16 April 2013

Increase in people who watch on mobile devices has broadcasters worried

Story originally appeared on Freep.

Some people have had it with TV. They've had enough of the 100-plus channel universe. They're tired of $100-plus monthly bills.

A growing number of them have stopped paying for cable and satellite TV service, and don't even use an antenna to get free signals. These people are watching shows and movies on the Internet, sometimes via cell phone. Last month, Nielsen started labeling people in this group Zero TV households, because they fall outside the traditional definition of a TV home. There are 5 million of these residences in the U.S., up from 2 million in 2007.

While show creators and networks make money from this group's viewing habits through deals with online video providers and from advertising on their own websites and apps, broadcasters only get paid when they relay such programming in traditional ways. Unless broadcasters can adapt to modern platforms, their revenue from Zero TV viewers will be zero.

"Getting broadcast programming on all the gizmos and gadgets -- like tablets, the backseats of cars, and laptops -- is hugely important," says Dennis Wharton, a spokesman for the National Association of Broadcasters.

Although Wharton says more than 130 TV stations in the U.S. are broadcasting live TV signals to mobile devices, few people have the tools to receive them. Most cell phones require an add-on device known as a dongle, but these gadgets are just starting to be sold.

Among this elusive group of consumers is Jeremy Carsen Young, a graphic designer, who is done with traditional TV. Young has a working antenna sitting unplugged on his back porch in Roanoke, Va., and he refuses to put it on the roof.

"I don't think we'd use it enough to justify having a big eyesore on the house," the 30-year-old says.

Nielsen is ready to count

Online video subscriptions from Netflix and Amazon -- which cost less than $15 a month combined -- have given him and his partner plenty to watch. They take in back episodes of AMC's "The Walking Dead" and the CW's "Supernatural," and they don't need more, he says.

For the first time, TV ratings giant Nielsen took a close look at this category of viewer in its quarterly video report released in March. It plans to measure their viewing of new TV shows starting this fall, with an eye toward incorporating the results in the formula used to calculate ad rates.

"Our commitment is to being able to measure the content, wherever it is," says Dounia Turrill, Nielsen's senior vice president of insights.

The Zero TV segment is increasingly important, because the number of people signing up for traditional TV service has ground to a standstill in the U.S.

Last year, the cable, satellite and telecoms providers added just 46,000 video customers collectively, according to research firm SNL Kagan. That is tiny when compared to the 974,000 new households created last year. While it's still 100.4 million homes, or 84.7% of all households, it's down from the peak of 87.3% in early 2010.

Nielsen's study suggests that this new group may have left traditional TV for good. While three-quarters actually have a physical TV set, only 18% are interested in hooking it up through a traditional pay TV subscription.

Zero TVers tend to be younger, single and without children. Nielsen's senior vice president of insights, Dounia Turrill, says part of the new monitoring regime is meant to help determine whether they'll change their behavior over time. "As these homes change life stage, what will happen to them?"

The TV industry has a host of buzz words to describe these non-traditionalist viewers. There are cord-cutters, who stop paying for TV completely and make do with online video and sometimes an antenna. There are cord-shavers, who reduce the number of channels they subscribe to, or the number of rooms pay TV is in, to save money.

Never connected

Then there are the cord-nevers, young people who move out on their own and never set up a landline phone connection or a TV subscription. They usually make do with a broadband Internet connection, a computer, a cell phone and possibly a TV set that is not hooked up the traditional way.

That's the label given to the group by Richard Schneider, the president and founder of the online retailer Antennas Direct. The site is doing great business selling antennas capable of accepting free digital signals since the nation's transition to digital over-the-air broadcasts in 2009, and is on pace to sell nearly 600,000 units this year, up from a few dozen when it started in 2003.

That brings us to truck driver James Weitze. The 31-year-old satisfies his video fix with an iPhone. He often sleeps in his truck, and has no apartment. To be sure, he's an extreme case who doesn't fit into Nielsen's definition of a household in the first place. But he's watching Netflix enough to keep up with shows like "Weeds," "30 Rock," "Arrested Development," "Breaking Bad," "It's Always Sunny in Philadelphia" and "Sons of Anarchy."

He's not opposed to TV per se and misses some ESPN sports programs like the "X Games."

But he's so divorced from the traditional TV ecosystem, it could be hard to go back. It's become easier for him to navigate his smartphone than to figure out how to use a TV set-top box and the button-laden remote control.

"I'm pretty tech savvy, but the TV industry with the cable and the television and the boxes, you don't know how to use their equipment," he says. "I try to go over to my grandma's place and teach her how to do it. I can't even figure it out myself."

25 March 2013

Michael Roarty dies at 84; marketer helped build Anheuser-Busch brand

Michael J. Roarty, a retired marketing executive who helped build Anheuser-Busch beer brands into international powerhouses, died at a hospital in a St. Louis suburb Saturday, a day after suffering a heart attack. He was 84.
Roarty had been debilitated by strokes in recent years and had been in poor health.
As vice president and director of marketing from 1977 to 1990, Roarty was credited with helping St. Louis-based Anheuser-Busch more than double its U.S. market share to 43% from 21%.
Roarty oversaw famous advertising campaigns, including "Weekends were made for Michelob," "This Bud's for you," "Head for the mountains of Busch," and Bud Light's canine mascot Spuds McKenzie. He was inducted into the Advertising Hall of Fame in 1994.
"He could spot the ideas, guide the creative process and navigate it through the difficult approval process within a complicated corporate structure," said Bob Lachky, a former chief creative officer at Anheuser-Busch.
Roarty was also considered a pioneer of sports marketing, branching out Anheuser-Busch's advertising complex from stadium signage to include race car sponsorship and the made-for-Super Bowl Sunday Bud Bowl.
He also is the executive who persuaded the brewer in 1980 to give financial support to a then-struggling all-sports TV network, ESPN.
"We gave them $1 million that first year. And if we hadn't, they'd have gone under," Roarty told the St. Louis Post-Dispatch a few months before he retired in 1994. "I believed the beer drinker was a sports lover.
"The next year we gave them $5 million. I think it turned out to be the best investment we've ever made."
In 1993, the Sporting News named him the sixth-most powerful figure in American sports.
Born Aug. 24, 1928, in Detroit, Roarty was the son of Irish immigrants. His father, John, was active in Sinn Fein, the political party closely associated with the Irish Republican Army.
In 1953, when he was a student at the University of Detroit, Roarty had a job selling and promoting beer in Detroit's East Side taverns and stores. He became such a familiar figure to saloonkeepers and other neighborhood characters that many called him "Mr. Budweiser."
He worked as a brand manager for Anheuser-Busch in Detroit, Chicago, Denver and Kansas City on his way up the corporate ladder.
Roarty, who first visited Ireland with his family in 1936, remained active in the Irish American community throughout his life. In 1991, he was named Irish-American of the Year by Irish America magazine. In 1994, Roarty was grand marshal of Dublin's St. Patrick's Day Parade; at the time, he was only the fourth American to have that honor.
He is survived by his wife of more than 58 years, Lillian; a son, a daughter, four grandchildren and a brother.
Kohler writes for the St. Louis Post-Dispatch and McClatchy Newspapers.

04 January 2013

No More Dollar Menu?

Story first appeared on usatoday.com.

Wendy's no longer thinks a hamburger has to be 99 cents to be a deal.

The fast-food company known for its Frosty shakes and square burgers has replaced its 99-cent value menu with a beefed-up array of options called "Right Price Right Size," with items ranging from 99 cents to $1.99.

At a time when costs for meat, cheese and other ingredients are rising, the revamped menu is intended to give budget-minded diners more options, while giving Wendy's more flexibility on pricing.

The switch to the "Right Price Right Size" value menu reflects the cost pressures faced by fast-food chains. Burger King and McDonald's have already moved past the $1 price point, offering tiered value menus that go up to around $2.

When it was introduced a decade ago, for example, McDonald's Dollar Menu included the Big 'N Tasty burger made with a quarter-pound beef patty. But the Dollar Menu has gradually gotten skimpier, with small fries being taken off the roster last year.

To ensure the profitability of its new value menu, Wendy's tinkered with the lineup and in some cases, raised prices. The Junior Cheeseburger Deluxe now costs $1.19 instead of 99 cents. And for 99 cents, customers now get four chicken nuggets instead of five. The plain Junior Cheeseburger, which had been taken off the menu, is back at 99 cents.

In all, there are now seven items that cost 99 cents on the new value menu, down from nine.

Although items on value menus tend to be less profitable, they play an important role in attracting customers who often end up spending more on other items. In testing in the past year, the "Right Price Right Size" menu not only boosted customer traffic, but also increased the average check size.

It grew because those customers tend to buy multiple products, noting that the vast majority of customers who ordered off the value menu bought items from the regular menu as well.

Wendy's isn't the only chain to tinker with its value offerings. McDonald's last year introduced its "Extra Value Menu," which offers items closer to the $2 price range. But after sales flagged, the company quickly went back to touting the Dollar Menu in advertising, noting that customers are focused on value in the uncertain economy.

Wendy's revamped approach also reflects the twin challenges facing traditional fast-food chains, which are scrambling to improve the reputation of their food even as they cater to budget-minded diners. As the popularity of chains such as Panera Bread and Chipotle Mexican Grill have raised expectations for food quality, traditional fast-food chains have stepped up their offerings.

Burger King made its french fries thicker and uses a different kind of bacon on its burgers. Taco Bell — known for its cheap eats — introduced a line of Cantina Bell bowls last year intended to appeal to a slightly more upscale crowd.

Wendy's, which is based in Dublin, Ohio, has in recent years introduced natural-cut french fries and premium offerings such as Dave's Hot 'N Juicy burger. Even as it touts its new value menu, Wendy's won't let up on that premium front. For example, executives have said the chain will introduce new breads for its sandwiches intended to improve perceptions about its food in the year ahead.

02 January 2013

California newspaper defies trend to shrink costs

originally appeared in The Associated Press:

New and expanded sections to cover business, automobiles and food. A nearly five-fold increase in community news pages and more investigative reporting. Even daily color comics.

It feels like a throwback to an earlier era at the Orange County Register, where a first-time newspaper owner is defying conventional wisdom by spending heavily to expand the printed edition and playing down digital formats.

The head of an investor group added about 75 journalists and, with 25 more coming, will have expanded the newsroom by half since his group bought the nation's 20th-largest newspaper by circulation in July.

Changes also include thicker pages with triple the number of colors to produce razor-sharp photos and graphics. By the end of March, the newspaper will have 40 percent more space than under previous owners, Freedom Communications Inc.

The investor group chief believes people will pay for high-quality news. His bet is remarkable in an industry where newspapers have shrunk their way to profits for years, slashing costs while seeking clicks on often-free websites to attract online advertising.

As more newspapers begin charging for online access, Kushner's spending spree is drawing close attention.

If he's successful, it's going to show the way for other papers to follow, according to the publisher of the Arkansas Democrat-Gazette and an early advocate of charging readers for online access.

Seated behind his large, clutter-free desk near shelves stacked with newspapers, the former Stanford University gymnast said his lack of industry experience may be a plus because he hasn't been through the tough times in newspapering.

So when we sit down and look at what's possible, our view of the world is different, he said. We're a little crazy in that we really do believe that we can grow this particular newspaper.

It's too early to know whether he's right. he said advertising revenues have grown, though he won't say how much.

Average daily circulation rose 5.3 percent as of Sept. 30 from a year earlier to 285,088 on weekdays and 387,547 on Sundays, bucking an industry decline of 0.2 percent, according to the Alliance for Audited Media.

One key test will be when the Register begins charging for online access sometime before the end of March. He said readers will pay the same as the print edition - a contrast to publications that charge online subscribers substantially less.

If you have a wonderful restaurant and it cost $10 to come in the front door, I've never understood why it should cost anything less to come through a side door, he said.

The value of the journalism isn't any less. The reporter isn't paid any less. The photographer isn't paid any less.

The investor group president who has a master's degree in organizational analysis, founded a business in the 1990s that allowed people to change their addresses online and later owned and managed a greeting-card company for seven years.

In 2010, he started an investors group, 2100 Trust LLC, to scout for newspapers, flirting with The Boston Globe and later with MaineToday Media Inc., publisher of The Portland Press Herald.

The president of The Portland Newspaper Guild, said the group chief presented the union with 50 demands, including a longer work week and increases in employee health care contributions.

We got off to such a bad start that it was hard to recover, according to the Newspaper Guild president, who is skeptical that the investor group's print bet will succeed.

The investor group president settled on Freedom and its 107-year-old flagship paper, the Register, for an undisclosed sum. The newspaper serves affluent, growing, well-educated and ethnically diverse communities near Los Angeles, bolstered by 24 community publications.

He became Freedom's chief executive and the Register's publisher, working five days a week at the company's Santa Ana headquarters and flying cross-country to his wife and three children in the Boston area.

Many executives stayed put, including the top editor, who joined the Register in 1989.

The newsroom is nearing 300 employees, including about 40 year-round interns who are paid $10 an hour and provided housing. The new owners eliminated 401(k) matches at the non-union newspaper and have resisted pay raises.

Like other newspapers, the Register experimented over the last decade as its circulation tumbled 40 percent and the newsroom shrank in half. A tabloid paper featuring snappier stories failed, as did a weekly entertainment publication.

Reporters got ever-rising numerical targets to generate Web traffic, with constant reminders of how they fared against peers. It was more like a sales floor than a newsroom, one columnist wrote in a recent piece hailing the Register's reawakening.

To focus more on the print edition, the Register slashed the number of blogs from around 40 to less than a dozen. It scrapped an iPad application for news, traffic and weather.

The new owners have introduced a daily page for coverage of a major development, began sending a reporter and photographer to every one of the region's 50 high school football games on Fridays and doubled editorial pages.

Reporters have been encouraged to dig deeper and expand sources. It's a new experience for (a publisher) to say, Are you sure you have enough investigative reporters? I think you ought to hire more, he said.

The Register's editorial page - once a strong libertarian voice - didn't endorse for president in November. The new owner has contributed to Democrats such as Barack Obama and Joe Biden and moderate Republicans, including Sen. Susan Collins of Maine.

He declined to discuss his political views and said they are separate from his work at the Register.

He is looking to buy more newspapers, telling Register staff last year that he had a list of 15 that fit his criteria. In an interview, he expressed interest in Tribune Co. newspapers, which include the Chicago Tribune, Los Angeles Times and Baltimore Sun.

Some readers and employees question how much the new owners will stomach if growth stalls. The owner insisted he is committed, saying the Register has a strong balance sheet and doesn't answer to shareholders seeking quick returns.

If you don't have a clear tangible way to grow revenue you only have one alternative and that's to cut costs, he said. That path may well work. That's not the path that we're on here.

FDA Scrutinizes Effects of Energy Drinks

Story first appeared on nytimes.com.

Iced tea and sports drinks are out sold by energy drinks.  These are the fastest-growing part of the beverage industry, with sales in the United States reaching more than $10 billion in 2012.

Their rising popularity represents a generational shift in what people drink, and reflects a successful campaign to convince consumers, particularly teenagers, that the drinks provide a mental and physical edge.

The drinks are now under scrutiny by the Food and Drug Administration after reports of deaths and serious injuries that may be linked to their high caffeine levels. But however that review ends, one thing is clear, interviews with researchers and a review of scientific studies show: the energy drink industry is based on a brew of ingredients that, apart from caffeine, have little, if any benefit for consumers.

Energy drink companies have promoted their products not as caffeine-fueled concoctions but as specially engineered blends that provide something more. For example, producers claim that “Red Bull gives you wings,” that Rockstar Energy is “scientifically formulated” and Monster Energy is a “killer energy brew.” Representative Edward J. Markey of Massachusetts, a Democrat, has asked the government to investigate the industry’s marketing claims.

Promoting a message beyond caffeine has enabled the beverage makers to charge premium prices. A 16-ounce energy drink that sells for $2.99 a can contains about the same amount of caffeine as a tablet of NoDoz that costs 30 cents. Even Starbucks coffee is cheap by comparison; a 12-ounce cup that costs $1.85 has even more caffeine.

As with earlier elixirs, a dearth of evidence underlies such claims. Only a few human studies of energy drinks or the ingredients in them have been performed and they point to a similar conclusion, researchers say — that the beverages are mainly about caffeine.

Caffeine is called the world’s most widely used drug. A stimulant, it increases alertness, awareness and, if taken at the right time, improves athletic performance, studies show. Energy drink users feel its kick faster because the beverages are typically swallowed quickly or are sold as concentrates.

A scientist at the University of Wisconsin became puzzled as he researched an ingredient used in energy drinks like Red Bull, 5-Hour Energy and Monster Energy. The researcher could not find any trials in humans of the additive, a substance with the tongue-twisting name of glucuronolactone that is related to glucose, a sugar. But the scientist who had studied other energy drink ingredients, eventually found two 40-year-old studies from Japan that had examined it.

In the experiments, scientists injected large doses of the substance into laboratory rats. Afterward, the rats swam better.

Energy drink manufacturers say it is their proprietary formulas, rather than specific ingredients, that provide users with physical and mental benefits. But that has not prevented them from implying otherwise.

Consider the case of taurine, an additive used in most energy products.

On its Web site, the producer of Red Bull, for example, states that more than 2,500 reports have been published about taurine and its physiological effects, including acting as a detoxifying agent. In addition, that company, Red Bull of Austria, points to a 2009 safety study by a European regulatory group that gave it a clean bill of health.

But Red Bull’s Web site does not mention reports by that same group, the European Food Safety Authority, which concluded that claims about the benefits in energy drinks lacked scientific support. Based on those findings, the European Commission has refused to approve claims that taurine helps maintain mental function and heart health and reduces muscle fatigue.

Taurine, an amino acidlike substance that got its name because it was first found in the bile of bulls, does play a role in bodily functions, and recent research suggests it might help prevent heart attacks in women with high cholesterol. However, most people get more than adequate amounts from foods like meat, experts said. And researchers added that those with heart problems who may need supplements would find far better sources than energy drinks.

A spokeswoman for Red Bull did not respond directly to the European marketing claims report but said that the company did not make claims for individual ingredients but rather for the product in its entirety.

To woo consumers, companies have also used another tactic — including huge amounts of well-known nutrients that make for eye-catching numbers on labels.

For example, a two-ounce bottle of 5-Hour Energy contains 500 micrograms of Vitamin B12, or 8,333 percent of the recommended daily allowance. The energy shot also has 20 times the recommended intake of Vitamin B6.

B-group vitamins serve many functions, such as in the digestion of food. But several experts said that healthy people get adequate amounts of them from food and that huge added dosages do not provide benefits.

The sugar found in some drinks does provide a quick source of energy. But as for glucuronolactone, the additive that made rats swim better, the authors of a recent report in a scientific journal, Nutrition Reviews, said they were clueless as to why it was used in the products or what it did.

The roots of the energy drink phenomenon — and the claims surrounding ingredient mixes — can be traced to Japan. Those origins appear tied to the emergence of supposed cure-alls after World War II, a time when drugs there were in short supply.

In the late 1940s, Taisho Pharmaceuticals, a Japanese drug maker, began selling taurine extract, apparently drawn to it by accounts citing its wartime use by the Japanese Imperial Navy to reduce fatigue among sailors and sharpen their vision at night, a history of the drug company states. A formula that is so effective in treating unexplained fevers, neuralgia, fatigue, whooping cough and other conditions for which there is no drug is very rare indeed, an advertisement for the extract declared.

But around 1960, Taisho executives decided to use taurine in a new product, one that helped start the energy drink industry — Lipovitan D.

Lipovitan D, which was sold in a small vial, contained 50 milligrams of caffeine, 1,000 milligrams of taurine, various B vitamins and flavorings. The product, which was sold cold in drugstores, was a huge success during Japan’s economic boom years, particularly with overworked office employees.

However, 50 years and 34 billion bottles later, Taisho officials acknowledged they had not run a single clinical study involving Lipovitan D.

Taurine is added to Lipovitan D not so much for specific medicinal benefits but for its multifaceted functions, said a Taisho executive.

It was also in the 1960s that a product appeared in Thailand that was similar to Lipovitan D in its ingredient mix. It was called Krating Daeng (pronounced grating deng), or Red Bull. An Austrian businessman reportedly discovered it when trying to cure a case of jet lag and, in 1987, he and the drink’s Thai creator founded Red Bull.

Red Bull quickly became popular in Europe with truck drivers and students and as a mixer for alcoholic drinks. It arrived in the United States in the late 1990s and soon inspired hundreds of competitors. In 2002, for example, Monster Energy was marketed in a 16-ounce can, twice as large as Red Bull’s 8-ounce can and with twice as much caffeine.

Over the years, some producers have financed scientific studies to try to bolster performance claims. A British researcher, Dr. Chris Alford, said that Red Bull approached him about a decade ago while he was doing work on the ability of stimulants to reduce fatigue in drivers.

In 2001, Dr. Alford, a psychologist at the University of the West of England in Bristol who has received financing from Red Bull, published a study that found test participants given the energy drink had better reaction times, were more alert and showed increased physical endurance than test subjects given a placebo like flavored water. But studies like Dr. Alford’s, researchers say, only underscore caffeine’s known benefits. And more recent attempts to tease out the impacts of drink ingredients have produced mixed results.

Last August, Scottish researchers reported that 1,000 milligrams of taurine taken as a supplement appeared to improve the performance of middle-distance runners. But other taurine studies have been negative or inconclusive. We found it difficult to make any conclusions about what taurine was doing, said a graduate researcher at Tufts University, who headed a study that ran participants through a battery of mental reaction and memory tests.

A University of Wisconsin researcher, said he believed there was a reason for such equivocal results. The scientist, who works at the school’s college of veterinary medicine, said that laboratory animals, like mice or rats, must be given huge dosages of taurine to see an effect.

What may qualify as the strangest trial in the annals of energy drink studies was financed by Living Essentials, the distributor of 5-Hour Energy. The office of a proctologist in a small Maine town apparently served as a setting for the 2007 study, the results of which were never published. But its findings and other details about it, like its location, emerged in a 2008 lawsuit filed by the maker of Monster Energy against Living Essentials.

The study found that test subjects given 5-Hour Energy experienced “energy” for about 40 minutes longer than when given Red Bull or Monster Energy, though it was not clear from court papers whether that difference reflected the energy shot’s higher levels of caffeine.

But another finding from that study sheds an interesting light on one of 5-Hour Energy’s central claims — that the energy shot, unlike competitors', produces No Crash Later.

According to the study, 24 percent of test participants who received 5-Hour Energy had reactions similar to a moderately severe crash that left them extremely tired and in need of rest, another drink or some other action, lawsuit filings show.

The Living Essentials spokeswoman, said the bold “No Crash Later” statement on product labels was followed by a special mark. That mark, which also appears on the back label, explains in fine print that no crash means no sugar crash.

That is hardly surprising, because 5-Hour Energy does not contain sugar.

Asked whether consumers mistakenly believe that the shot does not produce a caffeine-related crash, she said that the use of the special mark and its explanation were clear.

She added that another study showing the benefits of 5-Hour Energy was undergoing peer review for possible publication in a scientific journal. But she declined to say why the results of the study, which was apparently conducted five years ago, had not yet appeared. That study found a benefit when 5-Hour Energy was compared to a placebo like flavored water, she said.

Whatever the case, the energy drink boom has come full circle in Asia, the region where it started. Over the last decade, sales of Lipovitan D have fallen and its maker, Taisho Pharmaceuticals, has tried various strategies to revitalize the brand. Among them: bringing out Lipovitan Junior, a caffeine-free version for children.

In Thailand, Krating Daeng has suffered a similar fate. Its producer has tried to freshen up that brand by proclaiming that the Vitamin B12 in it helps the functions of the nervous system and brain.

Last year, the Foundation for Consumers in Thailand, an advocacy group, started a publicity campaign against energy drinks like Krating Daeng, arguing that producers were promoting unfounded health claims to push caffeine.