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Big Media Still Lack Big Ideas; Moguls No Longer Fear Netflix But Now Worry About Internet Video: UBS Confab Wrapup

By DAVID LIEBERMAN, Executive Editor | Saturday December 10, 2011 @ 4:00am PSTTags: 24, CBS, Chase Carey, Jeff Bewkes, Les Moonves, Lowell McAdam, Netflix, News Corp, Philippe Dauman, Reed Hastings, Time Warner, Verizon, Viacom

For some strange reason, I thought at least one Big Media mogul would use this week’s UBS Annual Media and Communications Conference to reset investor expectations about the Industry. I waited for someone to say that it’s time for execs to stop licking their wounds from the last decade’s disastrous mergers and recessions and to start launching dynamic job-creating initiatives. I even expected someone might  hint at a transformative deal that would expand the digital world’s supply of quality news and entertainment. The timing seemed right for all of the above since most of the CEOs noted that their companies are flush with cash and expect much more to flow their way in 2012, especially from the quadrennial advertising jolt provided by political campaigns and the Olympics. (Forecasters said that total domestic ad sales will be up anywhere from 3.2% to 4% in 2012.) Instead, the moguls mostly ladled out the same thin gruel they delivered throughout this year including their last round of earnings calls. They’ll collect additional revenues by syndicating content to digital streaming services. Or by demanding retransmission consent fees from pay TV providers. And returning cash to investors through dividends or share repurchases. hard to work up enthusiasm about such unimaginative strategies.

While the overarching themes of this year’s conference sounded a lot like last year’s, there was one important difference: Big Media isn’t afraid of Netflix anymore. At last year’s confab, moguls wondered publicly whether they should license TV shows and movies to the fast-growing company that seemed poised to become a gatekeeper to the promised land of Internet video. But Netflix CEO Reed Hastings packed the main auditorium at the Grand Hyatt New York by asking investors to forgive him for the pricing blunder in July that destroyed his company’s aura of invincibility — and resulted in a 76% decline in its value. Meanwhile, media moguls embraced Netflix because it’s now an important customer for their content. Even Time Warner’s Jeff Bewkes retreated from his comment last year that Netflix was like the Albanian army trying to take over the world. The streaming service “is our friend,” Bewkes now says. News Corp COO Chase Carey called Netflix a great venue for Fox’s series 24, which had been hard to syndicate. And CBS’ Les Moonves says that Netflix is “more friend than foe. We’re rooting for them to expand.”

But moguls still disagree about whether Internet video will upend traditional media, an issue that’s taking on new urgency as tech powers including Apple, Google, and Microsoft step up their efforts to find a place in people’s living rooms. Hastings says broadcasters will be big losers in a few years as viewers flock to Internet-delivered shows that address narrow, personal interests. “To some degree we’ll look at broadcast in 20 years as being like [telephone] party lines,” he says. Verizon CEO Lowell McAdam also believes Web video will appeal to pay TV customers, possibly leading many to cut back on conventional cable or satellite services. “The jury’s out, but I do believe there’s a place for over-the-top” — jargon for a digital alternative to traditional pay TV — he said. “That model has yet to be determined and I hope we’ll be a player in that.”  By contrast, Moonves sees broadcast TV growing ever stronger as audiences use DVRs and VOD, and in some cases old-fashioned antennas, to watch more of the major networks’ shows. Viacom’s Philippe Dauman echoed that it’s premature to count the Big Media old guard out. “We spend about $3B a year on programming. No one spends more than we do, and we’re going to grow that.”

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Report: Redbox Teaming Up With Verizon To Launch Video Service In 2012

By DAVID LIEBERMAN, Executive Editor | Thursday December 8, 2011 @ 12:52pm PSTTags: Coinstar, Lowell McAdam, Paul Davis, Redbox, Verizon

Web site TechCrunch appears to have filled in a key missing piece to the reports this week about Verizon’s plan to launch a digital service for movies and TV shows: The site says that much … Read More »

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Verizon Chief Mum On Netflix Challenge, But Says He Eyed Hulu: UBS Confab

By DAVID LIEBERMAN, Executive Editor | Wednesday December 7, 2011 @ 2:13pm PSTTags: Broadband Access, Comcast, Hulu, Lowell McAdam, Netflix, Verizon, Verizon FiOS, Verizon Wireless

It’s hard to figure out Verizon’s place in the infotainment world — and CEO Lowell McAdam kept things murky in his appearance today at the UBS Annual Global Media and Communications Conference. He wouldn’t address this week’s surprising report that the phone giant might launch its own national movie and TV streaming service, potentially pitting it against Netflix. But he’s clearly interested in the business: McAdam said that Verizon seriously considered bidding for Hulu. “The jury’s out, but I do believe there’s a place for over-the-top” — jargon for a digital alternative to traditional pay TV — he said. “That model has yet to be determined and I hope we’ll be a player in that.” Wouldn’t that hurt Verizon’s FiOS, which provides a cable-like TV service to 4M subscribers? “Over-the-top can be complementary,” McAdam says. ”I don’t think it’s one thing or the other.” He was equally certain that FiOS “will not be disadvantaged” by Verizon’s new agreement with Comcast and other cable operators: The phone company will pay them $3.6B for their wireless spectrum — but also give them opportunities to sell Verizon Wireless phone service, even in markets where they compete with FiOS. McAdam says that he expects FiOS to eventually capture as much as 50% of the video and broadband customers in the markets it serves. Read More »

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