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Articles of the Week

Posted in Digital Media, News with tags , , , , , , , , , , , , , , , , , , , , , , , , on January 10, 2009 by Dave Liu

VC 2009 Investments: Which Startups Will Get The Dough? — Investments for venture capitalists got squashed in 2008, and the outlook for initial public offerings (IPOs) and mergers and acquisitions (M&As) doesn’t look much better for this year. But at least one VC firm still plans to make investments in 2009. Jeremy Liew, managing director at Lightspeed Venture Partners, said the Menlo Park, Calif. VC will look to invest in companies focused on gaming, virtual goods, Web 2.0 and advertising, and those with solutions that monetize international traffic. While startups can expect fewer investments in the first two quarters, by the end of the year run rates should return to those seen in 2008, according to Liew. “The challenge with investing now is there’s a lot of uncertainty about the recession we’re in, how long it will last and how deep it will be,” he said. “Consumers with more time on their hands and less disposable income will look for the most entertainment for least amount of money.”

Google Solicits Suggestions For Mobile Products — Building on the openness underlying its Android mobile platform, Google is allowing users to propose ideas for new mobile product features through a new Web site. The Product Ideas page for Google Mobile allows Google users to submit and vote on mobile features they’d like to see the company develop. Through this Digg-like rating system, “we’ll be able to see more clearly what’s important to you and we’ll take it into consideration as we move forward with developing our products,” according to a post on the Google Mobile blog last week. “The Product Ideas team will pop in from time to time to see what you have to say, and we’ll be offering periodic updates on what we see and what ideas make it into your favorite products.”

Publishers Competing With Ad Networks — Behavioral targeting can be something of a double-edged sword for publishers, Ad Age’s Michael Learmonth explains. When a user visits a site like Edmunds.com, he or she instantly becomes an “in-market car buyer”, a valuable asset, but one from which Edmunds.com might not necessarily benefit. Like most Web publishers, Learmonth says that Edmunds doesn’t participate in the “mini-economy that flourishes after visitors leave” their site. Instead, “a host of ad networks will sell that ‘in-market car buyer’ to advertisers at a fraction of the rate, thereby increasing ad inventory while driving down ad rates for Edmunds, KBB.com and other sites like it.” The same story is true for other publishers who, by hosting users who demonstrate an interest in their products, create a profile that is eventually used by a third party network that packages and resells audiences at lower prices. As Learmonth says, publishers have long viewed this universe of networks and targeting firms with “unease”, in a similar manner to the way they compete with portals and news services that aggregate their content. Source: AdAge.

Consumers Union’s New Consumer Media Unit Could Expand Beyond Consumerist; No Paid Ads Allowed — Consumers Union’s new non-profit subsidiary Consumer Media LLC launches on Jan. 1 with newly acquired Consumerist.com as its only property but the announcement release stressed that it’s the first. Does this mean more acquisitions are on the way? “The short answer is we don’t know,” Ken Weine, VP-communications, told us. “We may down the road acquire or create new items.” Consumer Media is viewed as a way to expand
the nonprofit’s consumer advocacy mission and to take advantage of a growth spurt in recent years. For now, the new subsidiary sets boundaries between Consumerist, acquired this week from Gawker Media, and CU’s Consumer Reports magazine and website. “The message we’re trying to project—and the reality will reflect this—is we’re not purchasing Consumerist to make it into Consumer Reports and we wanted for that, among other reasons, to structurally create some distance between the two.”

Getting Rid Of The Box: Netflix Software To Be Embedded Directly Into LG TVs — In the march towards getting “rid of the box” as the going-forward philosophy in the evolving digital home, Netflix has extended its partnership with LG Electronics (SEO: 066570) and embedding its online video service directly into the new HDTVs from the Korean electronics company. LG’s new LCD and plasma “Broadband HDTVs” will allow current Netflix members to stream the videos from its service; these TVs have to be connected to a broadband connection, of course.

Monster.com To Create Co-Branded Job Sites With Sun-Times Media Group — The Sun-Times Media Group has struck an alliance with Monster.com on forming a series of online recruitment services and co-branded job sites across the publisher’s 70 newspapers. The deal comes over six months after Chicago-based Sun-Times joined the Yahoo (NSDQ: YHOO) Newspaper Consortium, which includes access to Yahoo’s Hot Jobs site. More recently, newspapers and online recruiters have seen help wanted ads decline precipitously as the economy worsens and unemployment ticks higher. The deal could help Sun-Times generate some more incremental revenue and attract more readers
to its classifieds. For Monster, it represents the growth of a media alliance that includes 250 newspapers and their sites, such as the NYTimes.com, and over 100 local TV outlets.

Macrovision Backtracks On TV Guide Network Sale To One Equity Partners; Chooses Lionsgate Instead — The TV Guide saga continues … Macrovision (NSDQ: MVSN) has a new buyer for its TV Guide Network and TV Guide Online properties—Lionsgate Entertainment. The TV and movie studio is slated to buy the properties from Macrovision for $255 million, the same price Macrovision had agreed to sell it to Allen Shapiro and One Equity Partners for (plus a $45 million earnout payable for the next three years) less than
a month ago. That deal was expected to close on April 1, 2009. Macrovision’s CFO James Budge told the WSJ that the company went with the
new deal because it seemed more certain to close: “At the end of the day, overall deal considerations were superior with the Lionsgate deal in all
circumstances.” This new deal is slated to close in February.

Gannett Lifts The Curtain On Local/National Hybrid Site ContentOne — Gannett (NYSE: GCI) is going live with its local/national web hybrid ContentOne this morning, says Jim Hopkins on his Gannett Blog. The program was introduced by execs speaking at the UBS Media Week conference last month. At the time, Craig Dubow, Gannett’s chairman, president and CEO, said ContentOne would serve as an exchange between its 85 local papers’ websites and USA Today’s site on the national level. He also described the idea behind ContentOne as “local content on a national level,” adding that it will use the regionally focused MomsLikeMe social net and Metromix web guide as the foundation. ContentOne would operate as a single site and serve as an easy access point for advertisers targeting readers both local and national level.

Better Late Than Never: Ad Agencies Try To Create Online Marketplaces — After witnessing ad networks and exchanges capture more revenue from major marketers these last few years, traditional media agencies are starting to play catch up. Interpublic Group’s buying and planning shop Mediabrands is working on a digital marketplace tool for clients that will include behavioral targeting. IPG’s major ad holding company rivals are not far behind either, WSJ says, noting that WPP Group, Publicis Groupe and Havas are also trying to come up with similar programs.

Mail.ru Investor Offloads Stake; IPO Looks Less Likely — While you were off for Christmas, the ownership of Russia’s top website (according to TNS) shifted a little. Tiger Global Management hedge fund sold its 27 percent stake in Mail.ru to its existing shareholders Digital Sky Technologies and Naspers. The Russian online investment vehicle and the South African media outfit now have 53.2 percent and 42.8 percent respectively, CEO Dmitri Grishin has 2.5 percent. The deal means DST, which is part-owned by Arsenal soccer club and LiveJournal investor Alexander Usmanov, now controls a majority of both Mail.ru and Runet’s top social site Odnoklassniki.ru.

Online To Weather 2009 — How will online advertising fare in 2009? Adweek says there are two schools of thought: optimists see tighter budgets shifting more dollars from less measurable media like TV and print to the Web; pessimists believe that weaker ad budgets will result in cuts across all media, although digital should fare a little better. With that in mind, search spending is expected to remain stable, while display and ads and microsites could come under pressure. Social ads are also likely to remain top of mind this year, as marketers look to move beyond experimenting with social media toward really engaging and leveraging users’ social interactions. Researcher eMarketer pegs online ad spending growth at 8.9% in 2009, from $23.6 billion to $25.7 billion. Forrester Research, another research firm, expects display spending to increase 8% this year.

IAC/InterActiveCorp Sees Strategic ‘Search’ And ‘Local’ Acquisitions As Use For USD 1.7bn in Cash — IAC/InterActiveCorp. (NASDQ:IACI), the New York-listed Internet company, is looking for strategic “search” and “local” area deals with USD 1.7bn in cash, according to a CitiGroup analyst report. The report cited comments made by IAC Chief Executive Barry Diller yesterday during Citi’s Global Entertainment, Media and Telecommunications Conference in Phoenix, Arizona. According to the report, IAC sees growth potential in the two areas, despite a cautious macroeconomic outlook for 2009. Source: mergermarket.

AOL’s Conroy Jumps To Univision As Interactive Media President — paidContent has learned that Kevin Conroy is leaving his post as AOL’s EVP, products, and heading to Spanish-language TV broadcaster Univision as president of interactive media. Before coming to AOL (NYSE: TWX) in 2001 to build AOL Music, Conroy was CMO for new technology at BMG Entertainment, where he worked for eight years. Conroy took on additional duties at AOL last April, when John Burbank departed as CMO less than a year after arriving at AOL.

Confirmed: Apple Dropping DRM Across iTunes, New Pricing Structure, 3G Downloads — Just before Tony Bennett sang goodbye to the Moscone Center faithful with “I Left My Heart In San Francisco,” Apple (NSDQ: AAPL) confirmed at its final Macworld Expo that it will drop DRM copy protection across 10 million iTunes Store songs from all majors, as per CNET’s earlier report. The move will apply to eight million tracks as of today and will extend to a further two million by the end of the quarter. Bringing to a close what have sometimes been fractious label negotiations, Apple is also introducing three new pricing tiers for iTunes tracks—$0.69 for older tracks, $0.99 for recent tracks and $1.29 for new hits. Marketing VP Phil Schiller, taking Steve Jobs’ traditional keynote spot, also said Apple is extending the ability to buy iTunes songs wirelessly via iPhone from merely WiFi to 3G mobile networks; also from today, tracks will be priced the same and have the same bitrate as desktop iTunes downloads.

@ CES: Microsoft CEO Ballmer Starts His Stage Setting With A Swipe At Yahoo’s Yang — We’re in the not-as-crowded-as-usual ballroom at the Venetian where the first Microsoft (NSDQ: MSFT) keynote completely sans Bill Gates (well, he got a mention and some applause) is underway with Steve Ballmer on the stage. It only took a couple of minutes for a light-hearted jab at Yahoo’s Jerry Yang, with a fake message asking: “Why do you keep ignoring my friend requests in Facebook?” No mention of the latest funky Yahoo deal rumor, of course, Ballmer’s real mission tonight is to outline his vision for Microsoft and to pitch Windows as the once and future software that will connect devices, platforms and people—and the PC as THE computer. “In many ways, connecting all of this together is the last mile. … The linchpin for bringing all of this together for you should be Windows.” Windows 7: “I am really pleased with the progress on Windows 7…. We’re working hard to get it right more quickly.” It should boot more quickly, take less battery life, incorporate touch. “We are releasing the beta of Windows 7; Tech Net and MSDN tonight.” Friday, the beta will be available globally for any user to try. Hasta la vista, baby.

Time Warner Warns Of Net Loss For ‘08; Expects $25 Billion Impairment Charge — Time Warner (NYSE: TWX) is warning investors that it will report a net loss ranging from $1.04 to $1.07 a share profit. Back in November, the company said it expected income to grow 5 percent over 2007’s $12.9 billion. The company is also expecting an impairment charge of $25 billion. About $15 billion of those write-downs are related to Time Warner Cable (NYSE: TWC), which the company is planning on spinning off, although it still holds an 85 percent interest, the WSJ noted. Time Warner made the announcement in advance of CFO’s John Martin presentation at the 2009 Citigroup Global Entertainment, Media & Telecommunications Conference today. Following the news, Time Warner shares were down 6.1 percent in
pre-market trading. Time Warner said the change in expectation was due to several factors and not just the worsening economic environment. For example, in December, it was hit with a $280 million expense related to a judgment against Turner Broadcasting System in a court case involving to the 2004 sale of its winter sports teams. Time Warner also pointed out that advertising at AOL and its publishing business suffered more than anticipated in Q4, reducing the expected income growth rate by about 1 percent.

Citi Media: Time Warner’s Martin On AOL: Don’t Expect Any Strategic Deals Soon — Asked about Time Warner’s plans for the AOL business and all its discordant parts—from access service to content and ad sales—CFO John Martin told the 2009 Citigroup Global Entertainment, Media & Telecommunications Conference in Phoenix that the company is still enthusiastic about exploring “strategic relationships.” However, to be realistic, this kind of economic environment isn’t conducive to quick action. The comments were somewhat in contrast to what CEO Jeff Bewkes said last month at the UBS Media Week event, when he told attendees “I’d like to get it resolved, meaning clear… so AOL can be seen and valued… We need to do it fairly soon and we’ve been working hard on it.” Still exploring alternatives: Martin: “We look at the company in three buckets, the cable, the content companies and AOL. With AOL, you have at least two big businesses in there. The access business has surpassed expectations in terms of cash flow. It’s declining, but it’s doing so at a predictable rate. The access business, though, is not strategic to Time Warner (NYSE: TWX). So we would be open to different options, but in this environment, we appreciate the fr*ee cash flow. As for audience size, AOL doesn’t have the industry scale that some of other businesses do. So we’ve been in talks with other companies about creating alternative structures and seeing what we could do. But this is a tough environment to do any strategic relationships. We just completed 22 months of considerable growth in usage on the vertical channels and there is still reason to be optimistic.”

@ CES: Discovery’s Kathy Kayse: ‘We’re Better-Equipped To Deliver On Digital This Year’ — Discovery Communications gobbled up online reference site HowStuffWorks for $250 million back in late 2007, and network brass told us that HSW would be the company’s “primary platform” for online growth. Well, has the company delivered on its promise? We asked Discovery’s EVP of digital ad sales Kathy Kayse at the Reinventing Advertising Conference at CES: Increased traffic: “It’s about a year into the integration process and we’ve seen significant growth in unique visitors and page views to both sites [Discovery.com and HSW],” Kayse said. “This year, we’ll focus even more aggressively on cross-channel promotion and integrating more Discovery (NSDQ: DISAB) content onto HSW.”

Microsoft Beats Out Google To Win Verizon Search Deal — It’s official. Microsoft (NSDQ: MSFT) has won the deal to become the default search provider on all phones on the Verizon Wireless (NYSE: VZ) network, reports Reuters. The two companies said they would go into greater detail about the deal later today at CES in Las Vegas. In November last year, the WSJ reported that in an effort to snatch the deal from Google (NSDQ: GOOG), Microsoft was offering guaranteed payments to the carrier of approximately $550 million to $650 million over five years—about twice what the search giant had proposed. The payments are to come from the ads that Microsoft would be able to serve up with search results.

Travelocity CEO Peluso To Leave — Travelocity CEO Michelle Peluso is packing her bags and will leave the online travel agency early next month. She’ll be replaced by Hugh Jones, who most recently served as chief operating officer for the Sabre Travel Network and Sabre Airline Solutions businesses. Sabre Holdings is Travelocity’s parent company. Peluso came to Travelocity in 2002, when the company acquired online travel site Site59.com, which she founded. Transitioning from CEO of Site59, Peluso became Travelocity’s COO a year later. At the end of 2003, she was became president and CEO. Over the past year, as other vertical categories started seeing slower growth, travel-related sites were still holding their own. Whether that will continue as the recession takes hold is unclear. Jones, who had served as a financial controller for American Airlines, was likely singled out to succeed Peluso because of his background. No word on Peluso’s next move.

Venture Capitalist Sounds Alarm For Facebook, Slide — In an interview with PaidContent writer Tameka Kee, Norwest Venture Partners principal Tim Chang expressed concern about two well-known Silicon Valley startups that he thinks will find it hard to grow their revenues or raise new money this year. “I’m concerned about Facebook,” Chang said. “Microsoft isn’t likely to renew its search-advertising contract–at least not at the same rate–and Facebook makes a significant amount of money from that deal. Imagine if you lost $300 million worth of revenue–how would you make it up? It’s not going to come from advertising, even if they have other ad platforms.” As Kee points out, that also raises questions about what happens to News Corp’s MySpace when Google renegotiates its search deal.

@ CES: Online Video Exec: ‘If We Don’t Do Things Differently, The Industry Is Screwed’ — Online video viewing continues to surge, but the ad dollars flowing into the space still aren’t scaling accordingly. Panelists at the Reinventing Advertising Conference @ CES trotted out well-worn reasons for that imbalance: lack of standard metrics; high volume of low-quality content; building the right amount of reach, etc. But Brian Terkelsen, EVP and managing director at MediaVest’s connectivetissue, (pictured) avoided the hand-wringing and laid it on the line: “Advertisers aren’t being aggressive enough in general—they helped grow TV to where it is now, so I think it’s partly up to them to drive video. If we don’t challenge the industry to do things differently, we’re screwed.”

Google Won’t Buy Ailing Newspapers, Could ‘Merge Without Merging’ — Their fortunes are poles apart and yet inseparable—one is hauling in buckets of advertising, the other is losing it at an alarming rate. Google (NSDQ: GOOG) sympathizes with the newspaper business’ predicament and continues to say it can help, but, sadly for NYT-Google acquisition speculators, CEO Eric Schmidt says he isn’t about to buy or bail out any news publishers.

AOL Reorganizes Products Division Following Conroy’s Departure — AOL (NYSE: TWX) is reshuffling parts of its products division following the departure of Kevin Conroy as AOL’s EVP of products. AOL Video, AOL Radio, Winamp, SHOUTcast, widgets and a few other areas are being moved from the Products & Platforms Group to the AOL Programming Group under EVP Bill Wilson. Programming will also take over AOL’s commerce and marketplace channels. Also, the chat applications under Userplane, which AOL bought in 2006, will move into the People Networks business unit under Joanna Shields. In a memo to staffers about the latest changes, Randy Falco, AOL’s chairman and CEO, says that there are few other details at the People Networks that will be completed in the next few weeks. Meanwhile, Conroy’s remaining duties within the Products and Technologies division, which include overseeing mail, video search tool Truveo, mobile and toolbar, will go to Ted Cahall, the group’s president.

Tracking The Shift In Media M&A Dollars in 2008 — Even though 2008 was a slower year for digital media M&A, about $0.88 of every dollar of industry revenue growth flew to four growth sectors: Database & Information; B2B Online Media; Consumer Online Media; and Interactive Marketing Services. Only $0.12 flowed to traditional media, according to an analysis by media M&A advisory firm The Jordan, Edmiston Group. This compares to $0.67 of every incremental ad dollar flowing to traditional media sectors (newspapers, magazines, events, etc.) from 2001 to 2007, while only $0.33 went to these four growth sectors. Some other highlights: Multiples: The all-important metric for an entrepreneur: The four growth categories saw average revenue and EBITDA multiples range from 3.4x to 4.5x and 13.5x to 21.3x, respectively, in 2008, as compared to 1.5x to 2.4x and 8.0x to 8.5x, respectively, for traditional media sectors. Deal numbers: Deal count and value declined 35 percent and 58 percent, respectively, in Q4 2008 versus Q4 2007. For the full-year, deal count was down 13 percent and deal value declined a significant 68 percent from 2007 highs.

Articles of the Day

Posted in Digital Media, News with tags , , , , , , , , , , on November 21, 2008 by Dave Liu

Microsoft Considers Debt Offering — Microsoft is considering selling bonds for the first time in its history, Bloomberg reports, a curious move considering the software giant’s $20 billion cash hoard. An SEC filing noted that the company is now free to issue debt at any time. What does Microsoft need to raise capital for? Silicon Alley Insider reminds us that the software giant sought to at least partially pay for a Yahoo acquisition by issuing debt. Of course, that deal fell apart, leaving no obvious reason as to why the company would continue with the registration process. Is Microsoft preparing another bid for Yahoo? Not if you’ve been listening to Microsoft CEO Steve Ballmer recently. Maybe Microsoft wants to buy Salesforce.com or Facebook, or maybe both? SAI thinks the company is most likely preparing a massive stock repurchasing program. At $17.53 per share, or 9 times trailing earnings, Microsoft thinks its stock is undervalued. Brad Lutz, vice president of investment research at Declaration Management & Research LLC, says a bond offering from Microsoft would be in high demand among investors, who are anxious to find sound investments outside the realm of finance. “Non-financials have generally received a warm reception by the investment-grade capital markets,” Lutz said. “There’s certainly demand for higher-quality issuers.”

Vivendi CEO: No Decision Yet On Whether To Sell Stake In NBCU; GE’s Immelt: ‘Would Buy In Heartbeat’ — Vivendi SA has yet to decide whether it will keep its 20 percent stake in NBC Universal or exercise its annual option to sell, CEO Jean-Bernard Levy told analysts at a Morgan Stanley conference in Barcelona today. According to Bloomberg, Levy said: “Right now, considering the general expectations for the value of the assets, the dividend flow we get from NBCU is very good. … We will have to make a decision to optimize the proceeds that we get from NBC Universal (NYSE: GE). We will probably find a better allocation of assets at the right time, in the right environment.’’ This may not be the time given NBCU’s decent performance in a rough environment but he left the window wide open: “We will have to make the decision in the next two to three weeks, so you will hear about it shortly.’’ The deadline is in early December. Vivendi has an annual option through 2016 to call for an IPO to sell the stake; GE has the right to pre-empt that by buying it. Immelt told Bloomberg earlier this week that GE would do just that: “They have been a terrific partner. I’m not anxious to do it because they have been a good partner, but I would do it in a heartbeat.’’

Yahoo Remains In Talks With Time Warner About Buying AOL — Yahoo, the Sunnyvale, California Internet company, remains in talks about buying Time Warner’s (NYSE:TWX) AOL unit, reported the Boston Globe. The report, citing a newswire, reported people familiar with the matter said executives from both companies have met in the past few weeks and are negotiating over a deal. Time Warner would give Yahoo AOL’s advertising business in exchange for a stake in the combined company, according to the report. The report noted that differences between both sides still exist. Yahoo has a market capitalization of USD 12.4bn. Source: mergermarket.

Q3 Online Ad Revs Rise 11 Percent—Less Than Half Q307 Growth Rate: IAB — Considering the economic meltdown of the past few weeks, the fact that online ad revenues grew 11 percent in Q3 would seem to be reason to celebrate. But comparing the latest figures from the Interactive Advertising Bureau to its Q307 report shows how much growth has slowed. While online ad spending approached $5.9 billion this past quarter, in Q307, when the IAB said revenues hit $5.2 billion, it had gained 25.3 percent over the prior year. Although online ad dollars had already been slowing last year consider the difference from Q306, when web-based advertising was up 33 percent. Flat revenues: Compared to the other two quarters this year, online ad spending is dead flat, said the report, which the IAB partnered with PriceWaterhouseCoopers on. For example, in Q2, online ad dollars climbed 12.8 percent. Looking at the first nine months of the year at least, revenues totaled $17.3 billion, up from $15.2 billion in the same period a year ago, for a 13.8 percent gain. Again, for the sake of perspective, in Q307, the IAB reported that the first nine months of the year grew 26 percent year-over-year.

Google Unveils Search Personalization Tools — Google on Thursday unveiled new personalization tools that allow users to re-rank and edit search results. The SearchWiki tools let anyone logged into a Google account move results up or down, delete them entirely, or add personal notes through markers that appear next to each entry. The changes do not affect anyone else’s search experience, although users can click a separate link to see a view that reflects changes made by other SearchWiki users. Marissa Mayer, Google’s VP of search products and user experience, tells The Wall Street Journal that the tools are particularly useful for searches that users do repeatedly. Someone who frequently searches for medical reference materials, for example, would be able to eliminate results they haven’t found useful in the past.

As Economy Slows, Facebook Hits The Accelerator — As the economic outlook worsens, most Silicon Valley tech startups are cutting costs, but not Facebook, says BusinessWeek. The social networking giant is pressing ahead with aggressive plans for growth. As Facebook investor and board member Peter Thiel says, “This is not the time for tech companies to be cutting back; this is the time to be hitting the accelerator.” What does that mean, exactly? According to the report, Facebook will continue to go to great lengths to keep user growth high in tough times. This means hiring aggressively, hitting the M&A trail (possibly), and continuing to roll out new ad platforms. Despite the site’s growing development costs, engineers are working on versions in languages like Xhosa, Tagalong and French Canadian to corner niche audiences. “We’re in this game not just for five or 10 years,” says Sheryl Sandberg, Facebook’s chief operating officer. “We’re in it for 20 to 30 years.”

Articles of the Day

Posted in Digital Media, News with tags , , , , , , , , , on November 17, 2008 by Dave Liu

Despite Industry Gloom, AOL Takes Its Ad Sales Pitch On The Road — Despite all its bad news lately, AOL (NYSE: TWX) can point to at least some revenue gains tied to its traffic jump. The company’s Q3 was mixed at best: profit dropped 7 percent to $400 million and display ad revenue fell 15 percent to $181 million; meanwhile, it had 12 percent gains in paid search. Later tonight, AOL, led by CEO Randy Falco and Lynda Clarizio, head of Platform-A, will gather 400 ad and media execs to kick off a “traveling upfront presentation” it’s calling the AOL Roadshow at the American Museum of Natural History. Bill Wilson, EVP of AOL Programming, demoed his presentation for me Friday; he’ll be trumpeting the company’s traffic numbers (one favorite of his: 21 months of consecutive year-over-year unique visitor growth for a current total of 56 million uniques). More important, he will also try to convince the industry that AOL is actually delivering on those traffic gains. Although total ad revenues were down 6 percent to $500 million in Q3, Wilson will highlight the news that the vertical content network of sites were up “solid double digits in Q3”—but no specific figures.

WSJ.com’s Third Super-Premium Tier Coming? — Murdoch’s love for newspapers is undying, nevermind the near-death throes of the medium itself, and he reads it out (literally, on the radio) as part of a series of Australian radio lectures titled, “The future of newspapers: moving beyond dead trees.” Compare and contrast this to his famous speech on April 13, 2005, to the American Society of Newspaper Editors, which shook the newspaper industry then for its forward thinking about the digital future of newspapers. And this was before he bought MySpace (three months later) and later in 2007 bought Dow Jones.

GE’s Immelt: ‘Some Opportunities In Media Consolidation’ — Jeffrey Immelt’s latest tack to convince people that NBC Universal (NYSE: GE) parent General Electric is staying in the media business—talk about buying more media assets. The GE chairman and CEO told the FT “There are going to be some opportunities in media consolidation, in infrastructure, oil and gas, aviation. And my hope is that we can play in some of those as time goes on.” Those who may need convincing include Vivendi (EPA: VIV), which owns 20 percent of NBCU. As FT points, it’s time for the annual guessing game over whether Vivendi will exercise its put option for GE to buy that stake and whether GE would sell NBCU to avoid further investment. GE acquired the majority of NBCU in a $14 billion deal in 2004. But much has changed at GE since the last time this question came up, including the company’s structure and NBCU’s designation as one of five operating units. Vivendi’s put option runs through 2016 and is based on market value; starting 2011, GE has an annual window with call rights through 2017 with a floor price of $8.3 billion that will increase based on the Consumer Price Index.

AOL Cutting Off Uncut Video Service; More Squeeze On Third-Party Vendors? — AOL (NYSE: TWX), as part of its efforts to trim the non-core and no-revenue-generating parts of its portfolio, is closing down the AOL Uncut online user-gen video service, after 2.5 years of trying to compete in the space. The service, started in May 2006, was powered by Videoegg, which has since moved on to become an online video-advertising network. According to a memo/FAQ to be sent out next week, obtained by Techcrunch, the service will close on Dec 18, and users will have to transfer video off the service before then. It is recommending that users transfer videos to Motionbox, the white-label video-upload service.

Discovery To Invest Up To $100 Million in Oprah Network; Has Spent $7 Million Till Now — The high-profile launch of “OWN: The Oprah Winfrey Network” in late 2009 has attracted its own share of speculation since the announcement in January earlier this year, including executives, programming choices and finances. The company has already names Robin Schwartz as president, Maria Grasso as SVP of programming, Robert Tercek as president of digital media, among others. But no other details on the finances have been revealed till now.

UMG Digital Sales Up 33 Percent, New Streams Offset Dropoff In CD Sales — Universal Music Group predicted a turnaround, and maybe it’s coming to pass… UMG posted EUR 3.14 billion ($3.97 billion) revenue in the first nine months of 2008 –that’s up 3.5 percent if you rule out currency fluctuations. True, in actual currency, it’s down 3.8 percent, but even that’s better than the kind of chronic results some of the majors have become used to. It’s not that CDs are enjoying a revival… the hike came thanks to growth in music publishing and merchandising after UMG bought BMG Music Publishing and Sanctuary, from increased licensing income via the growing number of music-using services, and from a 33 percent increase in digital sales. All of which ”more than offset lower physical sales, according to parent group Vivendi’s earnings. Earnings before the deduction of interest, tax and amortization expenses were up 21.8 percent to EUR 408 million ($516 million) but were actually dragged down by various restructuring costs. Duffy was a big seller for the label.

Articles of the Day

Posted in Digital Media, News with tags , , , , , , , , , , , , on November 7, 2008 by Dave Liu

Obama Begins Transition; Advisors Are Named For Tech And Communications Issues — A day after the election, names are already being floated as to who will likely be on the president-elect’s transition team, including advisors on issues involving technology and communications. Barack Obama is expected to appoint Washington, D.C. lawyer Henry Rivera to head the team focused on the FCC, reports Multichannel News, quoting informed sources. Rivera, who is a Democrat, is a partner at Wiley, Rein, and served at the FCC from 1981 to 1985. Current FCC chairman Kevin Martin also worked at Wiley. Rivera declined to comment.

IAC: Which Emerging Businesses Will It Sell or Close? — In the Q3 earnings call, Barry Diller dropped multiple hints about closing down or selling some of what IAC (NSDQ: IACI) calls its “emerging businesses”. And he said that it would happen within the next month. On the call: “No businesses in the emerging sectors are carrying any big investments. It is an area we not going to emphasize in the future: we think that is ditsy focusing. We don’t think emerging businesses are the tomorrow of our business. Some of the things within our emerging businesses: we will sell off and shut down, and we will do that next month.” The emerging unit is heavily skewed towards its digital media companies, some bought and some incubated within the company. This also includes its IAC Programming unit headed by Michael Jackson, and where MTVN (NYSE: VIA) vet Nicholas Lehman joined as COO last year. Tina Brown’s newly launched DailyBeast site is part of the programming unit.

Time Warner Q3 Profit Dips On Flat Rev; $100M Charge For Time Cuts; AOL Ads Drop 6 Percent — Time Warner managed to keep its net income from slipping much during Q3 but, with revenue “essentially flat” and a $100-125 million charge for Time Inc. layoffs on the way, followed other media companies by trimming its 2008 outlook today. Between New Line, Time Inc and some other restructuring, the company says the total charges by the end of 2008 could top $300 million. (That would seem to suggest the major cuts are done and that AOL won’t take a big hit in Q4 but this economy doesn’t offer much in the way of guarantees.).

Murdoch: WSJ.com Making Over $100 Million From Ads, ‘Probably’ $100 Million In Subscription Fees — WSJ.com is making more than $200 million from advertising and subscription, News Corp Chairman and CEO Rupert Murdoch told analysts during the company’s earnings call. He said the site is making “probably $100 million in subscriptions and certainly over $100 million in advertising.” This time last year, Murdoch was still testing waters on freeing WSJ.com; now safe to say he’s a subscription evangelist. WSJ.com is the “one web site … people are happy to pay for.” Print subscribers—and probably online, although he didn’t specify—are looking at rate increases over the next three years. Those increases will take a while to show up in revenues. Murdoch: “It takes time to work its way through. Advertising is not down a lot. It is certainly a bit below what we budgeted. … Today and tomorrow it’s on target.” He said to expect “even more emphasis than normal on international expansion” and that the big hope in Asia “certainly is putting our web site on mobile.”

FIM Revenues Soft As News Corp. Falls 22% — News Corp. fell 22% in Wednesday trading after the media empire cut its 2009 forecast primarily due to shrinking ad sales at its broadcasting and publishing properties. The traditional media giant finished the day down $3.02 to $12.88, posting its biggest one-day drop since December 1990. News Corp.’s third quarter earnings certainly weren’t boosted much by revenue growth from Fox Interactive Media, the online division which includes the social network MySpace. The division saw a revenue increase of 17%. In call with reporters, News Corp. executives conceded that MySpace display advertising was “softening.”

Disney Disappoints With 14 Percent Profit Drop; Revs Up 6 Percent — The Walt Disney Company has been playing the role of Wall Street darling but not today. The company still turned a profit but not what analysts were expecting—although it did beat revenue estimates with $9.4 billion for the quarter ending Sept. 27, up 6 percent from $8.9 billion year over year. The profit of $760 million was down 14 percent from $883 million in FYQ407, for earnings per share of $.40, down from $.44 last year. Excluding special items, it would have been $.43 per share. The company was hit by the fall of Lehman, taking a $91 million bad debt charge. Via Marketwatch, the FactSet Research analyst estimate was a profit of 49 cents a share on sales of $9.31 billion. We’ll have more color as the call gets underway but the overarching theme so far matches the rest of the media universe as the economic downtown takes its toll.

Ballmer: Yahoo Buyout Is Not Gonna Happen — Sorry, Jerry, a buyout’s not gonna happen. That’s the message MSFT CEO Steve Ballmer made clear at a business luncheon in Sydney, Reuters says. “We made an offer, we made another offer … We moved on,” Ballmer said. “We tried at one point to do a partnership around search … and that didn’t work either, and we moved on and they moved on. We are not interested in going back and re-looking at an acquisition. I don’t know why they would be either, frankly.” But he did leave the door open for a potential search deal, something some analysts say Yahoo will have to consider if it wants to stay alive despite the demise of its search partnership with Google. Ballmer’s definitive statement came after Yahoo CEO Jerry Yang suggested that MSFT buy Yahoo during the Web 2.0 conference yesterday.

NBA Launches International Video Subscription Via Broadband — The latest NBA expansion covers two growth areas for the league: international and broadband. NBA League Pass Broadband International is now available in 19 countries. The subscription includes access to 40-plus live games a week with play-by-play in English and VOD for 24 hours after they air. Some live games will be blacked out. Pay options include full season ($85 through Nov. 11; $100 after), monthly and daily. The international version follows a new U.S. option with NBA League Pass Broadband; before this season, broadband packages were available only as an extension part of the cable or satellite out-of-market package. Speaking of promos, EA NBA Live is sponsoring a fr*ee preview of the U.S. broadband service through Nov. 11.

Articles of the Day

Posted in Digital Media, News with tags , , , , , on October 15, 2008 by Dave Liu

Online Display Ad Prices Fall To Lowest Point This Year — Online display ad prices, which have been trending downward for the past year, hit their lowest point in the third quarter of 2008, just as the U.S. economic crisis began to unfold. The findings, which come from online publishing service provider PubMatic, found that the average display ad page generated a CPM of just 27 cents during the third quarter, down five cents from the second quarter of 2008, and down 23 cents (or 46%) from the fourth quarter of 2007, the first quarter for which PubMatic began tracking online display advertising costs.

J.P. Morgan Hammers AOL Revenue Forecast — To reflect slowing growth in the third-party and display ad business, J.P. Morgan has reduced its ad revenue forecast for AOL for the remainder of this year and next year. The report’s author, J.P. Morgan analyst Imran Khan, also plans to raise the bank’s estimate for cost of revenue “to incorporate our expectation of growing traffic acquisition costs.” “Our new Adjusted (Operating Income Before Depreciation and Amortization) estimate of $1.43 billion, 11% below our previous number, drives a 3c reduction in 2009 EPS to $1.13,” Khan writes in the report. “We now expect AOL advertising revenue of $2.4 billion in 2009, an increase of 8% year-over-year–compared to our previous estimate of a 12% improvement.”

Synacor Withdraws It IPO, Citing Market Conditions — Not that this is a surprise, but Synacor, the online content and application provider to the ISPs has withdrawn its IPO due to “current market conditions.” People had been asking the question about the company for a while now…it filed its S-1 in August last year, and planned to raise around $86.25 million, and not much was heard about it since then. The full SEC filing withdrawing its IPO is here. “In light of current market conditions, the Registrant has determined not to proceed at this time with the public offering..the Registrant hereby informs the Staff that it may undertake a subsequent private offering in reliance on the safe harbor set forth in Rule 155(c) promulgated under the Act.”

Online Ad Spend Estimated To Grow 13.8 Percent In ‘08; ‘09 Looks Flat: Jack Myers — Veteran media analyst Jack Myers has come in with his ad forecast for this year and next and the good news is, it could be worse. Myers projects online ad spend growth of 13.8 percent this year with $24.133 billion. But in 2009, Myers expects online’s growth rate to come in essentially flat at 13.5 percent, with $27.6 billion spent. Online’s share of the total media ad spend pie will be 10.4 percent, and will rise to 12.4 percent in ‘09. That’s not a leap by any stretch, but since Myers anticipates total ad expenditures to fall 1.3 percent in ‘08 and then drop another 4 percent next year, it’s hard for the industry to feel too badly. Come 2010, online will look a bit better with gains of 16 percent, as it assumes a 14 percent share of the whole ad market, Myers says.

Meredith Goes Outside Titles To Launch Food Social Net — Another day, another social network launching online. But this one is different–at least for Meredith Corp., owner of titles such as Better Homes and Gardens and Parents. The site, MixingBowl.com, represents the company’s first attempt to launch a content site that focuses on a topic–in this case food–but is not associated with any existing print title. The site, slated for a November launch, provides a place for cooking enthusiasts to share recipes and thoughts on food. It will also allow marketers to “get closer to consumers” by starting their own groups, essentially becoming just another user.

Articles of the Day

Posted in Digital Media, News with tags , , , , , , , , , , , , on October 8, 2008 by Dave Liu

Blinkx Drops Bid For Search Marketing Firm Miva — Online video search firm Blinkx, which is publicly traded on the AIM market, has dropped its public bid to acquire pay-per-click ad network MIVA. The London- and San Francisco-based Blinkx had offered $1.20 per share, valuing Miva at $41.13 million, a 54 percent premium over its early August stock price…Miva board rejected it outright then, saying the bid wasn’t up to the mark. This morning, in a statement, Blinkx explained its decision to withdraw: “The large premium blinkx offered in our initial proposal is even more significant today in light of MIVA’s second quarter earnings miss, subsequent downward revision of annual guidance, and public disclosure related to restructuring of the Media EU business. By choosing not to engage in substantive discussions in any material respect and an agreement with blinkx, MIVA Board and management in our view have failed to give due consideration to a transaction that had a uniquely attractive opportunity for MIVA shareholders, particularly in light of several challenges MIVA faces in the near term.”

AOL-Yahoo Merger Details Emerge; Deal Could Happen This Month — Yahoo is continuing its marathon merger discussions with AOL, sources close to the negotiations have whispered to us, and a deal could happen as early as this month. Is this just a rehash of the reported discussions in February and then again in April? Yes and no. It’s clear that AOL’s parent company, Time Warner, wants this deal more than ever. What isn’t clear is whether AOL’s assets will fix any of Yahoo’s problems. The deal structure that is currently being discussed is Yahoo’s acquisition of AOL (content, services and advertising), minus their subscription dial up business. That plus a couple of billion dollars in cash from Time Warner gets them approximately a third of the combined entity. Time Warner’s AOL headache is gone, and they have a stake in the world’s most valuable chess piece in the Google/Microsoft search and advertising war.

Viacom-YouTube Update: VCs Will Have To File With Court On Decisions To Back YouTube, Sell To Google — YouTube’s VC backers are being asked to explain to a federal court why they invested in the video venture—and why they sold to Google. As part of the $1 billion lawsuit Viacom (NYSE: VIA) filed against YouTube and Google in early 2007, MarketWatch reports, Viacom wants documents from Sequoia Capital, Artis Capital Management and TriplePoint Capital “related to the firms’ “actual and potential” investment in YouTube, Google’s acquisition of the startup and a “proposed indemnification for copyright infringement relating to this merger.” The documents are due Oct. 27, although there have been a lot of delays in this case all along so who knows. The companies reaped significant rewards in Google stock in the $1.65 billion 2006 sale: Sequoia, $504 million; Artis, $83 million; TriplePoint, $6.4 million. MKTW sees the notion of having VCs explain themselves as unusual but Google senior litigation counsel Catherine Lacavera says it is “not out of the ordinary.”

Google Begins Wider Testing In-Game AdSense System — Google is hoping to take advantage of in-game ads’ strong growth with its new AdSense for Games system, the company announced in a post on its blog. Citing comScore data, Google says over 25 percent of web users play online games every week, representing over 200 million global users. Google began offering the system on a limited basis back in November. It started off using pre-roll and mid-roll inserts with gaming startup Bunchball Games. With this wider beta test, AdSense for Games will let marketers place video ads, image ads, or text ads within developers’ games. The system is based on technology from Adscape, which Google bought for $23 million in February 2007.The AdWords sales team will sell company’s in-game ad placements directly to advertisers. Google is also promising text and image ads that are targeted by demo and location. To be eligible for the program, publishers must have a minimum of 500,000 game plays and have 80 percent of their traffic from the U.S. or the U.K.

Yahoo’s Yang May Have Missed Sales Opportunity In Asia — Yahoo CEO Jerry Yang has made clear his intention to sell off Asian assets such as Alibaba.com Corp. and Gmarket Inc. But thanks to the global financial crisis, it looks like he may have missed his chance to get top dollar. Such holdings have shrunk about $2.2 billion–that’s 23%–since Yahoo assessed them in July. The value of the holdings has been depressed thanks to investor fears that the deepening crisis will hurt the Internet advertising market. And even if a buyer were interested at this point, raising the capital to make the purchase would likely prove difficult now that banks are hoarding cash.

IAC/InterActiveCorp CEO Acknowledges Business Is Being Scrutinized For Divestments; Declines To Name Potential Disposals — IAC/InterActiveCorp boss Barry Diller declined to name potential disposals being considered by the listed Internet conglomerate. In the course of a Wall Street Journal interview, Diller was asked to identify areas of operation which might be divested; he replied that the decision had not yet been made so he would not be specific. He added that the New York-based group’s businesses were being analyzed in relation to size and markets to see if they were worth bothering with, the report said. When asked whether the credit crunch might hamper any efforts to sell, Diller said Internet companies had not so far suffered too much but added that it was possible the sector might freeze in the future. IAC/InterActiveCorp was broken up by Diller several weeks ago in a move towards streamlining the company, the report noted. It added that Diller said any acquisitions made with the proceeds of the USD 1.3bn break-up are most likely to be in the Internet advertising sphere with which IAC is familiar. Source: WSJ.

Articles of the Day

Posted in Digital Media, News with tags , , , , , , , , , on October 1, 2008 by Dave Liu

AOL Television Thinks ‘Outside The Box’ — AOL Television today is expected to launch a new free on-demand Web series named “Outside the Box.” In it, cast members from television’s most popular programs interview one another using fan-submitted questions. It will be supported by AOL’s digital ad business, Platform-A, which will be expected to identify opportunities for advertisers and provide relevant display advertising and content-targeted links on the sites.

WPP Could Win The Battle For TNS By Week’s End: Report — WPP Group CEO Sir Martin Sorrell’s persistence could finally pay off this week. After months of having its offers rejected again and again by audience monitor TNS Media Intelligence, the ad giant could finally prevail in its bid to take over the company, Ad Age reports. TNS executives have continued to urge shareholders to reject WPP’s 264.2 pence-per-share offer—which values the media researcher at £1.158 billion (about $2 billion). The company says WPP’s offer undervalues it. However, given the calamity in the financial markets, it appears that some shareholders feel that view might not be as true these days. WPP says it has managed to sway the company’s investors to its side, claiming the support of 42.7 percent of TNS shareholders as of Monday.

With Demand For Financial News Surging, Bloomberg Brings Its Online Video To AOL — Just in time for the financial market’s wild ups and downs this week, Bloomberg Television is making a tentative step toward syndicating its videos outside of its own website in a deal with AOL (NYSE: TWX). The business news network will run about 20 videos a day on the AOL Money and Finance channel. The Bloomberg videos will have its own distinct, branded broadband site on AOL’s portal as well. Bloomberg television hasn’t been too active on the online side, but that could be changing. The unit just struck a deal with Google (NSDQ: GOOG) TV Ads, involving audience measurement and targeted ads through satellite company EchoStar’s (NSDQ: DISH) set-top boxes. While that partnership doesn’t have any online applications at the moment, it does represent the beginning of a formal relationship between Bloomberg and the search giant.

Apple Threatens To Shut Down iTunes Store (Really) If Forced To Pay Higher Rates — While we’re on the subject of music royalty rates… Apple (NSDQ: AAPL) says it might pull the plug on its uber-popular iTunes store if the Copyright Royalty Board jacks up the amount it owes per track that it sells. Yep, the company made the “don’t come near me or I’ll jump” threat in a statement submitted to the board last year, now being reported by Fortune’s David Leonard. He notes that the CRB is set to resolve a price dispute between online music retailers and the National Music Publishers Association, which wants to collect 15 cents per track, up from 9 cents, currently. Apple, represented by the Digital Media Association, would actually like the rate lowered to 4.6 cents or 6 percent of “applicable revenue.”