May 2010

Sprightly Old Media Are Still Elderly

Juiced by a bounce-back in advertising from the recession, newspaper and TV stocks are enjoying a spectacular renaissance. In a couple of extreme cases, old-media values are now higher than for Internet companies. Investors are right to expect media earnings to rebound sharply from their lows if the economy recovers strongly and fosters a cyclical lift in advertising. But while TV-station groups are likely to post impressive first-quarter increases, that isn't the same as long-term growth. Certainly, this year's improvement in ad revenues justifies a lift in oversold old-media stocks. But the long-term threats overhanging the entire media sector haven't gone away-if anything they are closer to realization. Caution is in order.

FCC reclassification would face political, legal opposition, analysts say

Federal Communications Commission Chairman Julius Genachowski's reluctance to reclassify broadband as a Title II service suggests that pursuing such a course could be a struggle for the agency, according to a note from two analysts published Monday.

Rebecca Arbogast and David Kaut of Stifel Nicholas wrote in a report to investors that they don't think a final decision has been made by Chairman Genachowski, who would have to get three of five votes from FCC members in any decision. "This may accurately capture the current state of deliberations, but we do not think a final decision has yet been made," they wrote. "There's speculation that today's story was a trial balloon, an attempt to galvanize Title II backers to more forcefully make their case, or a snapshot of a moment in the deliberative process." Arbogast and Kaut said that reclassifying broadband as a Title II carrier service would face significant opposition from broadband service providers, who would challenge such a move legally and politically. Reclassification could also give Republicans political ammunition to use against the Obama administration; even though the FCC is an independent agency, Genachowski is an Obama appointee. The analysts said Republicans could argue that Title II reclassification would lead over-regulation of the Internet, hurting job creation and chilling investment. However, Arbogast and Kaut sought in their note to rebut claims about the heavy regulatory impact of reclassification.

"We do not agree with those who have charged that there will necessarily be massive re-regulation of broadband under Title II, and that even if the FCC decides to forbear from imposing common carrier regulations it would take years to effectuate the relief," they wrote. "Rather, we believe the agency will try to reach the same end game it was pursuing before the recent FCC setback in the Comcast case."

Arbogast and Kaut wrote that they expect Chairman Genachowski to give direction on the issue in the next few days or weeks. He would solicit public comments for several months. And they said that Genachowski may pursue multiple tracks at once: collecting comments on Title I or Title II; moving forward on merger reviews including of the Comcast-NBC Universal deal; working to bolster the FCC's case for network neutrality rules; and pursuing other items such as rules on wireless data roaming and reform of a phone subsidy to include broadband.

News Media Survival Requires Fact-Checking

[Commentary] In traditional media, trust in news was established by ethical behavior, like good intent backed up by checking the facts. Distrust in the press grows when traditional journalistic values, like fact-checking, are forgotten.

Fact-checking is a lot of work and frequently expensive, and in today's media environment, there are a few cases where it's done in good faith as it is at The New Yorker and Consumer Reports. For a while, two groups which have done really good work trying to restore this tradition, are FactCheck.org and also PolitiFact.com. Even when I disagree, usually regarding excessive literalism, I see they're doing good work. Recently, a genuinely big deal traditional journalism guy, Jay Rosen, suggested that the Sunday morning political talk shows start fact-checking their guests, big politicians. ABC is implementing the idea while NBC refuses to.

Why The FTC Should Allow The Google-AdMob Merger

[Commentary] The Federal Trade Commission is expected to make a decision as early as this week on whether to allow Google's $750 million acquisition of AdMob. The two companies expect the FTC to block the acquisition because of antitrust concerns. The reasoning doesn't seem to have anything to do with what will happen to the mobile ad-serving business as a result of the purchase -- rather it's a way for the government to show its concern for Google's dominance in search on the web. But there are plenty of reasons why the FTC should approve the deal. Mobile advertising is in its infancy, and was barely considered a vibrant market until Google agreed to buy AdMob. Apple's subsequent acquisition of Quattro Wireless helped generate additional momentum. In other words, the merger is a chance to make mobile advertising exciting after years of the wait-and-see game.

Duke study: TiVo doesn't hurt TV advertising

TiVo hasn't hurt television advertising or changed consumers' buying behavior, reports a Duke University researcher. Carl Mela, a professor in Duke's Fuqua School of Business, says that the ability to skip through the advertisements has had no effect on buying behavior and that not as many people fast-forward through television commercials as originally feared.

"Companies are afraid of a 'TiVo effect' and are changing their media spending as a result," says Mela. "But we find no change in people's shopping patterns when we compare a group that has TiVo with a group that doesn't. The manufacturers' fears seem to be overstated."

Mela attributes the lack of impact to several factors:

About 95 percent of people still watch television live and, as a result, cannot fast forward through the commercials.
Even those without a DVR can skip commercials by using the breaks to go to the kitchen or flip to a different channel.
While viewers fast-forwarded through about 70 percent of the commercials in shows they recorded, they still watch the screen to know where to resume play, meaning they are still being exposed to the advertisements.
The ability to record a show and watch it later means consumers are watching more television.

Cable news most trusted in new opinion survey

A new "60 Minutes"/ Vanity Fair poll finds CNN and Fox News to be "more trustworthy" than a couple of major newspapers and the news divisions at the broadcast networks.

Thirty-two percent of those polled picked CNN as the most trustworthy news source, with 29 percent choosing Fox. Breaking down the numbers along party lines, it seems that half of those who identify as Republicans chose Fox, while 46 percent of Democrats went with CNN. The broadcast networks were described as "most trustworthy" by just 13 percent of respondents, followed by the New York Times (8 percent), the Wall Street Journal (4 percent), and Comedy Central's "The Daily Show" (4 percent).

US Mobile Culture Still in Stone Ages, Survey Says

[Commentary] The United States is surprisingly lagging other countries in the adoption of both cutting-edge and traditional mobile services, states a new survey by Sybase 365, the mobile services arm of Sybase.

Sybase 365 commissioned a study of some 4,100 mobile phone users across 16 countries, including the United States, China, Germany, South Africa, India, Mexico and the United Kingdom, to learn about their mobile culture. The key finding: The United States finished dead last in the use of simple mobile technologies such as text messaging and instant messaging. Only one in three U.S. respondents take advantage of these services. In comparison, nine out of 10 respondents in China text on their mobile phones. The United States fared only a little better with modern mobile services, such as mobile commerce and mobile customer relationship management solutions. Thirteen percent of U.S. respondents make use of modern services, edging out Canada. Whereas nearly half of respondents in China have adopted them. How did other countries beat out the United States? Developing regions have more to gain with mobile commerce. In Africa, for instance, people can pay for goods with a simple text message and a payment card that acts as currency-that is, they don't need a bank account. In the United States, however, most people have access to banks and ATM machines.

CBO Scores Telework Improvement Act

The Congressional Budget Office has provided a cost estimate for the Telework Improvements Act of 2010 (H.R. 1722) which would require executive branch agencies of the federal government to establish policies to determine which employees are eligible to participate in certain telework programs. (Telework programs enable employees to work part time from places other than their regular place of employment.) Under the legislation, agencies would designate an officer to oversee teleworking practices and would authorize trial programs to test alternative ways to compensate certain federal employees who telework. CBO estimates that implementing H.R. 1722 would increase the administrative costs of federal agencies by $2 million in 2010 and by $30 million over the 2010-2015 period, assuming the availability of appropriated funds. CBO estimates, however, that any net increase in spending for telework programs by those agencies would not be significant.

Publicly Owned Fiber Networks Spur Competition

"Publicly owned fiber networks have proven globally competitive - they offer the single best hope for communities that need to stay competitive in the digital age," says Christopher Mitchell, Director of the Institute for Local Self-Reliance (ILSR) Telecommunications as Commons Initiative and author of a newly released ILSR report Breaking the Broadband Monopoly.

The comprehensive study offers details on many successful publicly owned broadband networks and draws lessons from their experience. Lafayette, Louisiana, and Monticello, Minnesota, the report notes, built citywide fiber-to-the-home networks offering a symmetrical 10 Mbps (million bits per second) package for less than $30/month. These packages offer the best broadband value of any connection in the US. The report explores the ways publicly owned networks have created true competition for citizens by breaking the stranglehold of cable and telephone oligopolies. As Mitchell, a national expert on community networks says, "Public ownership offers the only realistic option communities have to create competition in broadband services. Communities with these networks pay lower prices and have faster services."

Incumbent Facts May Be Stubborn, but Community Reality Bites

[Commentary] Let's do a little analysis of incumbent PR strategy. First, there's the ADD defense (attention deficit disorder). I make an argument, you shift the discussion to a point not relevant to mine and make your case with gusto. Then drop in a few data points that sound impressive. Repeat as needed. I've experienced this in several public debates I had recently. The thinking must be that the audience/readership is too slow to realize you dodged the topic, or they'll realize it but get sucked into the new conversation and never manage to get back to the original point. The challenge for everyone fighting for better broadband in the U.S. is that the constant repetition of facts can get people to buy into positions counter to their best interests if we're not vigilant and diligent. Our task in countering the incumbent PR machine is not separating fact from fiction, but separating reality from stated fact and the context of its use.

Benton

Search