Unpacking Viacom’s and Time Warner’s Holiday Suitcases

As I’ve recently returned from a week’s holiday trip, I’m feeling the need to unpack Viacom’s and Time Warner’s suitcases and provide some thoughts on the content of their suitcases. Luckily, even though these would seem like heavy bags, this is light packing, won’t need to worry about comparing the rates of checking a bag vs. USPS/FedEx/UPS. Come next holiday season, though, they could very well have some heavier cargo.

Let’s hope they have separate seats or lots of free drinks coming to them in first class. They don’t seem to be copacetic traveling partners. I’ll assume they aren’t taking the corporate jets – Don’t most socialist governments realize that their is power in owning the media…Wow, Colbert would be so proud of me…thank goodness I’m a Comcast subscriber – so they can properly rattle the tin cup when the time comes.

On w/ it then…

Unpacking Suitcase #1
Viacom expects higher fees from Time Warner to carry Viacom networks on Time Warner cables to Time Warner subscribers.

Time Warner says Viacom’s network’s ratings aren’t all that great and they don’t deserve the increase they’re asking.

Viacom points out that 20% of all TV viewing is of Viacom programming, while fees for Viacom programming is only 2.5% of a typical cable bill. Thus, per Viacom, Time Warner has under-valued their programming.

Thoughts on Suitcase #1
I’m going to have to side w/ Viacom when it comes to looking at their share of the viewing market vs. TV ratings. It’s a fragmented media marketplace in these “mass” media and if value is still being derived by the most eyeballs, and if 1/5 of all Time Warner subs eyeballs are in front of Viacom programming, then only sharing 1/50 of revenue w/ them probably doesn’t make sense.

I wonder – do people consider themselves (more) Time Warner’s customers or fans of Viacom’s programming? Is the (most) value in the programming or the access to it? Try to recall, if you can, a case where someone (who isn’t a network engineer or some affiliated type of job) has more love for cables that carry digital packets of information – even if it’s always/usually reliable/redundant – than LC, Colbert, John Stewart, Dora or Sponge Bob.

I think it may be time to see what’s in the other suitcase.

Suitcase #2
Viacom is banking their revenue growth on increased carriage fees from cable operators in light of a slow ad market. 2/3 of Viacom’s revenue comes from media network revenue, which was up 6% in 3Q (while the ad market was down 2%) – primarily due to double digit growth in carriage fees (and Rock Band).

Time Warner isn’t pleased that Viacom takes their TV programming and runs it on their websites, where Viacom reaps all the ad revenue and doesn’t have to pay Time Warner one red cent for access to it’s cables and the customers on the other end of those cables. Time Warner “doesn’t think that’s fair”.

However, and not pointed out in this article, when people access Viacom programming via Internet service, more cables, provided by Time Warner, Viacom doesn’t share in revenues of that access w/ any sort of carriage fee. I’m pretty sure this would allow Viacom to call some sour grapes on the cry of “not fair” from Time Warner.

Thoughts on Suitcase #2
Ah, the nub of it. New distribution of programming doesn’t run so well under old monetization systems. In the process of improving the infrastructure of media delivery, access providers and media companies did a short-sighted job of determining the value of the shifts in media usage that they caused by improving the infrastructure. They never developed a model that appropriately valued media usage that is more driven by people’s schedules of desired use via two way cables than their schedules of distribution through one way cables.

So they are left to squabble over which antiquated levers and buttons they can pull and push to make a buck, ultimately, at the expense – in terms of money and, perhaps more importantly, time and convenience – of their most valuable assets: people who pay for access and are fans of programming.

Kinda makes all the talk of “if the content is good, people will come” irrelevant, really. If the content is good and people come and no one makes sufficient money to produce more good content it really doesn’t matter. Unfortunately for the suits, the infrastructure does a fabulous job of supporting people worn out from bad access provider service and an inability to find consistent, “good” content.

But, ah, the possibilities! I’ve riffed a number of times on monetizing a new media world. It’s one of the reasons I’m energized by the prospects before this industry in 2009. Looking forward to helping to figure it out!

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4 Comments

Filed under bad media, digital distribution, future of media, media usage, monetizing media

4 responses to “Unpacking Viacom’s and Time Warner’s Holiday Suitcases

  1. And right on cue and at the 11th hour a deal is struck and all is well w/ the world…Shame, an opportunity missed.

  2. here here (as I pointed out in this post)http://www.mediapost.com/publications/?fa=Articles.showArticle&art_aid=97683

  3. Not surprising, Time Warner has not learned the lesson of history and has decided to follow the model first developed by railroad companies circa 1903. Check me if I’m wrong, but this the same group that runs AOL, correct?

  4. And what has Viacom learned from the launch of all their various online video experiences?

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