Daily Marauder

DIGITAL HOLLYWOOD: MOONVES AND THE FUTURE OF CBS

Today at Digital Hollywood in NYC, Steve Adler (Business Week Editor-in-Chief) interviewed Leslie Moonves, CEO of CBS. Summing up Moonves, the man definitely speaks his mind. At times, this prompted laughter and at other times general anxiety.

Favorite quote from the keynote: (In regards to American Idol) “I wish someone would kill that show. I would greatly appreciate it.” Well, OK. But only if I can take Paula Abdul out first.

The Highlights:

Shift of Advertising Dollars

• 70% of CBS’ business is advertising
• Conventional wisdom says that internet will draw ad $$ away from TV –> CBS has not seen internet advertising to be competitive but instead additive to TV ad revenue
• In 2007, CBS saw online revenue of $200 million
• Instead of TV, the first to see the hit in ad revenue will be radio & print

Acquisitions

• In 2007, private equity was driving up the price of companies making acquisitions difficult. This year, the rules have changed leading to an open market for CBS to make some acquisitions.

• Univision represents a missed opportunity for CBS. Moonves described the company as a fit with CBS but overpriced at the time they had looked at it.

• When asked about Facebook, Moonves responded that the company is overpriced and not at their core business to be considered as an acquisition.

• Moonves is considering The Weather Channel as an acquisition. Sees it as a fit for CBS.

Digital Distribution

• CBS offers its content across multiple platforms. They chose not to participate in Hulu because Moonves prefers to control the content and ad sales à Believe that CBS can distribute on its own to generate increased revenue in relation to a Hulu partnership
• Moonves was careful to also say that CBS would continue to weigh the value of a partnership with Hulu (i.e. the wait and see game)

• March Madness on Demand (MMOD) offers all of the NCAA games online available to watch anytime.
• MMOD began as a subscription model in year 1 generating $250K in revenue –> year 2: a free ad-supported model generating $4 million in revenue –> year 3: same model generating $10 million in revenue –> this year: same model with estimated revenue of $25 million. Pretty impressive. Good bye productive workforce.

WGA Strike

• Moonves, while seemingly somewhat sensitive to the writers’ situation during the strike, commented that some of those writers will never make back the money lost during the strike. Seems a bit snarky no?
• As a result of the strike, CBS will not be developing full pilots but instead will develop half pilots to reduce front end cost.

Content

• When asked about his three favorite shows, Moonves responded several more than three. Here are the first three out of his mouth. Interesting that the top two compete with Showtime.

1.

2.

3.

Dexter on Showtime

• Dexter watched by 1.4 million people on Showtime. When syndicated to CBS, Dexter now affords a viewer base of 6 -7 million.

Radio

• CBS has sold several stations and changed the leadership at several others.
• Moonves still sees radio as a strong industry. All CBS stations are now able to stream online.

Last.fm

• Online should not represent regurgitated TV content.
• Last.fm wasn’t simply about putting the music online but about building a community around that music.

For the first 10 minutes of the keynote click the image below. You will find 2 more videos capturing the next 20 minutes here.

BROADCAST/CABLE

Barry Diller is expected to take the stand in court today as he fights for job as CEO of the floundering Internet holding firm IAC. Diller will appear in Delaware court to defend accusations by business partner John Malone that he is trying to engineer a corporate coup. (http://money.cnn.com/2008/03/13/news/newsmakers/diller_simons.fortune  3/13)

 
Two years after he split apart his CBS and Viacom, chief Sumner Redstone says he is happy with the transaction. CBS and Viacom are now more “nimble.” E.W. Scripps, Belo and perhaps Time Warner are breaking up their assets, he notes. These companies are “following the leader.” (http://www.smartmoney.com/bn/ON/index.cfm?story=ON-20080312-000606-0858  3/12)

 
Time Warner chief Jeff Bewkes told analysts he was open to combining AOL with another company, admitting revenue would be flat at the division for at least another quarter.

 
Through the beginning of March, ratings for the nightly newscasts on broadcast television are all down year to year among key adult demographics. The sharpest declines are among adults 18 to 34. Also: Visits to news Web sites are said to be up 23%. (http://www.medialifemagazine.com/artman2/publish/Dayparts_update_51/Network_news_sees_big_slide_in_18-34s.asp  3/13, http://www.webpronews.com/topnews/2008/03/12/visits-to-news-web-sites-up-23-percent  3/12)

A&E’s third season premiere of Gene Simmons Family Jewels with two 30m episodes airing back-to-back (10p and 1030p), drew in an average of 1.4 million A18-49 and 1.4 million A25-54 viewers as well as 2 million total viewers for the hour.

 
The CW has a new project in development - one that may sound a little familiar to most viewers - a remake of the 1990s drama serial Beverly Hills 90210.  CBS Paramount Network TV is producing the project, which was originally produced by Spelling TV.  According to THR, on board to write the updated version is Veronica Mars creator Rob Thomas.

 
Comedy Central has announced its 2008-09 development slate, with series involving Snoop Dogg, Andy Richter and David Alan Grier in the works. The first series to be approved, a comedy set in medieval times titled “Krod Mandoon and the Flaming Sword of Fire,” will premiere in the first quarter of 2009. Broadcasting & Cable (3/12)

 
HBO has selected Lucy Punch and Timm Sharp to play two of the leads in its upcoming drama pilot “1%.” The show is about an Arizona chapter of the The Death Rangers, one of the toughest motorcycle gangs in the country. (The Hollywood Reporter 3/13)

 
Kevin Martin, chairman of the U.S. Federal Communications Commission, has two weeks to turn over a truckload of documents to Congress for an investigation into his management practices and decision-making processes. The probe is the result of complaints about Martin’s stewardship. (http://www.variety.com/article/VR1117982274.html?categoryid=1237&cs=1  3/12)

 
Satellite-television provider DirecTV is testing its own version of an on-demand movies and TV service that it plans to launch in the second quarter. The offering could give the satellite-TV company a weapon to lure customers from cable or phone-company TV services. (http://online.wsj.com/public/article/SB120536817760332065.html?mod=djm_HAWSJSB_WelcomeSkip  3/13)

 
Cable-industry analysts say they believe that if Charter is indeed up for sale, as recent SEC filings may indicate, Time Warner Cable or Comcast would be among the most likely suitors. Sanford C. Bernstein & Co. analyst Craig Moffett said that Time Warner Cable might also want to cherry-pick certain Charter systems that would enhance its customer footprint, particularly in Missouri and the Los Angeles DMAs. Time Warner Cable declined comment. (Cable Digital News 3/2008)

 
As Tivo picks up more and more agency clients for its Stop||Watch service, Nielsen announced it will begin offering second-by-second ratings collected from a group of 320,000 Charter set tops in the Los Angeles area. The service will become available to clients during Q2.

ONLINE SERVICES/INTERACTIVE MEDIA

Time Warner’s AOL plans to buy the online social network Bebo, bolstering its consumer Internet offerings. Bebo, with about 40 million users, is the top social network in Britain, Ireland and New Zealand. It is No. 3 in the United States behind News Corp.’s MySpace and Facebook. (http://www.reuters.com/article/technologyNews/idUSN1327727520080313  3/13)

Google plans to announce a new service that Web publishers can use to manage their online advertising sales and serve up ads each time a consumer pulls up a Web page. The new Ad Manager, which a limited number of Web sites are testing, will provide the ad serving free. (http://online.wsj.com/public/article/SB120537498814032575.html  3/13)

Click the image below for a tour of Google Ad Manager.

A new application on Facebook, called Market Lodge, will pay users a 10% commission on sales made on their recommendations. Market Lodge is made by a startup called bSocial Networks, which is betting that Facebook users will be receptive to helping merchants sell to their friends. (http://news.yahoo.com/s/ap/20080312/ap_on_hi_te/facebook_friendly_marketing  3/12)

Interesting idea but in practice the applications doesn’t work for two reasons:

1. No integration within the Facebook profile (i.e. I added the application but it doesn’t show up in my profile.) I’m guessing this is a glitch of some sort but is as of yet still not fixed.
2. The products are hella lame.  Things like Yoga Basics DVD and salt scrub you’ve never heard of before.  If this was a system of recommending entertainment of all kinds (print, media, online) and being paid for those recommendations, I would be down.  But in my short time using the application, I didn’t find one product that I had ever heard of before.

Amazon has now officially joined the Facebook craze. It has launched two of its own Facebook applications: Amazon Giver and Amazon Grapevine.   Amazon Giver shows your Amazon wishlist on your Facebook page. Of course, there are more than a dozen apps on Facebook that already let you do that, but only Amazon Giver lets your friends actually buy those gifts for you without leaving Facebook. Ah, distributed commerce. Your friends can also click on a recommendations tab that creates Amazon product recommendations based on interests reflected in your Facebook profile. So if you are “fan” of The Killers, it might recommend one of the band’s CDs. If you are a “fan” of a soccer page, it might recommend a soccer ball. It also provides recommendations for your friends, conveniently listed by closest birthday. (http://www.techcrunch.com/2008/03/12/amazons-latest-product-launch-is-a-couple-of-facebook-apps  3/12)

Next New Networks, home of niche channels such as the homegrown Channel Frederator and the acquired Barely Political, struck a deal with AOL Video to distribute 12 of its thematic networks as well as a channel of aggregated content to the portal’s Channels and Categories section. The company also secured $15 million in additional financing led by Goldman Sachs and Velocity Interactive Group. NNN has been on a roll in recent weeks, racking up 33 million video views in February alone after generating 100 million for all of 2007.

 
The computer will soon supplant the television as the screen of choice for younger audiences, according to Disney CEO Bob Iger. Broadband will become “the primary source of entertainment.” Traditional TV is “still a very powerful medium,” he adds. “We denigrate it by calling it ‘old.’ ” (http://www.broadcastingcable.com/article/CA6540330.html  3/12)

 
CBS says its Webcast of the U.S. national college basketball tournament will produce some $25 million in advertising sales, more than double last year’s tally. The total will make the Internet event as popular with advertisers as the pre-game show for the Super Bowl on network television. (http://www.bloomberg.com/apps/news?pid=20601079&sid=aOLZ7HAoy0yo  3/12)

 
Joost packaged itself as an online TV service when it first launched last year. It took a step closer yesterday unveiling a new live broadcast functionality, just in time for basketball fans to watch CBS coverage of March Madness on the service. The company plans to initiate its first live broadcast – streaming a chat with the Joost technical team – today at 2 pm ET, according to NewTeeVee.

 
MTV Networks is launching Jackassworld.com as a global destination for all “Jackass” content. Following the success of the U.S. site, international editions will launch in the United Kingdom, Italy, Spain and other countries, aiming to create a global community around the show. (http://www.nma.co.uk/Articles/37255/Jackassworld+launches+as+global+destination.html  3/12)

 
Media companies will start to embrace widgets, say experts in the field. In the future, “every consumer-facing Web site will be a collection of widgets,” predicts Eric Alterman, the head of widget producer KickApps. “All the money on the Internet will be in that space.” (http://www.mediaweek.com/mw/news/recent_display.jsp?vnu_content_id=1003724645  3/12)

 
AOL wants you to stop clipping newspaper coupons. The Time Warner unit is launching a new service, Shortcuts, for manufacturers to distribute coupons on the Internet. Users can simply choose the ones they want online and add them to an account tied to a grocery store’s loyalty program. (
http://news.yahoo.com/s/ap/20080313/ap_on_hi_te/techbit_paperless_coupons  3/13)

Gen Y (ages 13-28) viewers are more likely to view TV programs on network web sites and watch them all the way through, according to Knowledge Network’s How People Use study. They also led in saying they’d give greater purchase consideration to brands that sponsor web viewing.

WIRELESS

Apple’s open platform iPhone developer’s kit has already been downloaded more than 100,000 times since its launch on March 6.

In what the company says is a first-of-its-kind test, Comcast is running live Internet traffic from its facilities in Philadelphia to McLean, Va., on 100-gigabit-per-second optical-networking equipment from Nortel. “This is a significant milestone in readying for the deployment of 100-gigabit optics,” said John Schanz, Comcast’s executive vice president of national engineering and technical operations. “It’s an enabling building block for going to wideband.” (Multichannel News 3/12)

GAMING

Electronic Arts is not being deterred by the rejection by Take-Two Interactive Software’s management of its initial cash offer to take over the company, and EA is now instead taking a hostile-takeover approach with a $2 billion offering made directly to Take-Two shareholders. Take-Two Chairman Strauss Zelnick has said the EA offer does not reflect the true value of the company. (Bloomberg 3/13)

Activision, the maker of the popular “Guitar Hero” video game, has gone to federal court in a patent dispute with guitar maker Gibson, which now claims the game violates a 1999 patent. Activision wants the court to declare Gibson’s patents invalid and prevent the company — which has actually been working with the game developer for years — from seeking damages against Activision. (Pocket-lint.co.uk/Reuters 3/13, USA TODAY/Reuters 3/12)

TECHNOLOGY

Belkin’s TuneStudio, a four-channel audio mixer, is a yearbook-size device that enables musicians to record their songs directly to select iPod devices. Although the device has its pros and cons, this reviewer says the device was “fun and easy to use” and enables recording on the fly. (ClipSyndicate/Associated Press 3/12, Google/Associated Press 3/12)

Panasonic will begin rolling out a “critical mass” of plasma and LCD TV models in April with screen sizes ranging from 26 to 65 inches in both 720p and 1080p versions, a prelude to the introduction later this year of its VieraCast IPTV in its high-end LZ850 LCD and PZ850 plasma models. Panasonic executives said that the VieraCast would include an Ethernet connection and would also be adaptable to wireless capabilities. (Dealerscope 3/12, Home Theater 3/2008)

Acer will introduce next month a notebook computer with a screen resolution to match state-of-the-art HDTV sets and six speakers to replicate the “5.1″ surround-sound experience, the Taiwanese company said Tuesday. The laptop, part of Acer’s new “Gemstone blue” line, will retail for $1,999, or $1,699 with three speakers and a smaller HD screen. (Google/Associated Press 3/12)