The Week-In-Review: DirecTV CEO Says Targeted Ads ‘Back On Track’ In 2012

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February 20, 2012 – 12:03 am

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DirecTV On Targeted Ads In 2012

DirecTV reported a solid Q4 earnings and revenues last week, but Mike White, the satellite company's chairman and CEO Mike White conceded that last year, ad sales was one area things fell "a bit short."

However, White sought to reassure investors that the problems were due to the challenge of local targeted ad sales and that the system is now in place to address those disadvantages, he told analysts during the company's earnings call. The transcript is available via SeekingAlpha.

Among media buyers, DirecTV is viewed as a leader in targeted ad sales among cable and satellite providers. Unlike most cable systems, which are largely patched together through very different local systems that are hard to connect on to a single ad platform, satellite doesn't have the problems associated with physical wires. But that doesn't mean it doesn't have hurdles to overcome.

In speaking about the difficulties of local targeted ad sales, White told analysts during the earnings call that "We had a new technology. That technology got delayed a bit. But we now have it fully operating."

The company claims its already generating some revenues this year for HD DVR boxes, which is the platform it uses to deliver targeted ads. It's also working on expanding standard definition DVR boxes in the latter half of the year, which will also broaden the audience to whom it can serve targeted ads to.

"So we're probably, I would say, a good six to nine months delayed on that piece of the total for 2013," White said. "We're going to try and see if we can make it up. We're going to have, I think, a good year. We're planning a significant amount of ad revenues from the targeted advertising initiative this year."

In general, DirecTV expects to benefit mightily from political ad spending this year, just like ever other media company in the TV space. "So I think we'll get that one back on track, but we might have lost 6 months or something in trying to get to the total numbers. So I would say directionally, I however, feel very good about it. And all three of the initiatives in terms of today are kind of clicking and doing what we would've hoped. We just kind of had a little bit of a delay because of the Connected Home and the delivery of the HD DVR capability on targeted ads. But we're back on track now."

IAC's Aereo: The War For Metadata Begins

Barry Diller shook up the TV space in a big way last week with the launch of a new over-the-top provider called Aereo. The new entity, formerly known as Bamboom Labs, announced that it received $20 million in a first round funding from IAC and a mix of VC firms under the proposition selling a remote antenna and DVR that consumers can use to access network TV on web-enabled devices such as smartphones and tablets, and through internet TV solutions such as AppleTV and Roku.

The service launches in New York on March 12 and will offer users a free, one-month trial. After that, users only have to pay $12 a month to get streaming video and up to 40 hours of DVR recording time per month. Read the release.

Cord-cutting technologies have gotten a lot of attention over the past year. But the notion of cord-less homes using only broadband connections to access video has tended to be a bit overblown, as the number of broadband-only households remains less than 1 percent of all U.S. homes. Instead, Nielsen and other have pointed to "cord-swapping," as cable subscribers have mostly switched to satellite or telco companies' pay TV offerings, as opposed to abandoning the MSOs completely.

But cable companies have certainly been feeling the heat, especially as battles with networks over retransmission and carriage fees get more heated. (Consider the protracted battle between Time Warner Cable and MSG Network, which ended on Friday, just in time for the hot streak Knicks to lose on Friday. See this piece by the NYT's Howard Beck and Richard Sandomir for more details.)

The first pieces written about Aereo was not about its potential to move the "cord-cutting" ball down the field, or what sort of impact this new streaming service might have as an advertising vehicle, but rather, how the established broadcasting community was going to smother it with lawsuits. As Multichannel News' Todd Spangler noted:

"Aereo is licensing the metadata about broadcast TV from Tribune Media Services — but it doesn't want to spend a dime on the actual programming. (As a side note, this also points to the crucial nature of metadata for the future of TV: It's central to how we find, record and share television, and how content owners monetize it.)"

With so much at stake, the networks and media companies are bound to try to throw some obstacles in Aereo's way. But it also presents yet another reason for the cable companies to pursue the TV Everywhere model more quickly.

The release of Aereo comes amid a wave of activity in the OTT space. For example, NewTeeVee's Janko Roettgers reported this week that Boxee may launch a DVR subscription service for users of its new Live TV tuner. And AllThingsD's Lauren Goode writes how Roku is striking more deals with cable companies Comcast, Verizon, and others to put TV Everywhere apps on its streaming media platform. Ultimately, Roku expects to have about 1,000 video apps on its system by the end of year, more than double the amount it has currently.

In the interim, advertisers and their agencies will likely push MSOs and networks even harder on TV Everywhere efforts this year, as the media companies seek to break more records during the upfront negotiations this spring. After all, if more consumers are going to be turning away from traditional, linear viewing, won't that naturally have some diminishing affect on returns, even if the shift in viewing is ever so slight?

But Wait. There's More!

TVExchanger Is Everywhere

By David Kaplan

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February 20, 2012 – 12:03 am

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