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Sunday, August 3, 2014

Are Apple and Google Media Companies?


Last week, I had a very lively e-mail exchange with a very seasoned broadcast executive. At one point, he asked me what organizations would be the leading media companies 10 years from now. My answer will not surprise you. I said that forecasting was always risky but “the two tech giants, Apple and Google, seem to be the prohibitive favorites.” His response floored me. “Don, those are not media companies. Google is an aggregator and a utility and Apple is a high tech device maker.” Trying to be understanding, I gently asked, “Did you mean which companies would be on top among the legacy media companies such as Disney, Comcast or Fox?” “No, I mean overall,” he responded.

Back and forth we went. My argument was that I can understand how you could look at Google as a utility just as some see cable TV as one. Yet, when over 90% of your revenue comes from advertising as it does with Google, it has to be considered as a media company.

To dismiss Apple as a “high tech device maker” was also questionable to me. Yes, they continue to score with their high end i-phone and their refreshed i-pad plus Apple TV is looming out there and appears ready to pounce.  The i-watch may debut in October and i-TV is also likely in 2015. The old boy (14 years younger than I!), was buying none of it. He did, however, permit me to quote him in this post.

Look to the future a bit, my friends. To me, both of these tech behemoths are natural platforms for a post-broadcast world. For the moment, Google organizes and manages content but does not produce much. That could change. They bought YouTube way back in October, 2006 and have yet to fully exploit its global potential. They could use it as a platform for a global TV network and advertising powerhouse if they wished. If they lost a few hundred million on the venture, they would barely notice.

Apple has a great eco-system for the future. A friend, who is a creative chief, told me his goal for 2015-16 is to work on more apps than ads. Rumors abound that Apple TV may soon be running all their apps on it. If mobile is the future of advertising as I believe it well may be, then Apple has the wind at its back.

Also, what about acquisitions? Both of these giants have untold billions of dollars in cash. Apple has used some to buy back shares and pay a dividend. Google is playing it closer to the vest although both companies have billions overseas that they cannot repatriate without strong tax consequences. Even then, either could snap up very large legacy media companies with existing cash. Why don’t they? They probably do not see the value in them as the media and advertising worlds continue to evolve.

So, what do you think? Who will emerge as the leaders a decade from now? Are these giants media companies or not?

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

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