MediaPost
Early AT&T/Time Warner Merger Reports See Trouble Ahead
Wall Street investors aren’t so sure that the nearly $85.4 billion deal AT&T is proposing for Time Warner will be an easy ride. Early Oct 24 trading pushed Time Warner’s stock down 2.4% to $87.33 -- all due to AT&T’s proposed deal for the company equating to a price tag of $107.50. For its part, AT&T’s stock was down nearly 2% to $36.80. Analysts are worried on two fronts: First, that federal regulatory concerns will make it a tough go for the merger to be completed. Second, that vertical media integration itself has had difficult times in working well.
Although AT&T claims it competes in virtually no areas where Time Warner operates, federal agencies may believe that media vertical integration -- that of the biggest pay TV provider in the US, AT&T’s DirecTV, and a big TV-movie content producer, Time Warner -- isn’t a good deal for consumers. Another outside reason for troubles for the deal: A new possible bidder, which is why AT&T rushed to complete it over a weekend -- just two weeks before the presidential election. Donald Trump, for example, has already said he is against the merger; Hillary Clinton will generally be tougher on mergers overall. Still, favoring this merger could be the singular weaknesses of different media companies. That could mean other possible big media deals.
ISPs' Data About Consumers Is Worth 'A King's Ransom,' Privacy Guru Says
Broadband providers have spent months complaining that proposed new privacy rules would unfairly subject them to more stringent privacy rules than Google, Facebook or other online companies. Today, privacy guru and law professor Paul Ohm -- an outspoken proponent of tough privacy rules -- answers that objection. Internet service providers, Ohm says, should have to follow tough standards because ISPs pose a greater threat to privacy than other companies. "Your ISP is the mandatory first hop to the rest of the Internet, and everything you do while connected to a particular ISP flows first through its servers," he writes in a post at Benton Foundation. "Your ISP can develop a nearly-comprehensive picture of what you do that other companies would pay a king’s ransom to be able to access."
People's Web-Browsing History Isn't 'Sensitive,' ISPs Argue
Broadband providers AT&T, Comcast and T-Mobile have officially asked the Federal Communications Commission to retreat from a privacy proposal that could limit online behavioral advertising.
The proposal would require Internet service providers to obtain consumers' explicit consent before drawing on their app usage or Web-browsing histories for ad targeting. That proposal applies only to companies that offer Internet access services like Verizon and Time Warner as opposed to online publishers, search engines and other so-called "edge" providers. Google, Facebook and other Web site operators currently let people opt out of receiving behaviorally targeted ads, but don't seek people's advance permission unless drawing on data the ad industry considers "sensitive." In general, that ad industry says the concept includes precise geolocation information, financial account numbers and health-care data. AT&T, Comcast and T-Mobile are now lobbying the FCC against the proposed rules. AT&T vice president Joan Marsh spoke with the agency and espoused the view that customers "do not expect different rules to apply to the various entities within the internet ecosystem." T-Mobile argued in a separate filing for "a level playing field among ISPs and edge providers." The company adds that it should not have to obtain consumers' opt-in consent before drawing on their "non-sensitive" Web browsing and app usage history. Comcast senior vice president Kathryn Zachem likewise told FCC last week that broadband providers should be able to draw on subscribers' "non-sensitive" Web-browsing and app usage history for ad targeting on an opt-out basis.
Chairman Wheeler Plans To Finalize Broadband Privacy Rules This Year
Federal Communications Commission Chairman Tom Wheeler said that he anticipates finalizing broadband privacy rules later in 2016. Testifying at a Senate hearing, Chairman Wheeler also hinted that the final regulations could differ from a proposal he put forward earlier this year. That initial proposal would require Internet service providers to obtain consumers' consent before drawing on their Web-surfing data for behavioral targeting. Ad networks, online publishers and other online advertising companies, by contrast, typically operate on an opt-out basis. While Chairman Wheeler didn't elaborate on how the rules may evolve, he said in his prepared testimony that the Federal Trade Commission's input "has been particularly helpful."
Staff at the FTC recommended earlier this year that Internet service providers should obtain opt-in consent before using "sensitive" data for ad targeting, and allow consumers to opt out of the use of "non-sensitive" information. Some broadband carriers have argued that they should be able to treat sensitive and non-sensitive data differently. Verizon, for instance, argued in an FCC filing that it should only be required to obtain opt-in consent for "the most sensitive use cases." But privacy advocates have argued against different rules for different types of data. "A rule that varies based on sensitivity will be a much more complex, unpredictable, and less privacy protective one," privacy expert and former FTC adviser Paul Ohm recently told the agency. What's more, he adds, figuring out whether information is sensitive "requires far more invasion of privacy as well as far more surveillance."
Netflix Presses FCC To Condemn Data Caps
Netflix is calling for the government to crack down on broadband providers that impose data caps on their subscribers.
Data caps "discourage a consumer’s consumption of broadband, and may impede the ability of some households to watch Internet television in a manner and amount that they would like," Netflix says in a new filing with the Federal Communications Commission. Netflix is urging the FCC to rule that all data caps on wireline networks, as well as "low" data caps on mobile networks, may "unreasonably limit Internet television viewing." The company adds that data caps (as well as pay-per-byte billing) don't seem to have any purpose other than to make online video more expensive for consumers. Consumer advocates have made the same point, arguing that data caps don't help manage congestion on wireline networks, given that the caps aren't pegged to current network conditions.
Donald Trump Is King Of Earned Media
As Republican Presidential candidate Donald Trump now starts up a paid TV advertising campaign, he continues to lead in earned media over Democratic Presidential candidate Hillary Clinton. For the month of August, Trump pulled in $509.3 million in earned media compared to Clinton’s $364.2 million, according to mediaQuant, an earned media measurement company. In July -- the month in which respective party conventions were held -- the race was closer, with Trump getting $573.4 million compared to $539.8 million for Clinton. Earned media is defined as press interviews and appearances on all media including TV, radio, online and print publications. Overall, for the trailing 12-month period, Trump has amassed $4.6 billion worth of earned media versus Clinton’s $2.5 billion. In recent days, Trump has kick-started his first paid TV advertising campaign, which analysts says is traditionally very late for a presidential candidate. Trump said TV advertising has not been necessary, given his wall-to-wall TV appearances .
Watchdog Refers Sprint To FCC Over Ads
An ad industry watchdog has referred Sprint to the Federal Communications Commission over ads stating that mobile customers can save 50 percent on their monthly rates by switching to Sprint.
The National Advertising Division, a unit administered by the Better Business Bureau, recommended in May that Sprint revise the ads, which appeared on TV, the radio, the Web, and in print. On Aug 19, the NAD said it had referred Sprint to the FCC because the company "has not agreed to implement all of NAD’s recommendations." A Sprint spokeswoman says the company believes its ads are "truthful, accurate and in the spirit of competition." The ads, which were challenged by T-Mobile, promised to slash people's bills by 50% when they switched to Sprint. T-Mobile argued that the boasts were problematic because its customers are on "hundreds" of plans, and only some customers would see their bills reduced by 50 percent by switching to Sprint.
Comcast Defends 'Pay-For-Privacy' Pricing, Makes Case To FCC
Comcast is asking the Federal Communications Commission to reject proposed rules that would prohibit broadband providers from charging higher fees to subscribers who decline behaviorally targeted ads.
"A bargained-for exchange of information for service is a perfectly acceptable and widely used model throughout the U.S. economy, including the Internet ecosystem, and is consistent with decades of legal precedent and policy goals related to consumer protection and privacy," Comcast writes in a new FCC filing. The broadband provider adds that a prohibition on a pay-for-privacy pricing system "would harm consumers by, among other things, depriving them of lower-priced offerings." Comcast also contends the FCC "has no authority to prohibit or limit these types of programs."
Media Conglomerates Rely Less on Ad Revenues
Big media companies are moving to lessen their reliance on advertising revenue in favor of other sources of revenue including subscriptions, syndication, and production fees, according to a new analysis by SNL Kagan.
Whether it’s deliberate or not, media conglomerates are seeing ad revenues decline as a proportion of their total business, SNL Kagan noted.
TV Still Dominates World Media Use
Worldwide, TV viewing remains the single biggest media activity. On average, 2.58 hours per day are consumed globally, according to GlobalWebIndex’s recent Media Consumption report.
That's 23% of total time spent on the media. The US remains the biggest TV market, with an average of 4.33 hours a day. Online TV viewing continues to rise -- now at 0.7 hours a day. That's a 6% share of all media time.