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Rupert Murdoch surprised a panel at the World Economic Forum Thursday and said that not all the content on wsj.com would be made free. Before he had closed the deal with Dow Jones he had hinted broadly that he favored making the site free.
The criteria for free versus non-free seems to be that the information that can be basically found elsewhere will be for free but, “the really special things will still be a subscription service, and, sorry to tell you, probably more expensive.”
In doing this Murdoch is following the strategy by other financial news providers – that what is available elsewhere can be offered for free, but the exclusive story, the exclusive interview are given first to paying customers.
He didn’t say whether the change in his strategy is because the web advertising model is becoming more difficult with growth slowing, or whether he has become a convert to charging a high price for exclusivity. The senior managers at Dow Jones before he took over had urged he not make the site free. It had been estimated that if Murdoch did make the site entirely free then the annual subscription loss would be around $30 million, and given the uncertain US financial climate right he might be subscribing to that old adage, “A bird in the hand is worth two in the bush”.
Italian Prime Minister Romano Prodi’s center-left government lost a confidence vote in the Senate on Thursday, 161 – 156, forcing Prodi to resign some 20 months after his coalition had defeated the center-right Alliance of Prime Minister Silvio Berlusconi. Recent election polls show Berlusconi well ahead if new elections were now called, which could be held within two months.
But there is still one fly in the oyster that could disrupt Berlusconi’s quick return. President Giorgio Napolitano, who has said he will decide on Friday whether to accept the resignation – he basically has to -- could decide before calling new elections to appoint an interim government with the purpose of reforming Italy’s electoral system that has seen 61 governments since the end of World War II. Once that was completed -- no telling how long it would take – then he could call for new elections.
A distribution procedure growing popular with UK regional newspapers to give away issues downtown but sell the same newspaper in the suburbs has received the blessing of the Audit Bureau of Circulation (ABC) that says it will issue a single circulation certificate to cover both forms of distribution.
The ABC says it is merely accepting that there are now a variety of distribution methods now being used by the industry and its certificate needs to take that into account. In other words the expression “paid circulation” now basically disappears although the ABC says it will state how many newspapers are sold and how many are given away.
The Newspaper Society publishers association was pleased by the decision. "Combined reporting of an individual title's paid, free and pick-up circulation figures on one ABC certificate is a sensible development which reflects changes in the market. It should offer greater clarity for media buyers and publishers and help ensure that ABC remains an important component in regional press advertising decisions."
More than 62 million people visited US newspaper web sites in QA4, 2007, a 9% increase over the year before, according to Nielsen Online and that 39% of all web traffic was to those newspaper sites. The average time spent on the site was 44 minutes. In all, the 2007 total traffic was 6% higher than 2006.
"As our industry's transition accelerates, it is clear consumers recognize newspapers as their trusted source of information in an increasingly digital environment," John Sturm, president and chief executive of the Newspaper Association of America said in a statement.
The real debate between advertisers and publishers remains how many of those Internet readers are new and how many are cannibalized from the lost print readership.
The UK Digital Radio Development Board (BRDB) released Christmas period sales figures for DAB receivers. The news was very good. Kitchen table models, DAB enabled MP3 players and DAB clock radios were the biggest sellers.
DRMB forecasts another 2 million DAB receivers will be sold in 2008, bringing the total in the UK to about 9 million or 30% of UK households.
Worldwide, consumer electronics companies share prices took a beating this week as Apple and Motorola forecast weaker sales of mobile phone handsets and iPods.
Consumer electronics – from clock radios to mobile phones to flat screen TVs – are convenience purchases. When consumers worry about jobs, housing and other basics, those ‘nice to have’ purchases have to wait.
Looking for a worldwide trend? Don’t. Those days are over. (JMH)
Italian Prime Minister Romano Prodi is expected to resign today rather than allow the Senate to vote on a confidence measure that he can no longer win since the departure of one of his coalition partners. He is being encouraged by colleagues to actually go through with the vote, although Senate support is against him, but either way the result is the same -- his government resigns.
If Prodi resigns before the vote, or loses the vote then the question is what President Giorgio Napolitano does. He could call upon Prodi to head a caretaker government while everyone negotiates to form a new government, but the smart thinking seems to be that he will call for new elections.
And that could bring Silvio Berlusconi, Italy’s richest industrialist whose family has a controlling interest in Mediaset, back as prime minister. Recent polls show his center-right Alliance well ahead of Prodi’s center-left coalition. And the dissolution of Parliament would bring to an end all the pending reforms the Prodi government has tried to impose on Berlusconi’s media empire. No wonder pictures of Berlusconi this week have him smiling.
French publications concentrating on President Sarkozy’s “has he/hasn’t he” married Italian model Carla Bruni are reporting huge circulation increases, but a TNS Sofres public opinion poll published Wednesday has fully 93% of the French saying the media has dedicated much too much coverage to that story. It seems the French may tell the pollsters one thing and then do something different at the newsstand – shades of what happened to Barack Obama in New Hampshire!
Recent polls have indicated the French are not amused by Sarkozy taking his girlfriend on a visit to Egypt, and also to Disneyland Paris, and they would much prefer he concentrates on coming up with policies that will improve their daily economic life.
The message may actually be getting through to Sarkozy – he hasn’t been seen in public with Carla for nearly three weeks, and he has been visiting the provinces alone ahead of municipal elections to be held in March.
The spin in Philadelphia for the past year has been that after the brutal round of big layoffs which saved the company some $20 million, things were going pretty well at the Inquirer and the Daily News, but in a meeting Wednesday with 10 unions management warned of “dire consequences” if costs are not cut another 10% by the summer.
Both newspapers had already announced increases for their newsstand issues, effective in early February.
Again, as last time, the problem is not enough revenue to make the bank payments for the loans that enabled local Philadelphians to buy the two newspapers from McClatchy that in turn were obtained in the Knight-Ridder sale.
A year ago, the company fired about 70 Inquirer newsroom employees – 17% of the newsroom staff – and 34 advertising staff – 10% of the sales force. The good news had been that The Inquirer’s weekday circulation grew 2.3% in the last six-month reporting period to September 30, 2007, but the bad news is the advertising downturn.
Lee Enterprises reported its fiscal Q1 quarterly profit was down 17% from a year ago and the market welcomed that news with a 6.65% drop Tuesday, the shares closing at $9.97, marking a 70% one-year fall. And investors figured that if Lee had a rotten quarter then expect no better from McClatchy and punished those shares with the stock closing at $9.49, a 4.86% drop. That’s down 76% in the past 12 months. Remember the shares were around $56 when the Knight-Ridder deal was announced in 2006!
The New York Times Company also got punished, down 2.75% to close at $14.48, down 30% over the year. But Gannett bucked the trend closing at $34.30, up 0.79% -- but down 42% over 12 months.
The Westminster City Council finally has some success in its attempts to get Associated Newspapers, publisher of the free PM London Lite and competitor News International, publisher of thelondonpaper to install recycling bins throughout London’s busiest streets in the hope of cracking down on the trash of their free newspapers thrown away. The council did, however have to use a “stick” to get its way, threatening each publisher with banning their papers from certain parts of London unless they were more proactive in clearing up their mess.
So now both newspapers are actively spinning their corporate citizenship. They are paying for 70 bins which they will maintain and they have agreed geographic areas for which they will be responsible for pickup.
The papers have already installed 56 bins which have the capacity to collect 1.5 tons of newspapers for recycling daily.
The council estimates that newspapers are fully 24% of street waste in the main West End shopping area.
Having already put its three US Metro Newspapers – Boston, Philadelphia and New York up for sale, but as of yet not getting any takers, Metro International is beginning to shake things up, ousting its Boston publisher, cutting staff there and probably letting 49% minority shareholder New York Times have a more active role in running the newspaper. Cutbacks are also forecast for Philadelphia and New York.
Metro’s US newspapers have lost more than $10 million in the past year, according to company filings. It had been thought that Philip Anschutz's newspaper company, which publishes free daily papers under the Examiner name, would be interested, but apparently not.
Who said the private equity firms are shunning media deals? Not 3i. The British VC/PE firm is looking at taking 40% of Spanish TV production house Boomerang.
Who said all the investment money is going into new media? Actually, 3i made a big announcement last October about the virtue of new media.
3i is also in talks with Prisa to take a minority stake in the Spanish radio company Union Radio.
One thing you always know about VC’s: they ‘go with the (cash) flow.’ (JMH)
French president Nicholas Sarkozy ignited a fire-storm of criticism when he declared that all French external broadcasting would be merged. This, presumably, would include TV5 Monde, the international TV channel of French-language public broadcasters in Switzerland, Belgium and Quebec, Canada. Last year the partners gathered in Lucerne, Switzerland to forge an agreement for finance and the like. France, with some reluctance, signed on.
Now the partners are a bit dismayed.
Television Suisse Romande (TSR) director Gilles Marchand said, “If the multilateral dimension of TV5 is not guaranteed, we have no purpose staying,” quoted in Le Monde.
Apparently, about the time M. Sarkozy delivered his comments of the state of French international broadcasting, the TV5 Monde partners received a ‘memo’ from the French government on the reorganization plan.
Fadila Laanan, media Minister for French-speaking Belgium, scoffed: “This text seems not very compatible with the principle of the French language networks’ autonomy or respect for its partners.”
There you have it. (JMH)
A report in the New York Times says that the primary owners of Getty Images are soliciting bids for the company. It’s not the best of times to do this with the credit crunch drying up private equity funding, and also the share price has fallen 49% in the past year, and closed last week at $21.94 giving it a market capitalization of $1.3 billion. Over the past two years it has dropped 74%.
Getty Images is the world’s largest supplier of pictures and video to the media and advertising worlds, but it has been hard hit by low cost Internet rivals. Whereas Getty may charge $49 for a license to a picture (low by its standards) Internet competitors have licenses available for $1. If the $1 picture does the editorial or advertising job necessary, then why not?
Getty has been continually investing in its business at both the high and low end, but it is the low-cost competition that is continually causing it problems. It is trying to have both halves of the pie by being in the low-cost supply business and the high-cost quality picture supply business, but the indications are that for much of the market low-cost is good enough.
For those who follow the comings and goings of the Murdoch clan one of the most difficult things to understand is why, in July, 2005, elder son Lachlan gave up running the New York Post where he was basically positioned as his father’s successor, and instead he took the family home to Australia.
He has stayed out of the media business since, but he is now said to be teaming up with Australian tycoon James Packer in an A$3.3 billion joint venture to buy the Packer backed Consolidated Media Holdings (CMH) and split the business 50-50.
So does this mean he is going into competition against News Corp. in Australia? Apparently the CMH business and News Corp. are in different markets although they do come together in one entity –the pay-TV Foxtel in which both News Corp and CMH have a 25% share.
Private equity firms are known for slashing costs as much and as quickly as possible when they invest in order to get the margins up high, then sell the company onwards and do the same somewhere else.
But Philip Freise, a principal at KKR, told a digital conference in Munich Monday that KKR is in it for the long haul with its ProSiebensat1 and SBS investments – five to seven years if necessary.
Kohlberg Kravis Roberts and Permira Advisers bought 50.7% of ProSiebenSat.1 Media, Germany’s biggest broadcaster for €5.9 billion ($7.8 billion) in December 2006, from German Media Partners run by the billionaire Haim Saban of the United States. They paid another €500 million in a deal that closed January 16 for Axel Springer’s 12% shareholding, meaning the equity partners now own 62.7% of the company, 100% of the voting common shares, and approximately 25% of the non-voting preferred stock. ProSiebenSat.1 bought European rival SBS Broadcasting for €3.3 billion ($4.7 billion) in 2007 and the idea is to create an integrated media house for what is now Europe’s second largest broadscast company (Bertelsmann’s RTL is number one).
And because of the open question of whether there is still “life” for traditional media such as television, Freise says the ProSieben deal is his most risky.
Zimbabwe’s notoriously restrictive media laws may be changing, according to various news services. Saturday (January 19) state -owned newspaper The Herald, reported by the AP, said President Robert Mugabe signed into law a new journalist accrediting organization and relaxation of restrictions on journalists.
The new law, which takes immediate effect, creates the Zimbabwe Media Commission.
Earlier in the week the state media regulator Media and Information Commission (MIC) asked the banned newspaper The Daily News to reapply for state registration. The Daily News was banned in 2003.It had been Zimbabwe’s most widely circulated newspaper.
The Access to Information and Protection of Privacy Act (AIPPA), signed into law by Mugabe in 2004 and enforced by the MIC, makes practicing journalism without a license a crime. All journalists, Zimbabwean and foreign, and all media organizations must obtain official accreditation. Many western news organizations, including the BBC, have been effectively prevented from working in Zimbabwe. (JMH)
RTL owned and top rated Radio Hamburg is launching this week a massive promotional campaign guaranteed to send listeners tuning in. The on-air part starts tomorrow (Tuesday January 22) with an outdoor ad campaign of over 1000 posters starting in February. (Read Radio Hamburg release here, in German)
What’s the theme? “The whole truth about men and women.”
One of the posters says “Everybody looks happy naked.” (JMH)
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