Media Industry

Newspapers all over the U.S. may be losing advertising revenue, subscribers, and reporters in droves, but big bad media mogul Rupert Murdoch is on a buying spree.

Since completing his takeover of the Wall Street Journal last December, Murdoch now holds two major newspapers (the other being the New York Post) and two TV stations in the huge New York media market — not to mention book publisher HarperCollins, and the Fox News and Fox Business channels, which too are based in Manhattan.

Next, Murdoch seems poised to add Newsday, even though there is substantial political opposition to relaxing federal rules limiting the right of any party to attain undue influence by combining newspapers and TV stations in any one market, let alone the biggest in the land.

But Murdoch has never been one to dodge controversy. And a steady string of reports by industry insiders claim he has the inside track over New York Daily News owner Mort Zuckerman’s competitive bid for Newsday. (Both deals are valued at $580 million.)

In addition, there are rumors that a third suitor for the Long Island daily, Cablevision Systems Corp., may be readying its bid. This observer doubts either of the others can stop Murdoch. In typical fashion, he’s employing former U.S. Sen. Alfonse D’Amato as a lobbyist in order to curry influence with the usual suspects.

You got to hand it to Rupert. If he feels like challenging some rule or regulation, he does it in the most blatant way on the biggest stage available. Whether anyone inside government or media has the chutzpah to try to stand in his way remains to be seen.

But don’t hold your breath.

The fervently anticipated newest installment in Rockstar Games‘ Grand Theft Auto series hit stores Tuesday, which may explain why a large portion of your younger employees called in sick. First week sales of Grand Theft Auto IV, developed by Take-Two Interactive’s Rockstar North studio, have been predicted at $400 million, more than any other game in history.

The magnitude of the event apparently blew Lost Remote editor Cory Bergman’s mind, forcing him to prophesy a world where only one entertainment medium can survive:

As I’ve written off and on over the years, video games are becoming interactive movies, and they’ll ultimately replace most of the traditional Hollywood movie industry. Why would you want to sit passively and watch a movie (or a TV show) when you can live a movie.

I normally agree with Cory, but in this case, he’s got it completely wrong for several reasons.

1. People enjoy video games and movies in entirely different ways. Saying video games will replace movies is like saying crossword puzzles would replace Shakespeare. A good movie presents a director’s vision exactly as he or she wants viewers to see it and is passively enjoyed, while a good video game is engrossing because of its interactive properties that allow the player to take part in the storytelling.
2. The most successful video games are becoming less and less like movies. It was actually the Grand Theft Auto series that brought non-linear gameplay to the masses, giving the player the ability to create his or her own story, rather than simply following a game designer’s plotline from start to finish a la Super Mario Bros. The fact that games look more realistic nowadays and thus like CG movies is a superficial connection.
3. Movies and video games can coexist–as they do now. They’re very different industries that actually get lots of revenue from the other with game adaptations of movies and even movie adaptations of games.
4. Lastly, the movie industry is still making lots of money in the box office and with DVD rentals and sales.

Sexy sells, and to the multi-billion-dollar media industry, it doesn’t really matter how young the target demographic may be. So it’s no surprise that the top story on Yahoo’s Buzz the past 24 hours has all the elements: Celebrity, scandal, a famous photographer, a partly naked, very young pop star, and a magazine’s “exclusive” interview.

So, what’s all the fuss about? Until fairly recently, unless you happen to be the parent of a daughter around the ages 6-14, you might have been forgiven for missing the hullabaloo surrounding Miley Cyrus, aka Hannah Montana.

But now, thanks to the controversial photos taken by Annie Liebovitz in the upcoming issue of Vanity Fair, anyone who’s not stranded on a ice field in Antarctica knows who this kid is, if not necessarily her hit song, “Best of Both Worlds,” which is frequently the soundtrack in my house when I am cooking my kids dinner.

The song celebrates this wholesome 15-year-old’s secret life as a superstar while also remaining a “normal” high school girl. You can’t help wondering whether she’ll soon issue a remix, “The Worst of Both Worlds” on YouTube, where she’s already posted number of odd videos of herself.

Miley is the daughter of former country singer Billy Rae Cyrus (perhaps you’ll recall his “Achy-Breaky Heart”), is estimated by Portfolio (Conde Nast) to be “on track” to be worth $1 billion by the time she’s 18. Her sold-out rock concerts are the closest thing to a reincarnation of the Beatles since, well, since the Beatles.

Her TV show, which features guests like “Auntie” Dolly Parton, a family friend, also portrays the young singer happily growing up under the watchful eye of a single father, who conveys an obvious and deep affection for his daughter. It’s all heart-warming stuff.

In order to promote its upcoming issue, Vanity Fair has posted the cover shot of Miley wrapped partly in a satin cover and wearing an innocently sultry expression, staring back at the camera — or in fact, at Annie Liebovitz, probably the best celebrity photographer in the biz.

On its website, Vanity Fair has also embedded a video clip of the photo session, containing some sweet clips of Miley and her Dad, and barely hinting at the smoldering teenage sexuality that Liebovitz has captured. So, here we have a billion-dollar franchise, Hannah Montana; the Disney Empire, which has the hottest kid actor on its hands since Shirley Temple; and Conde Nast all claiming a piece of the ever-growing Miley pie.

The War of the Press Releases ensures that the unfolding narrative of the drama remains in the public’s eye for a while. First, Miley said she loved the photo, and that it was “artsy.” Then, facing critics who questioned how a child star could be “manipulated” into posing for sexy photos, she reversed course, and said she is “embarrassed” by the photos. Vanity Fair, and then Leibovitz, rushed in to say that her father and/or her “minders” were present throughout the shoot. Readers have weighed in, with 77 percent of 70,000 respondents telling People magazine pollsters that the photos are “inappropriate.”

As the headlines keep flying, even the staid old New York Times got into the act, reporting breathlessly on the “topless photos in Vanity Fair; only to retract that headline error later, since she is in fact “backless” in the cover shot. This story may have legs for another 24 hours or so, but after that, you can expect everybody in on the act to kiss and make up — as they cry all the way to the bank.

Guess what. There’s starting to be glimmer of hope for some of the top U.S. newspapers, although it’s buried in a metric that remains unfamiliar to most execs: time on site.

But first, today’s industry news is dominated by the huge red tide sweeping through this sector (23 of the nation’s 25 top dailies reported significant year-over-year losses in circulation for their Sunday editions in Q-1, according to the Audit Bureau of Circulations report released this morning. Here’s a few of the lowlights:

Newspaper Name — Change from Q-1 ‘07 to Q-1 ‘08

THE NEW YORK TIMES: (-9.26%)
LOS ANGELES TIMES: (-6.06%)
CHICAGO TRIBUNE: (-4.46%)
THE WASHINGTON POST: (-4.39%)
DAILY NEWS, NEW YORK: (-9.20%)

So, that’s the bad news, and it is indeed grim. But on to the better news. Nielsen Online released a study Friday indicating that 11 of the top 30 newspaper websites experienced an increase in time spent on site (TOS) by users in Q-1.

Winners included The New York Times, The Wall Street Journal Online, Village Voice Media, the Houston Chronicle, and Politico. In order to learn from these gains, content execs need to examine which features on their web sites are proving to be the stickiest.

In many cases, interface design and navigation can be more important factors in TOS than content, per se. At Salon in the late ’90s, for example, we implemented page breaks in long articles that previously had to be read by scrolling. That created an opportunity to write compelling subheads (”NEXT: What brand of cigar did she use, anyway?”), as well as new banner advertising revenue, of course.

Most news sites face a tricky tradeoff between their search v. browsing capability. Newspapers have been especially slow to comprehend that their content is essentially a bundles of keywords that should be easily searchable by relevance and date.

Too often, they rely on taxonomies that worked half a century ago, but seem tired and boring to the average web user today. These issues can be addressed by smart web design at both the interface and visual levels, but most newspapers cling to their old paradigms, with something resembling a death grip.

Watch for the disparity between the winners and losers of the TOS ratings for which news companies will be more likely to make a successful transition to online publishing in the months and years ahead. There are so many things to study — page views, return visits, ad click-through rates, multimedia platforms, free registration metrics, SEO, and various Web 2.0 applications that exploit innovative distribution arrangements.

But good old TOS remains a reliable marker as to how you are doing as a content provider. Good content is sticky — produce it, and the rest of what you need for success will follow.

Almost overlooked amidst the flood of red ink flowing from newspaper companies lately, is the remarkable success of The Financial Times (FT), most certainly one of the best business rags in the world.

No U.S. newspaper can yet compete with the salmon-colored FT for its overseas audience, which, though the paper is produced in Britain, represents almost 70 percent of its subscriber base. Today, I asked one experienced editor at an online news aggregation service to compare FT’s coverage with that of the much larger (but U.S.-centric) Wall Street Journal (WSJ).

“I would say FT is not only more worldly, less provincial than say the WSJ, but individual stories are, day in and day out, richer, more insightful,” he says. “The writing is better. The business hooks are clearer.”

This editor says his company’s site is prominently displaying around 50 separate FT articles from the past ten days alone — about twice as many as from the WSJ.

As other observers have noted recently, FT’s current success is actually a turnaround story. The operation lost over $77 million in 2003-4, but has recovered to generate $60 million in profits against revenues of about $600 million in 2007.

One of those who’s noticed is WSJ owner Rupert Murdoch. “Many suspect that if Job One for a Murdoch-owned Wall Street Journal is suffocating The New York Times, then Job Two is crushing the Financial Times,” Jon Fine wrote recently.

William Powers says in an article to be published tomorrow that he is “floored” by the quality of the writing and thinking in the FT, which he mainly buys in airports. “Rather than leave it on the plane, I found myself saving it to read again at home. When was the last time you did that with a newspaper? ”

For media execs everywhere, this translates into two key takeaways:

• The emerging media marketplace is globalizing faster than anybody predicted. FT’s success is partly due to its early recognition that its content would appeal to people everywhere, not just in its home country. FT’s global strategy is on display at the company’s Chinese-language web site and its various Asian print editions.
• The quality of the product still matters. Even in an age where lightning fast transmission of information appears to drive most audience behavior, you can’t build a successful news brand without paying attention to the quality of your content. FT articles never condescend to readers, i.e., you’re not made to feel dumb if you fail to recognize the kind of immature hip insiderism rife on much of today’s web.

In addition, it was a pleasant surprise to revisit FT’s website yesterday, as it appears to have improved substantially from the last time I checked in. The paper says that its online revenues grew 40% last year (about twice that of U.S. publications), though they still appear to be a relatively small slice of the company’s overall revenues. Overall, FT’s ad revenues increased at a rate of around 9 percent annually the past three years, while most U.S. newspapers have been suffering huge losses.

Assuming the rumors are right that Murdoch will eventually take on the FT directly, he’ll start from a larger subscriber base (1.7 million), or almost four times that of FT’s. But, like most U.S. pubs, the WSJ has been traditionally focused mainly on the U.S. economy, to the point it only has a paltry 3,500 readership in London to date.

Time for tea, perhaps?

The season premiere of Gossip Girl – the incredibly popular CW program that the current cover of New York Magazine calls the “Greatest. Show. Ever.” — debuted this week to slightly lower numbers than its previous season, with 2.44 million viewers as opposed to 2.5 million. It’s significant because of the CBS and Time Warner-owned network’s seriously flawed strategy to increase viewership, which was to stop posting new episodes of the show on the web.

I suppose it seems like a logical move in some twisted business sense: everyone loves our show, now there’s only one place to see our show (legally), so our numbers should increase. But making a show less available — in addition to taking something away that was previously offered — could really only have one outcome.

The Toad Stool makes an excellent suggestion on the subject — rather than limiting the show’s reach, why not use the medium where it gained its popularity to boost its numbers, via social networks and other promotions?

I’ve never seen the program, but it seems like an even more absurd move from The CW considering the show’s premise, which centers on a gossip blogger and a bunch of rich kids in New York (with such entitled surnames as Archibald, Waldorf, and van der Woodsen).

It’s that time of year again, time for the BNET Media Industry Award for the Best Political Report on Television, that is, in the Context of the Best Business Plan.

I’ve been an vocal admirer of Comedy Central’s Jon Stewart for several years now, but what he did on Earth Night (April 22) simply went over the top. (Watch video.) At the end of another long Primary Tuesday skipped by the “major” networks, as reported here yesterday, we needed some comic relief.

As usual, we got it from The Daily Show.

But, this time, in addition to the laughs, Stewart presented the only serious national security reporting to be found anywhere on TV, or for that matter, throughout the media universe generally, that night. Why should this matter, in a business sense?

It’s simple. While securing the entertainment market is one aspect of a successful business plan for today’s media companies, adding in the influential demographic seeking news and opinion can be much more difficult to accomplish.

Stewart does it by crafting a far more entertaining (and therefore educational) way of telling vital stories. In this case, he retold the recent New York Times investigative tome on how military media analysts have been embedded by the Pentagon inside the major TV and radio networks.

You couldn’t find a better example of why the transition from old business plans to new ones is happening so rapidly than by comparing Stewart’s spoof, courtesy of Media Matters, with the original Times piece, which was so boring as to make sleeping pills outmoded.

(Note to NYT: Couldn’t you have presented the facts a little more concisely? Maybe you were too busy attempting to ward off dissident shareholders, plus the challenge presented by Rupert Murdoch — whose makeover of the Wall Street Journal is documented in a new study released today — to notice the larger picture?)

Besides, Murdoch’s in-your-face challenge to the FCC rules limited ownership in any one media market (he is adding Newsday to a New York media portfolio that already hits the limit of two newspapers and two television stations there) soon will overshadow the Times‘ reach so substantially that the Sulzberger family may have no choice but to seek additional investors.

Back to my point. If the Times‘ leaders did have the time to look around, they would be well-advised to explore how to get into a direct partnership with The Daily Show. Notice how Stewart’s version of the embedded generals report played up what the Times played down– that the Pentagon comically calls these fellows “message force multipliers.”

What really impressed me in Stewart’s report that night was his exclusive coverage of a new report issued by the Government Accountability Office (GAO) documenting how the Bush administration has utterly failed in its other “war” — against Al Qaeda, in the Afghanistan-Pakistan border region.

This is usually the stuff of investigative journalism units, of the kind I used to run at the Center for Investigative Reporting, Inc.

Instead, it was on Comedy Central. So this year’s BNET Media Industry Award for the Best Political Report on Television — in the Context of the Best Business Plan ( or BMIAFTBPROT-ITCOTBBP) goes to none other than… The Daily Show.

And, of course the award for the best business plan goes to everybody who’s thinking outside of the old media box, which in due time will be recognized as the coffin it is.

[Editor’s Note: BNET’s PR analyst, Jon Greer, disagrees. He thinks that the Pentagon’s coaching of its x-generals is, well, not that big a deal, and poo-poos the media for not finding its own independent sources. What do you think?]

Business professionals may have finally realized that social networking isn’t just for the young and angsty. The latest metrics on social network growth reveal some impressive figures for business-oriented networking site LinkedIn, which more than quadrupled its number of unique users since last March.

Obtained by TVWeek, the figures from Nielsen Online unsurprisingly place MySpace and Facebook in the top two spots, although Facebook nearly doubled its users since this time last year, while MySpace grew by just 8 percent.

It’s unlikely that LinkedIn — targeting a specific audience — will ever grow large enough to challenge the huge user base of the more general social networking sites, but it’s certainly seen pretty incredible growth within its niche. Facebook already opened up for mass registration, but do you think the company will add some business-friendly features to Facebook to funnel professionals away from LinkedIn’s growing user base?

It’s a Presidential election year, which almost always means good financial news for the television industry. This year is no exception, as the political parties and leading candidates pour hundreds of millions of dollars into high-stakes TV ad campaigns. Meanwhile, where is network TV news in this mix?

If you’re talking about the traditional Big Three networks — ABC, NBC, and CBS, the answer increasingly is MIA. For example, none of the networks scheduled coverage of last night’s Pennsylvania Primary, nor did they show up for what was arguably the most important date in this election season to date, Tuesday, March 4, when the Ohio and Texas primaries were held.

The reason the news staffs stayed home on Tuesday nights has nothing to do with the news cycle and everything to do with money. It’s an “American Idol” night, to start with, so Fox almost always wins the ratings game. Meanwhile, the decision-makers inside the huge corporations that own the NBC, ABC, and CBS put up shows like “Big Brother,“ “Just for Laughs,“ “The Biggest Loser,” and “Dancing with the Stars.”

Meanwhile, on March 4, John McCain was actually wrapping up the GOP nomination. But, in order to know that, you had to have cable, probably going to CNN, and Wolf Blitzer, and his annoying chest-pounding (”The best political team on television.”) He’s right, of course, if only because most of the competition has left the field.

In fact, the only networks that scheduled live coverage last night were the cables: CNN, MSNBC and FNC. CNN’s flashy setup includes a high-tech wall map of the U.S. that’s nearly as long as basketball star Yao Min is tall. Correspondent John King goes over to this magical map, and uses a touch-screen interface to zero in on or out from cities, counties, and regions of interest.

It’s a pretty cool map. So where did CNN get it? Turns out David Bohrman, the head of CNN’s political team, found it at a military intelligence trade show last year.

Hello? What’s the head of the best damn political team on television doing at a military intelligence trade show?

No comment. At least he’s trying to make this election interesting. Not so the Big Three network execs. But the last time I checked, the airwaves still belonged to the public, and the networks were given bandwith in return for supposedly serving the public interest. I don’t think that means growing fat off of political advertisements while sitting out the primary season.

Maybe the next administration’s FCC should look into this matter.

Trust me, I don’t relish bringing you bad news about the media industry every day, but there’s not much else in the current wave of earnings reports, resignations, and rumors of sales to work with.

The McClatchy Co.’s CEO, Gary Pruitt, admitted this morning that the big newspaper chain’s revenue is declining “at a disappointing double-digit clip,” and cash flow eroding “at an accelerating” pace…”None of us has worked through such a period of transformation in our history,” he said.

Pruitt also observed that his company may not have reached bottom yet. “At this point we simply can’t tell when this decline will end,” he said. “We must continue to cut costs. It’s no fun, but we have no choice…”

Meanwhile, New York Times Chair Arthur Sulzberger, Jr., told shareholders that the company is not on the sales block. “This company is not for sale,” he said, in response to various reports this month that “top associates” of New York mayor Michael Bloomberg were encouraging him to buy Times. The idea is that the founder and majority owner of the Bloomberg financial news agency, could help the Times fight rising competition from The Wall Street Journal (WSJ). Responding to the reports, however, Bloomberg said, quoted by Reuters: “I am not going to go into the newspaper business. I am not a newspaper person.”

Meanwhile, across town at The Journal, managing editor Marcus Brauchli is resigning, according to a report on the paper’s website, after less than a year on the job. Insiders say Brauchli grew tired of being undermined by Murdoch surrogate Robert Thomson, who became the Journal’s publisher after the takeover four months ago. Brauchli, 46, had succeeded Paul E. Steiger as managing editor in mid-May of last year, shortly after News Corp.’s bid for Dow Jones became public.

Steiger, meanwhile, is now running a non-profit investigative reporting group called Pro-Publica. He’s hired many long-time reporters away from The Journal and The Times, as well as other papers. But his funding source, Herbert and Marion Sandler, are prominent Democratic Party supporters with a reputation for a very “hands-on” style. So it remains to be seen whether this group can produce journalism that outsiders do not perceive as politically motivated.

So, that’s the roundup for today.

But, come to think of it, there may be one glint of good news on the horizon, although we won’t know about that until the markets close today. Yahoo is set to report its earnings, which Wall Street expects to be unimpressive.

I beg to disagree. Behind the scenes, Google and Yahoo have been working together to boost Yahoo’s Q-1 results. The goal appears to be to force would-be suitor Microsoft to raise its bid in its hostile takeover attempt.

Look for Yahoo to beat analysts’ expectations; and if it does, give due credit to the economists down on Ampitheater Parkway in Mountain View.