VISION of the Media Evolution

Recently,  Booz & Company, one of the top consulting companies, published their annual The Global Innovation 1000, by Barry Jaruzelski and Kevin Dehoff.  This report highlights how the largest companies that focus on research and development (R&D) spend their budgets, prioritize their efforts, and approach R&D.  What they found this year was startling.

Most of the companies did not have a correlation between the decline of their profits and their spend against innovation—developing new products, services, and technologies.  In fact, they indicated that their commitment to R&D actually increased because this was their competitive advantage for when the market turned around.

So…what does this have to do with our industry?

We are masters of cost cutting.  In fact, when the going gets tough, we get budgets slashed.  In many instances, this is a good thing as we may be funding the wrong parts of our business. What is imperative, though, is to understand that innovation is necessary for us—as an industry, enterprises, networks, or individual stations.  As one of my favorite bosses used to say, we cannot cut our way to prosperity.

We should be looking for the right investments that increase our multiplatform capabilities.  Or, we should be funding the right upgrades in our sales tools and systems.  And, now, during a slow year, is the time to make those investment, change our processes, and reinvest in what matters most—our core business.

Innovation, as found by Booz &Company, is a competitive advantage.  We for too long have forgotten that fundamental business rule.  Now, more than ever, broadcasters—local, regional and nationally—need to focus on how we can innovate.

We’ll not only be better positioned as profitable businesses, but more competitive ones, as the economy slowly returns.

For more information on the Booz & Company’s report, go to:

http://www.entrepreneurship.org/PolicyForum/Blog/post/2009/11/03/Innovation-in-Recessionary-Times.aspx

At the end of the day, we all know that our businesses are still propelled—or stalled—by our ability to capture advertisers interested in reaching our audience.  After the doom and gloom of the past four quarters, our roll-your-shirt sleeves mentality is finally kicking back in!

• Competition? Got it.
• Fewer dollars? Understand.
• Multi-platform environment? Check!

This isn’t just a list of challenges but our new reality.  Sure, to be über-prepared and successful, we have to change the way we’ve been doing business. 

• Investment in sales tools? Got it.
• Higher expectations? Understand.
• Fresh, new talent and skills? Check!

Here’s an article that I really liked – addressing how new media and the economy are affecting the upfront salesperson/process.  Some look at this like a challenge and others an opportunity.  They are changing the way they approach the sales process given that the dynamics of the media game have changed.  http://www.tvnewscheck.com/articles/2009/11/09/daily.5/

Sure, the pressure is on for Q4.  But, the whining is definitely over.  The survivors are realizing that it’s time to move on.  And, those that are approaching media sales in creative, innovative new ways?  Well, they are not just surviving…but thriving.

economy new media TV Newscheck

For those of you that read the trades, it’s impossible not to see the flurry of activities—and unlikely “joint respondents”—to the recent news that the FCC was considering another spectrum reallocation. Yes. They actually put it forth five months after we finally made the decade long transition to the ATSC standard.

In essence, there are certain companies proposing that the spectrum allocated to over the air broadcasters is not utilized efficiently. Rather, by “repacking” them and using new technology, additional spectrum would be freed up for other important digital services. Like Broadband. The #1 agenda item for the new FCC.

Simply put, I’m all for Broadband. It’s a service we need to propel our economy and education of our citizens. What’s sad is that it still costs money. And, those that need it most are also the ones that cannot afford it. What do they have? Free over the air television.

The public interest is still being served by these broadcasters who spent millions and millions of dollars into the digital transition. And, after only five months into the full transition, I am convinced we have yet to see the real benefits of this new service. To make another change now seems not only rushed—but unnecessary.

Readers of my blogs know that I’m all for change. But, change for change’s sake—or to potentially put at risk a valuable, reliable, free public service—is bad business and bad for the public interest.

For over the air broadcasters, this is nothing less than a turf war. But, one worth fighting for.

For those of us in the US, today is a day to remember the brave men and women in the Armed Services. Some of us will go to parades, watch children home from school, and/or catch a story or two on the evening news. And, many of us will work as it’s more of a bank/school holiday than a corporate one. That doesn’t mean, though, that we should allow the day to pass without tribute. Especially given that we are in the media industry.

Why? We are fortunate that we live in a country with free media outlets. In fact, we have a proliferation of them! Each day, those of us in the media industry work to develop programming, schedules, and new media services that educate, entertain, and share viewpoints. Just think of the different political viewpoints you can find across our cable networks. Or, how easy it is to find the local weather on broadcast TV Stations located near you. And, in the not-so-distant-future, technology will increase our ability as media to provide these services to all citizens in new ways.

Our industry is founded on the hard fought and rightly won principle of free speech. In essence, the US has more media outlets than other countries because we believe, as a nation, that an informed citizenry is a key part of the democratic process. Our paychecks come from these media enterprises which everyday are privileged to represent this value—the value of free speech.

So, as you are working on your new sales proposal to an advertiser, a log, or thinking how great it is to have the day off, remember why we have jobs. We do because we live in country that has so many tv and cable outlets—all founded on the efforts of those that have come before us and who today work for those values.

Regardless of your political beliefs, we in the media definitely owe a THANK YOU to our veterans and members of the Armed Services. Find time today to do your part and remember them.

Two weeks ago, the FCC announced that they will be hosting a number of workshops to address the Media Ownership Rules.  Every four years, the FCC is required to review the ownership rules that, in essence, govern who can own what based on the needs of the “public interest.”

Of course, the media industry—radio, television, cable, satellite, newspapers, etc.—has radically changed in the past four years.  In fact, it’s impossible not to think of the radical changes that the industry has undergone in the past 12 months!  Undoubtedly, there are business and technical challenges that are driving media companies to behave differently to thrive—and, in many instances, survive.

These can be opportunities.  And, a thorough review of the ownership rules could enable new partnerships, acquisitions, and content sharing that up to this point that could provide new information and better content to consumers—at a more affordable business model.  Up until this point, such ideas had been deemed blasphemy.  It was a major no-no to have media companies own too much of the information in any particular market (among other things).

With the proliferation of content resources on the Internet or streamed to mobile devices, it’s hard to imagine that there would be less information available than what exists today.  And, traditional media companies have to get out of the box about how best to compete in this environment.

As followers of this blog will know, I’ve already been on a soap box about how important the FCC is to the business of media.  Here’s my plea—if you have an opinion, participate in the process.  We won’t have another shot of influencing the process until 2014…and just imagine how different media could be then!

For additional information: http://www.fcc.gov/.

FCC mobile rules

It’s hard to miss the news that Comcast and NBC-U are in serious negotiations.  With the rumors, it’s hard to know if it’s a joint venture, partnership or full-out acquisition of NBC-U from Comcast.  Regardless of the outcome, it’s showing that the dynamics of our business have radically changed.

How so? 

In the past, such large media conglomerates relished the competitive nature of the biz.  While not considered “true” competitors, Comcast has been expanding into the content sphere for some time.   With the development of E! or the acquisition of The Golf Channel, Comcast’s senior management has been quite clear: they aim to grow and do so via acquisition that diversifies their current MSO model.

NBC-U, on the other hand, was confident that it’s content play—whether for the broadcast stations or cable channels—should remain “agnostic” to carriers.  As retransmission fee negotiations rose for both segments, it diversified the NBCU revenue from advertising and/or content sales.

Therefore, the need to stay in their separate camps—content distributor versus content producer –was clear.  Both could justify more money through the business model that they work with all players on the other side of the proverbial content fence.

Now?  It’s obvious that the content lines have blurred.  Comcast needs content.  NBCU needs some form of growth—and it’s hard to find that in its current businesses.  Overall, the definition of media enterprise continues to expand as companies look for new ways of making—and saving—money in the volatile economic environment cable and broadcast companies find themselves in.  And, they are not the first to start blurring such lines, but they will definitely be the biggest.  (E.g., has anyone been noticing how much “unique” content DIRECTV is coming out with recently?)

I won’t comment on the viability of the model(s) that Comcast & NBCU are proposing.  I will applaud their out-of-the-box thinking and challenge to the old ways of doing things.  I’ve been promoting the concept that the Vision of the Media Future is very different than the pictures of the past…and Comcast & NBCU are definitely pushing the boundaries.

Note:  Comcast and NBCU are currently VCI Solutions customers but I have no inside information on this deal.

As an industry, we make money many ways—but the vast majority is still
through commercial advertising.  Whether
its network TV, local placements on the radio station, or MSOs scheduling
direct response programming, we still count on retailers needing to promote via
our traditional distribution channels. 
But, the world is changing…

• Consider
  that YouTube.com has 15 hours of video uploaded to its site every minute.
• Google
  now makes more money from the advertising on its home page today with fewer ads there! 
• And,
  Blip.TV has created a way for independent content producers to make salaries up
  to $100k a year through its unique placement of short “segment advertising.”

As Jeff Zucker told a group at Google early this year,
Hulu.com was built so that NBC-U and Fox could control their own destinies—not
because they were experts in Internet broadcasting.  (And, Disney, ABC, and many others have
joined that bandwagon.)  That said, the
fundamental belief was that YouTube.com was built on the NBC-U content
(specifically Saturday Night Live).  So, after working new partnerships,
maximizing current workflows and asking more of the software vendors,
multiplatform was born.

 Now, there is no going back. 

Rather than shy away from our multiplatform world we
need to embrace it.  We need to maximize
the new opportunities it affords us. We need to get creative and think outside
the box.  I know that broadcasting is a
great business to be in, but only if we as a team can break through the
traditional means of doing business and take advantage of new workflows,
technology, partners and above all find new ways of doing business.