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Monday, November 30, 2009

The Republican Bailout Package of Fall, 2010

After the November, 2008 elections the Republican Party was virtually given up for dead. The Democrats had not only captured the White House but added a few dozen seats to their House of Representatives majority and moved toward a filibuster proof 60 seats in the United States Senate. To those of us with long memories, it looked a lot like the mid-1960’s where the Republicans clout was at a low not seen since the 1930’s.

In recent weeks, things have changed and radically. The GOP won Governor’s races in Virginia and New Jersey and our new president’s honeymoon with both the press and the American public seems to be coming to an end. Some poll numbers are very telling:

According to a Washington Post/ABC News poll, 51% of Americans disapprove of his handling of the deficit. Gallup found that his job approval rating is 49%; it’s lowest yet. And, only 19% of voters believe that Mr. Obama’s health care reform will not add to the deficit as he is claiming. (That may be lower than those of us who believe in the Easter Bunny)

Incredibly, the party considered dead 12 months ago has, according to Gallup, a four point lead of 48-44% of those who identify as generic Republicans over Democrats. A year ago, the Democrats had a commanding 12 point lead with that statistic that most of us thought could only widen. Independent voters caused the generic shift and they now favor Republicans by 22 points.

What does this mean to the media world? Plenty! The Republicans, always great fundraisers, will break records for an off-presidential year in 2010. There are 40 House seats that are not in strong hands, particularly those won in 2008. Also, the Democrats have several Senate seats in jeopardy in states like Arkansas, Connecticut, Nevada, New York, Delaware, Colorado, and Illinois (we will give our fearless forecast on the races six weeks before the election).

Next fall TV stations and cable systems and some radio stations (who will see lots of action from the many hotly contested house seats) will benefit mightily. From Labor Day to Election Day on November 2nd things will look good for TV advertising in many, many areas.

My opinion is that the economic recovery (last quarter’s GDP growth of 3.5% has been “adjusted” to 2.8%) will emerge in the summer but be tepid at best. The political spending will be a very welcome and needed shot in the arm for local TV, Radio, and cable players.

If you would like to contact Don Cole directly, you may reach him at doncolemedia@gmail.com

Tuesday, November 24, 2009

No TV; No Problem!

Earlier this year, we had a dispute with a well known television provider. My wife cancelled the service and after Digital D-Day, we realized that we had no TV of any kind. We did not move quickly although we looked in to satellite services and a new cable competitor. As the weeks rolled by, we found we did rather well without TV and still were avid users of video. Today, we discuss our several months of TV free life.

There were absolutely no withdrawal pains. My wife in our thirty years of marriage has been the lightest TV viewer that I know. For me, it should have been tricky as I have certain interests that lend themselves to light but pretty regular TV viewing. And, as a media analyst, I need to keep current on programming. But, we found alternatives within a few days.

Hulu.com bailed us out by providing all of the current primetime programs that either of us watched with some regularity. We also became spoiled watching with the low commercial load. The Hulu.com option was there when we wanted it.

I am news junkie particularly of the business and political vein. Watching CNBC daily via streaming video actually enhanced my enjoyment. I only watched those interviews that I chose to and generally saw only a 15 second spot before each segment. Book TV on C-Span has long been a favorite but, again, I did not waste any time. I could go on-line and pull up any interview that I wanted. The same held true with MSNBC, Fox News, and CNN. I heard Meet the Press on the radio a few times as well.

There were two things that I missed. Some live sports just cannot be replicated and I missed the US Open Golf Tournament and Wimbledon Tennis (I saw Tom Watson’s valiant run as a 59 year old in the British Open Golf Championship in a restaurant while trying to chat with the owner who spoke almost no English). And, a summer without any baseball was annoying although I normally only watch an inning or two. What else? Turner Classic Movies! The great Robert Osbourne gives insightful commentary prior to each film. I learn so much even as an old movie buff that I sometimes watch his preamble and then do not watch the film if I have seen it before.

Netflix filled some holes as did getting an entire season of British mysteries or a year of an HBO series borrowed for free from the library. Of course, I saw no advertising under that scenario.

Many college students that I have spoken to watch very little TV but, like me, they watch a good bit of video although their choices were significantly different than mine.

Also, I must add that when we traveled, we stayed a bit too long with The Weather Channel or Headline News after not having TV for so long.

To my friends and readers in broadcast and cable, I say categorically not to worry. Most people would not be willing or maybe able to do what we did for a few months. The exercise did show how much the world has changed. So much is available in our digital world these days and you get more flexibility and see far less advertising which may appeal to some. If more people go this route, it will likely spread rather slowly, but even if only a few hundred thousand do, it will be one more leak from the depleting reservoir of advertiser supported TV.

If you would like to contact Don Cole directly, you may reach him at doncolemedia@gmail.com

Thursday, November 19, 2009

Who Will Join Rupert's Pay Wall?

There has been a lot of print and buzz lately about attempts to monetize on-line newspaper. This past week it really accelerated when Rupert Murdoch announced he will be putting pay walls on his newspaper sites.

Murdoch in an Australian interview was a bit coy about details. It could be a situation like The Wall Street Journal (owned by Murdoch’s News Corp.) where visitors may see the lead paragraph of a story gratis but then have to pay to see the entire piece. Ironically, when Murdoch first purchased the Journal a few years ago he suggested that WSJ.com be distributed for free. When he saw the revenue the subscriptions generated, he thought better of it. Now, he appears to want to expand some version of the Journal model across his entire newspaper empire.

I cannot say that I blame him. Despite rampant cost cutting, most major metropolitan newspapers are losing lots of money. They cannot cut much more staff and be viable. Early this year we talked about how investigative journalism in many small and mid-sized markets will soon disappear as publishers cannot afford to have reporters spending weeks hunting down a story. And, forget about the next Woodward and Bernstein to come along. There will be no one who can afford to subsidize such exhaustive digging into a story like Watergate. So corrupt mayors and city councils in many markets can soon rest easy and do terrible damage. It will be much harder to catch them going forward. Some say a loss of newspapers will be a serious threat to democracy. Others say that cable news will pick up the slack. Maybe nationally cable and network news can serve as a cop on the beat, but locally the sleazebags will have a lot more room to maneuver.

Setting aside that serious issue, what about the economics? In a beautifully written cover story in Time Magazine earlier this year, Walter Isaccson argued that on-line pay walls were vital to keep newspapers solvent. He argued that historically newspapers made revenue from newsstand, subscriptions, and advertising. However, on-line advertising is not enough to keep the papers solvent as hard copy sales shrink. Some form of “micro-payment” system could be put in place that could help newspapers survive as more people moved on-line. An example was 5 cents for an article, 10 cents for a specific day’s paper, and several dollars a month for an on line subscription. He also said that most people would not have a problem paying.

The execution of micro-payments is probably tricky. How do you handle thousands and thousands of 5 cent transactions? But the broader issue is the tough one for me. Everything that I have seen indicates that most people would have a hard time paying. They have received something for free for nine or ten years and now they are asked to pay. Most seem to just go somewhere else for their news.

Some publishers have tried some unique approaches. In my home state of Rhode Island, The Newport Daily News with a tiny circulation of 12,000 had a novel offering. If you subscribed to their paper in standard format (Monday-Friday afternoon editions plus Saturday morning) you paid $145 a year. Print plus on-line was $245 and on-line alone was $345. While daring, this to me is completely counter-intuitive. You are driving people to the format, print, that is dying! I wish my fellow Rhode Islanders well and applaud their bold experiment but I am profoundly skeptical of its success. They have guts but do they have the vision?

A friend and weekly reader of Media Realism tells me that pay walls can work only if some major players do it all at once. He gave me the example of how ESPN.com had a pay wall for certain content. Immediately, he went to Sport Illustrated (SI.com), loved what he saw for free, and does not feel a need to go back to ESPN.

His point is well taken. The Wall Street Journal put up the pay wall first and it was a stiff fee ($200+) that people did not have a problem paying. A lot of their subscriptions are corporate so people were not paying a few hundred dollars personally. And, let’s face it. The Journal is unique. Most truly serious U.S. businessmen feel that they must read the Wall Street Journal to keep up to date on the financial happenings in this country and the status of major corporations. When it comes to politics and world affairs The New York Times and The Washington Post have similar aficionados. But most papers, magazines, and websites are not imperative reads.

A personal example makes the point well, I believe. In recent months, people have written or called me and suggested that I charge a subscription for Media Realism. With a straight face I told my wife who immediately broke into uncontrollable laughter. We sat down and figured that excluding relatives and a few very close friends I might have 25 paid subscribers. This for a blog that delivers 1200 readers in a slow week and as much as 3300 when the topic appeals to a lot of people and they pass it on aggressively. I am not putting myself down and certainly not you, dear readers. The blog is great fun to write and I really enjoy the hundreds of comments that I receive from you. But, I am keenly aware that you have other places to go for media/advertising news and commentary in today’s world. And, unlike many newspaper publishers I am still quite solvent, thank you, and can publish indefinitely from my basement or sun porch.

If publishers erect pay walls all it will do is reinforce bloggers such as I and even encourage more Twitter which is really micro-blogging. Yet, the American Press Institute states that 75% of publishers believe that they can successfully charge for content. Many say by late summer of 2010, they will have pulled the trigger.

To me, sadly, it may be too little too late. Newspapers over the last decade never really acknowledged on-line as part of their product line. On-line ad sales were not good and they did not package it well with their traditional newspaper offerings.

Now the rush is to provide various monetization models. I wish the industry success but a lot more papers will have to go down before the pendulum swings back, if ever. One possible scenario would be a total industry wash out where hundreds of newspapers go down in the next few years and exist only as weak on-line vehicles. The blogosphere which can no longer lift free articles from newspapers will get so bad and opinion rather than fact based that people will throw up their hands in disgust and pay for content. But, I am still not sure. Local news may fade and cable network news will dominate. It seems a shame but the tidal wave of change is impossible to hold back.

If you would like to contact Don Cole directly, you may reach him at doncolemedia@gmail.com