Several installments of my “media deconsolidation” series have dealt with problems at AOL-Time Warner (see parts 8, 12 and 14). That’s because when this marriage was struck back in 2000, media critics where in full-blown Chicken Little mode over the deal. Critics claimed the AOL-Time Warner deal represented “Big Brother,” “the end of the independent press,” and a harbinger of a “new totalitarianism.”
What a joke. It’s just another sign how irrational people get about media ownership issues. Reality is rarely so exciting. In fact, as the latest news on the AOL-Time Warner front proves, reality bites for many traditional media operators. Like so many other companies who are struggling to adjust to our modern world of media abundance, user-generated content and digital everything, AOL-Time Warner is struggling to make “synergy” work.
Unfortunately, synergy isn’t working out so well for them. The company had lost a staggering $99 billion in market cap by January of 2003 and shortly thereafter Time Warner decided to dump AOL from their corporate name altogether. This summer, Time Warner President Jeff Bewkes went so far as to declare the death of synergy, famously calling it “bullshit.” And this week Jonathan Miller, chief executive of AOL, admitted to the U.K.’s Sunday Telegraph that the Time Warner board is indeed mulling over a break-up of the company. When asked by the Telegraph about the possibility of an AOL-Time Warner divorce, Miller said that “It’s possible, going forward. It’s not a discussion that Time Warner has a problem with understanding or engaging in. Until we were on this present course, it wasn’t even the right discussion. Now it becomes more interesting.”
It’s only a matter of time before it’s finalized. I wonder what all those media kooks will say then. I’m sure that they’ll find something to complain about.
My post earlier today about virtual reality helmets is probably all based on a big Internet hoax, but this virtual reality story is 100% legit. Reuters has announced that it is opening a “Second Life News Center” and assigning a reporter (Adam Pasick, who is shown below) to cover breaking developments in this cyber-world.
For those of you who aren’t as big of a nerd as me, “Second Life” is an incredible massive multiplayer online game that, as the title implies, allows hundred of thousands of people to build new lives and interact in a new world together. (This month’s Wired magazine has a wondeful guide to the game if you need a good primer.) And now mainstream media reporters will be covering developments there, wherever “there” may be. Pretty cool, and it’s another sign of how video games have become a major force in modern society / culture.
Scholars at RAND Europe recently released a comprehensive analysis of the European Union’s controversial Audiovisual Media Services Directive (AVMS), more commonly known as the “Television without Frontiers Directive.” This effort, which is being coordinated by EU Commissioner Viviane Reding, aims to bring some rationality to inconsistent EU media regulations. The problem is, in an effort to make the rules more rational, Reding has essentially proposed a significant expansion of government regulation for new media outlets and operators, including the Internet. (See these three papers by my PFF colleague Patrick Ross for a detailed explanation of the dangers of Reding’s efforts to expand content regulation).
Thus far, most of the criticism of the AVMS has been based on social / content-related concerns. Rightly so. There is little doubt that the directive will threaten freedom of speech and expression on the Internet and over other new media outlets / services. But the new RAND study takes a different approach to the issue by focusing on the potential economic impact of the AVMS directive on European companies and the EU’s competitive standing in the new media world more generally. [An executive summary of the report and the full report can be found on the Ofcom website here].
RAND’s conclusions are not encouraging… unless you happen to be an American or Asian company rooting for your European competitors to be handicapped by excessive government regulation!
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Supporters of free markets and free speech in communications lost a friend this past week with the passing of Sol Schildhause at the age of 89. While perhaps not well-known to many today, Sol was for decades a fixture in the world of cable TV, serving as the first head of the FCC’s cable bureau from 1966 to 1974–where he fought against rules that protected broadcasters from cable TV competition–and later as an attorney and chairman of the Media Institute, where he worked tirelessly for competition in cable TV itself. He was particularly instrumental in the effort to end exclusive cable franchising on the grounds that it was an unconstitutional violation of free speech. The Supreme Court decision that resulted from those efforts established that cable television firms’ were entitled to First Amendment protection, although it stopped short of banning exclusive local franchising.
Schildhause always seemed the maverick in his work, a happy warrior fighting against the status quo. This was evident even during his years at the FCC, where he was far from your typical bureaucrat. Sometimes this caused difficulties, as related by Tom Hazlett (now of George Mason University) in a 1998 article for Reason Magazine entitled “Busy Work”:
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In parts 8 and 12 of this series, I’ve discussed Time Warner’s ongoing problems in what was suppose to be mass media paradise. The mega-merger that critics decried as “Big Brother,” “the end of the independent press,” and a harbinger of a “new totalitarianism” has turned out to be anything but. $100 billion in lost market cap by 2003 alone, AOL bleeding subscribers, and talk of spinning off the cable division have all led Time Warner President Jeff Bewkes to declare the death of “synergy.” More poignantly, he went so far as to call synergy “bullshit”!
And now the oldest members of this marriage – – Time and Warner – – may actually be considering a divorce too. Just last week Time announced that it was putting 18 of its 50 magazines up for sale. And, according to David Carr of the New York Times, the fire sale may not be over:
“[C]urrent realities and pressure from shareholders suggest that Time Inc. will either become a smaller, more profitable division of a public company or it will be in play. A very large boat will have to be turned around very quickly with little additional investment. There will be no big magazine start-ups, no significant acquisitions, only the grinding, dangerous task of taking some of the most storied brands in publishing and making them relevant at a time of rapidly changing consumer and advertising dynamics.”
It’s just another sign of how dynamic the media marketplace really is. See my last book for more details.
So here’s an interesting legal question that involves the First Amendment, copyright law, technology policy, and property / contractual rights: Who has the right to film videos at a professional football game? I’m not talking about the live video feed of entire games; that’s clearly copyright-protected. Instead, I’m just talking about select video clips of portions of games for journalistic purposes.
Here’s why I ask. Ten days ago, David Rehr, the head of the National Association of Broadcasters (NAB) sent a letter to the National Football League’s (NFL) new commissioner Roger Goodell inquiring about a recent NFL policy change regarding local television station coverage of games. Last year, for reasons I have not been able to determine, NFL team owners decided to reverse a long-standing policy that allowed local broadcasters to film video clips from the sidelines during football games. Apparently, local TV broadcasters will now have to get that footage from the TV network that broadcasts the game or from NFL Films, which is owned and operated by the National Football League.
I’m going to attempt to fairly weigh the arguments on both sides of this dispute even though I have a particular (and admittedly peculiar) bias in this matter that I will admit to at the end of the essay. (See * below).
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The FCC’s localism report has attracted massive controversy as to whether it was inappropriately scotched by the FCC. By contrast, there has been remarkably little attention on its substance. “Do Local Owners Deliver More Localism?: Some Evidence From Local Broadcast News,” was written in 2004, apparently by FCC staffers Peter Alexander and Keith Brown. Using a 1998 database from the University of Delaware, the authors looked at how the ownership of television stations affects the amount of news they deliver. The headline finding was that stations that are locally-owned have some 5.5 minutes more of local news on their half-hour news programs, and over 3 minutes more of local on-location news. Because of this finding–which points to a possible downside to national chains of TV stations– the FCC allegedly killed the study.
But, as Matthew Laser–an author and former Pacifica Radio reporter–argued today, the report is actually much more complicated than the headlines suggest. He points out that several aspects of this study undercut the advocates of strict ownership limits. The study found that television stations that also own a radio station in the same market provide more news than those without such cross-ownership. It also found that television station/newspaper cross-ownership was not found to be a significant factor in the amount of local news provided.
Perhaps most striking, the report concedes that more local news may not always be a good thing. “For example,” it suggests, “if the local [television] owners also develops real estate locally, they may cover the local zoning board in a way that favors the owners’s real estate interests.”
In fact, the report does not address perhaps the biggest question: do viewers actually want more local content? This issue is addressed only in a footnote of the study, which simply states that “non-local content may be more appealing to viewers than local content.”
In this regard, the study tracks much of the current debate: policymakers determine what content is preferred, with only occasional nods to whether consumers object. Its a topsy-turvy analysis: instead of defining success, consumer preferences are seen as potential obstacles to it. This really is more complicated than it seems.
The New York Times today has an excellent article on the incredible shrinking audience for broadcast radio. Increasingly, the Times points out, Americans are tuning out their AM and FM stations and going elsewhere for music and news–to satellite radio, the Internet, their iPods and more.
More than 9 of 10 Americans do still listen to broadcast radio each week, but they are listening less. Americans aged 12-24 in fact listen to broadcast radio as startling 15 percent less than they did only seven years ago. “We’ve lost the hipness battle,” one executive is quoted as saying, along with a fair amount of stock value. The major radio firms are fighting back in a number of ways–but many are also selling stations.
The trend has obvious implications for the FCC–which has just launched an inquiry into, among other things, its radio ownership limits. For some time, the radio ownership debate has been focused on the dominant position of Clear Channel Communications, which is routinely trotted out as example number one of a Media Monopolist (oddly, since it holds only some 10 percent of licenses nationally). But dominance in broadcast radio today isn’t what is used to be. After all, what’s the point of being a monopolist when there’s so much competition? It simply may not matter how many AM or FM stations someone owns when their customers can so easily listen elsewhere.
If you’re a video game fan then by now you’ve heard the troubling news that Sony has announced there will be yet another delay in the eagerly anticipated launch of its PlayStation 3 gaming console. As a headline in the London Times read: “This year’s must-have toy is cancelled for Christmas.” (Needless to say, that’s about the last headline you want to read if you’re in the Sony marketing or PR department!) The new delay will mostly impact European customers, but North American customers will apparently see fewer boxes shipping our way during this holiday season when the box is set to launch here.
As a video game fanatic and former business school student, I must say that this entire episode has turned into quite an interesting case study of how three major competitors go about launching major new business technologies / platforms. Microsoft has taken the “KISS” (keep-it-simple-stupid) approach with their new XBOX 360 and offered a unit without any digital HDMI connections or a built-in high-def disc drive. (A HD-DVD “sidecar” player is scheduled to be offered later this year but the price has not yet been announced). And MS even offers a bare-bones “core” model of the XBOX 360 without a hard drive for just $299, $100 less than its premium $399 unit.
As a result, the company was able to get its system on the market back in November of last year, a full year earlier than Nintendo and Sony’s new systems are due to hit store shelves. Millions of consumers, including some like me who grew tired of waiting for Sony’s PS3, have made the plunge and purchased a XBOX 360. This constitutes a huge advantage for MS in the platform wars. Some predict that 10-15 million XBOX 360s will be sold before Sony finally gets around to pushing out the PS3 in some markets.
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The Technology Liberation Front is the tech policy blog dedicated to keeping politicians' hands off the 'net and everything else related to technology.