Archive for September, 2009

PRISA needs more time… more cash… and new ideas

September 29, 2009

 PRISA is the biggest and most influential Spanish media group. It has set the agenda and it has dominated the political debate in Spain since the end of the seventies. But now it is feeling the pinch.

Of course, part of the problem comes from the present crisis: consumer spending is low and advertising expenditure decreased last year 11% in Spain. But on top of that, PRISA has a debt of 5.500 million euros, as a result of its takeover bid for Sogecable. In this difficult context, the Spanish government has approved the launching of new pay TV channel (Gol TV) which will broadcast soccer and other sports. Sogecable has been forced to reduce its fees and therefore it will generate less cash flow.

This week, Juan Luis Cebrián, managing director of PRISA, announced that the media conglomerate has agreed a deal worth around 247 million euros to sell 25 percent of its book publishing arm, Santillana. The deal gives some time to PRISA managers but it does not solve the problem. The company should sell some of its most valuable assets. A new strategy is also needed. Is it time for new leadership at PRISA?

Is there any willing to pay for on line content?

September 28, 2009

The paid content:UK/Harris Inteactive poll has shown the small willingness to pay for on line newspapers.  Only 5% of the users say they would pay for on line news. However, when the question uses the combination of discounts with on line and paper edition, the willingness to pay increases. Nearly 48% of users would pay for on line news if it included a free/discounted paper sub.  This means that print still has a value.

Whereas some studies show that combination of paper and online products are the only way to charge, others continue to believe in the power of the brand, as News Corp.  Richard Freudenstein, CEO of News Digital Media says: “News has conducted some audience research here in Australia and in the UK and U.S., which gives us confidence that, if we get the product and delivery system right, people will happily pay for news content online, on their computer, mobile, e-reader or other devices.”

What it seems clear is that the most appropriate bussiness model will be found after trying and combining numerous possibilities. In the meantime, we will be able to enjoy very valuable on line content for free.

Are soccer rights profitable at all?

September 22, 2009

It seems pay television services are looked again as  a profitable business model for the future of television.  After enjoying the monopoly of soccer rights in the late 90s, pay television services (either satellite or cable) saw themselves fighting for soccer rights with open-to-air channels, loosing the cornerstone of their business.

However, with the advent of digital terrestrial television, the open-to-air channels have struggled to get the permission from the Spanish government to establish pay channels through terrestrial television. And they got it this last summer. Once the permission is got, under a great controversial, the problems come from the electronics industry. There are no decoders ready to assume this change with complete guarantees.And there is only one channel under pay television premises at the moment: Gol TV, which serves soccer games under pay per view.

Are pay services the future to make a profitable business in television? Was no other way than allowing open-to-air channels to become pay services? I do think the answer is easier, since it is not a matter of making television business profitable. The problems we have are the answer of having made soccer rights so overestimated. The question should be formulated as follow: Are there enough advertising incomes and direct viewer payments to give football clubs the money we have offered to them for so many years?

Same crisis: different impact in different companies

September 16, 2009

In the development of their activities firms are influenced by many forces, some of them positive but other negative, that make up the environment the company. Within these factors, the economic is a key element with a large impact on the behaviour of all organizations. The current economic crisis we are now crossing has affected all firms in all industries to a great or small extent. However, we could say that the media industry has been one of the most negatively affected by the crisis. This has involved a substantial decline in the activity of media firms, with consequences for the employment of professionals, in the definition of the strategy of the most outstanding companies and in their profits.

This fall is the outcome of a vicious circle that far from being broken keeps working with the new data that appear. The economic situation is depressing, firms do not see the way out in the short term and try, as far as possible, to cut expenses. In these saving efforts, one of the items easier to cut if the advertising budget, since even today commercial communication is considered by most companies as an expense and not as an investment. The repercussions that these sharp declines in advertising investments have had on newspapers, magazines, radios, televisions and in general on conventional media, has multiplied for these firms the negative impact of the crisis. A yearly two digits fall in income implies an important readjustment in the size of the workforces of these firms and a decline in the profits that for many companies leads entering in the world of losses. In this context it is important for firms to make and effort to remain in the market, knowing that the economy is cyclical and that after the crisis recovery comes. However, if the negative situation continues, the time that firms achieve to stay in the market, will depend on the quality of strategy formulation, so that bad managed firms will be the first to leave the market. Cristina Etayo.

Entertainment media and vertical integration

September 15, 2009

Disney has acquired Marvel for 4 billion dollars. Was it the right price? The market is not sure: the day after the deal the shares of Marvel went up 25% while Disney’s shares felt 3%. Two years ago Disney payed 7 billion dolars for Pixar. The two operations have the same logic: to ensure the access to popular products and formats which can be monetized through several exhibition windows.

Warner has imitated Disney’s strategy: next week it bought DC Comics. Is that just a defensive decision to avoid a strongest position of Disney whitin the media market? Other recent mergers and acquisitions both at international and national levels show a deeper trend in entertainment markets: the coming back of vertical integration.

There is a strong difference between news media companies and entertainment media companies. News are local; even international news should be tailored to local tastes (people need contexts to understand what happend, and what are the facts’ reasons and effects).  By the contrary, entertainment products and brands are international and can be stocked, re-packaged and delivered several times. Therefore, when a corporation has a very good “delivery chain”  it make sense to pay a lot of money for products, brands, rights, characters or ideas which will adequately fill the pipeline.

Disney, Warner, Viacom, News Corp, Sony, Bertelsmann, or Vivendi are able to reach all over the world millions of consumers who want to be entertained. But to be succesful, those corporations need access to the most popular contents. And they will pay for it.

Euronews travel to the East

September 14, 2009

Although it’s not very pleasant for a Spaniard to talk about Turkey just after the last basketball game of the Eurobasket, I do think that the interest of Turkish public television in Euronews Channel deserves some reflexion.

The Turkish Public Broadcasting channel has become the forth shareholder of Euronews, with 15.7%. Euronews president sees a great opportunity to spread its channel, whereas the General Manager of the Turkish channels assesses that it’s also a way of fostering the integration in the European Union.

It is obvious that there are strong political interests behind this.  So, there are some questions which arise, in relation with this channel. To what extent Euronews is an independent channel? Euronews says about itself that it is the unique news channel mantaining impartiality and avoiding a national viewpoint. Is that possible having shareholder such as Turkish Public Broadcaster?

It is time to assume that Euronews is as much voice of the people as the other news channels, with its pressures and influences, and also, we hope, with the professionality of its journalists.