Media Concentration in the World

January 19, 2010 by

From 1960 to 2000 there were a controversy about concentration of media companies all over the world. Sometimes, media moguls were described as people who did not care about their media outlets’ impact on society because they were only focused on how to increase profits and shareholder value. During that period, big media companies became more international, more diversified, more horizontally and vertically integrated, and more powerful.

What is going on nowdays? Are media markets more concentrated? The answer depends on how we define markets. If we analize the newspaper market or the magazine market, we will identify a trend towards more concentration in most countries. But if we take the “information market” (including online services, radio news networks, 24 hours news TV channels, blogs and other user generated contents) it is obvious that there are less players whith dominant positions and less bottlenecks in the value chains. That applies both to news markets and entertainment markets.

If media markets are less concentrated, it is time to change some legal frameworks which made sense in the old times but which are inefficient and oldfashioned when choice for consumers is almost limitless. (That, of course, applies only to free market societies but not to state-controlled economies like China, Cuba or North Korea).

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Internet as a Battlefield for Media Companies

January 12, 2010 by

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.

The Media in Spain: Forecasts for 2010

December 30, 2009 by

Usually, this blog presents data and trends about several media markets. We are focused in Spain, but we also analize other European and American markets. Today we will do something different: we will be bold enough to forecast what will happen during the next 365 days. Here is our forecast.

– After two years of strong decrease, advertising will be flat. That will means that the crisis of the media industry will end, but the recovery will be slow. The non-leading companies will keep fighting for survival.

– TVE 1 will be the leader of the Spanish television market. The public broadcaster will take advantage of its new business model: the audience will like a channel without advertising.

– Both SER and Onda Cero will be the winners in the radio industry. Onda Cero will add new listeners -mainly from Cope- and the distance with the dominant SER network will decrease.

– Circulation of newspapers will go down between 1 percent and 3 percent. Editors’ new marketing strategies will not be efficient enough to avoid the competition of online services.

– The internet stars will be the most popular social networks and, of course, Google. But TV channels will be also very active: their webs will provide new services which will be integrated with other platforms (mainly broadcasting and mobile phones).

Mergers and TV companies: is media like cheese?

December 22, 2009 by

Last week two Spanish broadcasters, Telecinco and Cuatro, announced that they will merge. It seems that other two, Antena 3 and La Sexta will do the same quite soon. Each new audiovisual group will have between 21 percent and 23 percent of the audience market share (the legal threshold is 27 percent).

Telecinco’s main shareholder is Silvio Berlusconi, while Cuatro is owned by PRISA, a media company closely linked to the Spanish Socialist Party. On the other hand, Antena 3 has a right wing orientation and La Sexta has the opposite position.

During the last days, managers of the four TV companies concerned said that each channel will preserve its identity. But… is media like cheese? A cheese company can produce Gruyere, Emmetal, Gorgonzola or Roquefort: different options for different tastes. But can we apply this model to media? Will the journalists be happy if they know that the new owner is only interested in profits because he has not a pourpose of making a positive impact on society? Will the company keep the standards of quality and innovation if their most creative people are not motivated? The future will give us the right answers.

2010: A Year of Mergers in the Spanish TV Market?

December 15, 2009 by

2009 has been a year of dramatic changes in the Spanish television market: a new legal framework, a decrease of advertising income close to 24%, and a more fragmented audience. Other issues have been less innovative: during the last 12 months we have seen again several controversies about the quality of programming and about the role of the public television. Also, in spite of the launching of new entertainment substitutes, TV consumption remains high.
Spanish television companies are feeling the pinch because of both the advertising decline and the launching of new channels. Only two operators -Telecinco and Antena 3- will be profitable in 2010 and their margins probably will be below 12% of their income.
In this context, mergers and acquisitions seem inevitable: a majority of competitors are not profitable and the law allows consolidation of companies with a limit of 27% of audience’s market share.
What are the barriers for implementing such deals? Firstly, the small TV companies have big debts. And secondly, two merged companies only can have one boss: that last fact will be the main obstacle for consolidation of companies in the Spanish TV market next year.

Could the Crisis be an Oportunity for Media Groups?

December 1, 2009 by

Media groups all over the world are feeling the pinch. Almost everything is going down: advertising incomes, profits, share’s prices, circulation figures, size of staffs, managers’ expectations…

In periods of prosperity it is not easy to discover companies’ failures because profits usualy hide managers’ mistakes. But now the crisis has helped us to identify some strategic errors: most part of media groups have been short term oriented, have take to much financial risk, have been obsessed with maximizing profits and increasing size, have had weak editorial projects, and have not paid enough dedication to motivate their teams.

The crisis remind us that good management requires strong leadership, a culture of innovation, balance between short term focus and long term goals, a highly motivated team, good understanding of new technologies, the ability to protect brands’ value and a coherent editorial project.

Companies can not avoid the crisis -which is deep, long and almost universal- but at least can learn from it.

All together to the Web

November 27, 2009 by

It is interesting this article from The New York Times in which the author writes about the merger of several companies for the Web. That means two things:

Firstly, as we said in a previous post, media are trying to fight against economic crisis through joint ventures. Advertising investment is still decreasing and does not seem that is going to stop in short term. Companies have to save costs and sharing expenses is a way to do it. If media enterprises work together they will be better afterwards.

Secondly, print circulations are going down and this is not only a temporary situation but a very deep structural damage related with new technologies. More and more people are getting used to obtain the information on Internet through iPhones, BlackBerrys and e-book. Now publications have to develop not only contents for Internet, but software standards for contents viewing on these platforms.

20 Minutos and Metro join forces

November 25, 2009 by

The economic crisis is forcing free dailies to become partners. Metro International and 20 Minutos closed a deal wherebythe Swedish Company will manage the international advertising of SchibstedSpanish free daily.

The agreement means that every advertising campaign managed byMetro in the world could include Spain as a country and 20 Minutos as a medium. Until now, international campaigns had very little representation in the Spanish paper.

During the third quarter of 2009, the advertising income of 20 Minutos shrunk 12.5%. These figures complicate the future of Schibsted in Spain. Even though the free daily reduced costs dramatically, including staff, the effects are still not evident.

Schibsted and Metro International maintain good relations since May 2008,  when Metro divested 35 percent of MetroSweden to Schibsted, who then decided to close their title Punkt.se.

The deal with Metro will not only support advertising incomes of the Spanish free daily, but will also allow it to trade with important European brands. The same agreement was signed by Metro UK (Associated Newspapers), so Global Sales of Metro International will negotiate the international advertising packages of both publications. This is one of the strategies free dailies are implementing to fight the crisis.

52% would pay for online contents

November 19, 2009 by

Yesterday I asked some students if they would be disposed to pay for online contents. They said “no”. But today I read that a Boston Consulting Group research affirms that, in Spain, 52% of Internet users would pay for those contents.

Rupert Murdoch, who is convinced that the future of Internet depends on charging for the contents, is gaining more and more supporters. London Times already charges for their contents in its portal and many other editors are planning to do the same.

Boston Consulting Group has studied nine countries and in every one of them the results have been positive in favor of paying. The nature of the contents for which people would pay is especially local, although in EE.UU and U.K. Internet users prefer to pay for the breaking news service.

However, Boston Consulting Group research explains that even though a lot of people would give money for those contents, they are not disposed to pay a lot. In Spain, people would pay four Euros per month for “premium contents” on Internet, and only 11.3% of the Internet users would reach to ten Euros for them.

One of the walls that difficult the operations is that people do not like online transactions through credit card, because they have to give some bank details.

The New Regulation of Spanish TV

November 16, 2009 by

The Spanish TV legal framework has experienced relevant changes during the last 15 months:
– Acoording to the law 8/20009 about the financing of public television, TVE will not broadcast more advertising from 1 January 2010. That decission will means that the 700 million euros of TVE’s advertising income will go to other media.
– A decree dated 14 August 2008 allows TDT operators to launch pay channels. Therefore, six private operators can increase the level of competition in a market where Sogecale has a dominant position (with 2 million subscribers and more than 70% of the pay TV market). The public operator TVE will be able to own also two pay channels. The first mover after the decree has been La Sexta: the owners of this young commercial channel have launched Gol TV, a pay channel that broadcast soccer matches.
– The Telecommunications Law 7/2009 has relaxed the limits of concentrations: now two commercial chanels can merge, provided the combined audience does not overcomes the limit of 27%.
On top of that, a general TV law (Ley General de la Comunicación Audiovisual) is currently under discussion. This new piece of legislation will deal with controversial issues like sports rights, obligations for TV channels concerning Spanish films, and protection of children and young audiencies. That law, which will be aproved by the Spanish Parliament in 2010, will reagulate a very competittive market which is suffering a deep crisis: advertising decreased 11% in 2008 and it will go down around 24% in 2009.