On January 14th, 2019, NBC Universal, a division of Comcast, announced that it had plans to launch an AD SUPPORTED streaming TV service sometime in the first quarter of 2020. They made it clear that it would be free to subscribers of traditional TV services such as Comcast, and had plans to include it for free even to competitors such as Charter, AT&T, Cox and Dish.
There will be over 1500 hours of NBC programming available along with Universal movies and some new and sports as well. If you are a non-subscriber to any of the services mentioned above, there will be a charge of approximately $12 per month for content. Also, they have stated that they have no plans to withdraw existing content from Netflix or other streaming services.
Importantly, they are bullish on the ad revenue that the service can pull in and stress that it will only have up to four minutes per hour of advertising.
When I sent this information out to key members of the Media Realism panel, I received a remarkably consistent response—“why are they bothering with this?” Admittedly, many worked for entities competitive to Comcast.
The streaming space will soon become more crowded with Disney planning a major league launch later this year. Apple and Facebook have more than hinted at it as well. What will NBC streaming have that will differentiate it so much from other horses in the race? The other fly in the ointment that I discreetly put in caps above is that the service will be ad supported. A big part of the appeal of Netflix, Amazon Prime Video, HBO, and Hulu+ is that they are commercial free. Will people really ante up $12 per month for a lighter commercial load just to get NBC fare? I realize that they, as all major media companies, have many smart people on staff, but no one has told me nor can I personally see great potential for this service.
Many young people whom I speak to hate commercial interruptions and have been spoiled by Netflix and Amazon Prime Video. Several have told me that they will never subscribe to an ad supported content provider. Others have told me that they have bought antennas, cancelled basic cable and use a blend of over the air TV via rabbit ears or antenna plus a streaming service or two. Others complain that they have kept cable and have Netflix but are questioning keeping cable as they monitor how much of their viewing is now on advertising free streaming venues. Also, a la carte streaming fees will begin to add up if you have four or five.
If you could explain to me and my panel members why the NBC Ad Supported streaming service is likely to get traction, we would love to hear from you.
Should you wish to contact Don Cole directly, you can reach him at doncolemedia@gmail.com or leave a message on the blog.
Wednesday, January 30, 2019
Saturday, January 19, 2019
Jack Bogle, RIP
Over my life, I have not had many heroes. As I child in southern New England, Ted Williams of the Red Sox and Bob Cousy of the Boston Celtics certainly made the cut. When I began a golfer at age eight, I read about the history of the game voraciously. I wrote to both Bob Jones and Sam Snead for autographs and both responded within a week. In politics, there were none although I liked parts of what many people said and did very much. In economics, Nobel laureate Friedrich Hayek made the cut and in my personal life, two people who will go nameless will always be my heroes. In the business world, only one man stands out.
John C. “Jack” Bogle was the founder of the Vanguard group of mutual funds. Although he did not invent the index fund per se, he certainly popularized it. Jack preached the gospel of low cost investments. It is not exaggeration to say that people who invested in low cost index funds with Vanguard directly, often paid 1/20 of what others did with financial planners or some mutual funds. Over the years, as index funds flourished the industry was forced to lower their fees to stay competitive with Vanguard.
Jack lived to be 89 years old, the last 33 as a heart transplant recipient. He never lost his edge, his candor or sense of humor. The author of 10 books, he was busy until the end. I have read nine of his publications and would highly recommend his THE LITTLE BOOK OF COMMON SENSE INVESTING (John Wiley & Sons). It explains his philosophy with great clarity. Essentially, you are told to buy the entire market with an index fund, get low fees, and stay the course. Over the years, you will do very well as the economy grows. Channeling Miquel Cervantes of Don Quixote fame, he said, “Don’t look for the needle—buy the haystack.” Most of us rely on hot tips or waste our lives trying to find the next Google, Amazon, or Microsoft. Jack seemed to be saying buy an index fund, add to it through thick and thin and get on with your life.
To me, his best book was an amazing tome entitled, THE BATTLE FOR THE SOUL OF CAPITALISM (Yale University Press, 2005). It is a tour de force as it explains how small investors are often duped by financial salespeople and how many companies, especially multi-nationals, often “cook the books” with sophisticated accounting tricks. If you are serious about making money and keeping it, this is a must read.
Vanguard became so popular and index investing so prevalent that many modest investors were surprised to find themselves millionaires. They formed clubs locally and called themselves “Bogleheads”. Guess whom they would invite to be their guest speaker at their annual soirees? Even Warren Buffett conceded that Jack Bogle helped more people achieve financial independence than anyone in the U.S. Buffett recommends that almost all people should use index funds.
Someone once told me that they admired Bogle but that index funds were not really investing. I saw his point in the sense that there was not careful analysis of balance sheets, demographic or societal trends that many of us wonks go through when evaluating places to park our money. Yet, the success over the decades has been amazing with Bogle admitting that much of it is due to the low cost that his (and now other) index funds charge for their services. One might also say that with an index fund you do not “overthink” it. My only beef with Bogle was that he was not a fan of international investing. It is a big world out there and much future growth will come from non-U.S. companies (admittedly, many large US companies have a huge international presence).
Jack was consistent year after year. He stayed the course and never wavered. His approach required consistency, courage and patience. He once was quoted as saying “Time makes more converts than reason.”
There was only one Jack Bogle. The world needs a handful of men and women like him very badly.
If you would like to contact Don Cole directly, you may reach him at doncolemedia@gmail.com
John C. “Jack” Bogle was the founder of the Vanguard group of mutual funds. Although he did not invent the index fund per se, he certainly popularized it. Jack preached the gospel of low cost investments. It is not exaggeration to say that people who invested in low cost index funds with Vanguard directly, often paid 1/20 of what others did with financial planners or some mutual funds. Over the years, as index funds flourished the industry was forced to lower their fees to stay competitive with Vanguard.
Jack lived to be 89 years old, the last 33 as a heart transplant recipient. He never lost his edge, his candor or sense of humor. The author of 10 books, he was busy until the end. I have read nine of his publications and would highly recommend his THE LITTLE BOOK OF COMMON SENSE INVESTING (John Wiley & Sons). It explains his philosophy with great clarity. Essentially, you are told to buy the entire market with an index fund, get low fees, and stay the course. Over the years, you will do very well as the economy grows. Channeling Miquel Cervantes of Don Quixote fame, he said, “Don’t look for the needle—buy the haystack.” Most of us rely on hot tips or waste our lives trying to find the next Google, Amazon, or Microsoft. Jack seemed to be saying buy an index fund, add to it through thick and thin and get on with your life.
To me, his best book was an amazing tome entitled, THE BATTLE FOR THE SOUL OF CAPITALISM (Yale University Press, 2005). It is a tour de force as it explains how small investors are often duped by financial salespeople and how many companies, especially multi-nationals, often “cook the books” with sophisticated accounting tricks. If you are serious about making money and keeping it, this is a must read.
Vanguard became so popular and index investing so prevalent that many modest investors were surprised to find themselves millionaires. They formed clubs locally and called themselves “Bogleheads”. Guess whom they would invite to be their guest speaker at their annual soirees? Even Warren Buffett conceded that Jack Bogle helped more people achieve financial independence than anyone in the U.S. Buffett recommends that almost all people should use index funds.
Someone once told me that they admired Bogle but that index funds were not really investing. I saw his point in the sense that there was not careful analysis of balance sheets, demographic or societal trends that many of us wonks go through when evaluating places to park our money. Yet, the success over the decades has been amazing with Bogle admitting that much of it is due to the low cost that his (and now other) index funds charge for their services. One might also say that with an index fund you do not “overthink” it. My only beef with Bogle was that he was not a fan of international investing. It is a big world out there and much future growth will come from non-U.S. companies (admittedly, many large US companies have a huge international presence).
Jack was consistent year after year. He stayed the course and never wavered. His approach required consistency, courage and patience. He once was quoted as saying “Time makes more converts than reason.”
There was only one Jack Bogle. The world needs a handful of men and women like him very badly.
If you would like to contact Don Cole directly, you may reach him at doncolemedia@gmail.com
Monday, January 14, 2019
The Upside of Inequality
Last October 25th, I put up a post entitled “Income Inequality”. It generated pretty good readership as well as quite a few comments to me. There was little disagreement with my post. One long time MR reader surprised me, however. He dared me to read a book entitled THE UPSIDE OF INEQUALITY, How good intentions undermine the middle class, by Edward Conrad (Penguin, 2016). It author, Edward Conrad, was an original partner at Bain Capital (of Mitt Romney fame) and now is a visiting scholar at the American Enterprise Institute. His e-mail to me was not strident but he challenged me as I have said more than once in MR that I make a regular practice of reading material that I generally disagree with simply to question and test my currently held beliefs. His approach was a brilliant piece of mind-manipulating gamesmanship. How could I not read the book as I said reading opposing opinions had been my method of operation for decades?
Hence this post.
The book is not an emotional diatribe at all. If any, to use Federal Reserve speak, it is almost entirely data-driven. What I did like about it was that he mouthed the same top line statistics that one sees and hears across all major media but then he dug deeper with a special emphasis on the demographics. He truly proved that one can drown in a river with an average depth of six inches. In the introduction, he states: “If you take nothing else away from this book, I want you to remember this: Higher payoffs for success increase the supply of properly trained talent, and these higher payoffs motivate innovators, entrepreneurs, and investors to take risks. These two effects loosen the current constraints on growth, which frees the economy to grow faster.”
He then goes on to make a spirited defense of the 1% in American society. The argument is not new but he argues that the super wealthy, even after taxes, do not spend a large part of their incomes. After taxes and charity (which can be substantial among the 1% and especially the .1 of 1%), they reinvest a great deal of their income. This stimulates growth and creates jobs. Those who are fans of income distribution do not seem to grasp that basic truth according to Conrad. He is kind to immigrants and is especially fond of the approach that Canada has taken in recent years of recruiting ultra-high-skilled young people as a way to accelerate economic growth.
Do I buy the whole story? His arguments are well reasoned but he makes one big error in my view. Conrad states that if we raise taxes on the 1% they will not be incentivized nearly as much as now. Observing some very wealthy people over my fairly long life, I beg to differ. Serious financial players tend to love “the game.” Yes, if taxes became confiscatory (60-70%) as a few are now touting, some may slow down or vote with their feet and leave America. I feel it would take a lot to really kill incentives among the Uber-rich. Even modest private investors including myself, enjoy the action and would not walk away from it unless the tax bite and regulations became extremely draconian.
He also makes no mention of possible class warfare or civil unrest if income inequality continues to grow. Again, most of his comments are interpretations of real data that is carefully researched so sociological prognostication does not find its way in to the text.
His admiration for entrepreneurs is sincere. What I really like is that he did not sugar coat the process. Most will fail and, especially in tech, the payoff to those who succeed will often generate a lottery sized windfall. These innovators will trigger significant growth. So, in essence, he is saying that by leaving the 1% alone, we can lift many up in our society as their investments in innovative ideas and technologies will create new jobs, new industries and wealth. Also, to his credit, he admits that crony capitalism does exist in our society but those with connections are hurting growth by using their political influence to keep the playing field anything but level.
Most of us would agree that in a free market society there will always be income inequality. As I have written before in MR, some people work harder, some are smarter, some are luckier than most of us and some are unknowingly well positioned just as their industry is leaving the station. He clearly agrees with this and also takes on current French economic icon Thomas Piketty whose CAPITAL IN THE TWENTY-FIRST CENTURY a few years back was a clarion call for aggressive income distribution. Piketty attacked the wealthy saying much of their income came from passive income (dividends, bond interest, rents). Well, where did the money come from to generate the income? From savings. We all know a number of well off mature people who live largely on dividend income. They are not the idle rich a la the British aristocracy in the 19th century. They worked hard, saved, and invested.
As I mentioned, I do not buy his entire thesis. Inequality is growing which concerns me. Yet Conrad states his case with careful statistics and inarguable demographic data. Do I blame the media for not reporting on this topic in detail? Not really. We live in a world of 30 second sound bites, and, sadly, tweets. How do you cover a topic as involved as this for mass consumption?
I thank my reader for challenging me to read THE UPSIDE OF INEQUALITY. The book did not sway me completely but it made me think. You cannot ask for more.
If you would like to contact Don Cole directly, you may reach him at doncolemedia@gmail.com
Hence this post.
The book is not an emotional diatribe at all. If any, to use Federal Reserve speak, it is almost entirely data-driven. What I did like about it was that he mouthed the same top line statistics that one sees and hears across all major media but then he dug deeper with a special emphasis on the demographics. He truly proved that one can drown in a river with an average depth of six inches. In the introduction, he states: “If you take nothing else away from this book, I want you to remember this: Higher payoffs for success increase the supply of properly trained talent, and these higher payoffs motivate innovators, entrepreneurs, and investors to take risks. These two effects loosen the current constraints on growth, which frees the economy to grow faster.”
He then goes on to make a spirited defense of the 1% in American society. The argument is not new but he argues that the super wealthy, even after taxes, do not spend a large part of their incomes. After taxes and charity (which can be substantial among the 1% and especially the .1 of 1%), they reinvest a great deal of their income. This stimulates growth and creates jobs. Those who are fans of income distribution do not seem to grasp that basic truth according to Conrad. He is kind to immigrants and is especially fond of the approach that Canada has taken in recent years of recruiting ultra-high-skilled young people as a way to accelerate economic growth.
Do I buy the whole story? His arguments are well reasoned but he makes one big error in my view. Conrad states that if we raise taxes on the 1% they will not be incentivized nearly as much as now. Observing some very wealthy people over my fairly long life, I beg to differ. Serious financial players tend to love “the game.” Yes, if taxes became confiscatory (60-70%) as a few are now touting, some may slow down or vote with their feet and leave America. I feel it would take a lot to really kill incentives among the Uber-rich. Even modest private investors including myself, enjoy the action and would not walk away from it unless the tax bite and regulations became extremely draconian.
He also makes no mention of possible class warfare or civil unrest if income inequality continues to grow. Again, most of his comments are interpretations of real data that is carefully researched so sociological prognostication does not find its way in to the text.
His admiration for entrepreneurs is sincere. What I really like is that he did not sugar coat the process. Most will fail and, especially in tech, the payoff to those who succeed will often generate a lottery sized windfall. These innovators will trigger significant growth. So, in essence, he is saying that by leaving the 1% alone, we can lift many up in our society as their investments in innovative ideas and technologies will create new jobs, new industries and wealth. Also, to his credit, he admits that crony capitalism does exist in our society but those with connections are hurting growth by using their political influence to keep the playing field anything but level.
Most of us would agree that in a free market society there will always be income inequality. As I have written before in MR, some people work harder, some are smarter, some are luckier than most of us and some are unknowingly well positioned just as their industry is leaving the station. He clearly agrees with this and also takes on current French economic icon Thomas Piketty whose CAPITAL IN THE TWENTY-FIRST CENTURY a few years back was a clarion call for aggressive income distribution. Piketty attacked the wealthy saying much of their income came from passive income (dividends, bond interest, rents). Well, where did the money come from to generate the income? From savings. We all know a number of well off mature people who live largely on dividend income. They are not the idle rich a la the British aristocracy in the 19th century. They worked hard, saved, and invested.
As I mentioned, I do not buy his entire thesis. Inequality is growing which concerns me. Yet Conrad states his case with careful statistics and inarguable demographic data. Do I blame the media for not reporting on this topic in detail? Not really. We live in a world of 30 second sound bites, and, sadly, tweets. How do you cover a topic as involved as this for mass consumption?
I thank my reader for challenging me to read THE UPSIDE OF INEQUALITY. The book did not sway me completely but it made me think. You cannot ask for more.
If you would like to contact Don Cole directly, you may reach him at doncolemedia@gmail.com
Wednesday, January 2, 2019
Advanced TV and Reach & Frequency
Over the last several weeks a few readers and two members of the Media Realism (MR) panel, have asked me to weigh in on Advanced TV and OTT (Over the Top) TV. There is not much that I could add to the current discussion but then, like the Disneyesque bolt out of the blue, came a request from an enthusiastic and erudite MR reader to discuss these growing “TV” options in terms of performance estimates (Reach & Frequency) and frequency distribution patterns. Those questions were centered directly in my wheelhouse—hence this post.
To refresh you memory, or if you are no longer active in the broadcast/advertising game, let us define terms for a moment. Advanced TV is really an umbrella term. It encompasses all forms of TV not included through a broadcast, cable or satellite connection. Over the Top (Ott) is placed by many under the same large umbrella and is video provided over the internet.
Okay, what does this mean? Well, several readers have e-mailed or called me saying how Advanced TV advertising has helped them. Great! You can reach cord-cutters or cord-nevers not reached by cable or satellite and the handful that have no conventional TV of any kind. There is a basic problem to me with this. Clearly, you pick up more viewers to your advertising by going this route. BUT, do the same rules apply as with conventional TV, cable, and satellite? What is the level of viewer attentiveness? I have struggled with this for more than 40 years and felt like some sort of pariah for telling the absolute truth. Way back in the 1970’s, we told people that we REACHED 90+ % of the target with our TV campaigns. Did we really? The issue to me was always that even the best models at the time only provided EXPOSURE OPPORTUNITIES not verifiable delivery. By the late 80’s, unless you were speaking at an annual sales meeting to rally the troops, you avoided saying that reach was in the stratosphere (Reach is the percentage of your target audience exposed to the message and frequency is, of those “reached”, how many times were they able to see the message).
Today, the issue has become far more extreme with advertising avoidance at an all time high. When people watch TV today or any video format for that matter, many have another device going. If you are young, the odds are overwhelming that a Smartphone or Laptop or Tablet is in use and gets special attention during commercial breaks. So, providing performance estimates (i.e, reach & frequency) was always a dicey game at best but now wildly overstates real world delivery. So while Advanced TV does help an advertiser pick up new prospects, never forget that viewing via streaming options still has commercial attentiveness issues that are very real.
The second topic brought to me was the integration of the delivery between conventional TV and Advanced TV. My honest answer is that I am clueless regarding how to integrate the two to come up with a reasonably reliable reach projection. Additionally, it seems anecdotally that there is a greater chance for advertising wear out with Advanced TV as it is not monitored as closely as is over the air or cable rotations. That leads to the last issue which is the integration of the frequency distributions of conventional and Advanced TV campaign delivery. To date, I have asked quite a bit but no one seems to have captured this with much precision. Where you can, response is always a nice indicator. Reach & frequency projections to me were always overstated and, in recent years, often wildly exaggerated, but trying to blend the frequency distributions of the two types of TV in today’s world seems way above every analyst’s pay grade at this point (A frequency distribution is how many people were exposed to the message 1+, 2+, 3+, 12+ times, etc).
Is this an arcane discussion? Absolutely. Yet, how are most people determining the right mix of conventional and Advanced? Right now, it seems to be trial and error and far more art than science.
Welcome to 2019! I hope the year is prosperous for all of us. Also, I want to thank the MR readers from all over the world. At present, some 54% of readers are based outside of the United States with particularly strong growth in Western Europe during 2018. Welcome!
If you would like to contact Don Cole directly, you may reach him at doncolemedia@gmail.com
To refresh you memory, or if you are no longer active in the broadcast/advertising game, let us define terms for a moment. Advanced TV is really an umbrella term. It encompasses all forms of TV not included through a broadcast, cable or satellite connection. Over the Top (Ott) is placed by many under the same large umbrella and is video provided over the internet.
Okay, what does this mean? Well, several readers have e-mailed or called me saying how Advanced TV advertising has helped them. Great! You can reach cord-cutters or cord-nevers not reached by cable or satellite and the handful that have no conventional TV of any kind. There is a basic problem to me with this. Clearly, you pick up more viewers to your advertising by going this route. BUT, do the same rules apply as with conventional TV, cable, and satellite? What is the level of viewer attentiveness? I have struggled with this for more than 40 years and felt like some sort of pariah for telling the absolute truth. Way back in the 1970’s, we told people that we REACHED 90+ % of the target with our TV campaigns. Did we really? The issue to me was always that even the best models at the time only provided EXPOSURE OPPORTUNITIES not verifiable delivery. By the late 80’s, unless you were speaking at an annual sales meeting to rally the troops, you avoided saying that reach was in the stratosphere (Reach is the percentage of your target audience exposed to the message and frequency is, of those “reached”, how many times were they able to see the message).
Today, the issue has become far more extreme with advertising avoidance at an all time high. When people watch TV today or any video format for that matter, many have another device going. If you are young, the odds are overwhelming that a Smartphone or Laptop or Tablet is in use and gets special attention during commercial breaks. So, providing performance estimates (i.e, reach & frequency) was always a dicey game at best but now wildly overstates real world delivery. So while Advanced TV does help an advertiser pick up new prospects, never forget that viewing via streaming options still has commercial attentiveness issues that are very real.
The second topic brought to me was the integration of the delivery between conventional TV and Advanced TV. My honest answer is that I am clueless regarding how to integrate the two to come up with a reasonably reliable reach projection. Additionally, it seems anecdotally that there is a greater chance for advertising wear out with Advanced TV as it is not monitored as closely as is over the air or cable rotations. That leads to the last issue which is the integration of the frequency distributions of conventional and Advanced TV campaign delivery. To date, I have asked quite a bit but no one seems to have captured this with much precision. Where you can, response is always a nice indicator. Reach & frequency projections to me were always overstated and, in recent years, often wildly exaggerated, but trying to blend the frequency distributions of the two types of TV in today’s world seems way above every analyst’s pay grade at this point (A frequency distribution is how many people were exposed to the message 1+, 2+, 3+, 12+ times, etc).
Is this an arcane discussion? Absolutely. Yet, how are most people determining the right mix of conventional and Advanced? Right now, it seems to be trial and error and far more art than science.
Welcome to 2019! I hope the year is prosperous for all of us. Also, I want to thank the MR readers from all over the world. At present, some 54% of readers are based outside of the United States with particularly strong growth in Western Europe during 2018. Welcome!
If you would like to contact Don Cole directly, you may reach him at doncolemedia@gmail.com
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