TV Content wars, blackouts could spur M+A
Evercore analyst Bryan Kraft believes the prolonged blackout that has left DirecTV’s 20 million subscribers without MTV, Comedy Central or Nickelodeon for a week, could lead to some industry consolidation.
In a research note out late Wednesday night, the analyst said if content providers Viacom, as well as home of ‘Breaking Bad’,AMC, which was dropped from No. 2 satellite provider Dish Network in July, get the upper hand, it raises the chances of a merger between satellite companies and cable providers.
If DirecTV and Dish comes out the winners, he said, it encourages cable TV networks to merge, but only when their valuations fall. DirecTV has pushed backed against what it claims are exorbitant increases in Viacom’s programming fees that it says it does not want to pass on to customers.
And DirecTV viewers aren’t the only ones suffering. Kraft estimates that the dispute is making Viacom lose about $14 million a week. Meanwhile DirecTV would need to lose 1.15 million subscribers before its cash flow was impacted. Kraft said that if DirecTV expects to lose more than 1.15 million subscribers, it should pay up the $3 per subscriber fee Viacom is likely seeking.
As one of the most high profile blackouts stretches into its second week, time will tell whether the spat will be the one that changes the pay TV landscape for good or whether it just causes viewers to change the channel.
Viacom drags online video into DirecTV dispute
Just as we were getting prepared for the latest round in the increasingly vicious battles between programmers and TV distributors, the Viacom fight with DirecTV took a new twist.
For the first time we can recall, the fight was extended to Viacom’s freely available shows online. The owner of MTV, Comedy Central, BET and many more decided that in order to properly enforce its blackout of TV shows from DirecTV it would “slim down” its Web offerings by blocking the latest episodes of Comedy Central’s “The Daily Show” and “The Colbert Report.” These shows are usually available for free soon after airing on TV.
One issue might be that, to date, Viacom shows are ‘free’ in the true sense in that they do not require the online viewer to have a cable or satellite subscription — something that News Corp’s Fox has done. The idea is that you can watch these shows at no extra charge if you can “authenticate” yourself as a paying cable subscriber.
Netflix: The New Arch-Frenemy
The Albanian Army is coming everyone, watch out!
We’re only into week 1 of big media companies reporting their quarterly earnings and the most prominent name hasn’t been CBS Corp, Time Warner Inc, Comcast Corp, and Viacom — instead it’s all been about Netflix.
Viacom chief Dauman plays down Nickelodeon ratings dip, sees more ads
Viacom Chief Executive Phillipe Dauman tried to play down the Nickelodeon surprise double-digit ratings drop in September as a Nielsen glitch which is being worked on and would not impact the upcoming quarter.
Dauman, speaking at a UBS Media and Technology investment conference, expressed his frustration at the issue but said there was little that could be done about it at this stage. He said “Nielsen is the only game in town”.
He described the timing as unfortunate coming in the crucial September quarter ahead of the holiday season.
Karmazin: I’d have sold Viacom but for Sumner
Sirius XM Satellite Radio chief Mel Karmazin on Tuesday stopped by the annual Reuters Global Media Summit to talk about his company, its future and to occasionally go down memory lane on a range of what if’s.
The 68-year old acknowledged that after roughly 50 years in the business he finally realizes that he’s not a good number two. He also proudly noted that he has no aversion to selling a company he leads if the right offer comes along. His track record backs him up on that claim. Karmazin sold Infinity Broadcasting to CBS in 1997, and then CBS to Viacom in 2000, creating enormous wealth for his shareholders in the process.
But there’s one deal Karmazin seemed to regret not having a chance to get done–selling Viacom. He admitted that given the opportunity and presented with the right price he would have sold Viacom when he was in charge. But Viacom’s 88-year old legendary leader Sumner Redstone, who has majority control over both that company and CBS, stayed at Viacom longer than expected. Indeed, Redstone still serves as Viacom’s chairman, outlasting Karmazin, who decamped to SiriusXM after three years of constant clashes with the octogenarian.
Are kids wringing out SpongeBob?
Back in September, right before the quarter ended, Viacom trimmed its advertising revenue outlook to high single digit growth from double digit growth. One of only a few media conglomerates to take that step–News Corp, Time Warner, and CBS were much more upbeat–the move prompted some concern among media watchers that advertisers were beginning to slash their budgets on macro-economic concerns.
But that wasn’t the case. It turns out the problem was Viacom specific. As the Sumner Redstone-controlled company disclosed during its fiscal fourth quarter results Thursday, domestic advertising revenue growth slowed in part because of a mid-September ratings plunge kids network Nickelodeon. Total domestic ad revenue across Viacom’s cable networks, which also includes MTV, VH1, and Comedy Central, for FQ4 was up 7 percent versus the third quarter’s climb of 12 percent.
What’s more is that Viacom CEO Philippe Dauman threw audience measurement company Nielsen Co under the bus on Thursday’s earnings call, saying the ratings drop at Nickelodeon was “inexplicable.” He said Nielsen’s data did not match Viacom’s own set top box data for viewers. The company is currently in discussions with Nielsen– the dominant company that tracks TV ratings that determine ad rates — and the watchdog organization Media Ratings Council to resolve the situation.
MTV lays off staff; Viacom chief cuts outlook
As Viacom Chief Executive Philippe Dauman was managing investors expectations speaking downtown at the Goldman Sachs Communicopia conference, back at its midtown Times Square HQ, staffers at flagship unit MTV Networks were fretting as pink slips were being handed out. There was widespread concern internally, according to a source. (AdWeek reported it last night).
Dauman was his usual deadpan self as he lowered outlook, saying advertising sales would still be up but by “high single digits” percentage growth rather than the double digits growth he had promised as recently the third quarter call just last month.
Viacom shares tanked by some 9 percent on Thursday, more than a wider market downturn, as investors read Dauman’s cutback as an early sign of worse to come. The worry on everyone’s minds is of another major 2008-like ad recession may be round the corner. Shares are off another 3 percent on Friday morning. It’s worth noting CBS, whose revenue is 70 percent advertising, dropped by 7 percent despite bullish comments by CEO Les Moonves a day earlier. It shows how jumpy everyone is right now.
“Jackass 3D” tops “Avatar” on Viacom Chief’s movie list
“My favorite 3D movie of all time is Jackass 3D,” Viacom’s Chief Executive Philippe Dauman said on Wednesday at Reuters Global Media Summit. The movie, which grossed $116 million in the United States, according to Box Office Mojo was “relatively low cost” and “significantly profitable,” Dauman said. “You’ll see more of that coming.”
What else might the future hold for Viacom in 3D? Possibly Snooki.
Friday’s Media and Technology Roundup
Fans scramble for Apple’s iPhone upgrade-Reuters
“Apple fans lined up overnight by the hundreds outside stores in the United States, Europe and Japan to snap up the latest iPhone, setting a new benchmark in the fast-growing smartphone market,” writes Franklin Paul, Marie Mawad and Sachi Izumi.
