinds of proposals."

26 May 2010

Russians: Facebook is only the First Step

Telegraph UK

The Russian investment vehicle that bought a $200m stake in Facebook last year is preparing to buy stakes in dozens of well-known internet companies as Russia turns to the internet to lead its future prosperity.

Digital Sky Technologies (DST) has already invested $1bn (£693m) buying up stakes in web companies including Zynga, the makers of the popular online social game FarmVille, and acquiring AOL's messenger service, ICQ, for $188m.

Yuri Milner [pictured], chief executive, said: "There are a few dozen companies globally that we are following. When you do late-stage investment focused on the internet your universe shrinks dramatically."

He said there were probably only about 100 full-developed internet companies around the world.

DST, which is 35pc owned by Alisher Usmanov, the Russian billionaire linked to a bid for the football club, Arsenal, has built up a war chest of more than $1bn to fund the next stage of its investment strategy. The company, which also counts Goldman Sachs and fund manager Tiger Global among its investors, was recently valued at $3bn when Tencent, China's biggest internet company, snapped up a 10pc stake for $300m.

So far DST has invested solely in Russia, eastern Europe and America, but Mr Milner said he is actively looking at companies in the Asia, Australia and the UK. He declined to name any investment targets, but pointedly refused to rule out buying a stake in Twitter.

Although Mr Milner is looking solely at internet companies, he said his strategy is to invest in disruption.

"Every single industry will get disrupted by the internet. This is permanent, not cyclical. Music will never be the same again, the newspaper business will never be the same again. No matter what happens macro-economically, the internet will continue to change the world. I am investing in disruptive companies, that just happen to be internet companies."

Facebook remains Mr Milner's most high profile and strategic investment. It is understood that he has been quietly building on the original 2pc stake bought last May in shares held by Facebook employees. Mr Milner refused to comment on DST's current Facebook stake.

Mr Milner dismissed suggestions that at a valuation of $10bn he overpaid for his stake in Facebook, especially given that the social networking site has yet to prove it has turned to profit.

"Many people thought Facebook at a $10bn valuation at the bottom of the market was expensive," he said. "But our thesis is to find the best companies in their categories and invest in them. The better companies that we look at tend to be expensive."

Although DST may have overpaid, Mr Milner's investment valued Facebook at $5bn less than when Microsoft bought a $240m stake in late 2007.

"Anybody can make a mistake," he said. "But this is a vision I am convinced [of]. My vision is that Facebook will change a lot of things about the world, particularly e-commerce payments."

Mr Milner believes that people will shift far more of their purchases online. He also predicts that social gaming, in which people pay money to play characters in a fictional online world, will "explode".

"Billions of dollars are already spent on social gaming." he said. "In China people spend a multiple of what they spend in cinemas on social gaming. That is what it is going to be like everywhere."

He acknowledges that it is a vast amount of money to spend on things that only have a virtual existence, but says people are already spending billions of pounds on other "unnecessary" goods, such as ties and fancy furniture.

"People spend a lot of money on non-practical things. They could save a lot of money if they did that on the internet instead," according to the 48-year-old former theoretical physicist and World Bank strategist.

"Everything you do in real life you can do for cheaper on the internet. We have a dating site in Russia, so instead of taking your girlfriend to a restaurant you can meet her online.

"If you want to meet people you could go to a nightclub, but if you spend a few dollars online you can promote your picture for everyone to see. For the same money you can be seen by more people," he said. "I would argue that it is much more efficient to meet on the internet.

"I met my girlfriend in the gym, that's not the most efficient way either, as gym membership costs $1,000 a month."

Is everything in life about efficiency? "For most people, yes. Economics are important, most people would rather do things cheaper."

Stones' Re-Issue Earns Band 1st Number-One Album Since 1994

'Exile On Main Street' reissue leaps to the top of the charts

The Rolling Stones have topped the UK album chart for the first time since 1994 with the re-release of 'Exile On Main Street'.

The album, which originally topped the charts in 1972, has been remastered and released with a host of bonus tracks, and outsold Faithless' new album 'The Dance', which is at Number Two. LCD Soundsystem's 'This Is Happening' also makes the Top Ten, going in at Number Seven.

25 May 2010

Movie Tickets Reach the $20 Mark

The Wall Street Journal

For the first time, a major Hollywood film will hit the $20 threshold at the box office, as movie-theater owners test the public's ability to absorb ever higher ticket prices.

Several theaters will charge $20 per adult ticket to IMAX showings of the animated 3-D family film "Shrek Forever After," the fourth "Shrek" installment from DreamWorks Animation. The theaters include the AMC theater in Manhattan's Kips Bay neighborhood, AMC Loews 34, AMC Loews Lincoln Square and AMC Empire 42nd Street.

The increases weren't officially announced, but were reflected in prices posted Wednesday on movie-ticketing Web sites such as Fandango.com and tracked by BTIG LLC media analyst Richard Greenfield.

"With the state of the economy remaining questionable, we worry pricing is simply moving up too quickly," cautioned Mr. Greenfield in a research blog post, adding that he was especially concerned about how quickly children's ticket prices are increasing. "The danger is scaring consumers away from the movie theaters."

This weekend's price increase come less than eight weeks after theater operators instituted some of the steepest hikes in a decade. Those increases in late March—in some cases of as much as 26%—varied theater to theater and focused on 3-D and IMAX showings of another DreamWorks Animation title, "How to Train Your Dragon." The same AMC theater in Manhattan charged $19.50 for an IMAX showing of "Dragon."

The $20 ticket may prove to be a psychological barrier too steep for some moviegoers to overcome, but the industry appears ready to take the risk, especially in the wake of a string of 3-D blockbusters, from "Avatar" to "Alice in Wonderland." 3-D movies accounted for the vast majority of last year's 10% jump in domestic box-office sales. That figure is likely to climb even higher for 2010.

While box-office revenues are up about 6% this year compared to the same period last year, attendance is slightly down—a reversal from several months of rapid expansion at the box office and a record-breaking year in 2009, when attendance was up more than 5% and revenues broke the $10 billion barrier.

24 May 2010

Facebook Privacy Woes = Free Publicity for Hollywood Movie


Recent changes to Facebook's privacy controls, as well as a litany of new products that share more user and demographic information with third-party partners, are ticking off a lot of users.

Weblogs and Mahalo founder Jason Calacanis recently joined GDGT founder Peter Rojas and prominent Googler Matt Cutts in the ranks of notable tech industry figures who have announced that they're deleting their profiles altogether. Rumors have been swirling about internal disputes at Facebook over whether the company really did cross the line and whether changes should be in store.

But I'm willing to guess that a few people very high up in Hollywood are watching the Facebook privacy hysteria unfold with glee, secretly or not-so-secretly hoping that the rabble-rousing headlines about CEO Mark Zuckerberg keep dominating tech news for a few more months.

That's because tumult at Facebook could very well amount to free press for "The Social Network," the upcoming film about the origins of the company. It is slated for an October 15 release.

Based on author Ben Mezrich's unauthorized Facebook tell-all "The Accidental Billionaires," the Columbia Pictures movie stars Jesse Eisenberg and Justin Timberlake as Zuckerberg and former Facebook exec Sean Parker, respectively.

In a blog post on Wednesday, TheWrap.com blogger Jeff Sneider speculates that the star power of the movie--director David Fincher, screenwriter Aaron Sorkin, and producer Scott Rudin, not to mention the cast--may very well add up to Oscar nominations.

That's good news for Columbia Pictures and bad news for Facebook. The company did not approve of Mezrich's book or Sorkin's screenplay treatment, and its few comments in the press about the matter have painted the tale as fanciful gossip. Indeed, the storyline doesn't portray Zuckerberg as the good guy. He's depicted as ruthless, greedy, and more than willing to stab former collaborators in the back on his way up Silicon Valley's power ladder.

When I read the book and the screenplay, I theorized that Facebook was already so powerful and ubiquitous that it shouldn't have to care much about a movie revealing its (allegedly) shady early days. "The Pirates of Silicon Valley," a late '90s made-for-TV movie about the rivalry between Bill Gates and Steve Jobs, for one, didn't do a thing to derail either Microsoft or Apple.

But Facebook right now is in a far more vulnerable position, image-wise, than it was a few months ago. The aftermath of the company's most recent privacy developments have thrown it out of many members' good graces, and seeing a slick, on-screen fulfillment of their concerns about the company could amount to even more malaise.

Trailers for "The Social Network" should be popping up in movie theaters soon, likely running ahead of Columbia Pictures releases that are coming out this summer. TheWrap's Sneider speculates that the first of these may be the upcoming Angelina Jolie flick "Salt." That comes out July 23. But knowing how these things work, a trailer may leak to the Web sooner rather than later.

Broadcast Networks in Good Time Slot for Sale

NY Post

The upfront presentations may have wrapped up last week, but the broadcast networks' sales pitches may be just beginning.

With General Electric in the process of selling NBC Universal to cable giant Comcast, some Wall Street dealmakers predict Sumner Redstone and Disney will begin debating whether to put CBS and ABC, respectively, on the block.

Among bankers, CBS appears to be garnering the most attention amid signs Redstone these days isn't dismissing out of hand the notion of selling CBS.

"This is a good time to sell a network," said one Wall Street exec. "Retransmission makes it look more interesting. [CBS] has assets in radio but no long-term strategy in cable." Retransmission refers to fees for "retransmission consent," in which cable and satellite operators pay a network a monthly per-subscriber fee to carry the channel on their systems.

Reps for CBS and for Redstone, who is CBS' majority owner, declined to comment.

Meanwhile, ABC's future in the Mouse House is also not guaranteed, with Disney chief Bob Iger said to be taking a hard look at the network.

"There are no guarantees," he said recently about ABC's future at Disney. A source said the issue is what to do with the accompanying stations.

Sources said this year may be broadcast TV's best hope for finding buyers. While the audience tuning in to broadcast TV continues to erode, the Big Four networks -- ABC, CBS, Fox and NBC -- collectively are expected to pull in as much as 20 percent more in ad dollars at this year's upfront than in last year's dismal showing. (News Corp. owns both Fox and The Post.)

Further, the networks are gaining ground in their years-long fight with cable and satellite operators to get paid for their broadcast signal the way ESPN and MTV do.

Analyst Larry Gerbrandt forecasts that networks could each reap up to $400 million in the coming years, thanks to retransmission fees. He predicted that by 2016, the networks' take from retransmission consent could hit $5 billion.

That's good news because these days broadcast networks make little, if any, profit just by airing sitcoms and dramas.

While audiences will still show up in droves for tentpole events like the Super Bowl or an awards show, the increased popularity of cable is eating into broadcast networks' bottom line, which is further hampered by the high costs associated with producing series, steep sports-rights fees and expenses tied to owning a news operation. Also weighing on broadcasters is their ownership of local TV stations, which have been hit hard by the ad slowdown.

Experts said the networks' real money-making opportunities lie in ancillary businesses, such as international syndication, DVDs and other merchandise, and ownership of a network isn't necessary to reap those benefits.

22 May 2010

Google's Open Video Standard Begins New Battle with Apple

San Francisco Chronicle

Google may have just entered a new battlefront with Apple at the "I/O" developers conference when it took the wraps off its plans for the VP8 video codec.

While this battle is not as transparent, or sexy, as Android versus iPhone, it's going to create yet another point of tension for the two companies.

Google's big open video plan is called the WebM project. It will make the VP8 video codec, which it acquired when it bought On2 for $133 million, an open source standard. It will also use the open source Vorbis codec for audio.

When Google announced the new open source project, it said it was partnering with Mozilla, Opera, Google Chrome, Adobe, and others to proliferate the standard across the web.

As John Gruber at Daring Fireball noted, there's a big name missing from the list: Apple. (Microsoft is also missing, but it has thrown some support VP8's way.)

Apple is missing because it put its full support behind another video codec, H.264. H.264 is not an open standard. H.264 is free to use for the next five years, but after that MPEG LA plans on charging a royalty for using it.

It is a proprietary standard, owned by a consortium of tech companies called MPEG LA. Apple and Microsoft have both contributed patents to MPEG LA, so they are part of the consortium.

Those patents are important. Steve Jobs has hinted he will be doing all he can to protect them. In an email to Hugo Roy of the Free Software Foundation, Steve Jobs wrote (our emphasis added):

All video codecs are covered by patents. A patent pool is being assembled to go after Theora and other "open source" codecs now. Unfortunately, just because something is open source, it doesn't mean or guarantee that it doesn't infringe on others patents. An open standard is different from being royalty free or open source.

We don't know, but we suspect that Steve Jobs knew Google was planning on open sourcing its video format when he wrote this. While he specifically mentions Ogg Theora, he also mentions "other 'open source' codecs," suggesting that Apple could be mulling plans to sue Google over the VP8 codec format.

This wouldn't be Apple's first patent lawsuit aimed at Google. Let's not forget it's also suing HTC, a big Android customer.

Aside from the possible patent issues, this codec bothers Apple for other reasons, according to web video experts.

We spoke with Peter Csathy, CEO of Sorenson Media and David Dudas, VP of product development about Google's VP8 announcement. Sorenson Media has been involved in video encoding and compression for over a decade.

Peter and David speculated that Apple doesn't like VP8 for the following reasons:

    * Apple is a control freak, and it doesn't like the idea of Google having control over a new video format, even if it is open source. Apple is closed, it likes its own quality control. With H.264, it has some of that.
    * Apple has been getting companies to commit to its H.264 format. That works well for transmitting video on iPads and iPhones. If another format comes along, it could mess that up.
    * Apple is battling with Google. Why would it help proliferate VP8? The new standard is only going to help Google. Peter and David think Google can monetize from this new format in a number of ways -- from advertising to cloud services. It will also help Android, Google TV, and Google's tablet efforts, they say. Conversly, it's unclear what Apple gains from it.

Admittedly, it's still early in whole messy codec-war. And as you probably noticed, it's also very complicated. It's entirely possible Apple will eventually announce support for WebM once it gets a better look at it.

Lately, though, Apple has not been in the mood to play nice with competitors. We've already mentioned its lawsuit against HTC. It's also in a lawsuit war with Nokia. Then there's also the nasty spat is has going with Adobe. Remember also, CNBC reported Steve Jobs hates Google CEO Eric Schmidt now.

If Google plans a new format that will give it more control over web video, possibly hurting Apple in anyway, we don't see any reason for Apple to let this one go. So, get ready for more fireworks between the two tech companies.

This time it could be over video codecs, of all things.

21 May 2010

OFT to Review Outdoor Ad Market

Guardian UK

The Office of Fair Trading is to scrutinise the £800m-plus UK outdoor advertising industry to examine the dominance of the few players in the sector and the role played by commissions.

The OFT said that it intends launch a study, which is expected to be completed in December, that will look at the "high concentration" of specialist buyers, outdoor media owners and the "payment of commission and "how these affect the incentives of those buyers".

The OFT said it would also look at contracts between outdoor media owners and local authorities because some agreements may contain clauses that stop deals being done with rivals, or directly with advertisers, which may ultimately be "detrimental" to taxpayers.

"This study will consider whether there are any distortions of competition or barriers to entry at different levels within the sector," said the OFT.

The outdoor advertising industry is estimated to be worth £833m this year, yet the number of companies effectively controlling the sector is small and the commission system is described by one senior media executive as "murky". Commissions are likely to account for about £167m of the total amount spent by advertisers this year.

Four big players own the majority of the outdoor advertising sites across the UK: Clear Channel, JCDecaux, Primesight and CBS Outdoor.

In terms of specialist buyers, those who actually buy the campaigns booked by media agencies on behalf of advertisers, the market is effectively dominated by two companies: Aegis-owned Posterscope, which in 2008 did a deal with the then third largest player IPM, controls close to 60%; and Kinetic, which is owned by Sir Martin Sorrell's WPP, controls about 40%.

Of every pound spent on an ad campaign, about 15% commission goes back to media agencies, which in practice often end up pushing the money back to their clients behind the campaign, and 5% goes to specialist buyers.

"It has traditionally been a fiddly medium that is difficult to deploy, more labour intensive than say buying TV, which is why there has been the 5% extra to specialists," said one industry source.

The market study is thought to have been kicked off at least in part due to recent consolidation, such as when JCDecaux, the world's second largest outdoor advertising company, bought rival Titan Outdoor back in January.

"The cost of all forms of advertising is reflected in the price consumers pay for goods and services," said Heather Clayton, senior director of infrastructure at the OFT. "This market study into outdoor advertising will take a look at whether the market works well in terms of offering firms and local authorities deals that are fair, competitive and transparent."

20 May 2010

MySpace Promises Users Simpler Privacy Settings


In a letter to users, MySpace's co-president Mike Jones on Monday outlined the company's stance on privacy and its place within social networking, as well as detailing what he calls a "simplified" version of the social network's privacy settings that will roll out to users in the next few weeks.

The announcement comes just three weeks after Facebook's F8 conference, where Facebook introduced, and immediately implemented new privacy settings that have drawn user and media ire for making profile information too public. Facebook's new system has also drawn criticism for being overly complex.

Jones said the new system will continue to give users the same three tiers of privacy for each aspect of their profiles that they have right now (public, friends only, and public to users over the age of 18). The key difference from Facebook's approach, however, is that the toggle to change all the settings will be contained in one switch. Jones also said that users who are currently using the "friends only" option will keep their settings without having to opt in or out of anything.

"While MySpace at its core is about discovery, self expression and sharing, we understand people might want the option of limiting the sharing of their information to a select group of friends," Jones said. "We respect our users' desires to balance sharing and privacy, and never push our users to an uncomfortable privacy position."

Jones went on to say that the the company's goal has remained the same throughout its existence, and that users shouldn't worry about changes in privacy affecting information or content they've uploaded to MySpace. "MySpace's core value of allowing self-expression and representation of yourself remains true, without the fear that your unique contribution to MySpace will be unknowingly used for an alternative purpose," Jones said.

19 May 2010

Brown Out -- Spitzer In?

Washington Examiner

It's official: Campbell Brown's prime-time show on CNN is toast, sources say.

The ratings are down 6 percent from last year, at 159,000 viewers in the coveted 25-to-54 demographic, CNN says. Mediaite took Brown's spin and reported that she asked to break her contract months ago, but insiders are saying she was getting heat to leave. She hasn't been featured in recent CNN promotions and was present at the CNN Newsmaker Breakfast last month but not a featured talent.

Insiders are buzzing about how Brown's falling ratings may lead CNN U.S. President Jonathan Klein to eat his words and bring back a "head-butting debate" show he once detested ala "Crossfire."

The network is even considering bringing in disgraced former New York Gov. Eliot Spitzer, a friend of Klein, to panel the show. Spitzer has been a guest on Brown's show and filled in for MSNBC's anchor Dylan Ratigan's show Monday afternoon.

When Yeas & Nays reached out to Spitzer about the possibility of joining the team, he briskly shut it down saying, "Nope. Nope."

"I've been there once or twice, twice, maybe," Spitzer continued.

As for CNN, spokeswoman Christa Robinson said, "There has been a lot of talk about CNN lately. As always, we are not going to comment on any speculation that may be out there."

Brown would not comment on the record.

18 May 2010

Networks' Viewership Topped by YouTube


America’s Funniest Home Videos may have pioneered the YouTube concept, but as the site reaches the five-year mark, its audience size is no laughing matter. YouTube’s viewership now exceeds that of all three networks combined during their “primetime” evening time slot, with more than 2 billion views per day, Google announced Sunday.

Granted, YouTube’s numbers come from worldwide views, while ABC, CBS and NBC broadcast their primetime channels within the United States. But this is a significant milestone nonetheless, and hints at an eventual tipping point when the internet could become the world’s dominant video-delivery system, Mark Cuban’s predictions aside.

Google also trumpeted some other key stats: People upload over a day’s worth of video to YouTube every minute; the average user spends only 15 minutes a day on the site, which YouTube would like to increase in part by renting full-length films; and YouTube has broadcast live sports to more than 200 countries.

To celebrate its fifth birthday, YouTube asks the site’s users to upload videos of how the site has affected their lives, some of which will appear on a specially curated channel. In addition, celebrities including Conan O’Brien — whose best next career move might be to become official curator of YouTube — marked the occasion by posting a playlist consisting of their favorite videos (view his above).

Should the networks really be worried about being overtaken by YouTube? Yes and no. They own their content, YouTube has professed a wish to lengthen viewing times. Licensing currently-airing full-length network television shows (in addition to the older shows they currently license) would be a great way to do that. And the networks are in a more favorable negotiating position than the record labels were when they made similar deals, due to Hulu (ABC and NBC) and CBS.com already attracting large audiences for that content.

Perhaps a more serious threat to the networks is that YouTube is changing our viewing behavior, and that our viewing habits on the computer will soon migrate to the living room.

Plenty of set-top boxes already play high-definition and even 3-D YouTube videos on a television set. When Google unveils its next-generation set-top box, possibly as soon as Wednesday’s I/O Conference, in partnership with DishNetwork, Intel and/or Sony, YouTube will assume an even greater presence on the television. Even if the networks continue to hold back their full episodes of new shows from on YouTube, users could come to prefer a higher percentage of direct-to-internet content on their televisions.

As paidContent founder and editor Rafat Ali tweeted Monday morning, Conan O’Brien seems “a lot funnier on the internets” than he did on network television, and O’Brien recently joked with a roomful of Google employees about a world without television networks. Who knows, five years from now, O’Brien could be hosting his own show on YouTube, rather than fretting about his terminated NBC contract.

“I don’t know what television’s going to be five years from now. There’s a lot of people that think you’re just going to experience it all through your server, and people don’t even know how the business is going to change,” said O’Brien, who should know, as a longtime television host and writer-producer of the Simpsons.

“There might not be really network television as we know it — wouldn’t that be sweet.”

17 May 2010

Pa. Newspapers' Layoff Notice Called 'Procedural'

Associated Press

PHILADELPHIA — Employees of Philadelphia's two major newspapers have been sent a letter warning of possible layoffs, but the lenders who won the newspapers at a bankruptcy auction last month say the notice is "procedural" and no such action is planned.

The letters, sent Friday on letterhead of The Philadelphia Inquirer and Philadelphia Daily News, say the new owners "will continue as the employer of all employees" but also note that the letter would serve as notice under a federal law that requires employers to give 60 days' notice in the event of mass layoffs.

"The letter is a procedural letter. It was agreed they would send it out up at the auction in New York," said Robert Hall, named chief operating officer by the new owners. "The old company goes out of business that day and we start anew."

"Our intention is still exactly the same as it was before," Hall said. "There will be no massive layoffs when we take over the company."

Creditors last month won a frenzied bankruptcy auction for the two newspapers and their website over a local group's bid. Greg Osberg, who has been named publisher and chief executive officer, has said he expects the sale to close in late May and hopes to complete contracts with the newspapers' unions by the end of June.

In a note accompanying the letters, outgoing publisher Brian Tierney said he was sending them "with a heavy heart, but at the direction of the prospective owners."

"Issuing this kind of ... notice does not happen in every sale," Tierney said. Such notices weren't issued when the previous owner, Philadelphia Media Holdings LLC, bought the newspapers nearly four years ago, he said.

Dan Gross, a Daily News columnist and president of the union that represents newsroom and advertising employees, said he had been assured that no job cuts are planned at the newspapers, which have about 4,500 full-time and part-time workers.

"They reiterated their commitment to offering employment to all current employees," Gross said.

Gov. Ed Rendell said a company lawyer had given him similar assurances and told him the letters were required because of "an entity change."

Rendell said he would have no problem if there were no layoffs or unilateral reductions in wages and benefits, but "if they unilaterally offer ... wages at 75 percent or 50 percent benefit cuts, that would be absolutely wrong and a betrayal of the process."

16 May 2010

Global Ad Industry Grapples with New Spending Trends


Some of the world's top advertising and marketing chiefs will meet in Moscow this week to exchange ideas on the best ways for the $450 billion industry to capitalise on a still fragile economic recovery.

Although the picture is mixed worldwide, the major economies of the United States and parts of Europe are returning to growth and with them the fortunes of ad agencies and media owners, which trail but closely mirror gross domestic product.

The two-day conference of the International Advertising Association starting on Tuesday evening comes at a time of cautious optimism for the industry -- first-quarter results reported in recent weeks have shown improving trends.

But the fact that a dire early 2009 makes almost anything look good by comparison, combined with the fact that many advertisers are still driving hard, last-minute bargains, mean that predictions for the second half of the year are scarce.

Current turbulence in the euro zone is adding to the uncertainty of recovery there.

"Booking is late, so visibility and confidence into the second half, where comparatives stiffen, is low. Beyond the bounce, to see whether there is growth, we may have to wait for 2011 estimates," Citi analysts wrote in a recent note on Europe.

Global advertising spending is expected to rise 2.2 percent this year, driven by online paid search ads, according to leading media buyer ZenithOptimedia, which is part of the Publicis (PUBP.PA) agency group.

Advertising on television -- a cheap form of entertainment during a recession -- together with cinema and outdoor ads are also expected to improve, but in general the Internet is sucking money from other media.

"The downturn probably accelerated the shift of budgets from traditional media by focusing advertisers' minds on the importance of measurable return on investment," ZenithOptimedia wrote in its most recent forecast.


Below the surface, another structural change has been taking place, which predates the recession: organisations have been spending an increasing proportion of their marketing budgets on their own websites instead of on external media.

Technology is enabling companies to communicate in ever more sophisticated ways directly with their customers, while social networks like Facebook and Twitter offer ways for users to multiply the effect of corporate messages.

Chuck Richard, lead analyst at information advisory and research firm Outsell, says companies now spend more than half their online marketing budgets on their own sites. "It's been 50 percent or more for the last three years," he says.

As the proportion of total marketing budgets spent online increases -- ZenithOptimedia estimates online will account for 13.9 percent of all ad spend this year and 17.1 percent by 2012 -- the money available to spend on external ad space diminishes.

Richard reckons that U.S. companies will spend about $63 billion this year on their own websites -- roughly equivalent to the total size of the U.S. television advertising market.

"For the media companies, this is critical, because they've been the ones selling the space," he says.

This week's meeting will bring together not only chief executives of top ad agencies including WPP (WPP.L) and Publicis but also the marketing chiefs of the likes of Procter & Gamble (PG.N) and Hewlett-Packard (HPQ.N) on whom they depend.

Consumer goods giant P&G, the world's biggest advertiser, cut its advertising budget to $7.6 billion last year from $8.6 billion in 2008.

The company has started to use more non-traditional approaches to advertising and promoting its household products, such as having pages on social media sites such as Facebook and reaching out to bloggers with new product samples.

Many ad agencies can adapt to this new order, but media groups need to take more radical action: for example, Hearst, whose publications include Cosmopolitan, is said to be buying digital marketing company iCrossing for about $375 million.

"Advertisers are beginning to adopt a two-pronged view of the world," says Richard. "You can buy or sell media, or you can buy an audience, and those are different."

15 May 2010

Disney Plans Joint-Venture Channels in South Korea

Associated Press

LOS ANGELES — The Walt Disney Co. says it plans to launch two Korean-language Disney channels in South Korea in a joint venture with SK Telecom.

The venture plans to launch Disney Channel and Playhouse Disney Channel aimed at children and families there in the spring of 2011, pending approval from Korean regulators.

SK Telecom will own 51 percent of the venture, while Disney will own 49 percent.

The channels will be carried on cable and Internet-connected TV services.

SK Telecom CEO Man-won Jung said in a statement Tuesday that he hopes the alliance will create other opportunities and noted that consumers watch video on an array of devices including mobile handsets and tablet computers.

The Rise of Content Farms

The Economist

Can technology help make online content pay?

THIS week the Wall Street Journal, the pride of News Corporation’s stable of newspapers, launched a 12-page daily section of local news in New York, in a direct challenge to the New York Times. The premise behind the launch is that expensive, thorough reporting will pay for itself by attracting readers and advertisers. Indeed, Rupert Murdoch, News Corp’s boss, recently proclaimed, “Content is not just king, it is the emperor of all things electronic.” However, a new brand of media firms dubbed “content farms” takes the opposite view: that online, at any rate, revenue from advertising or subscriptions will never cover the costs of conventional journalism, so journalism will have to change.

Newspaper articles are expensive to produce but usually cost nothing to read online and do not command high advertising rates, since there is almost unlimited inventory. Mr Murdoch’s answer is to charge for online content: another of his newspapers, the Times of London, will start to do so this summer (the Journal already does). Content farms like Demand Media and Associated Content, in contrast, aim to produce content at a price so low that even meagre advertising revenue can support it.

Demand Media’s approach is a “combination of science and art”, in the words of Steven Kydd, who is in charge of the firm’s content production. Clever software works out what internet users are interested in and how much advertising revenue a given topic can pull in. The results are sent to an army of 7,000 freelancers, each of whom must have a college degree, writing experience and a speciality. They artfully pen articles or produce video clips to fit headlines such as “How do I paint ceramic mugs?” and “Why am I so tired in winter?”

Although an article may pay as little as $5, writers make on average $20-25 an hour, says Mr Kydd. The articles are copy-edited and checked for plagiarism. For the most part, they are published on the firm’s 72 websites, including eHow, answerbag and travels.com. But videos are also uploaded onto YouTube, where the firm is by far the biggest contributor. Some articles end up on the websites of more conventional media, including USAToday, which runs travel tips produced by Demand Media. In March, Demand Media churned out 150,000 pieces of content in this way. The company is expected to go public later this year, if it is not acquired by a big web portal, such as Yahoo!, first.

AOL, a web portal which was recently spun off from Time Warner, a media giant, does not like to be compared to such an operation. Tim Armstrong, its boss, intends to turn it into “the largest producer of quality online content”. The firm already runs more than 80 websites covering topics from gadgets (Engadget.com) and music (Spinner.com) to fashion (Stylelist.com) and local news (Patch.com).

In AOL’s journalistic universe there are three groups of contributors. The first two are salaried journalists and freelancers with expertise in a certain domain, who currently number more than 3,000. Then there are amateurs who contribute to individual projects, for instance when AOL recently compiled profiles of all 2,000 bands at the SXSW music festival in Texas. (Contributors were paid $50 for each profile.) All this is powered by a system like Demand Media’s that uses data and algorithms to predict what sorts of stories will appeal most to readers, what advertisers are willing to pay for them and what freelancers should therefore be offered. So far, however, the numbers are small: in the week of April 25th, 61 writers published 155 articles in this way on 33 AOL sites.

Predictably, many commentators are appalled. Demand Media has been called “demonic”. But, argues Dan Gillmor, a professor of journalism at Arizona State University, “the firm is at least interested in what people want to know—which is nothing to sneer at”. And unlike many other services that take advantage of “user generated content”, he says, Demand Media actually pays its contributors.

The problem with content farms, Mr Gillmor and others say, is that they swamp the internet with mediocre content. To earn a decent living, freelancers have to work at a breakneck pace, which has an obvious impact on quality. Moreover, content that is designed to appear high up in the results produced by search engines could lose its audience if the search engines change their rules.

In AOL’s case, the question is whether the infrastructure for the three tiers of contributors will work financially, not just journalistically and technically. Clay Shirky, a new-media expert at New York University, suggests that content produced cheaply by freelancers could serve to fund more ambitious projects. If AOL can make that work, the pundits will cheer.

13 May 2010

Drifting Satellite Threatens U.S. Cable Programming

Associated Press

A TV communications satellite is drifting out of control thousands of miles above the Earth, threatening to wander into another satellite's orbit and interfere with cable programming across the United States, the satellites' owners said Tuesday.

Communications company Intelsat said it lost control of the Galaxy 15 satellite on April 5, possibly because the satellite's systems were knocked out by a solar storm. Intelsat cannot remotely steer the satellite to remain in its orbit, so Galaxy 15 is creeping toward the adjacent path of another TV communications satellite that serves U.S. cable companies.

Galaxy 15 continues to receive and transmit satellite signals, and they will probably overlap and interfere with signals from the second satellite, known as AMC 11, if Galaxy 15 drifts into its orbit as expected around May 23, according to the two satellite companies.

AMC 11 receives digital programming from cable television channels and transmits it to all U.S. cable systems from its orbit 22,000 miles (36,000 kilometers) above the equator, SES World Skies said. It operates on the same frequencies as Galaxy 15.

"That fact means that there is likely to be some kind of interference," Yves Feltes, a spokesman for AMC 11 owner SES World Skies, told The Associated Press. "Our aim is to bring any interference down to zero."

He would not name any of the cable television channels or providers that could be affected or say how long the interference could last.

DirecTV Inc., the largest US satellite TV company, said it will not be affected. Comcast Corp. said it was monitoring the situation.

Cox Communications Inc. said it could not immediately specify if its service would be affected and Dish Network Corp., Time Warner Cable Inc., Charter Communications Inc. and Cablevision Systems Corp. had no statements on the matter or did not return Associated Press calls seeking comment.

"We are confident that service disruptions will be minimized or avoided," said Dianne VanBeber, a spokeswoman for Intelsat.

Galaxy 15 is floating over the Pacific Ocean slightly to the east of Hawaii, said Emmet Fletcher, space surveillance and tracking manager for the Space Situational Awareness Programme at the European Space Agency, an 18-nation consortium.

He said Galaxy 15 was highly unusual because it continued to send out television signals, unlike other malfunctioning satellites that automatically went into complete shutdown when their navigational systems malfunctioned. A spokesman for the satellite's manufacturer, Orbital Sciences Corp., did not return a phone call seeking comment.

The dead satellites still are a threat to other satellites, but less of one than Galaxy 15 poses, Fletcher said.

"They'll just cruise around the geobelt, drifting wherever they go, potentially causing havoc, when you lose control of them," he said.

The geobelt is the relatively narrow band of space where satellites can move in orbits that allow them to appear stationary in the sky in relation to specific points on earth.

Feltes, the SES spokesman, said one option to prevent interference with U.S. television would be using AMC 11's propulsion system to shift that satellite about 60 miles (100 kilometers) away to an orbit that's still within its carefully prescribed "orbital box" but as far away as possible from Galaxy 15.

He said SES had other strategies under consideration but declined to provide details.

"We have all of our technicians, all of our specialists on this case," he said.

Both companies said there was no risk of an actual collision between the two satellites in space.

Intelsat said it was analyzing signals from Galaxy 15 daily in order to predict its trajectory and was trying to figure out if it can shut down the satellite's transmission so it would not interfere with AMC 11.

VanBeber said cable companies could also adjust their equipment in order to minimize any interference.

She said satellites like Galaxy 15 today cost $250 million to build, launch and insure but it probably cost less when it was launched in 2005.

Feltes said the two companies, both based in Luxembourg, were cooperating closely.

"They have tried numerous things to regain control of the satellite or to have it finally shut down," he said. "It needs some collaboration to bring the impact of this failure to an absolute minimum."

12 May 2010

Betty White Shows She's Ready for 'Not Prime Time'

NY Daily News
Betty White, the oddest comet in our crowded celebrity sky, did nothing to diminish her stature last night as she hosted "Saturday Night Live."

In fact, there was probably more at stake for the show, which has suffered this season from postelection ratings and creative depression.

That may help explain why it put the 88-1/2-year-old White into every skit, whether there was a joke waiting there for her or not.

The return of former "SNL" stars like Amy Poehler, Rachel Dratch and Tina Fey gave White a posse that formed the core of several sketches, including one in which White played the blunt-talking Grandma in a 1904 family parlor scene.

All the sisters are dressed in prim white dresses except Poehler, who enters with overalls and a basket out of which she pulls a fish.

As the others try to make Poehler more of a proper girl, White declares, "She's a lesbian." She declares this again, with slight variations, another dozen times.

She got to stretch more in a spoof on a National Public Radio talk show, where she played a guest invited to talk about her muffins for National Dietary Fiber Day.

"A baker of your age might tend to have a drier, more crusty muffin," said one of the hosts, setting the stage for an exchange of double entendres that, like most "SNL" sketches, lasted a little longer than the humor.

The show made a running gag out of White playing the grandmother of spoof movie hero "MacGruber," engaging him in absurd discussions that distracted him long enough that the explosives he was trying to diffuse all went off.

The writers seemed to make their own running gag out of finding a way to insert White's age in virtually every skit. They did upsize her from 88-1/2 to 90 for her "Weekend Update" commentary sketch.

The audience generally seemed to applaud as much for White's presence as for her jokes and seemed less surprised by the ongoing old-lady-talks-salty gags than her monologue, whose funniest lines had her trashing the Facebook culture that propelled her into the host gig in the first place.

She admitted she had never heard of Facebook before the campaign to put her on the show.

"And now that I know what it is," she said, "it seems like a huge waste of time. ... At my age, if I want to connect with my old friends, I need a Ouija board."

It's possible that putting White in every sketch was a subtle commentary on the bizarre way in which she seems to have saturated popular culture over the last few months.

As she suggested in her monologue, however, overexposure isn't a bad problem to have at the age of 88 - and a half.

11 May 2010

CBS's Showtime Said to Test Online Service for Cable Channel's Subscribers‏


CBS Corp.’s Showtime is developing an online video service for subscribers, according to a person with knowledge of the plans, joining rival cable channels that are seeking to reach customers away from TV sets.

The service would be similar to the Web access being tested by Time Warner Inc.’s HBO, said the person, who asked not to be identified because the plans aren’t public. Showtime, with 18 million pay-TV subscribers and original shows including “Nurse Jackie” and “Weeds,” hasn’t set a starting date.

Premium cable channels are experimenting with ways to offer service online and to mobile customers without cannibalizing monthly pay-TV subscription fees that contribute the bulk of their revenue. Showtime is discussing the planned service with pay-TV operators that distribute the channel, the person said.

“There’s nothing to announce at this time,” Johanna Fuentes, a spokeswoman for Showtime in New York, said in an interview.

HBO, which along with Cinemax has about 40 million subscribers, in February began offering HBO GO at no additional cost to customers on Verizon Communications Inc.’s FiOS TV service.

“All the HBO subscribers in the United States are going to have HBO programming on demand across every device,” Jeff Bewkes, Time Warner’s chief executive officer, said on a May 5 conference call. “That is a powerful offering.”

Starz, owned by Englewood, Colorado-based Liberty Media Corp., provides shows to Netflix Inc., which offers the cable channel’s content online as part of its monthly movie-rental subscription plans.

Viacom Inc.’s Epix, the premium movie channel first offered in October 2009, includes online access for all customers. Two- thirds have viewed movies online, with an average age of 36, according to a survey released today by Epix.

Epix, also owed by Lions Gate Entertainment Corp. and Metro-Goldwyn-Mayer Inc., has distribution with pay-TV systems including Englewood, Colorado-based Dish Network Corp., Verizon’s FiOS, Cox Communications Inc. and St. Louis-based Charter Communications Inc.

CBS, owner of the most-watched U.S. television network, slid 75 cents, or 5 percent, to $14.21 on May 7 New York Stock Exchange composite trading. Time Warner fell 65 cents to $30.25 and Viacom Class B shares dropped 59 cents to $32.26. All are based in New York.

Tot Shots at Lindsay Lohan

NY Post

The E-Trade baby struck back at Lindsay Lohan -- and what a potty mouth on this kid!

Lawyers for the financial firm filed hundreds of pages detailing Lohan's drug abuse, brawls and DWI busts -- including reams of profanity-laced Internet comments from detractors -- all under the guise of proving she lives in Hollywood and not Long Island, where the case was filed.

Despite the catalog of bad behavior the papers chronicle, E-trade claims it's not making the argument that she has already defamed herself far more than their commercial -- which features a "milkaholic" baby named Lindsay -- ever did.

Lohan is "a pot-stirring, lazy, irresponsible, disrespectful little drama queen," the papers -- filed in Nassau County Supreme Court -- quote one on-line commenter as saying.

"Why does anyone want to know what this train wreck is doing?" another adds. "She is the classic child star. A little success (parents pushed her into the business) at a young age and then she thinks she's the poo."

"How can she pay her rent and pay for her coke?" yet another writes. "That sugarcane she's sniffin' doesn't come cheap . . . "

The huge file of clippings is being used to advance the argument that Lohan is a Californian.

E-Trade is not, however, requesting a change of location to LA -- they want the court fight to be switched to Manhattan, where E-Trade has its corporate headquarters.

Dina Lohan, the star's mother, said the court papers are only going to help Lindsay's $100 million lawsuit.

"This is the whole reason we are suing them -- for demeaning Lindsay," Dina Lohan said. "They are just proving how they operate -- they play dirty."

Lohan's lawyer, Stephanie Ovadia, vowed to fight the motions to dismiss and to change the venue.

E-Trade lawyer Howard J. Rubin declined to comment on the case, but his papers claim that public records show Dina Lohan, not her daughter, owns the Merrick address given as Lindsay's in the lawsuit.

TV Networks now See a Seller's Market for Advertising

NY Times

A YEAR ago, as television executives prepared for the 2009-10 season, they suffered double-digit percentage losses in advertising revenue because the economy weakened demand among marketers for commercial time.

Now, as those executives get ready for the 2010-11 season, they are optimistic for a rebound in revenue, and higher rates, because demand has improved in recent months.

But as the stock market proved on Thursday, months of expectations can be undone in moments. The gyrations on Wall Street reminded everyone taking part in what is known as the upfront market — called that because the talks and deals occur before the TV season starts — that happy days are not quite here again.

“Going down 300 points, I say: whew,” Rob Master, North American media director for the giant marketer Unilever, said in a telephone interview on Thursday, referring to the decline of the Dow Jones industrial average, but “it’s not like we’re in an economic boom.”

“We were in a very different place 12 months ago, taking today out of the equation,” Mr. Master said, “so there’s more clarity. But it’s all relative.”

Unilever, which sells brands like Axe, Dove, Good Humor, Lipton and RagĂș, will take part in the upfront market, he added, but is also looking at interactive media, social media and other places to spend its marketing dollars.

In fact, Mr. Master and other Unilever executives are in California this week, he said, to meet with Silicon Valley companies like Apple, Facebook and Google — all of which offer alternatives to traditional ways to advertise, like television commercials.

Although “TV remains an important part of our go-to-market strategy for our brands,” Mr. Master said, “we’re comfortable with continuing to move our dollars to other places.”

Steven Center, vice president for advertising and public relations at the American Honda Motor Company, agreed that “the predisposition now would be that things are getting better” compared with conditions during the upfront market last spring, “when the predisposition was that the end of the world is coming.”

Still, “we’re not seeing a lot of enormous underlying strength” in the economy, he added.

His colleague, Thomas J. Peyton, senior manager for national advertising at American Honda, said the company “intends to be active in the upfront this year. ” Because “ there are certainly more buyers in the market than there were last year,” Mr. Peyton said it would not be surprising if the broadcast networks and cable channels were able to put through “small increases” in rates.

Two brokerage firms that follow the media industry have forecast robust gains in ad revenue for the biggest broadcasters in the 2010-11 upfront market compared with the 2009-10 market. Barclays Capital predicted an increase of 20 percent, and Credit Suisse predicted an increase of 21 percent.

But as the trade publication Advertising Age pointed out, such results would leave the large broadcasters short of the ad revenue they took in during the 2008-9 upfront market, before the financial crisis sapped confidence among consumers and marketers.

That could mean that TV executives may need to do somewhat more promoting of the benefits of the upfront and television advertising to potential customers than is usual.

For instance, during an upfront presentation by the Oxygen cable channel, Lauren Zalaznick, president for the women and lifestyle entertainment networks at NBC Universal, told media agency employees in the audience, “You can look like a hero if you make a big, strategic deal in the upfront.”

And during a presentation by the CNN and HLN cable news channels, which are owned by Time Warner, Jim Walton, president for CNN Worldwide, began his remarks to the media agency audience members this way: “Thank you. Thank you in advance for your business this year.”

Those presentations precede the upfront market during which the television and marketing executives negotiate purchases and prices. The presentations are intended to offer previews of the shows being scheduled for the coming season.

The presentations range from simple to elaborate to over the top. Some analysts believe they can divine the health of the upfront market by how spartan or lavish the events are.

(Based on attendance at a half-dozen presentations, a reporter who noticed generous spreads on buffet tables, open bars galore and piles of napkins imprinted with the hosts’ logos is forecasting a bounce in the upfront market from last year.)

The cable channels typically present first, then the broadcast networks. This year, the cable presentations began somewhat earlier than usual, in early March. The broadcasters — ABC, CBS, CW, Fox and NBC — plan to follow their usual timetable and will make their presentations in mid-May; this year, the dates are May 17 to May 20.

Some cable channels, eager to compete with the broadcasters, have started scheduling their events during the broadcast upfront week. This year, ESPN, TBS and TNT will make presentations on days that broadcasters have scheduled events.

In years when demand lags for commercial time, the upfront market can last through the spring and into the summer. That was the case last year. In years when demand for spots is strong, the upfront market can wrap up in a couple of weeks or less; there have even been fiercely robust markets that concluded by Memorial Day.

Given the circumstances this year, it is unlikely to be a “two-week upfront,” said Steve Gigliotti, executive vice president for advertising sales at Scripps Networks Interactive, which operates cable channels like Food Network, HGTV and Travel Channel.

Still, “strong brands will do very well in this marketplace,” Mr. Gigliotti said, referring to channels that are enjoying growth in viewers and ratings, because of the rising prices in recent months for commercials that are bought shortly before they run rather than ahead of time in the upfront market. (Such short-term buying takes place in what is called the scatter market.)

“The scatter market has been incredibly strong,” Mr. Gigliotti said. “That’s going to push advertisers into thinking, ‘I have to make a decision for the long term’ ” and make deals in the upfront market.

CBS Loss Narrows as Advertising Revenue Rebounds

Bloomberg / Business Week

CBS Corp., owner of the most-watched U.S. broadcast network, reported a narrower first-quarter loss as advertising sales rebounded.

The net loss of $26.2 million, or 4 cents a share, reflects restructuring and tax related costs, and compares with a loss of $55.3 million, or 8 cents, a year earlier. Sales gained 12 percent to $3.53 billion, New York-based CBS said today in a statement. That exceeded the $3.45 billion average of 14 analysts’ estimates compiled by Bloomberg.

CBS, which generates two-thirds of its revenue from ads, is benefiting from increased marketing by automotive and financial services companies, Anthony DiClemente, an analyst at Barclays Capital in New York, said in an April 23 report. CBS and Time Warner Inc.’s Turner Broadcasting announced a $10.8 billion deal last month to share the cost of carrying the March Madness college basketball tournament.

“Unlike other media companies, margins did not outperform at CBS,” David Joyce, an analyst at Miller Tabak & Co. in New York, said in an e-mail. Revenue beat estimates as all divisions aside from publishing gained, he said.

The results included $57.1 million in restructuring charges and $25.9 million in tax items, according to the statement.

Excluding some items, earnings of 5 cents a share matched the average of 16 analysts’ estimates compiled by Bloomberg.

Entertainment Unit

CBS, controlled by Chairman Sumner Redstone, fell 48 cents, or 3 percent, to $15.10 in extended trading after the results were announced. The shares dropped 62 cents to $15.58 at 4 p.m. in New York Stock Exchange composite trading and have gained 11 percent this year.

CBS and Time Warner’s CNN cable-news channel have discussed ways to cooperate for years, CBS Chief Executive Officer Les Moonves said today on a conference call. Time Warner CEO Jeff Bewkes today said he expects CNN to reach an agreement with a partner within the next year.

Revenue in the entertainment unit, which includes the television network, rose 15 percent to $2.1 billion, reflecting a 25 percent rise in TV ad sales following the broadcast of the Super Bowl. Publishing revenue fell 6 percent to $151.7 million because of the “continued soft retail market.”

10 May 2010

Media Moguls on an Elevated Pay Scale

LA Times

When an executive runs a company whose success depends on stars — whether they are richly rewarded TV news anchors or generously compensated movie idols — it is only fitting that the boss is paid, well, like a star.

Call it the Katie Couric Syndrome.

That's one take-away from a Los Angeles Times survey of compensation packages of media and entertainment company executives. While the nation's CEOs in general typically saw their earnings slip in 2009, the men — and they're all men — at the top of the conglomerates that operate the TV networks, movie studios, cable systems and other outposts of the media world continued to command pay packages on par with, and in some cases far higher than, A-list actors.

Walt Disney Co. Chief Executive Bob Iger collected a package worth nearly $24 million for 2009. Philippe Dauman, who manages Viacom Inc., which includes the MTV networks, Comedy Central and Paramount Pictures, got an almost 22% raise to $34 million. CBS Corp. chief Leslie Moonves' pay more than doubled to $43.2 million. News Corp.'s Rupert Murdoch topped $22 million, and Time Warner Inc.'s Jeffrey Bewkes received nearly $20 million.

"The explanation you hear for entertainment company CEOs is that they have a lot of people in their company — like Katie Couric — who get paid these high salaries, and the CEO thinks, 'I run the company, why should I get paid less?' " said Paul Hodgson, senior research associate at the Corporate Library. (CBS pays Couric about $15 million a year.)

That might have been OK a decade ago during the gravy-train years of the entertainment industry, when it seemed there could never be enough movies or TV shows to feed the "content" pipeline.

But for the last two years the content business has been under assault.

Media companies have laid off thousands of employees, cut TV and movie production budgets and crunched news divisions as the economic moorings of their businesses were eroded by declining DVD sales, a slowdown in advertising and the migration of viewers to the Internet and other forms of entertainment.

Median compensation in 2009 for CEOs of 342 companies in the S&P 500 fell 8% from the previous year to $7.5 million, according to a survey by the Northern California executive compensation research firm Equilar. It was the second year in a row that overall compensation dropped.

By comparison, full-year median compensation for executives managing the companies included in the Times survey was $15.9 million in 2009 — substantially higher than the median of, for example, healthcare company CEOs, which Equilar estimates was $10.5 million last year.

Media companies that are still run like family businesses hand out some of the biggest paychecks.

Murdoch, for example, received the highest base salary among the media chiefs — $8.1 million — which means the 79-year-old mogul is guaranteed at least that much even if his company has a terrible year. Corporate governance experts frown on such arrangements, preferring to see executive pay tied more closely to a company's performance.

"The base salaries at News Corp. are quite obscene, really," said Hodgson. He noted the average base salary for S&P 500 chiefs was "just over $1 million" annually.

Comcast Corp. CEO Brian Roberts collected $27.2 million in 2009 and his No. 2, Steve Burke, hauled in $34 million, which included a handsome bonus and stock awards for renewing his contract and a raise to reflect his expanding responsibilities. Burke is expected to soon be managing NBC Universal after the pending merger with Comcast receives federal approval.

Moonves earned the distinction of collecting the largest pay of media CEOs, when calculating cash and stock awards, even though CBS is considerably smaller than Disney, News Corp., Time Warner Inc. and Comcast.

At the very top of the survey was Greg Maffei, chief executive of Liberty Media, which includes the QVC shopping channel and the premium movie channel Stars. Maffei's package was valued $87.5 million, including $79 million in stock options that vest after four years. Because of a Securities and Exchange Commission rule change, companies must record the present value of the stock option awards during the year they were made.

DreamWorks Animation CEO Jeffrey Katzenberg's compensation also soared because of the accounting change. His package was worth $23.4 million, almost entirely in stock and options that vest in several years. Meanwhile, Katzenberg collected an annual paycheck of $1.

For several companies, including CBS and Viacom, a dramatic rebound in stock value pumped up pay. "These companies have been doing quite well in the market during the last year, so it is not surprising to see the pay go up," said Aaron Boyd, research analyst with Equilar.

Doing quite well, yes, but that's in comparison to quite dismal lows. CBS stock is trading at about $16 a share, quadruple its recessionary nadir last year but well off its peak in 2007 of above $30 a share.

There also is the benefit of longevity.

"A lot of these guys have been around for years and they helped establish their companies, like Moonves, Murdoch and Barry Diller," said Boyd. "For them, it is probably easier to make the case that they should have a certain pay because they have played such an important role."

However, Corporate Library, an independent corporate governance research firm based in Portland, Maine, pointed out that company founders and other "executive chairmen" can take advantage of their influence. "Many executive chairs have no operational role within their companies but are paid like high-level executives," a recent report by the firm found. It said Sumner Redstone, who is executive chairman of both CBS and Viacom Inc., was one of the highest paid.

Last year, Redstone, who turns 87 this month, received $33.1 million as chairman of his two companies. He spends much of his time at his estate perched above Beverly Hills with his long-haired dachshunds.

But where are the watchdogs?

"It ultimately comes down to the board of directors. Should these directors 'just say no' to the CEOs?" asked Charles Elson, a professor at the University of Delaware who specializes in corporate governance. "How independent are they from the management of the company? These boards should be negotiating in the best interests of shareholders."

Standing up to a strong CEO can backfire. If a board cuts a CEO's salary, the executive could become bitter and leave. That could destabilize the company and cost it much more than what was saved by paring the salary, said James F. Reda, a New York-based executive compensation consultant.

Still, Reda predicts that in five years entertainment chiefs won't rake in such hefty rewards. He compared media moguls to the steel barons and railroad titans of the 1930s. Captains of those industries are now much further down the corporate pay scale.

"The whole move to digital doesn't bode well for entertainment companies," he said. "These big compensation packages are something of a holdover, and the profit margins do not support them. There is going to be a tipping point and then you will see this begin to trend down. But for now, there is a lot of inertia."