The Streaming Wars--Part IV

The Financial Giants

As the streaming wars heat up, the obvious question is what will some of the greatest companies in history do? Perhaps not as obvious, but still important, is why are they are getting involved?

Let us take a look at several of the emerging players in streaming who are not pure entertainment companies:

1) Amazon—The success of the massive on-line retailer made founder Jeff Bezos the wealthiest man in the world recently. Why would a retailer get in to streaming video? Not easy to say from my perspective. Sometimes Amazon Prime Video is positioned as a free service that you receive with your Amazon Prime subscription. That certainly would have some real appeal especially with younger audiences who depend on Amazon for some much of their shopping needs. Also, if you have been following it at all closely, the service is improving quite rapidly. Some videophiles that I know gave it low marks a couple of years ago but now say it has improved. The made for Amazon films and original programming are also getting stronger and more interesting. By positioning Amazon Prime Video as a “perk” for Amazon Prime members, the retail giant has reinforced their reputation for one stop shopping. And, they can afford to get some of the best content out there if they want it. The service is “free” with Amazon Prime membership but a few prefer to get it freestanding for $8.99 per month to see award winning content such as “The Marvelous Mrs. Maisel” or “Fleabag.”

2) Apple—As alluded to in early posts, I was more than a bit surprised when Disney honcho Bob Iger resigned from the Apple board and then Apple announced Apple TV Plus at $4.99 per month. The tech/hardware giant is reportedly spending more money than Disney right now on new programming although admittedly they are starting from zero. They signed big stars, Jennifer Aniston, Reese Witherspoon, and Steve Carrell for “The Morning Show” which received lukewarm critical reviews and Oprah is returning with her book club now and then. Steven Spielberg will be a creative consultant. They have the cash to play the long game if they choose. Right now, the content available is thin. That can change fast if they get out their checkbook.

3) HBO MAX—now owned by debt laden AT&T, HBO is not going away but getting deeper and maybe stronger. They are keeping HBO but adding new series. A sequel to “Gossip Girl” will be featured and “Sesame Street” and “Friends” will be on board as well. HBO got it right for decades. They produced several good, some outstanding series per year. The programming developed a big following (people still talk about The Sopranos and Sex in The City). It will be interesting to see what happens as they branch out. Set for a May launch, HBO MAX will be $14.99 but their will be a free year for some AT&T users. Do not play them short.

4) Alphabet (Google)—the kings and queens of search have owned YouTube for nearly a dozen years. They have not done much with it except for a few tepid tests. You Tube gives them a powerful platform to launch a streaming service (Google Tube + ?). Also, as we write, they have surpassed Apple in net free cash at over $105 billion (Apple has been buying back shares with both hands in recent years). With You Tube in place, they have a global and much loved platform plus record cash to enter the streaming game in a big way.

5) Peacock—set for a Spring, 2020 launch, this NBC Universal service (a division of Comcast) will be advertiser supported. It will have new versions of “Battlestar Galactica”, “Saved by the Bell” and “Punky Brewster”. Remember “Punky Brewster”? I used to watch it with my kids in the 1980’s. What I remember the most is that it was opposite “60 Minutes” at Sunday nights at 7 pm EST. “The Office” is shifting back from Netflix. Pricing has not been announced yet.

Okay, people say to me that Sports will save legacy properties for a number of years. Really? Does the NFL care who pays their rights fees as long as they are huge? As a viewer, would you watch the Super Bowl with commercials on You Tube? I think that I know the answer. Someone listed above with deep pockets can easily jump in to sports. Disney, of course, has experience with ABC and ESPN.

All of these players have the financial wherewithal to play the streaming games for either several years or forever.

More to come. Stay tuned in early 2020!

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

The Streaming Wars--Part III

Disney +

On November 12, 2019 Disney +, a new streaming service from the Walt Disney Company, launched with a lot of fanfare. On day one, media reports were that they had 10 million subscribers on day one. For a while, they were adding a million new subscribers per day and showing great early strength in far flung places such as Australia. Netflix, long the winner in the streaming wars now had competition from Disney, the king of content, and Amazon and Apple with the deepest pockets in business history. Alphabet (Google) with their popular sleeping media giant, YouTube, was considering entering the fray along with Facebook. Other players are also lining up including AT&T with HBO Max, and Comcast with their new Peacock service starting in spring, 2020. There are others that we will discuss in upcoming posts.

Candidly, I was surprised when Apple announced that they were launching Apple TV+. Bob Iger, the long time CEO of Disney had sat on the Apple board for years. My presumption was that Apple might get involved with some form of co-production with Disney or take a significant equity position in Disney itself (15-20%). Bob Iger wrote in his recent autobiography that he had a great relationship with the late Steve Jobs, and had Jobs lived, Apple might have bought The Walt Disney Company outright. So, Apple’s entry, with a skinny lineup at $4.99 per month, was low cost but did not appear to have significant appeal to prospects. Apple does have over $100 billion in cash as I write so they may buy up properties pretty easily.

The Disney lineup is familiar to all of you. They have a film archive going back to the 1930’s, the Fox film library, ABC TV and 4,000 titles for viewers plus amazing franchises such as Star Wars, Marvel and  many others. What fascinates me is the powerful bundle that they can put together of Disney +, ESPN+, and Hulu ( of which now Disney has a controlling interest). The bundles vary but the trifecta of Disney +, ESPN+ and Hulu can be had for several dollars less than what many of us are paying for Netflix. It has lots of appeal and is not simply for families with young kids as many seem to be saying. Netflix, as mentioned in our last post, has been borrowing heavily to produce original programming (much of it high quality) so it is unlikely that they can cut subscription rates in the U.S. and remain viable in the credit markets.

Disney and the other media/financial giants can play “the long game”. In fact, Disney says that they do not expect Disney + to be profitable until 2025. An article in BARRON’S  in mid-November said that, for a few years, Disney + will “look like a little Netflix inside Disney.” So, while it will be a drag on earnings, they will bounce back with strength from theme parks, blockbuster films and do not forget merchandise. That is a huge profit center for Disney. The company also has a hedged position if somehow direct to consumer (streaming) fails as they will remain a powerful player in cable. Also, where do they spread their content? Will the Disney Channel survive? Do they put a new show with promise on ABC, Hulu, FX or Disney +? They have a real challenge in optimizing their content for maximum profit. Most companies dream of such a problem!

I asked a group of millennials if they had subscribed to Disney +. About 40% said yes and also that they liked it very much. One fellow in the corner said nothing but was beaming. He approached as I was leaving and said, “I love Disney +. For the rest of my life, I will watch a Star Wars film at least once a week.” That, my friends, is a franchise, with a Warren Buffett deep and wide moat!

So, Disney looks to be a survivor when the smoke clears a few years from now. Will they be the dominant player? Time will tell. More to come in a few days.

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

The Streaming Wars--Part II

The topic for this post is Netflix. It is always a bit difficult  for those of us who analyze media to write or talk about Netflix. The reason to me is that so many people really like or even love the service. Those of us who are considered old or stodgy or both do not get much traction when we discuss the debt that Netflix has piled up or the huge money they spend each year to develop new programming (reported to be $12 billion + in 2019). People push back with the truly magnificent stock market performance of recent years and the burgeoning global subscription base which sits somewhere north of 160 million as we write. And, Netflix shares trade at a lusty 100 times earnings.

Candidly, as is true of many of you reading this post, I really like Netflix as a consumer. Many of their made for Netflix series have significant appeal fto me and I have been an avid user of the service for several years. Things are changing a bit and a dogged look at the facts surrounding the company raise some medium and long term issues.

Over the last five years or so, Netflix has done, as best as I can count, a total of eight debt issuances. That would be fine if growth and earnings were very large and competition was muted. Yet, the situation is changing and fast. Disney launched their new Disney + service last month (November). They reportedly signed up 10 million subscribers on day one. Many other days one million more climbed aboard with particular strength in Australia. They also have upwards of 4,000 hours of content and are offering package deals with ESPN, a property which has great appeal to many males. The Disney franchises such as Star Wars and Marvel have great fan bases plus their film library goes back to the 1930’s. Their balance sheet is strong (though not as strong as Apple’s which we will discuss in a future post) and they now control HULU which many considered a meaningful threat to Netflix recently along with Amazon Prime Video.

Some financial analysts agree that Netflix is burning cash (some borrowed) and will not really turn cash flow positive until 2022. That does not sound bad but keep in mind that studios are pulling content from Netflix. So, they will be borrowing money to produce their own series and films (much of it first rate) for the next few years for sure. Others see caution on Netflix to be alarmist. To many, streaming has a clear runway ahead as Korea, China and India are underdeveloped and can help Netflix which likely will be getting hurt in Western nations. Maybe so, but keep in mind that in India many of the new subs that Netflix is picking up are only paying $3 per month for mobile service only. Revenue growth is the key not necessarily subscriber count going forward.

What might happen? Netflix is still the global leader in streaming. They are not going to dry up and blow away soon. Yet, they will face formidable competition with VERY deep pockets. The best case might be if they sold 15-20% of the company to Apple/Amazon or Alphabet(Google)/Facebook. One of those financial behemoths could backstop them financially and they could do what they do best. Remember, their database of customer preferences is unparalleled ( see Media Realism—“Disney’s Big Challenge, April 29, 2019).

Netflix has been a resourceful player for a few decades. Now, they face the fiercest competition imaginable. Who will win? No forecast yet except to say that the consumer, particularly American, will be in the best spot possible. As the price war continues of Netflix vs. HBO vs. Amazon vs. Apple vs. Disney  plus others, the millions of American couch potatoes will get extraordinary value for their subscriptions for whatever mix of streaming services that they choose.

Next up—Disney +

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

The Streaming Wars--Part I

In recent weeks, the press has been giving significant coverage to the launch of Apple TV+ and Disney +. I have waited to put up a post in order to sift through the news reports and chatter. This  brief post will be the first of several to come between now and the end of the year regarding the new world of streaming video.

On November 6th, Reed Hastings, co-founder and CEO of Netflix, gave a 30 minute interview at the New York Times Deal Book Conference (you can catch the whole thing on YouTube by simply plugging in NYTimes Deal Book Conference or pasting https://www.youtube.com/watch?v=8oVl3gyIaeI). He was interviewed by Andrew Ross Sorkin of both CNBC and The New York Times. Mr. Hastings also took a few questions from prominent players in media and tech world who were in the audience.

In brief, some highlights were:

1) He described Disney as a “wonderful competitor” and said that he would subscribe to Disney +.

2) Hastings said that Netflix had the most to learn from Disney compared to other competitors. Enjoyed watching “Fleabag” on Amazon Prime Video.

3) He said that his focus will be on “pleasing our members” and not going in to news, sports, or anything associated with gaming.

4) Also, he confirmed that Netflix is now in 190 countries.

5) From the floor, a lady asked whether he would consider adding paid advertising to Netflix as Hulu has done. He said absolutely not and mentioned how Disney+ will not have advertising even though they now have a controlling interest in Hulu. I could not help but smile at that. Back around 1984, I gave my first major address at a conference and discussed how, inevitably, HBO would one day have to take advertising before and after their feature films or specials. Here we are 35 years later and I am still wiping the egg off my face. Colleagues reminded me about it from time to time and many others never seemed to forget my worst all time forecast. At an airport last year, someone approached me and said, “Are you Don Cole?”. When I said yes and tried to place him, he flashed a dirty smile and responded, “Nice call on the HBO advertising forecast, Mr. Guru.” Since then, I have arranged to be cremated so my gaffe will not be on my tombstone.

 One thing was clear listening to Hastings. He is not trying to be all things to all people. Netflix has won the streaming war globally. It will take many years for content king Disney to roll out Disney + that far and wide. Apple TV + and Amazon Prime Video have deep pockets for sure but lack the experience in programming at present although they can certainly buy it.

A substantial issue really never came up in the interview. Netflix is still not a real moneymaker despite its global reach. That would seem to be a problem over the next few years as the cost of producing new shows will be in the annual range of $12-15 billion dollars.

This is the tip of the iceberg. There will be much more to come soon.

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

Fail Fast!

I began playing golf when I was only eight years old. My father taught me the game and was VERY patient with me as a beginner. As is true of most youngsters, I did not always hit my drives particularly straight. So, when in the rough or behind trees, I would try to rationalize taking a risky shot that would propel me well down the fairway toward the hole. He would smile and say “Don, take your medicine now. Chip the ball out safely in to the fairway and then have a clear shot at the green.” I did not always listen at first but it was a great lesson to learn in both golf and life.

Last year, I received an email and then had an extended phone call from a broadcaster who is now (sadly) a former broadcaster. I always admired his energy and his ethics. He told me that his two radio stations were in dire straits and he was struggling to make loan payments. Then, he told me something that really stuck with me. “I have hung on here for nine years. About 18 months in, I knew that this mini-station group was a losing proposition. Five years ago, someone out of the blue offered me a price for the properties that would have allowed me to pay off all my debts plus pocket a few hundred thousand. I turned him down saying that I would turn the business around soon. Clearly, I was wrong but what I did really wrong was not recognize that if you are going to fail and all of us will at one time or another, you need to fail QUICKLY and then move on to something else.”

The idea of failing often but quickly is a trait that is prevalent among some very successful entrepreneurs and large companies as well. As skilled as many companies are with new business development, the savvy players all know that most new products fail. Angel investors and venture capitalists know going in that most of the projects or entities that they bankroll for budding entrepreneurs will go bust. Big companies have strong balance sheet strength and can shrug off the failure of a new product pretty quickly. And, they course correct a great deal as they rollout a new venture if things are not going well. They also are pretty fearless about pulling the plug when they clearly have a loser on their hands.

Smaller players such as the aspiring broadcaster discussed above cannot absorb losses so they get in even deeper instead of “taking their medicine.” Yet today some entrepreneurs have fully embraced the fail but fail quickly approach to business development. Of course, they do some do diligence before a launch. Yet, they do not invest so much time and money in to it, that they lose everything if it implodes as most things do. People who go all in and fail are often psychologically scarred by a big loss and are afraid to try anything again. This paralysis has to kill lots of spectacular ideas.

One entrepreneur told me that she has to have significant interest and passion before pulling the trigger on a venture. She always lines up some amount of O.P.M. (Other People’s Money) prior to launch. Some are angels who have worked with her before and both made and lost money. She says that way if she fails it is before things get too complicated and she can make a quick exit and return a portion of her capital to her backers. They appreciate that very much and are often open to her new ideas of which there are many.

The same person says that failure keeps her humble. Even the most successful ventures have marketing or advertising tests that do not work or flanker products that bomb. She recognizes that she is only human and that the marketplace is unforgiving but generally correct. She even said that failure makes her stronger (I wonder if she has read Nietzsche?). Admittedly, she is far more resilient that almost all of us but her spirit is amazing. She plans on failing a lot in the future but recognizing that failure really equals experience.

Finally, a controversial young billionaire, Mark Zuckerberg, testified before Congress last week. He did not do very well according to most media pundits. One quote of his made several years ago rings very true with me. It is: “The biggest risk is not taking any risk. In a world that is changing very quickly, the only strategy that is guaranteed to fail is not taking risks.”

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

The Importance of Saying No

Most of us do not like saying no to people. It is natural to want people to like or accept you, so it is not unusual for us to allow ourselves to get involved in situations that could have been avoided by simply saying no. This can have significant, even profound effects, on your business if you are an an entrepreneur and on your career at a large enterprise not to mention your personal life.

Very early on in my career, a much older broadcaster gave me some very valuable advice. He said, “when you agree to do something, you are obligated to do it well. If it means staying until midnight or cancelling weekend plans, you must do that to honor your commitment. If you know that your plate is full, do not volunteer and say no if you have to, if you are asked directly.” It turned out to be a very important policy for many that I know.

I have met a few entrepreneurs who started out doing pretty well after a few years. They were superstars in terms of service but then the wheels came off and fairly quickly. How? They could not say no to people. Some smaller customers took up huge amounts of their time and would grind them for lower prices. They did not draw a line in the sand and they let these pests take them away from larger, more profitable customers who also had significant potential. Others wanted to do joint promotions which would benefit the other guy 80% and my friends 20% even though my contacts were putting up as much as 60% of the money in to the test. As one of these business owners told me, “I failed because I failed to mind my own store. I have learned how to say no politely and tell people clearly what I can and cannot do. Over the years, I have lost very little business saying no and been freed up to do new things or taking care of my important customers.“

The concept of FOMO comes into play here especially in the deal business. A very old acquaintance told me about the pitfalls of FOMO (Fear of Missing Out). He is allowing me to quote him almost verbatim—“Some 50 years ago, I was out on the golf course with three prominent men in my community. One was an attorney, another a prominent car dealer, and the third was a fair sized player in local real estate. The real estate investor began to talk up a local deal that he was cooking up in town. By the 18th hole, the others had signed on to the deal. Over a drink in the clubhouse, all eyes were on me. Well, do you want a piece of this deal? We can cut you in for only $10,000. Don, that does not sound like much today but I was only 32 years old. A $10,000 commitment was a great deal to me.  So, I said yes and we all shook on it. The papers arrived a few days later and I barely looked at them, signed them and dropped off my check to the developer. My young wife was furious. I lectured her and told her this was my chance to get in with the movers and shakers in our community. Well, you know what happened. The deal went sour. The other guys shrugged and the lawyer told me that most deals do not work out so we all needed to simply move on to the next one. It was a great life lesson. As you know, I retrenched and got involved in many partnerships and equity investments. I learned to do very careful due diligence and to say no most of the time no matter how good the track record of the lead partner(s) in the deal. Saying no has saved me and made me.”

Saying no can also save your personal life. If you are drowning at work, the best approach is to tell someone tactfully that you cannot take on the new assignment as you would not be able to do it well. There is a delicate balance involved here. If you always say no to superiors, you put your future in jeopardy. Yet, we are all allowed a life away from work and leisure and family life provide rewards and great balance.

Perhaps the best comment on this subject that I have ever heard came from (you guessed it) Warren Buffett. Speaking to a crowded group of MBA candidates a few year ago, the great man said, “The difference between successful people and really successful people is that really successful people say no to almost everything.

Buffett and his partner, Charlie Munger, at Berkshire Hathaway allegedly look at dozens of deals and  Warren reads and breaks down the financials in hundreds of annual reports each year. Yet, they only make a few moves each year and sometimes do almost nothing in terms of new commitments. Maybe the third wealthiest American is trying to tell us something.

If you would like to respond to Don Cole directly, you may email him at doncolemedia@gmail.com or leave a message on the blog.

Stretched Out Car Loans Will Bite Us

Last week, on October 1st, The Wall Street Journal published an excellent and much needed article on the US automobile market. It was entitled, "The Seven-Year Auto Loan: America's Middle Class Can't Afford Its Cars."

When most of our readers were younger, the standard automobile loan was three years. Not so any longer! The length of the auto loan's term has been creeping up to the point that Experian PLC, quoted in the Journal piece, now says that roughly a third of the of auto loans for new vehicles are LONGER than six years. Ten years ago, it was less than 10%.

The Journal went on to say that "Car loans that are increasingly stretched out are a pronounced sign that some American middle class buyers can't afford a middle-class lifestyle."

Another important bellwether is that many buyers of a new vehicle have not paid off their existing car. So, they do a wrap around loan that covers both cars and these are usually six years plus. Today, the average car loan is $31,119 and over 30% are rolling over the debt on the old vehicle as well.

One thing mentioned in the piece really alarmed me. Car loans are being bundled in to bonds. So what, you might ask? Well, these are really very similar products to the Collateralized Debt Obligations (CDO's) that got us in to so much trouble in 2007-2009. You may recall that CDO's or Asset Backed Securities packaged up mortgages of varying quality and sold them to the public and institutions. When the housing market faltered, some weak mortgages pulled down the CDO if too many people defaulted and creditors could not be paid.

Think about this for a moment in terms of the auto market. You do not HAVE to have a house. More than a third of Americans are renters. Yet, unless you live in New York, Washington, DC and a handful of other places, you usually need a car to get to work.

Unemployment is at a 50 year low. At some point in a year or two a recession will finally hit us again. When it does, unemployment will rise and some people will be in a real bind. They will not be able to make vehicle payments and the car will be repossessed. Additionally, how do you interview for a new job or start one without an automobile? These individuals will be caught in a vicious Catch-22.

Even if the recession is mild and it likely will be quite mild compared the Great Recession of 2008-2009, several million people will lose their cars, jobs, and others will be even deeper underwater when they need to buy a new one.

The media is not covering this well. I applaud The Wall Street Journal for featuring this topic. The comments about the possible ripple effects of these long term loans and "car bonds" are mine alone.

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

Update on the 1%

Yesterday, I was walking along a corridor and overheard a conversation that stunned me. Two young adults were talking. One was lamenting that the job offer that he received that morning was for only $33,000. His friend shot back and said, "well, you are in the top 1%." The complainer responded with a vulgarity but the friend said--"No, I am correct. If you make over $32,400 you are in the GLOBAL top 1% of earners". I do not know the well informed young man but I assure you that he is correct. Hearing that, I though it was time to give an update on the top 1% here in the United States.

Very recently, using IRS data, 24/7 Wall Street published updated projections on America's top 1%. Of particular interest to me, was the information that they provided by state.

Here are top and bottom five states in terms of income to make the floor of the 1% in that locality:


 Rank        State              Minimum Income to Reach 1%       Average Income of 1%

   1       Connecticut                    $663,009                                      $2,178,625

   2       Massachusetts                 584,022                                        1,812,907

   3       New Jersey                       570, 745                                      1,509,794

   4       New York                          555,569                                      2,058, 789

   5       California                          526,427                                       1,690,208

   46     Kentucky                           288,860                                         752,547

   47     Arkansas                            268,412                                         992,874

   48    Mississippi                          265,138                                        648,830

   49    West Virginia                      259,702                                         533,534

  50     New Mexico                       256,208                                         643,395

Surprised? Probably not all that much by the state rankings. The issue to some would be the spread between what it take to make the 1% vs. the average household income among the 1% in that particular state. Number one, Connecticut, has hedge fund managers and other financial titans who pull the average up sharply. New York, at #4, also has many ultra high income households that pull the average up higher than #2 and #3, Massachusetts and New Jersey.

A key takeaway to me is that lumping all the 1% together is a big demographic mistake. If you barely made the cut in New Mexico at $260,000 and moved to Manhattan or San Francisco, you would be solidly middle class but not considered rich as you were at your original home. So, as is true of the real estate world, the 1% varies widely depending on location, location, location!

Tied in to the above statistics, I was able to pull income data from the Social Security Administration. Here is how some key numbers shake out:

Group                     Average Income      % of National Income

   .1%                       $2,757,000                       5.2

  1.0%                           718,766                      13.4

   5.0%                          229,810                      28.0

 10.0%                          118,400                      39.1%

Please remember that this is INCOME, not net worth. There are young billionaires in tech whose companies may not pay dividends yet who have relatively low incomes but vast wealth. Also, older citizens may control significant wealth but have stocks that pay low dividends and shield them from higher income taxes. When they do sell off assets, it is at tax-friendly capital gains rates.

As I have written before in MR, there has always been income inequality in countries that have free markets. Lately, with the recent run-up in equity prices, the skew to the top tier is getting more exaggerated.

By the way, the global top 1% control approximately half of the world's wealth (net worth). Count your blessings. Compared to the other 7.3 billion people on earth, most of us are doing pretty well.

If you would like to contact Don Cole directly, you may reach him at doncolemedia@gmail.com or leave a message on the blog.

I Was Totally Wrong!

In recent months, I have put up several posts that covered the upcoming “Streaming Wars” in the video world. There will, I assure you, be more to come. In one of the posts, I talked about how a major threat to Netflix would be if Disney and Apple formed some kind of alliance. Perhaps, they would produce content on a joint venture basis. Or, Apple, with their deep $200 billion + in cash at certain times, would take a minority position in Disney (5-15%) which could backstop the Mouse House if the launch of Disney + was rocky for a few years. Well, on Friday, the 13th of September (sic), Disney CEO Bob Iger, resigned from the Apple board of directors. The business press cited conflict of interest as Disney + would be competing directly with Apple TV +.

If I were Reed Hastings at Netflix or players at Comcast, Amazon or Hulu, I would be breathing a large sign of relief. An Apple/ Disney alliance of any kind would be beyond formidable.

So, where does leave us? As mentioned above, I will put up some posts on this topic in the weeks and months to come. As it looks now, I would say that Apple could be the short term loser in this scenario. They are getting lots of press regarding their new series with Jennifer Aniston, Renee Zellweger and Steve Carell and Steven Spielberg’s commitment to Apple TV +. Yet, developing a wide array of fresh content will take some time (they have the money!). So, by not joining forces with Disney, Apple is passing on the leader in video content globally. Disney has several platforms and franchises that cannot be replicated or developed overnight.

So, as I write, I would say that Apple TV+ will have pretty tough sledding for a while. If they are committed for several years, they may get it right and there is no question that they have the financial resources to ride out early losses. Also, their $4.99 per month subscription fee undercuts both Disney and Netflix nicely which should generate some early trial. The danger is that if there is not enough good content at launch some people may walk away saying that it is not worth $4.99.

The games are about to begin before Thanksgiving. We will be in for very interesting times in the media world.

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

Accentuate The Positive

Today, I was. surprised to receive a phone call from someone whom I have not heard from in years. It was great to catch up. He is a broadcaster in a medium sized market, said he had been reading MR  for several years and had some questions. When I agreed, he plunged right in to the issue. In recent years, as is true of many in TV and Radio, his property had been struggling. The beancounters at headquarters pressured him constantly for more money. Despite some what he described as “herculean efforts” by station personnel, the billing for his property would probably only be up 1-2% this year. His ownership wanted seven and were very difficult when monthly conference calls took place.

His main issue was how to keep from getting discouraged in front of his hard working team and how to motivate them. Also, he said he and senior staff all were in great fear of the next recession. I quote: “Even a modest downturn, nothing like 2008, will hit us very hard. I will be gone for sure as will some senior sales and on air people.”

Well. Part of it is the sign of the times. We have all seen the shift away from advertiser supported broadcast. What to do?

How about taking a deep breath and expressing a bit of gratitude? Theresa Glomb is a professor at the Carlton School of Management at The University of Minnesota. She is a leading expert on work environments and organizations. Reading some of her research, I came across a wonderfully insightful observation. She wrote: “Good things are about three to five times more frequent than bad things at work, but bad events have about five to 10 times the impact as good things.”

My long time acquaintance grumbled for a moment and then laughed saying, “that is oh so true!”

He then went on to tell me that he had lasted in the business for nearly four decades and it had been one hell of a ride for a kid from a rural area who hated school but had the gift of gab. Life had worked out well for him and his family.

I gave him this advice. There have to be good things that happen every day.  Stop to savor them and share them with your team. The long haul picture for your station is not positive. Yet, daily some good things happen. Yes, your team will never have the career that you did in terms of fun, longevity, or probably financial reward. You can still, however, give everyone constant encouragement. If people learn how to sell, be good marketers or broadcasters, they can surely transfer those skills in to other avenues when the ax falls.

Finally, I suggested that he take a day every now and then away from social media and business news. It can be discouraging if you see a 29 year old with a backwards baseball cap selling his tech startup for $2 billion while you are fighting for a nice share of this month’s local Ford dealer’s billing.

I am not encouraging false optimism. The die is cast and we are not going to return to broadcast’s golden age. Yet civility, a sense of humor and savoring small victories can make the waning years palatable.

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

Dreams and Skills

Ludwig von Mises was one of the most prominent economists of the first half of the 20th century. He was the leader of the Austrian School of Economics (strong free market orientation). Mises escaped Vienna before Hitler marched in and spent the last few decades of his life teaching a seminar at NYU.

Legend has it that one day after class an earnest young student approached and complimented him on that evening's lecture. Mises was gracious in response and the young man asked if  he could recommend any books so that he could explore the topic more closely. The great man said of course and wrote down a few titles on a piece of paper and handed it to the young man.

After glancing at it, the student said, "but professor, one book is in French and the other is in German". Mises allegedly asked, "Do you wish to be a scholar, young man?" "Oh yes, professor." "Then learn them", said Mises and he left the room.

Did it really happen? Not sure. However, it makes the entire point of this post. Over the years, I have met a number of people in the media business whose dreams far exceed their skills. They want to be the man or woman in charge but they lack the skills to get there AND do not want to make the sacrifice required be a leader.

I vividly recall a young sales rep who would always be pestering me about certain aspects of different media types. It was flattering but he never seemed to read the material that I sent or handed to him. Once, I offered to meet with him on a Saturday to review a topic that he was struggling with before a major client presentation. He was aghast. "Meet on Saturday, Don? I don't work on weekends." I held my breath and said that I was willing to give up a few hours of my free time to assist him. He said no way and I did not see much of him after that. The guy left the business a couple of years later and was a very bitter young man.

He missed something very big that Mises was trying to get across to his budding economist. It is fine to have dreams that are far greater than your skills BUT if you want to reach your dreams you have to change and upgrade your skills. Successful and ambitious people seem to understand this intuitively and never stop learning or improving no matter what their age.

If you would like to contact Don Cole directly, you may reach him at doncolemedia@gmail.com or leave a message on the blog.

Traits of the Wildly Successful

A few days ago, I was talking to a young person about to set out in the world with his first "real" job. He asked me what traits I saw in people that were really, really successful. I told him that I did not want to answer off the cuff but would get back shortly. I just finished meeting with him and thought that it might be interesting to share my thoughts in this post.

I dismissed many of the obvious things such as hard worker, brilliant, lucky, or imaginative. They are largely true but have taken on virtual cliché status.

To me, there are essentially two traits that stand out among those who tend to have great success. They are:

1) Willingness to ask for help

2) Curiosity

Let us take them one by one:

1) The few business giants (largely media moguls) that I have met may be brash in interviews but none are know-it-alls in private. Each man and woman reach out to staff, others in their field, sometimes competitors, academics or retired executives when they face a thorny problem or a big decision. They realized a long time ago that they can not do it all themselves. Successful entrepreneurs, even small ones, realize this and are not afraid to reach out to some eminence grise in their field when they are floundering.  Many of these people are secure enough to realize that you cannot be a one person band in today's world. It serves them VERY well.

2) As a general rule, the more successful someone is, the more curious they are about the world around them. They want to know how things work and they are anything but superficial. A few times it has been annoying when someone plays 20 questions about what I do, but the bigger people are, the smoother they tend to be and usually I am flattered that Mr. or Ms. Big is giving me so much time.

Also, they get to the heart of issues. Over the years, I have had people ask "can you get me smart about this in 10 minutes?" At times, I had to brief people quickly to get them through a client meeting or sales presentation that I could not attend. Ideally, if I had a day I talked to them and then added a tightly written memo that covered the bases.

The truly successful never asked for a quick answer. I remember meeting someone who was undergoing medical treatment at the same time that I did. We talked a bit and he invited me to a ball game at Turner Field. I was startled when I googled him and found out who he was. Sitting in his brother's skysuite, we talked baseball history for a while and then he asked me if I knew anything about a particular topic (it was not media). I said yes, that I had been involved with it since 1973. He asked lots of questions over the next few hours interrupted by comments on the live game and likely Hall of Fame candidates. As we parted and I thanked him for the evening at the game, he thanked me and asked if I could e-mail him the names of several books or advisory services covering the topic he asked me about. I said of course and a week later he e-mailed back and said that he digested two of the books already.

I am sure that this was standard behavior for this gentlemen. He was intensely curious and knew that his learning on many topics was not complete.

I challenge you to think of the most successful people that you have encountered. It would surprise me if those men and women did not have high levels of curiosity and reach out  for help regularly.

If you would like to contact Don Cole directly, you may reach him at doncolemedia@gmail.com or leave a message on the blog

Long Term Planning

The late Zig Ziglar was a popular speaker in the 1970's-1990's. He conducted a great deal of sales training seminars, spoke at conventions to fire up sales teams or franchisees and did his share of inspirational speaking. Also, he published a number of books. Some people dissed him due to his down home accent ( he was from Coffee County, Alabama) but he helped and inspired hundreds of thousands of people.

One very early morning, I woke up jet lagged (3:30 am) in California after a long cross country flight. Rare for me, I could not get back to sleep and so I channel hopped in my hotel room. I came across Zig Ziglar speaking. Essentially, he was giving a TED Talk before there was such a thing. He said one thing in his presentation that I will never forget. It was--"If you aim at nothing, you will hit it every time." His talk was about setting goals and doing long term planning.

For decades, I and many of you were or have been involved in marketing or media planning. As I matured in the industry, I would often try to talk to clients about long term goals AFTER we had sold in the next quarter or year's recommendation. I was always surprised and disappointed about how few people looked ahead despite the accelerating pace of change that they are or were experiencing.

People would often dismiss me saying such things as "I am focusing on keeping my job" or "I am focused on this year's bonus" or "I don't have time for that long term crap."

Well. That long term crap has hit many of these people like a freight train and a number of them are no longer in the business world. They clearly ignored the warning that Warren Buffett gives to every MBA class that he addresses: "Don't go sleepwalking through life."

It is human nature, I suppose, to focus on the immediate. And, sometimes you simply have no choice if you are an entrepreneur fighting for survival as many are or the brand that you are responsible for is getting clobbered by competitors. Yet, far too few people look ahead and try to  plan for the future as they should.

I have spent my entire career always trying to look forward 10 years. Some people flattered me from time to time and dubbed me a "futurist" but I realized that they were simply being kind. No one can forecast the future with great precision but all of us need to keep thinking about it and monitoring trends. Some companies have very long term goals--it has been reported that Exxon/Mobil has a 50 year outlook on planning. If so, they are probably planning for a post fossil fuel world and are taking small steps now to be part of it.

Recently, someone asked what stocks that I was researching. I always hesitate to answer that question as, if something goes down, you may lose a friend. So, I dodged specifics but said that I spent a fair bit of time looking for things that would be good for my grandchildren to own decades from now. He told me that I was stupid.

Stupid? Perhaps. My long term plan that is constantly being updated is to aim at something and try not to miss!

If you would like to contact Don Cole directly, you may reach him at doncolemedia@gmail.com or leave a message on the blog

Dornbusch's Law and Media

The late Rudiger Dornbusch was a long time economics professor at MIT. He was generally considered a global expect on monetary theory and, to economic theory junkies such as I, he was something of a rockstar. He became well known outside of the arcane world of academic economics during the Tequila Crisis of 1994-95 when the Mexican peso collapsed and it impacted markets for quite a while. The good professor articulated what became known as Dornbusch’s Law. It goes like this—“Crises take a much longer time coming than you think, and then it happens much faster than you would have thought.”

He died in 2002 just as the media world was finally seeing sweeping and long anticipated changes. I kept thinking of Dornbusch’s Law as I saw things evolve and double back to it even to this day. A few examples:

1) Newspaper—as the internet grew, many people began forecasting the death of daily newspapers. Yet, newspaper ad spending stubbornly hung on a decade longer than many of us thought possible. Suddenly, with the Great Recession hitting hard in 2008, newspaper billing collapsed by double digits in back to back years and has never recovered. The industry was way too slow to move to digital and did not know how to monetize it. Millennials have no interest in waiting for a hard copy of a newspaper today as they want news instantly. Sadly, many depend on Facebook for much of their information.

2) Radio—the argument for radio’s durability has often been “it will always be there.” True so far but time spent listening especially among upwardly mobile young adults is in sharp decline. Tech improvements have propped up stations nicely in terms of staffing and sales expense but there are too many musical options giving listeners total control which should block any strong comeback in the medium.

3) Cable TV—back in the 80’s, many would say that all cable had to offer was HBO, some Gomer Pyle reruns, and Braves Baseball games. Over the air networks did not react fast enough and suddenly saw their audience shrink significantly. Later, the big players purchased cable networks and that hedged their revenue picture nicely. Now cable and the major over the air networks are reeling from streaming services such as Netflix, Amazon Prime Video, Hulu, and the upcoming Disney +. Yet, as late as 2011, people were telling me that Hulu would be gone in a year and never get traction.

4) Magazine—very few titles are thriving these days and survivors seem struggling. Today, I subscribe to a few publications and I am amused how after a subscription lapses, they often add another six months to a year. It appears that they are protecting their advertising rate base.

5) Ad Agencies—as retail shifted via Amazon et al, agencies often talked about doing better commercials. Some pivoted in time, embraced the digital world, and became more focused on consulting, forecasting, new video options and analysis.

The next recession, whenever it hits, will take down a number of properties and, similar to Dornbusch’ Law, they will fall quickly in my opinion.

What about now? Well, think about it. Big Data is the rage right now and certainly helps marketers. Yet, if the Blockchain catches on with consumers quickly, will Big Data dry up to a certain degree as more transactions become private thanks to the new technology? Perhaps 10 years from now, the Cloud will be a relatively minor player.

It always has surprised me how people do not act on the obvious. The Internet was not a “flash in the pan” as some forecast but after the dot.com crash of early 2000’s many marketers did not embrace it for a few years. Streaming services spread like a prairie fire, people saw the danger in other video disciplines, but did not do much of anything to evade the herd of charging buffalo coming right at them.

As an aside, this ignoring the obvious is not limited to media. As I type, Congress is raising the debt ceiling and guaranteeing trillion dollars deficits for years to come. Despite snarky comments about politicians, I am confident that most can do simple arithmetic. Yet, talk to people about the dangers of the huge national debt and their eyes glaze or they tell you that you are way too gloomy. How about the global water crisis? Capetown is in trouble again as is Mexico City. Parts of Africa are no longer viable for agriculture and millions have no choice but to move. How will countries handle this? Our infrastructure is in terrible shape. Bridges and roads are unsafe and our airports are antiquated. People and politicians shrug and kick the can down the road knowing that it will bite and bite hard and expensively some day. Finally, the big one—climate change. The world gets hotter and hotter, air gets dirtier, the oceans keep rising. If not now, when?

Dornbusch’s Law is alive and well. As a young adult, I followed closely a small northern New England town and their need for a new water system. They issued bonds and established a “sinking fund” to redeem the bonds in 25 years. Money was added to the sinking fund each year and earned market interest. At the end of the term, the bonds could be redeemed in full with no increase in taxes to cover the large bill. A few newcomers at the town meeting suggested not creating the sinking fund. The flinty old Yankee running the meeting was having none of it and neither were the long standing residents. They were not Wharton MBA’s but saw a clear problem down the road and dealt with it immediately accepting minor pain but avoided a larger problem years in to the future.

Yes, it is human nature to procrastinate. Yet, hurricanes of all kinds are coming. We need to board up the doors even if it is a few years early.

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

Immigration and Demographics

You hear a great deal about immigration these days. Most of the discussion is heated and there appears to be great polarization on the issue. If you look at American history, there has never been a rational process for immigration in perhaps the last 150 years. I will not get on a soapbox and discuss the current political debate other than to say that, as both a father and a grandfather, separating families, especially little children from their relatives, disturbs me more than anything in my lifetime. The media focus on the current controversy but mostly ignore the big issue to come.

Okay, let’s get in to my wheelhouse—demographics. We need immigrants in the United States now and, in the future, the need will become even more acute. It does not have to do with politics. The issue has to do with two wonky terms—The Age/Dependency Ratio and Zero Population Growth (ZPG). In 1980, there were 19 people 65+ for every 100 aged 18-64 in the U.S. Now, there are 25 persons 65+ for every 100 who are 18-64. By 2030, census projections are that there will be 35 persons 65+ for every 100 of traditional working age 18-64. Already, this is putting a strain on Social Security and Medicare as those systems are basically “pay as you go” meaning that taxpayers pay in but the outflow goes largely to the rapidly growing 65+ demographic.

Coupled with the Age/Dependency ratio is Zero Population Growth also known as ZPG. In order for a population to remain stable, the fertility rate need to be 2.1 children per couple. During my youth as an early baby boomer, it was 3.7 children on average. In late 2017, it fell to 1.76 meaning that America will face a decline in population along with workers paying in to Social Security, Medicare and the IRS in the years to come. Bring this up even with erudite people and they agree but say that we are in much better shape than Italy and Spain which now have a fertility rate well below ZPG at around 1.0. That is true and will let us observe what will happen to Western countries along with Japan that are below ZPG. Yet, our problem gets worse even though intelligent people see it coming and do nothing.

In 15 years or so, America will be faced with some tough choices:

1) Cut benefits in Social Security or Medicare (or means test Social Security and tax much of it away from the affluent, raise the age for eligibility, or raise Social Security taxes). These would all work in some combination but are they politically viable?

2) Raise taxes sharply across the board and not just on the top 1-5%.

3) Allow more immigration.

Throughout our history, immigrants have been a driver of growth in America. Today, they tend to be eager, hard workers and many are entrepreneurial. They are coming from places that were struggling or dangerous and buy into the American Dream big time. We need them now more than ever as demographics are an unstoppable trend or, as I have often said, “Demographics are destiny.”

For me, America has always been an idea even more than a place. You have the freedom to fail or to make something of yourself. My tough minded Irish catholic mother once said to me—“Foreigners often are taught to know their place—in America, you make your place.” I was 22 when she said that and it has stuck with me. Perhaps that is why people who are American immigrants tend to be so aspirational.

Years ago, I finished a client meeting and some clients and I were at an airport. The senior client bought us all a drink. He asked us all our ancestry. When my turn came, I said that I was largely Irish and a bit English. He then asked when did our families come to America. I was a bit uncomfortable but told the truth. James Cole came to Plymouth, MA in 1631 ( a few ships after the Mayflower). One of the clients, not the boss, said: “Wow, you are more of an American than the rest of us.” I replied carefully that no, we are all Americans and someone who took the oath of allegiance that morning was every bit as much of an American as I. They called their flight and the clients scattered. As I picked up my roller board and headed for my gate, a man stopped me. “I heard what you said (I was at the next table), and wanted to shake your hand. I became a citizen two years ago and am very proud but people sometimes tell me that I am not really an American.” I said, “they do not know what an American really is, I suppose.”

We need immigrants. Demographics do not lie. They can save us from a lot of pain.

If you would like to contact Don Cole directly, you may reach him at doncolemedia.com or leave a message on the blog.

Is Data All That We Need?

Over the last few weeks, I have put up a few posts regarding some of the strengths of Big Data that were articulated in Seth Stephens-Davidowtiz’s fascinating book, EVERYBODY LIES (Harper-Collins Books, 2017). The two posts generated tremendous response from readers to my personal e-mail and I was pleased to hear from several readers who had purchased and read the book. One person wrote to me with a provocative question that generated this post. He asked, “With Big Data getting so advanced and so quickly, is there any more need for advertising or for media or marketing analysts anymore?”

Well. That is quite a question. Let me attempt to do it some justice.

There can be no question that the quantity and quality of information available to marketers is the best ever. And, it will continue to improve going forward. Marketers who can observe how often an individual visits their sites, how much time and money they spend and what appears to be the price point that will encourage a visitor to pull the trigger and purchase have to be in an enviable position going forward. But, as Peggy Lee once famously sang, “Is that all there is” to 21st marketing and promotion?

A few things seem to be missing here. Over the years I have seen all kinds of business analysts—marketing, media, financial, currency, precious metals, energy, and real estate. The good ones certainly did like good and plentiful data. And, importantly, they were able to interpret it pretty well. Other characteristics certainly entered the mix. The first one to me was curiosity. People who are curious tend not to make for superficial analysis. They dig for details and seem to enjoy what they are doing. The best employees and students that I have enjoyed being around are not those with a natural aptitude necessarily. It is those who are on fire with the topic and never stop wanting to learn and understand more. People who perpetually ask “why” often make the best analysts.

The next issue is harder to pinpoint and it is creativity. Can someone be a creative coupon or natural gas analyst? Absolutely! I have seen it. So, as Big Data grows the batting average for promotions and finding the optimal pricing of an item will likely get better—sometimes much better. Yet, laying creativity and curiosity on top of the real world data could likely turbo-charge marketing return on investment.

For years, if you have wadded through the hundreds of MR posts (thank you!) you will notice that a theme that I have returned to several times is that entrenched companies will increasingly have a huge advantage over new enterprises when it comes to introducing a product. Colgate can simply do a line extension into oral care and get distribution, consumer acceptance and market share often without an enormous dollar commitment to marketing. Don’s toothpaste, made in a tiny lab, will face a much more precarious road to success and will likely disappear or, if the firm is lucky, can be bought out by a giant.

So, Big Data can be helpful. Yet, how do reach the people not buying from your site currently or from Amazon? Word of mouth can only carry you so far.

My conclusion, then, is that we need more than just data. The Big Data information is accurate and marketing gold, for sure. Even as conventional advertising is cut back in the years to come, savvy analysts will still be needed to make clever judgements to maximize results.

If you would like to contact Don Cole directly, you may reach him at doncolemedia@gmail.com or leave a comment on the blog.

Land of Opportunity?

If you are of a certain age, as I am, you grew up being told and probably believing that America is the land of opportunity. For many of us, it certainly has been. The combination of working hard and steadily, saving, and playing by the rules has paid off for many. Yet, as a person who deals almost daily with demographics, I have often had a gnawing feeling when I looked at income, education and lifestyle distributions. Is this still or was it ever really the land of opportunity?

My last post was about Big Data and I recommended that readers get a copy of Seth Stephens-Davidowitz’s EVERYBODY LIES and devour it. A study that he mentioned in that book will be the topic of this post.

Most of us have looked at hundreds or, in my case, thousands of research studies both long and short, superficial and occasionally profound. One question I always need answered is how large is your sample, how was it drawn, and what geography did it cover? People often brag about the number of observations that they have—500, 800, 1000! Well, Seth found us the veritable mother load of observations. A study from Raj Chetty at Harvard tracked the tax records of all Americans over a period of several years(using actual IRS data). This treasure trove of data gave them a staggering 1.2 billion observations. Now, the knee jerk reaction of many who hear of that kind of any unwieldy base is to say that a traditional survey would have given them remarkably similar answers. They are probably correct. Yet, what Professor Chetty did with the data was different—with so many observations, he was able to drill down and deep GEOGRAPHICALLY. What he found was enlightening, disturbing, yet made a great deal of sense.

Previous global studies found that if one were born in the bottom 20% of a society economically their chance of reaching the top 20% was as follows:


United States     7.5%

United Kingdom     9.0

Denmark          11.7

Canada.                    13.5


The U.S. does not do well in terms of upward mobility, it would appear.

Chetty, with his massive collection of cold income facts, was able to break out the U.S. by MARKET.

Here is what popped and is quoted in EVERYBODY LIES:


San Jose, CA                               12.9

Washington, DC                          10.5

Unites States Average                   7.5

Chicago, IL                                   6.5

Charlotte, NC.                              4.4


Amazingly, he also tracked people who moved from a metropolitan area that was a low performer to one that had greater prospects for upward mobility. The results? Over time, people who moved or their children had a higher probability of climbing the rungs of the financial success ladder. Other issues emerged that backed this up. College towns did better despite lack of high wealth as it appears the local professor population demanded and fought for better schools. Low income students did well perhaps due to peer pressure from children of academically advanced parents. So, concluded Stephens-Davidowitz, “some parts of America are better at giving a chance to escape poverty than others.”

Also, a few other trends emerged. The top 1% of women in income live 10 years longer than the bottom 1% of women. With men, the gap is a staggering 15 years! Poor people in a city with a lot of rich people live longer than those not surrounded by the wealthy. Professor David Cutler says it could be due to “contagious behavior.” The wealthy work out, eat better, tend not to smoke, and like less pollution. Poor people in wealthier cities tend to mimic that behavior.

Absorbing all this makes me pause a bit. I am not saying that pre-destination reigns in America. Young men and women can “pull themselves up by their bootstraps” and overcome adversity in many cases. But, it has always been hard and given certain structural issues in our society today, it may be getting even harder.

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

Everybody Lies

My friends, please forgive the provocative headline. Actually, you are NOT about to be treated to an angry rant. EVERYBODY LIES is the title of a book that I have read and re-read in recent weeks. Its author is Seth Stephens-Davidowitz. The entire title is: Everybody Lies, Big Data, New Data, and What the Internet Can Tell Us About Who We Really Are (Day Street Books, 2017).

If you are a marketer, a media tactician, a political consultant or even a serious investor, may I suggest that this book is required reading. Much of the book covers how Big Data is getting to be a better and better forecasting tool. Seth is a very engaging writer and questions the significance of surveys using the moniker in his title of Everybody Lies. How did Trump surprise the pundits with his electoral college win? Easy, several percent of people surveyed did not want to appear politically incorrect, so they did not admit for whom they would vote. As a media researcher, I often wondered how PBS would consistently do a 2.0 rating in most Nielsen markets (DMA’s). Back in the 70’s Masterpiece Theatre probably did not really deliver Downton Abbey size ratings but people said they were watching to appear more sophisticated.

The author raises some profound issues although he does not address the advertising model directly. By looking at purchase data, a marketer has a great handle on your likes, dislikes and how you spend your time and money. Why bother with traditional media where over 90% of your audience will never be buyers? Zero in using Big Data and the marketing effort becomes infinitely more profitable. Forecasting is never easy but it has to get sharper as Big Data gives you real world information. As Winston Churchill once put it—“Facts are better than dreams.”

I will return to this topic and book a few times in the weeks and months to come. Meanwhile, take a look at EVERYBODY LIES. It is the clearest presentation of the future and usefulness of Big Data that I have seen to date.

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

Connecting the Dots

Someone, quite young, asked me recently, if there are any advantages to getting old. I laughed but said yes, to me, there was a really big one. “These days, I am much better than ever at connecting the dots.” The young adult did not quite get what I was saying so I gave an explanation that I will now share in part with you.

As kids, we were given little games or quizzes where we had to connect the dots on a page. The resulting artwork was sometimes logical but usually messy but always fun. As the years went on, I was confronted by many problems or situations and the assignment remained to somehow find a way to “connect the dots”.  In the business world “connecting the dots” usually means making logical inferences connecting items of information. Over time, most of us should have gotten better at it.

When I look at issues today in media, marketing or finance, I often conjure up the familiar refrain of “I have seen this movie before.” Business goes in cycles and while many think that something is totally new, the reality is that many things are a rehash of the past or simply packaged differently. Companies that are allegedly the next best thing get overextended financially and crash and burn. In media, the “new” is really a new platform but the idea is not novel. Also, as more players crowd in to that unique and new space, there is a big shakeout and the original players depart. Were Google and Facebook and Amazon the first in their categories? No way. Yet, they executed better and pushed out rivals who were at the party earlier.

By writing this, I am not being cynical. What I am saying is that when something seems to be the next big thing or dominant player in a category, I always take a breath and try and connect the dots in the situation. Is this truly unique? Is it capitalized properly? Is the timing in the business cycle good or terribly risky?

It is amazing how the “cannot lose” upstarts rarely make it. The backers of such enterprises are not spending enough time trying to connect the dots. Do I still get fooled? Of course! My batting average is getting better as  compared to similar situations from the past. Yet, I rarely get wrapped up in the euphoria of someone’s somewhat breathless description of the next Apple or Amazon.

Mark Twain allegedly said that “History does not repeat itself but it rhymes” (Actually, some argue the saying first emerged in 1970! Twain passed on in 1910). What it means is that there are many similarities from past enterprises or events that help us predict the future. So, old folks, I cannot help you with your aches and pains. Yet, on a positive note, just remember, if you stay alert and objective, you may well connect the dots better than many half your age. Experience counts!

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

I Am Just Being Honest

Over the years, we have all observed or been criticized by someone personally. The individual  doing the attacking may see the wounded look on someone’s face or their angry response and say, “Sorry, I am just being honest.” Fair enough. Lately, I have noticed a number of millennials using the term but in a somewhat different context and I find it a bit disturbing.

Let me preface this by saying that I like millennials very much. Given economic issues plus the demographic and technology tidal waves underway, I think that they will have a tougher time making it than we American baby boomers did. I wish all of them the best.

What I find jarring is how many throw themselves under the bus with the “I am just being honest” rationalization. Here are two recent examples that happened amazingly within an hour of each other. I ran in to a student who I was to see later in the day. I asked if he was going to deliver a paper on a selected topic or take a quiz. He smiled, said he had not bothered to study, so he knocked out a brief paper in the wee hours of the morning. I froze, kept my composure and said, “Why are you telling me this?” An answer of I am submitting a paper would have been sufficient for me. He answered, “I am just being honest.” Later that day and the next, I read his paper four times. Why? I was trying to be fair. Clearly, I was annoyed and wanted to make sure that I did not give him a grade that was guided by my emotions.

Later that day, I was meeting with a group and explaining a concept using a hypothetical example. One person, sitting in the back of the room, was typing furiously on his/her laptop. I stopped my monologue and said, “You will not find the answer on line. I made this case study up as a hypothetical example. It never happened.” With a dismissive wave of the hand, the individual said, “I have not been listening to you. I am trying to order something online.”  Again, my answer was “why are you telling me this?” And, you guessed it, the response was, “I am just being honest.”

Candidly, I liked both people but now I wondered how they would behave in formal business settings. Both said way too much. They did not have to lie but either saying I wrote a paper or simply stop typing would have been fine. I would never say this to them but they were not simply being honest, they were being stupid. These two cases are not isolated. I hear it all the time.

Worst case, remaining silent in those situations is a mild sin of omission. Yet, a number of people have used that term to me in recent years in similar situations and I do not understand why. All they do is make themselves look unprofessional. Would I want someone so careless working for me or representing me? Would I give them a great job reference?

There is an old phrase that has been around for generations. It is “silence is golden.” Often, I found it to be a great negotiation tool. I would make an offer via phone and then get quiet. Some 15-20 seconds would pass. The person on the other end of the line would ask if I were still there. I would say yes and then get quiet again. Most of the time, they would sweeten the offer as they were negotiating with themselves and I was giving nothing away.

My young acquaintances need to learn this lesson. Do not lead with your chin or deliberately make yourself look bad when a person needs a simple answer. Play it close to the vest when you are busted but the other person does not know it.

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

Update on Quibi TV

Last September 17, I put up a post entitled "The Allure of New TV." It talked about how Meg Whitman of ebay and Hewlett Packard fame and Jeff Katzenburg, an extremely prominent Disney alum, were teaming up to produce a new streaming device dubbed New TV at the time. The service would have short form video of extremely high quality with episodes lasting around 12 minutes apiece. The service would be available on wireless devices which translates largely to smartphones.

Recently, Ms. Whitman sat down with David Faber of CNBC for an interview. The link is:
https://www.youtube.com/watch?v=rrFSs2vPp34

The service is slated to debut in 4th quarter of 2019 and has a formal name now--Quibi. The name is an abbreviation of Quick Bites. As usual, Mr. Faber gives a solid interview and Ms. Whitman is as direct as ever. One thing hit me and it may effect you the same way. The pricing structure for the service is $4.99 per month with advertising and $6.99 without commercial interruption. What is intriguing is $6.99 is the same price that Disney, one of Quibi backers, is charging for their new Disney + service.

I understand the concept and wish Quibi well. The target is people on the go, largely 18-35, who spend several hours on their mobile device daily and one hour of that watching video. Will they be willing to pay for it?

Informal polling that I have done shows a sharp, as you would expect, demographic divide regarding Quibi. Several 21 year olds told me that they loved the idea as Netflix episodes were too long. More mature people whom I would presume would be reaching for their reading glasses as I would, do not seem enamored with a service that they could only watch on their mobile device.

I see significant value on college campuses and people with long subway or mass transit commutes. Also, I suppose it might be a nice break during your lunch hour to catch an episode. Ms. Whitman admits that consolidation will hit the streaming space so maybe that is already baked in to the cake.

It will be very fun to watch how Quibi unfolds.

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

Update: The Coming Streaming Wars

Last week, I put up a post entitled “Disney’s Big Challenge.” It generated lots of direct response to me as I projected that while Disney could compete easily with Netflix on a content basis given their vast properties and film franchises, they were behind in international growth and particularly in Artificial Intelligence (AI). If Disney Plus, their new streaming entry is to succeed this fall they will need to step up their game in AI and do it with some speed. Many readers agreed, and, as usual, a few said that I was out of touch with reality.

Well. In this this post, I will look at things from the point of view that I always prefer to take—the long game.

Soon, there are likely to be four major players in video streaming—Netflix, Apple, Amazon and Disney. Yes, other players will be there such as AT&T with HBO will be engaged, but, for this post, let us limit to the four media, retail or tech giants. Developing new programming is expensive. How much cash does each player have on hand at present? From Yahoo Finance at end of 1st quarter, 2019, we find:


Company Cash (Billions/U.S.)

Apple $86.43

Amazon           41.25

Disney               4.46

Netflix              3.71


A cursory look at the above numbers should tell you one thing: Apple and Amazon can definitely play the long game in streaming. Either one could lose a few billion a year for a long time with their streaming entry and still survive and prosper. Apple could continue to buy back shares and up their dividend by low double digits as they have done in recent years as they are now only paying about 30% of earning back to shareholders in the form of dividend hikes. Netflix, on the other hand, has borrowed a reported $3 billion this year to help finance the production of new made for Netflix series.

We also feel that Netflix is vulnerable to a price war. When Disney announced two weeks ago that Disney Plus would cost $6.99 per month, the press was surprised. By undercutting Netflix, they can “buy” some share. If the service gains significant traction prior to the next recession, people may cancel Netflix (and cable, I might add) and keep Disney Plus when the inevitable downturn hits. And, Amazon can tout that their rapidly improving (in my eyes) video service is free as the cost is embedded in each Amazon Prime subscription.

Another stat that a number crunching wonk such as I likes to look at is Leveraged Free Cash Flow. What the hell does that mouthful mean? A financial dictionary would describe it as the amount of money a company has left after paying off all its financial obligations. Here Apple is at $45.14 billion and Netflix $8.47 billion.  Investors like to look at this as do company management as it illustrates if a firm can make further investments in the company business or pay a bigger dividend.

And, Apple has modest debt while Netflix has very high debt levels. One more well known measure that investors look at would be the price/earnings ratio meaning how much do you pay for each dollar of earnings if you purchases shares in the company? Apple is a low key 15.86 while Netflix is at an eye popping 96.25 largely owed to  their rapid growth and little competition in recent years.

So, what is going to happen? I do not know. If Apple and/or Amazon go full throttle at Netflix they could starve them out in a few years. That is unlikely as they both have many irons in the fire and direct to consumer video is not their top priority at present. Disney is formidable from a content standpoint but will lose money on Disney Plus for a few years and it will take a while to roll it across the world. All three players will chip away at Netflix some for sure. Many of you reading this and the writer love Netflix as a service. Yet, in a free market, if someone appears to have a field to themselves others want to enter and do. The difference here is that two have the deepest pockets in corporate history and one has an unparalleled expertise in the content.

I would like to provide a hypothetical scenario. It is NOT, I repeat, not a forecast. About two years ago, I was among many who thought that Apple might buy Netflix. Then the shares of Netflix exploded upwards. So, Netflix might not be such an attractive target for Apple as it was until recently. What if Apple decided to form an alliance with Disney or even decided to purchase Disney? Bob Iger, the Disney chairman, has sat on the Apple board of directors for several years. In a recent interview with David Faber on CNBC, Iger said that he recuses himself when the topic of Apple’s foray in to video comes up. At the same time, Reed Hastings, CEO of Netflix, is resigning from the Facebook board, just as Facebook is reported to be entering the streaming space as well. Hmmm. Interesting.

Netflix has the lead, both domestically and internationally. And, they have millions of loyal viewers such as you and I. Yet, Frederick the Great allegedly said it right in Prussia nearly 300 years ago—“God is on the side of the big battalions.” Apple and Amazon are the big battalions for sure and Apple/Disney would trump anything imaginable.

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

Disney's Big Challenge

On April 12th, Bob Iger, CEO of Disney, unveiled the long awaited plans for Disney Plus, a streaming service that would be competing directly with Netflix. Media reports consistently mentioned that a collective gasp went up in the audience when Iger announced that the new Disney entry would cost  a subscriber $6.99 per month or $69.99 for a complete year. Clearly, it was priced very attractively for all kinds of households and well below what all of us are paying for Netflix.

The Disney franchise is a strong one going back to 1937’s “Snow White and The Seven Dwarfs.” Today, they have the current Disney studios, legacy films, the Fox film library and great franchises such as Pixar, Marvel, and Star Wars. This weekend their new “Avengers” entry garnered well over a billion dollars at the box office. Disney Plus, according to Iger, will also be the exclusive venue for 30 years of “The Simpsons.” So, to put it mildly, Disney is the king of content in the media world. Disney projects 90 million subscribers to Disney Plus by 2024. Many media analysts put it somewhat lower at 50-60 million but one generally expects bullishness at the time of a major announcement.

A lot of people are stopping here which strikes me as a big mistake. Let me be clear. I have great admiration for Bob Iger. He is not just the greatest media executive today but one of the greatest leaders, in my opinion, across all industries both domestic and international. He is very shrewd and saw how the media world was evolving. Iger knew that he had to do something as commercial avoidance continued to advance and Netflix and other video alternatives gobbled up more and more viewing time with direct to consumer plans.

To me, too many observers are focusing solely on the video content. Disney has to transform itself from a largely legacy or conventional provider to a strong streaming entity. To me, they can do that. They have many talented people on board and have the hammer of abundant content to execute it. Many say that Iger has delayed his retirement for a few years to oversee the transition.

Looking across the world, it is clear that Netflix has won the streaming battle with 160 million + subscribers in countless countries (despite this, they are not a big moneymaker). So, Disney, even under the best case scenario is not going to unseat Netflix overnight or even in several years. Disney faces a big or huge challenge that few people are mentioning but I feel is key to the Disney Plus and even their corporate future. As mentioned, Disney has lots of content and nobody does it better. The edge to me that Netflix has is not with their subscriber base but with their amazing lead in Artificial Intelligence (AI). Look closely at Netflix. Their logarithm is not good—it is amazing. When in college, some friends and I ran the film society on campus. We became devotees of classic films. Over the years, I have reviewed over 3,000 films for Netflix. Using my preferences, they have NEVER recommended a film that I did not like. Not once.

They can create original programming by looking at their viewer profiles and tastes and putting together shows that might not have huge broad appeal but build loyalty among a fair sized number of aficionados. Some reports claim that they have users divided in to over 1,000 buckets and tailor programs to them.

This to me is the big hurdle that Disney will face as they launch Disney Plus on November 12th. They can produce content—some good, some great. They have deeper pockets than Netflix and can lose money on their Plus entry for quite a while. What they need to do as they transform their company is get up to speed and quickly on AI. That is the issue that will be key going forward on whom will be standing profitably years from now in the video world.

Very soon, I will put up a post regarding Netflix vs. Disney vs. Apple. Watch for it!

If you would like to contact Don Cole directly, you may reach him at doncolemedia@gmail.com or leave a message on the blog

Programmatic Advertising and The Death of Editorial Environment

This morning, my wife and I both opened our laptops and over coffee began to read THE NEW YORK TIMES.  She directed me to the top of the masthead where there was a link to a new Cartier commercial  featuring the news that the Hudson Yards location was now open. The 30 second spot was beautifully done and featured the iconic Cartier panther that has been seen in their video work in recent years. I was impressed by the execution but also the wonderful placement. A blue chip, sophisticated and cosmopolitan audience such as that of the Times would be ideal for the Cartier message.

I bring this up as, a few weeks ago, I heard from my most strident critic, a young man who sees me as a supercilious old fart. His comments are sometimes interesting, occasionally valid and often more than a bit mean. He asked why I did not write about Programmatic Advertising more in MR and suggested that I did not even know what it was.

These two separate events have inspired this modest post.

To those of you not currently in the ad game, here is my brief explanation of Programmatic Advertising:

Let us say that you would like to visit Vancouver, British Columbia, one of my favorite places in North America. You compare hotel prices, Air B&B’s and conventional B&B’s, shake your head at the stiff prices and do not book any rooms. Like it or not, you now have a Vancouver cookie on your device. The next morning you log on to check your e-mail or the action in the overseas markets. Your cookies are passed on to an ad exchange. The exchange in the blink of an eye auctions off the information from the cookies to the entity in Vancouver who is most willing to pay for it. The ad of the winner of this instantaneous auction is loaded in to your current web page in a flash.

Is there anything wrong with this? Not really although when shopping I can never get rid of the ad for a novelty tie that I did not want for months! Yet there is one tragic flaw to it for me. Programmatic advertising virtually dismisses quality content. When I was a young pup in the advertising business decades ago, it was drilled in to me that while demographic delivery was important, almost of equal value was the editorial environment that the selected media vehicle provided. More importantly, as marvelous as the Cartier spot was this morning, the environment of THE NEW YORK TIMES counted for a lot as well.

A vehicle that had quality content merited a premium price. THE WALL STREET JOURNAL was great for business advertisers as were FORBES, FORTUNE, AND BUSINESS WEEK. Even in TV, I worked hard and had my teams cherry pick programming that seem to fit the lifestyle or interest of our primary target even though Nielsen gender and age data may have suggested other choices.

With programmatic buying, a quality site such as the Times is not differentiated at times from a tractor pull page or perhaps a very suggestive site.

When we paid a premium for a high quality environment we still thought that it was a good value proposition.

So, to my acerbic young friend, I do see the value of programmatic buying in reaching people efficiently. At the same time, something is lost when quality content takes a back seat or all but disappears.

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

Illigitimi non Carborundum

During World War II, British intelligence apparently adopted “Illigitimi non Carborundum” as their mantra as the powers that be gave them impossible tasks and never seem satisfied with their results.

The first time that I heard the expression I was a sophomore in college. I had just been chewed out by a literature professor after a class ended. He was rude and did it in front of other people as a new group of students was filing in to the classroom. A young political science professor witnessed the whole thing. When the mean spirited prof left, the young one said to me, “Illigitimi non Carborundum.” I told him that my Latin was more than rusty and he whispered, “Don’t let the bastards grind you down.” Over the years, I have embraced that term when things get a bit rocky. In fact, I have a tie that has the term embossed on it. I wear it when I need it a jolt of confidence.

The older I get, it continues to amaze me how negative people can be. As recently as a few years ago, I told someone of a (modest) plan that I had been working on for some time. His response, with a sneer, was “someone like you could never do that.” I have been hearing that line or something similar to it since 1964 when I spent four years studying with the Christian Brothers who proved to be the least Christian people whom I have ever encountered. For some reason, people often want to cut us down and tell us what we cannot do. After I learned to embrace the Illigitimi non Carborundum mantra, my attitude became “who is going to stop me?”  Listening to valid criticism is valuable but comments from the mean spirited are hurtful and worthless.

I have learned to play things close to the vest. As I have written a number of times in this space, most things do not work out or at least the way we originally saw them. So, I am very careful about telling people what I am doing. My mind is going 24/7, I am an omnivorous reader, and I eat demographic, consumer and financial trends for breakfast . Markets have enthralled me since I was eight. I will never kick back and retire.

So I urge all of you to never give up on your dreams. Yet, be careful with whom you share them. Someone, usually an observer rather than a participant, will try and cut you down. Endorsing the wisdom of the Illigitimi non Carborundum cloak will help you overcome more than you can imagine.

By the way, there will be a Latin purist or two reading this. The term “Illigitimi non Carborundum is not proper Latin. Academics refer to it as “Dog Latin” or a mock translation. So be it. The term has helped me a lot when dealing with difficult people and kept my chin up. I bet that it can do the same for you.

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

The Global Reach of Netflix

A few weeks ago I put up a post asking if any streaming service could catch Netflix. Most respondents said no and agreed with me that Netflix had a commanding lead in the streaming space. A few said that Disney’s new service and Amazon Prime Video would chip away at the lead that Netflix has and a few mentioned Apple getting in to the game as well. One topic that I alluded to in the earlier piece was not mentioned by anyone—Netflix is a powerhouse outside of the U.S. Depending on the estimates that you look at, Netflix has somewhere between 140 and 160 million subscribers. Last year, for the first time, Netflix had more non-US subscribers than domestic ones and their growth is largely overseas as move through 2019. Netflix now is available in 190 countries. They are licensing or producing hundreds of programs in many languages and their knowledge of what viewers like in different cultures is getting stronger by the day thanks to their shrewd use of Big Data.

When people tell me that Amazon will soon catch up, I can only smile. Amazon is a superb on line retailer and will be tough competition at some point for sure. Yet, keep this in mind. Netflix does basically one thing—providing programming. Amazon operates globally as well and many perceive Amazon Prime Video as a free service as it is embedded in an Amazon Prime subscription. The rub is that Netflix can deliver their service to virtually anyone, anywhere who has high speed internet. Amazon Prime operates globally but does not deliver to every podunk village in the world. The costs of delivery would be prohibitive at present and many overseas customers cannot afford a prime subscription. They would have to spin off Amazon Prime Video or make it available freestanding to go head to head with Netflix. It would take years to be a viable GLOBAL competitor to Netflix. Disney needs to crawl and then walk with Disney + before traveling abroad with the service. So, the head start that Netflix has appears to give them an advantage that could protect them for several years which is a lifetime in today’s tech world.

So, is Netflix completely safe?  I see one little known (in the U.S) but viable player out there who could possibly upset Netflix’ global juggernaut. We have all heard of the BAT’s in China. Baidu is the Google of China, Alibaba is the Amazon of China, and TenCent is the gaming giant of China. A fourth player is iQIYI (pronounced eye-chee-yee) which is rapidly being nicknamed by securities analysts as the Netflix of China. iQIYI is a bit different than Netflix in that it has free content with advertising plus a subscription service that others use. The subscription video service now has 80 million subscribers and is growing. iQIYI has the same cost issue that Netflix has in that it is expensive to produce original programming. Also, Alibaba and TenCent have a minor entry in streaming video at present which could grow.

A few rumors exist that say that iQIYI may move beyond China’s borders. This could put a crimp in Netflix growth especially in many Asian countries. FYI, iQIYI now trades on the New York Stock Exchange under the symbol IQ (not a recommendation but you may want to read their annual report as I did).

This is what I love about the free market. When some company appears set, they find that their competitive advantage is not sustaining for long. So, even mighty Netflix has to stay innovative and run a bit scared. To date, they have done a fine job of it.

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