Archive for the ‘Media Markets’ Category

Indebted Media Companies

March 2, 2010

Every 10 years media companies realize that their debt is a extremely heavy burden. At the beggining of the 90’s, News Corporation was close to collapse, and the empire of Robert Maxwell (at that time owner of the Mirror Group) was destroyed. In 2002 AOL Time Warner fired its CEO, Bob Pittman, and Vivendi Universal its CEO, Jean Marie Messier; Bertelsmann did the same with Thomas Middelhoff: those (and other) big media coroporations have increased their debt in order to follow strategies of fast growth.

Companies should choose between the aim of been the faster and bigger player of the market or, by the contrary, the aim of preserving the organization’s future. They can not do both things at the same time: one of the two options is always the priority.

The crisis is a good oportunity to learn. Sooner or later the “perfect storm” arrives: advertising decreases, consumtion goes down, the banks are not so willing to lend…. Well managed media companies are prepared to face such unavoidable disasters: innovation is part of the game, but prudence is the neccesary complement.

Radio Networks and the Internet

February 9, 2010

Radio stations and networks have been a very succesful business for the last 80 years. In most developped countries, they got between 6 and 11 percent of total media ad sepending. They managed to keep low production, marketing and distribution costs and they were able to face the entrance of new strong competitors like TV.

In some way, the success of radio stations and networks has been based on their humility: on the one hand, they did not ask the listeners’ total attention; usually the audience is involved in other activities -eating, cooking, driving, walking…- while listening to the radio programms. On the other hand, managers of radio companies do not ask for high rates to the advertisers.

But the Internet has changed the rules of the game. Radio companies’ strenths have become weaknesses: Internet is not as portable as the radio; the users of Internet can not do other activities at the same time; radio is about sounds and Internet is mainly about texts and images… All those reasons are behind the lack of adaptation of radio companies to the Internat Age. The future of radio stations and networks depend on the ability of leaders in radio companies for sorting out such difficulties.

Internet as a Battlefield for Media Companies

January 12, 2010

Internet has changed the “rules of the game” for media companies: it has destoyed the big music companies’ distribution advantages; it has allowed the launching of online news services which means more competition for newspapers and magazines; it has increased the windows for audiovisual services; it has fostered the launching of new offers in the market like social networks, blogs and other user generated contents.

Managers of media companies should pay attention to this new battlefield: they should understand who are the winners and what are the reasons for their success.

Amazon, Google, Facebook, eBay, Yahoo, BBC News Online, YouTube… do they have any similar key success factors? We suggest here some “Internet winners’s” common values: they have highly motivated people; innovative culture; long-term focus; attitude of embracing uncertainty; lack of ties with past experences; openess to learn from experiments and from errors; strategic foresight which combines different methods and perspectives.

Digital Terrestrial TV in Europe

November 3, 2009

At the end of 2008, coverage of digital terrestrial television in Europe reached 92,38% of households in Spain, 90% in Germany, 89% in France, 85% in Italy and 80% in United Kingdom.

To be able to receive digital signals, househlods should have a
digital television set with an internal digital decoder (an “integrated digital TV”) or a digital set-top box to convert the digital transmission before its gets to the analogue television set. Acording to EGM, in June 2009 only 45,2% Spanish househols have done such transition, but that figure is an increase of 93% from previous year.

The digital switchover will mean more choice, better picture quality, and more diversity. It will create more oportunities for creativity and innovation. But to make the most of such options, media managers should be focused on long term projects which will provide brand prestige and consumer satisfaction.

The Spanish Radio Market

October 27, 2009

The radio business in Spain has been very dynamic. Early deregulation and great creativity are behind the success stories of Spanish radio.  Most part of big networks and local stations have been quite profitable. Traditionally, radio advertising acounted for 11% of total above the line advertising.

But nowdays radio companies in Spain are feeling the pinch. Of course, one of the reasons is the crisis, but there are also some other problems: lack of reliability of audiences measurement systems; launching of new networks and fragmentation of audiences; new competition from Internet, pay TV and videogames…

Radio advertising income was 641 million € in 2008, 9% of total above the market advertising and 5,3% lower than the previous year. (The decrease in the US market was 7,4%). Managers of Spanish radio companies should look for new strategies to face the increasing competition. Consolidation, new distribution windows (like Internet), pay services and more innovation in programming are some options to pay attention to.

Sarkozy and the French Press

October 20, 2009

Nicolas Sarkozy is concerned about the health of the French press. And he has good reasons: France appears on the 28 position in the ranking of newspaper readership in the world. The President wants to know why his country, which has been a worldwide leader in any field of culture, is so badly placed in terms of newspaper consumtion.

One year ago, Sarkozy launched an initiative to identify efficient ways to protect the French press. The project can ve visited at

The French press is expensive (the price is 1,26 per copy, highier than in most European countries).  Paris papers are distributed by a no very innovative monopoly: the NMPP. And there are not truly French multimedia companies able to create synergies, economies of scale and profitable brand extensions.

On top of that, the owners of the most prestigious French newspapers are not “pure editors”: Rothschild, Dassault, Bolloré, Pinault and Arnaud are family names mainly linked with luxury goods, distribution, advertising and defense. Perhaps their newspapers are less focused at serving the readers’ interests than at protecting their main business. Mr Sarkozy should think about that risk.

The Future of Newspapers

October 13, 2009

Newspapers have been a very good business both in Europe and North America. The leaders in their markets usually got margins of profits above 20%.  The USA market is dominated by local papers. Continental Europe is mainly an addition of  regional markets. And the UK is the paradise of national newspapers. The three different models worked very well: those markets had high circulation figures, a lot of advertising income, strong entry barriers and excelent profits.

Internet and free papers have eroded the competitive advantages of paid newspapers. In 2008 newspaper circulation decreased 1.8% in Europe and 3.7% in North America. Advertising will drop 22% in North America in 2009 and a bit less in Europe.

European and American Publishers should change their busines models. They should forget about the “good old times” of mass market one-platform products. Newspapers should become multi-platform brands with several windows of revenue: print, online, mobile devices, and so on. They should take advantage of the power of their brands to capture the “every day more demanding consumer”.

Online charging helps quality

October 9, 2009

Charging fees for online content has been one of the most interesting debates for the last few years. The problem of how to make money through the Internet has taken publishers to consider the possibility of charging fees for their online content.

Companies that want to be profitable on the Internet currently need to atract millions of visitors because it is the only way to get good advertising contracts. However, many enterprises are anticipating a change of paradigm and rethinking their business model and planning a shift to getting money directly from the visitors, through micropayments or subscription (

Charging for content would have a very positive impact on media industry because it would force the journalists and people who work producing and delivering information to make better products. When one competes against a company which distributes free information it becomes imperative to make an effort to differentiate one’s product and convince the public that it is worth paying for higher quality content.

Hollywood and the European Film Industry

October 6, 2009

US films account for an average 68% of the European market. In return, European movies represent 5% of the North American box office. What are the reasons of such unbalance?  Some authors think that the dominant position of US companies comes from the higher identification of American films with the tastes of the European audience. Others argue that the Hollywood success is mainly due to its control of the distribution system.

European policy-makers have introduced the “quota system” to protect national industries and cultural identities. But such policy is both inefficient and old-fashioned:

– It is increasingly more difficult to identify the ‘nationality’ of a given film, which is often created by people from various countries and which is produced by a company owned by hundreds of small shareholders.

– Producers could pay most of their attention to flatter the agencies (usually controled by governments) which give the subsidies; the risk is to discard the preferences of cinema-goers.

– A strong quota system could be against the viewers’ interest.

Regulators should forbid some activities that distrort free competition like ‘block bookings’. This practice is used by the largest distributors to control the exhibition sector. Such abuse of a dominant position hurts the interests of consumers and exhibitors.

Policy-makers should implement some ways to foster efficiency and creativity of European organizations: grants to young film makers, subsidies for exchange of experiences between companies which can lead towards joint-ventures or joint-projects, financial advantages for investors in film production, or more transparency requirements.

It is time to find efficient substitutes of the “quota system”.

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.