[opendtv] "And while the broadcast business has big problems in general..."

  • From: Craig Birkmaier <craig@xxxxxxxxx>
  • To: OpenDTV Mail List <opendtv@xxxxxxxxxxxxx>
  • Date: Thu, 26 Jan 2006 10:56:20 -0500

So Bert...

If two huge media companies cannot launch successful broadcast 
television networks, what make you think that local broadcasters can 
attract viewers with local content and/or re-runs in the DTV 

Enquiring minds want to know...


P.S. And how do DTV broadcasts appeal to the next generation of TV 
viewers, who - according to this story - "are increasingly tuning out 
of television altogether."

Can they view them on their Video iPODs?


Ready For Prime Time
Peter Kafka, 01.24.06, 6:30 PM ET

NEW YORK - Can two mediocre broadcast networks make one decent one?

That's the bet CBS and Time Warner are making by combining their UPN 
and WB networks. The logic, according to the two media giants, is 
that the combined network, to be called The CW, will be able to 
attract the famously elusive youngsters who are increasingly tuning 
out of television altogether.

And while the broadcast business has big problems in general, and the 
joint venture faces some particular stumbling blocks--for instance, 
who's really going to steer the 50/50 operation, CBS's Les Moonves or 
Warner Bros.' Barry Meyer?--there's actually a decent chance the 
merger could work for both sides.

The big picture is clear enough: Both networks, launched in 1995, 
have gone after younger viewers, and both have failed. Both are also 
money losers--The WB lost Time Warner $55 million last year, and CBS 
lost about $20 million on UPN, Deutsche Bank analyst Dough Mitchelson 
estimates--and neither has a show among Nielsen's top 20. But both 
have had some success with shows targeted at young 'uns: UPN's 
Everybody Hates Chris, for instance, and The WB's Gilmore Girls. 
Combine the two, and you may be able to make a run at the big four of 
CBS, News Corp.'s   Fox, General Electric's NBC and The Walt Disney 
Co.'s ABC.

"The notion of a fifth network is absolutely viable," said Bruce 
Rosenblum, president of Warner Bros.' Television Group.

That would likely be true no matter who was behind the fifth network 
in question. Just by reducing the number of broadcasters by one, the 
merger shrinks the inventory of prime-time advertising slots, which 
should boost prices across the board, notes Media Metrics analyst 
Laura Martin.

But there is additional appeal for the two partners. Both have strong 
studios--Warner in particular--that benefit not only when they place 
a show on their own networks, but also when they can resell the same 
show in syndication, on DVD or on whatever digital format consumers 
end up adopting down the road. Combing the networks gives both a 
better chance of getting their shows on the air to begin with, and 
the two sides have already worked out an agreement that lets them 
split revenue from any show either studio places on The CW.

And while media mergers and joint ventures are notoriously tough to 
pull off--Time Warner's Richard Parsons is still trying to sort 
through the wreckage of the Time Warner-AOL deal, while Sony Corp. 
and Bertelsmann are in the midst of a very public squabble about 
their combined music operation--here the two companies are a better 
fit than most. For starters, both are coming from pretty equivalent 
positions of power. And the four executives who will be overseeing 
the whole operation have all spent time together without breaking 
into public acrimony: Moonves, Rosenblum and CBS's Nancy Tellem all 
worked at Lormiar Television together, and Meyer worked with all 
three at Warner.

It's also probably not a coincidence that the deal was put together 
by two corporate parents under particular pressure to dazzle 
shareholders. Moonves needs to show investors that Sumner Redstone's 
move to split Viacom into two different stocks will pay off by 
letting him strike inventive deals. And Parsons, in particular, needs 
to convince his investors they're better off sticking with him and 
tuning out to rabble rouser Carl Icahn, who wants to break up Time 
Warner. A new network won't do that by itself. But it's a start.
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