meek-investor

The News Corp’s launch of the tablet newspaper The Daily in February 2011 was heralded as the future of news and revealing opportunities for major new entrants in the news market. After a year and a half of operation, the digital newspaper has lost more than $30 million, managed to gain only 100,000 subscribers—not a trivial amount but low for a global player, and has just announced that it is cutting 1/3 of its editorial staff and ending original production of sports news and commentary. Journalistically The Daily is not a bad news product and its app is facile and effective. So why hasn’t it been more successful? The fundamental problem is that the digital-only paper has been overshadowed by the success of legacy print newspaper brands in the market for digitally delivered news. The Daily has never been so brilliantly written and edited that it could gain the significant attention and acclaim needed to overcome the brand advantages of legacy news providers. Major newspaper—s...

The decision to close the News of the World in the UK because of the fallout from the phone hacking scandal shows the importance of ethical behavior and public credibility for media firms. The paper had been hacking the private communications of celebrities, politicians, crime victims, and even relatives of soldiers killed in Afghanistan and then spent four years trying to cover it up by paying hush money and—according to some reports—bribing police officers to ignore its crimes. The paper, owned by Rupert Murdoch’s News Corp., was Britain’s largest selling Sunday newspaper until it spectacularly unraveled in recent weeks. Continuing revelations of illicit activities and the announcement of Parliamentary and police investigations led advertisers including Ford, Sainsbury, Lloyds Banking Group, Virgin Media, Dixons, and Vauxhall to pull their advertising. Perhaps it was embarrassment—but it was more likely the loss of revenue, the loss of almost $3 billion in market value for ...

The decision by News Corp. to dump MySpace once again reveals the risks of over exuberance toward digital companies that do not have a proven business model or long-term customer loyalty. There are plenty of digital investments that meet those requirements, but a number of the most hyped firms moving toward IPOs and acquisitions do not. They need to be considered with hard headed pragmatism. MySpace was launched 2003 and rapidly became the toast of the digital world as a social networking site and “the place” for musical stars and fans to connect. By 2005 it was the fifth most visited site on the Internet. New Corp., which was anxious to benefit from growth in digital media, jumped at the opportunity to acquire the service and paid $580 million in 2005. It was an enormous price for a company with an unclear revenue potential. Within two years MySpace had grown to be the world’s number one social networking site and was receiving 100 million unique monthly visitors. But it still had rev...

This is not trick question and it is being increasingly asked as public broadcasters grow larger, offer multiple channels, move into cross-media operations, and increasingly commercialize their operations. The Federal Communications Commission will have to consider that question shortly when it considers the effort of WGBH Education Foundation—operator of WGBH-TV, the highly successful Boston-based public service broadcaster—to purchase the commercial radio station WCRB-FM. WGBH is the top ranked member of the Public Broadcasting Service in the New England and produces about one third of PBS’ programming. It operates a second Boston television station, WGBX-TV, and WGBY in Springfield, Massachusetts. In addition it operates FM radio stations WGBH (Boston), WCAI (Woods Hole), WZAI (Brewster), and WNAN (Nantucket) and is a member of National Public Radio and Public Radio International. It operates two commercial subsidiaries involved in music rights and motion picture production. This mo...

The impetus toward subscriptions for access and micropayments for single use of online news is growing because online advertising alone cannot sustain the news organizations necessary to provide high quality and broad coverage. In recent weeks Rupert Murdoch announced News Corp. will begin shifting its newspapers to an online paid model in the next 12 months, starting with Wall Street Journal and then progressively shifting papers such as the New York Post, The Times of London, the Sun and The Australian to a paid model. Dean Singleton followed by indicating MediaNews Group will begin doing the same for its papers, including Denver Post, San Jose Mercury News, Detroit News, St. Paul Pioneer Press, and Salt Lake city Tribune. Clearly charging for online news is likely to reduce online consumption because of elasticity of demand, but—setting aside the extent to which demand for online news will fall if a price is imposed—moving to a paid model will also creates two common, industrywide c...

Family owned and controlled businesses face challenges because of difficulties in passing firms on to succeeding generations of the family. Tax issues are a common problem, but the biggest challenges involve finding effective managers among the family and the needs for new capital that diminishes family control. How family members view the company over time create problems for sustainability. Individuals who establish firms tend to view it as a business enterprise; their children tend to see it as supporting the family; and multigenerational family businesses tend see it has providing status in the community. These latter priorities can interfere with profit and reinvestment objectives and endanger long-term sustainability. As a consequence of these kinds of factors, only about 30% of family firms are passed to a second generation and only 13% reach a third generation. This brings us to the challenges facing media firms. Three big companies—News Corp., Viacom, and New York Times Co.— a...

The real challenges facing media companies today are not technology or opportunities, but how to monetize activities in digital video media. The popularity of video downloads and streaming video on internet and mobile devices is growing exponentially and motion picture and television production companies are rushing to create deals to participate in the phenomenon. The biggest challenge is finding workable business models. A combination of technology and capricious consumers are altering existing media business models and making success with new models difficult. The traditional business models of media are eroding as audiences and advertisers respond to changing media markets and today both legacy and new media are struggling to find effective new business models for their existing operations and new products and services. It is complicated because a fundamental shift in financing media is underway and many companies are finding it difficult to adjust their business perspective. Durin...