Two Media Giants, One in the US The Other In The UK, Find the Traditional Media Financial Going Tough And The Digital Revenues Can’t Come In Fast Enough To Turn the Tide

They’re two very different organizations, but each are media leaders in their own country, and each is having a tough time in the traditional media field. And both see the future in digital.

Tribune, heavily into broadcast and newspaper traditional media, currently makes about 6% of its total revenue from the Internet. The company is on record that it wants to double its Internet revenue within three years.

The company operates more than 50 web sites and just this week bought the New York-based ForSaleByOwner.com web site that helps property owners sell their homes, bypassing a realtor, and charging far less than a realtor does. The sales price was not announced.

Nielsen/NetRatings says that Tribune sites in April had more than 14 million unique users generating 300 million page views. The unique visitors were 28% higher than April, 2005.

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It’s Time The Media Quit Wasting All That Money On Share Buybacks, And Put That Money into The Internet Instead
Media companies continue to throw millions of dollars, pounds, euros, kroner – you name it -- into a stock market bottomless pit in a bid to boost their share values. Financial analysts say buybacks are “A gift to shareholders that keep on giving” but the media’s experience is that it is just throwing good money after bad. So its time to call “Time” and invest that shareholder value where it will do the most good – the Internet.

Is There A Correlation Between Internet Advertising Increasing 22% in 2005 While National Newspaper Advertising Dropped 4.7%, And That Some 50 Million Americans Now Turn to the Internet For Their Daily News Fix?
As broadband Internet access increases so will their users turn to the Internet for their daily news requirements, according to significant US research. And since 37% of adult Americans now have broadband compared to 10% four years ago, is it just coincidence that advertising revenue growth for traditional media fell last year while on the Internet it soared 22.3%?

Online Revenues Shine While Print Revenues Fade as Two Large US Media Groups Prove Their Internet Investments Were the Right Thing to Do
The New York Times and Dow Jones both made large Internet investments this year, and already they are successfully impacting the bottom line, with online ad revenue increasing for each company in excess of 25%, according to the Q2 earnings reports. Print, on the other hand, showed a low single digit increase at the Times and a decline for Dow Jones.

Who Do You Think Is Raking In the Money?
Google Is now worth some $US60 billion, Yahoo around $US50 billion. Compare with Dow Jones at about $US3 billion or Tribune, with all their big city newspapers and TV stations, at around $US15 billion

As If Metro Was Not Already Giving Publishers Heartburn by Taking Their Younger Readers
Now It Is Going For the Jugular Targeting Classified Advertising Revenues By Converging With New Web Sites

But Moody’s has had Tribune on credit watch since mid-March and this week took the expected action of downgrading senior unsecured long-term debt of some $4 billion to the third lowest investment grade (Baa1 from A3). It means the company’s credit is considered a moderate risk edging on the speculative.

Moody’s believes the traditional newspaper business will continue to experience further deterioration and even though the company is busily building its Internet business those new revenues still do not replace the revenues being lost by traditional media, including the television properties.

Across the pond, Britain’s ITV is experiencing major problems with its lead commercial channel, ITV1. On a recent Saturday evening it managed only a 12 share, the lowest is has ever recorded, although admittedly it was up against what turned out to be one of the most exciting English football cup finals. But its share has been down all year -- it fell from 38.8% to 34.9% for the first four months -- and the advertisers have taken note. The network is now adopting an “out with the old and in the new” programming strategy to get the advertisers back.

But it isn’t that simple. Something has fundamentally changed in the UK commercial television scene, and ITV knows it.

It shares rights with the BBC for the World Cup football coverage that begins next month. The network had counted on a big positive advertising bonanza – just as a US network showing the Super Bowl expects to make millions on its coverage. Instead the forecasts now indicate advertising income in the June-July period of the tournament actually down some 4% over a year ago with media buyers saying their prime targets are women, not men, and prolonged football coverage turns women away from television.

And media buyers are warning that the ITV television spend in July could be down anywhere between 12 – 20% with the whole second half of the year looking pretty awful.

The UK television scene has changed so much in recent years. Sky’s satellite services kept adding subscribers – irt now has more than 8 million --, then along came Freeview, the free digital over-the-air service that just needs a set-top box and that’s around another 8 million homes with digital reception meaning that some 16 million households now have a choice of 30 or more channels. The result: With 65% of British households having digital television TV audiences are seriously fragmented.

ITV1 now provides about two-thirds of ITVs revenue and management realized some time ago that to grow the business it needed to diversify from that ITV1 dependence. Its target now is to get half of its revenues from outside ITV1 by 2010.

To do that the network has launched several digital channels with ITV 2,3,4 doing quite well via the digital platform. It also bought the Friends Reunited, the UKs leading reunion site, last December for £120 million plus another £55 million in 2009 depending if the site meets performance targets. The company is participating in a broadband trial for local programming and classified advertising – ITV Local – and with 50% of British homes forecast to have broadband by 2010 and with Internet revenue set to be more than £1 billion this year, the company believes this is the way forward to boost revenue.

The company is now looking for its digital stations and its ITV Play, an interactive service, to produce some £250 million by the end of 2008.

The company is also divesting itself of non-core assets – just this week it sold its 11.6% stake in Australia’s Seven Network for £87 million, and it has an offer on the table for a buy out of its share of Ireland’s TV3. It has so far raised about £400 from sell-offs since it was formed two years ago by the merger of Granada and Carlton.

And to top it off, to keep uneasy shareholders happy, the company is in the midst of a £300 million share buyback program. Earlier this year it turned down a bid by Greg Dyke, former BBC director-general, of 130 pence a share.