August 22, 2011 – 12:03 am
Here's today's TVexchanger.com news round-up... Want it by email? Sign-up here.
TWC's Many 'Insights'
Time Warner Cable's $3 billion purchase of cable operator Insight Communications would appear to be as straightforward a deal as any other. On the face of it, TWC, the U.S.'s number two MSO, gets to immediately expand its footprint in Insight's Midwest and southern turf. In addition to adding Insight's 750,000 subs, TWC says it will save about $100 million through the elimination of duplications in programming and corporate costs including staff and infrastructure. Read the release.
But The Wrap's Matthew Cain senses something else at work here. With dwindling cable subscribers, MSOs are desperate to reach more consumers and will pay through the nose to get at them.
How much more? Insight sold roughly half of its subscribers to Comcast in January 2008 for $1.3 billion. Cain does the math on the TWC deal and reckons that the MSO paid a per-subscriber valuation of about $3,950 -- more than 50 percent higher than just six years ago.
Cain concludes that TWC made a pretty smart move, at least for the moment. Insight was able to derive annual subscriber revenues of $850 in 2005; today, that amount is $1,400. Still, with cable subscriber numbers falling across the board for the last year, does that mean the ones who remain will be more valuable? Or less? Given the need for public cable companies to downplay subscriber losses to investors, expect to see smaller pay TV providers being snapped up for those precious cable consumers.
In the meantime, don't say TWC doesn't see the handwriting on the walls. GigaOm's Ryan Lawler highlights the company's efforts to build up its growing broadband access business, though the traditional pay TV side makes up more than half its annual revenue. So far, most of TWC's rivals reject the notion of becoming just an "internet pipe," but TWC has tended to follow its own path, especially when it comes to aiming bundled packages at low-income consumers. Right now, it hasn't seemed to paid off much, but as the weak economy shows no signs of abating, TWC may yet be proved prescient. (For a look at Yahoo's "entertainment check-in" plans, take a look at this video interview on the Hill Holiday blog featuring Adam Cahan, the CEO of IntoNow, which the portal acquired a few months ago.)
Ratings: What Counts
People are practically beginning media companies to take note of their TV viewing, music listening and movie- and concert going. So why does it still seem so hard to figure out a ratings system that makes sense to the producers, advertisers and agencies?
Well, part of the problem is that those are three very different constituencies with vastly different perspectives of what they want to see counted when it comes to figuring out what a typical TV viewer/iPad owner/video streamer is consuming. Still, Nielsen, the recognized standard bearer when it comes to TV audience measurement, is in the planning stages for counting iPad streaming across the Time Warner Cable and Cablevision streaming video apps. In an interview with Deadline, Matt O'Grady, Nielsen's executive vice president of media audience measurement, emphasizes that the effort is still at the beginning. "But we're taking [the project] dead seriously because our clients need to know what the viewing is on tablet and smart phone platforms," he says.
So as the media world waits not-so-patiently for Nielsen's touch to adequately count iPad streamers – the company says the numbers aren't consequential right now anyway – isn't there something media companies can do to figure out how to tap social media for cult shows? Lucas Kavner, writing in the Huffington Post, muses on the intense following Fox's Arrested Development continues to have five years after being canceled for low ratings, which peaked at a paltry six million (and ended its run with 3 million).
Kavner has a great example of the wrong-headed values placed on viewers, suggesting that engagement is not given its due in the current measurement environment. "A viewer who stumbles across an episode of CSI:NY while he's cooking dinner is given more weight than a viewer who plows through two straight seasons of Breaking Bad on DVD," he writes.
While the Internet is still a young medium compared to TV, Radio and Newspapers, in terms of usage, it's certainly the most popular among coveted younger viewers and certainly on a par with every other format, measurement methodology takes a little longer to catch up with user adoption.
Okay, we can all understand that. But the real problem is that the industry is trying to make measurement of online more like TV, when it should really be the other way around. Engagement is much more meaningful to advertisers – it means nothing if an ad ran and 20 percent of the audience went to the bathroom or the fridge during that 30-second TV spot. Ultimately, large advertisers, who are increasingly under pressure to figure out what works and what doesn't with their marketing dollars, will be pressing media companies to come up with better figures for how the audience has reacted to expensive media buys. No wonder Nielsen is making sure everyone knows it's working on it. And to be sure, it has been rolling out more sophisticated measurements for all the screens users are viewing. But it had better have some tangible results soon, or it could find its dominance threatened as the standard audience counter.
Google's $12.5 billion purchase of Motorola Mobility, the devices and services division of the Schaumberg, Illinois-based telco, isn't necessarily a bid to be a player in the manufacturing of mobile phones a la Apple and the iPhone. No, Google appears to be aiming at a much more open area: set-top boxes.
While there are a number of big device makers, none have an equivalent hold on the market the way, say, the iPhone does. So Google, which has been trying – and not necessarily succeeding – in its early attempts with its over-the-top service Google TV, may be vying to create something along the lines of what Apple has done on the phone. (Apple TV, that company's OTT device, is hardly a major area of concentration for Steve Jobs and Co., at least at the moment.)
In an AdAge op-ed, Simulmedia CMO Brian Wieser advises the search giant to concentrate on the set-top box business and try to make it easier for media buying and selling. Granted, as a targeted TV company, Simulmedia has a vested interest in seeing more dollars flow in and out via set-top boxes, but Wieser has some worthwhile thoughts about where Google ought to be going with this latest purchase.
However, he still doesn't think that having a hand in crafting set top boxes will allow Google to create a perfect freeway for media transactions. "Google would have to spend many billions of dollars more to replicate the infrastructure that has already been laid by cable operators," Wieser writes. "Additional money would need to be spent to procure all of the programming necessary to satisfy consumer expectations around video services."
So Google should find a company it can partner with to develop the necessary ecosystem (hmmmm… we wonder if Wieser can think of any companies in the targeted TV space Google should consider…). Of course, Google does believe in alliances when it benefits them – most often, media agencies and marketers – so if Google does reach out, it will likely be to a Starcom or similar buying operation before it hits up emerging targeted TV ad providers.
In a separate AdAge opinion piece, Josh Bernoff, SVP, idea development at Forrester Research, cable operators also have equal reasons for worry and hope about Google's set-top box plans. For one thing, Google could indeed provide incremental ad revenues to cable operators, pushing out other middle men. Or, more likely, MSOs may regard Google as a frenemy and line up against it the way many networks have sought to block shows from Google TV. In any case, when Google finds a door locked, it usually finds a way in.
But Wait! There's More.
- TRA Patent Ensures Consumer Privacy -- MediaPost
- TRA Secures a Second Major Patent – press release
- DirecTV To Offer NFL Sunday Ticket Package On PlayStation Consoles – Multichannel News
- A deal for Clearwire could be a wireless tipping point – GigaOm
- Sprint, Cable Ops In Talks To Acquire Or Pump More Cash Into Clearwire: Report – Multichannel News
- Scripps to Buy Stake in Virgin Media's UKTV (subscription) -- WSJ
- Rovi and Ford Collaborate on Digital TV Advertising Program – press release
August 22, 2011 – 12:03 am