Tag Archives: Time Warner

Amazon seeking to launch TV, movie subscriber service: WSJ

Amazon is seeking to launch a service that would give paying subscribers unlimited access to television shows and movies over the Internet, The Wall Street Journal said Wednesday. The newspaper, citing “people with knowledge of the proposal,” said the move is a bid by Amazon to take on movie service Netflix and grab a bigger slice of the online TV business. It said the Seattle-based company has proposed the Web-based subscription service to several major media companies including NBC Universal, Time Warner and Viacom among others. The Journal said Amazon would like to launch its new video service in time for the holiday season, “but it is unclear if any media company intends to participate.” It said the plan could could be delayed or shelved if not enough companies sign on. The service would be viewable on the Internet or through devices such as Web-connected TVs or Xbox 360 videogame consoles that play television shows and movies Amazon already sells on an individual basis, the newspaper said. Like Apple’s iTunes, Amazon currently offers TV shows for USD 1.99 per episode. The Journal said subscriptions could be bundled with the Amazon Prime service that gives offers free shipping on purchases. It said spokesmen for Amazon, NBC Universal, Time Warner and Viacom declined to comment on the proposed service

http://blogs.rnw.nl/medianetwork/amazon-seeking-to-launch-tv-movie-subscriber-service-wsj

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AOL says to close German, French offices

US Internet company AOL announced on Tuesday that it intends to close its French and German offices as part of a worldwide round of job cuts. AOL began meetings at its European offices on Monday, when it announced plans to shut down installations starting in Spain and Sweden. AOL, which was spun off from media giant Time Warner last month after a troubled merger, had announced in November it would take a 200-million-dollar charge as part of a restructuring as it regained independence. In December, AOL said the reduction in the workforce, representing about 2,500 jobs, was to be voluntary, with involuntary lay-offs to be used only if the restructuring target were not met. But only 1,100 employees took the voluntary departure programme, AOL spokeswoman Alysia Lew said on Monday. In the United States, the New York-based company said it began notifying “a limited number of individuals” affected by the lay-offs on Monday, with the majority of the pink slips being delivered on Wednesday. AOL, which employed 19,000 people in 2006, will have 4,400 employees after the restructuring plan is completed. The company is currently the number four gateway to the Web after Google, Microsoft and Yahoo, while its dial-up Internet access business has been gradually supplanted by high-speed broadband services.

http://news.yahoo.com/s/afp/20100112/tc_afp/useuropeitinternetcompanycutsstructureaol

AOL says it plans to offer marketeers the chance to create custom content. AOL’s ad model will allow advertisers to be affiliated with the content but not control what is written or created

AOL is putting the finishing touches on a high-tech system for mass-producing news articles, entertainment and other online content, the linchpin of Chief Executive Tim Armstrong’s strategy for reviving the struggling 25-year-old Internet company after Time Warner spins it off next month. Mr. Armstrong’s goal is to make AOL, which has been losing visitors and revenue, a magnet for both advertisers and consumers by turning it into the top creator of digital content. He hopes to do so in part by turning some media and marketing conventions on their ear, and potentially blurring the lines between journalism and advertising. AOL is betting it can reinvent itself with a numbers-driven approach to developing content, based on what Web-search and other data tell it is most likely to attract audiences and sponsors. Instead of waiting to sell ads until an article or Web video is produced, AOL—which has scores of niche sites, such as beauty and fashion site Stylelist, in addition to its AOL brand—says it plans to offer marketers the chance to work with its editorial team to create custom content. AOL says that its ad model will allow advertisers to be affiliated with the content but not control what is written or created. Media experts and others say that disclosing when articles or videos have been shaped by advertisers will be crucial to AOL’s credibility.

http://online.wsj.com/article/SB10001424052748703300504574565673001918320.html?mod=googlenews_wsj

Final farewell to worst deal in history – AOL-Time Warner

It was an auspicious occasion, the business titans of the West standing shoulder to shoulder at the dawn of a new century. On the stage of the Shanghai International Convention Centre, in late September 1999, the crème de la crème of business achievement smiled at the hundreds of delegates, both Chinese and from around the world, who had gathered for the Fortune Global Forum.

From AIG’s Hank Greenberg to Viacom’s Sumner Redstone, from Yahoo!’s Jerry Yang to General Electric’s Jack Welch, the three-day gathering was a veritable who’s who of corporate America.

Among the high-powered throng were two other men, perhaps less well known to the crowd. Gerald “Jerry” Levin, chairman of Time Warner, the media giant which had been formed 10 years earlier from the $14bn (£8.4bn) combination of Time Inc and Warner Communications; and Steve Case, chairman of AOL, the dotcom darling which had effortlessly swallowed Netscape for $4.2bn just months earlier.

It was at this rather grand gathering that the first seed was sown. Case pulled Merv Adelson, a long-time Time Warner board member, to one side, and asked him whether Time Warner’s board had thought about merging with AOL. Adelson went straight to Levin, who shrugged and initially dismissed the suggestion. But within three months – after a series of clandestine meetings in New York and Boston and a dinner at Case’s home – the two men announced the $360bn combination of AOL Time Warner on January 10 2000.

One of the world’s biggest media content companies was to merge with one of the largest distributors of internet content – a match made in mergers and acquisition heaven. It was the biggest corporate merger the world had ever – or would ever – see, and the supposed start of an expectant new age where traditional media companies would work hand-in-hand with their internet rivals.

Or at least, that was the theory. But within months – before the merger had even received regulatory approvals – things were beginning to sour. By December 2000, Time Warner issued a damaging profit warning that saw its shares plunge by 14pc within a day. It was downhill all the way from then on, and by the time the two companies formally combined in January 2001, it was clear to insiders that the cultural clash between the two would prove insurmountable.

A decade on, with AOL on the verge of stepping out from Time Warner’s shadow, by means of a long overdue demerger scheduled for December 9, the corporate world now has a chance to assess not only what went wrong, but also what the implications are for the two companies as they emerge from a decade-long corporate headlock – and for the rest of the industry as well.

Levin and Case knew little of one another – and arguably of one another’s businesses – before they struck the deal. An ageing Levin, a lawyer by training, had worked his way quickly through Time Inc’s corporate ranks, and while aware of the need to have an internet strategy, had little idea of the best way to get one.

Case, 20 years his junior, could not have been more different, having worked first in marketing for Pizza Hut, and then at a business which initially delivered computer games down telephone lines and eventually grew into America Online (AOL). A poster child for the internet age, by the age of 40 he had amassed a $1.5bn fortune and was running one of the world’s 25 biggest companies.

In the negotiations for the deal, Case used AOL’s larger market value to dominate Levin. He made sure he would have his key men around him, with AOL lieutenants taking the top financial job and one of the co-chief operating officer roles. Case became chairman and Levin chief executive in charge of operations. Neither man wanted to cede control.

According to Nina Munk, whose book Fools Rush In is the authoritative account of the merger and the subsequent fall-out, “even before the deal was announced, it was clear to just about every insider that this was going to be a fiasco”.

“As one of the top bankers who worked on the deal told me, trying to merge AOL with Time Warner was ‘like trying to mate a horse with a dog’,” she told The Sunday Telegraph.

Munk’s argument is that the deal was motivated not by logic or strategy but by egos, in particular the “fragile ego of an ageing Jerry Levin”. Board discussions quickly became fraught following the merger itself. Ted Turner, a director and the company’s largest shareholder, went public over his dislike of Levin, while Case and Levin came to blows on several occasions. The door to the chief financial officer’s office became a revolving one, with four occupants in three years and by the start of 2003, Case and Levin had both fallen on their respective swords.

The boardroom ructions meant that the new company never really merged. Although each of the two original companies had its own reason for merging – AOL wanted broadband capability from Time Warner Cable and additional content to use across its sites; Time Warner desperately needed a way to digitise its content and reach out to a new online audience – neither strategy was played out in practice.

Integration did not take place – apart from at a corporate level – and as the various business units continued to stand alone, so the expected financial benefits from merging the two companies did not emerge. Negative synergies even developed, as AOL was held back from getting involved with external providers, in part because of a great suspicion of AOL managers by their Time Warner counterparts who believed they wanted to take over the entire company.

One of the biggest blows to the merger was the damaging revelation that AOL had been inflating sales to cope with falling advertising in 2000 and 2001 to the tune of $190m. The company paid a heavy price, with write-downs leading it to report a $98.7bn loss for 2002 – the largest in US history at the time. It also had to pay sizeable fines.

Given all this coincided with the bursting of the dotcom bubble – without which the all-share merger would never have been possible in the first place – it was perhaps no surprise that the men behind the disastrous merger jumped ship, and by January 2003, Dick Parsons, formerly co-chief operating officer, was left to single-handedly sort out the mess. What Parsons started – a slow unravelling of the merger which began with the removal of the AOL name from the merged business in 2003 – his successor Jeff Bewkes has accelerated in the 22 months he has been chief executive.

Where Parsons was heavily criticised for not being swift enough in demerging parts of the empire, Bewkes could not be accused of being slow to act. In his first year fully in charge – Parsons only stepped down as chairman at the end of last year – he has completed the demerger of Time Warner Cable, which produced $9bn in cash which he still has to hand, and paved the way for the impending demerger of AOL.

Unlike his forebears, Bewkes is not a fan of marrying distribution to content, believing the two should be separately managed, and has taken what many view as the correct decision to focus the company on its niche: content. Although a firm believer in the power of the internet in terms of increased viewers and readers, he does not see the need to reinvent content for online readers, rather just repackage and direct it in the best way possible.

Whilst its publishing division, the Time magazine business, is struggling – sales fell 18pc in the three months to September – Bewkes has recently dismissed suggestions that he might turn most of its 23 magazines into online-only operations.

When it comes to television, Bewkes believes in what he calls “branded networks” – that speak to specific segments of the audience. In the US, the business, through its Turner division, has a stable of strong cable channels including TBS, which positions itself as the home of comedy, TNT, the home of drama, and CNN, the home of independent news. The content-led strategy flows through into Bewkes’ remaining two divisions – premium content cable channel HBO and film business Warner Brothers – and is one he is set on.

To date his strategy appears to be paying off and while third-quarter results showed a slight dip in profits, he told investors the outlook for 2010 would deliver “steady and attractive” returns, perhaps why Time Warner’s share price has risen almost 50pc since the start of this year.

AOL’s future, however, does not look as bright. Although the strategy of chief executive Tim Armstrong is almost identical to that of Bewkes, focusing on content and increasing on-site advertising, the challenges he faces are more significant. Not only is he in the process of asking just over a third of AOL’s 6,900 workforce to take voluntary redundancy, but he also has to get the outside world to understand not only that AOL actually still exists, but what it stands for today.

At the recent Money and Media conference in New York, Armstrong stressed that AOL would not be the unfocused one-time internet behemoth of the past. Instead, he said he wants it to be the king of content, content people might not readily realise belongs to AOL. The company has slowly acquired a wide and varied network of news websites and blogs, from special interest news sites like Politics Daily and Blogging Stocks, to locally-focused news sites like the “Patch” sites currently operating in New Jersey and Connecticut. He’s also focused on delivering video content online, and is a strong believer in the power of social networking tools to deliver content, through the likes of Bebo and also AOL’s popular AIM and ICQ online chat tools. The theory is that the content and its viewer-base will drive advertising, in particular banner and display advertising.

But that’s where the mis-match is between Armstrong’s rhetoric and reality. What he does not really talk about is the fact that the “vast majority” – according to Time Warner’s recent results – of AOL’s profits come from its dying internet access subscription business. That business lost 2.1m users in the year to September 2008, and now has just 5.4m users and counting, downwards. The media business, which relies for some of its web traffic on the access business, loses approximately $600m a year. Unless Armstrong can work out how to replace those profits – and quickly – AOL’s financial future looks highly uncertain.

Just as AOL finally emerges from Time Warner’s shadow, two other media companies look set to travel the same rocky route. Comcast’s advanced discussions with General Electric about a joint venture with the industrial conglomerate’s NBC Universal division is exactly the marriage of distribution and content that failed at AOL Time Warner.

And just as they did nearly 10 years ago when that merger was taking shape, Wall Street’s technology and media analysts are getting over-excited at the prospect of Comcast and NBC joining forces, in spite of the lessons of the recent past.

It would “accelerate new business models, momentum for online authentication, new approaches to on-demand and online windowing content, and interactive advertising initiatives,” wrote Bank of America Merrill Lynch analyst Jessica Cohen in one note. Very few have sounded caution, although Macquarie’s Ben Stretch did note earlier last week that there appear to be growing “howls” about the deal, arguing that “vertical integrations fail to add value”.

Some media giants appear to have learned from the mistakes of their rivals, with Sumner Redstone’s Viacom spinning off CBS and creating Viacom’s cable networks business, while Barry Diller’s IAC has demerged a number of smaller entities to provide value for shareholders and strategic focus. Yahoo!’s decision to essentially hive off its search engine to Microsoft and focus on big-name advertising clients is somewhat similar.

Indeed, although not directly related, the lessons of the financial crisis are also prescient here. Some argue that the marriage of consumer banks to investment banks in the 1980s and 1990s created a toxic atmosphere which led to the creation of derivative products and the absence of risk management, the after-effects of which are still being felt. The excess and lack of forethought seen in the AOL- Time Warner deal is similar to this.

In a corporate world where big has always tended to be seen as better, perhaps the implications of the fall-out from the AOL-Time Warner fiasco might stop other business leaders wandering aimlessly down the value-destructive path trod by Case and Levin 10 years ago. The titans were brought down to Earth with a crash.

http://www.telegraph.co.uk/finance/newsbysector/mediatechnologyandtelecoms/media/6622875/Final-farewell-to-worst-deal-in-history—AOL-Time-Warner.html

CNN plans move from web TV to full scale Video on Demand services as four CNN.com web anchors are ‘dropped’

CNN laid off its four Web anchors on Thursday and said it had stopped producing continuous live video for CNN.com, curtailing one of the Internet’s biggest news experiments. The company, a unit of Time Warner, also said it was making new investments in on-demand video. CNN.com established a broadband channel in 2005, first as a subscription site and then as a free advertiser-supported service. At its center was a live-anchored newscast from 9 a.m. to 7 p.m. each weekday that often resembled a minor league rendition of CNN on television, complete with many of the same correspondents and guests. The programming was “very ambitious and very expensive,” said Andy Plesser, who analyzes online news sites as the executive producer of Beet.TV. CNN has seen substantial revenue gains from online video advertising this year, but company officials concluded recently that the live-anchored Webcasts were not cost-effective. Of the roughly 100 million video streams that CNN.com says it delivers each month, only two million to three million of the streams were for the service, called CNN.com Live. CNN.com will still show live streams of events like press conferences.

http://www.nytimes.com/2009/11/13/business/media/13anchor.html?_r=2&ref=media

Nielsen meets with big clients to discuss TV and Internet measurement solution

Nielsen Co. has wrapped an important meeting with 80 clients from companies that included CBS, NBC, ABC, Microsoft, Time Warner, Comcast and Hulu where the topic was how best to move ahead with developing a single-source system that will measure both television and Internet media consumption in the home.

The push from some clients is to get such a system up and running by late 2010. Nielsen has been pushing for the middle of 2011. Putting the squeeze on to move up the timeline are cable giants Comcast and Time Warner Cable, according to a person at the meeting. Both are pushing new online viewing services and have lined up several major cable networks to provide content.

Currently, Nielsen has people meters in about 18,000 homes. It’s those meters that provide the ratings responsible for billions of dollars’ worth of ad sales. As more and more people start to watch content online on sites such as Hulu or YouTube, content providers and distributors want solid numbers to sell advertising. Nielsen has been testing measuring for both TV and Internet viewing in about 395 homes. Nielsen measures online usage in a separate sample that tracks about 200,000 people. If you are wondering, like I was, why the Internet sample is so big, that’s because while Nielsen only tracks about 100 channels, it follows 20,000 websites.

There was a “broad agreement” of adding Internet measurement in the households that already have people meters,” said Sara Erichson, Nielsen’s president of Media Client Services, who ran the get-together at the Harvard Club in midtown Manhattan.

The challenge, Erichson said, is finding homes that will allow for both the people meter and the software that goes inside the computer to measure Web watching.

“Tens of billions of dollars are transacted off of these numbers; we want to make sure that by asking people to do both, you don’t have fewer people saying yes,” she said. “Can we do it faster without negatively impacting quality” is the issue, she added

http://latimesblogs.latimes.com/entertainmentnewsbuzz/2009/10/nielsen-meets-with-big-clients-to-discuss-internet-measurement.html

Magazines seek clever social media ‘community’ route to market – create an online virtual kiosk

Time Inc is gathering U.S. magazine publishers to start a jointly run digital newsstand next year that would deliver their titles to mobile devices like increasingly popular electronic book readers.

Time Warner is leading the effort, and has approached other big U.S. magazine publishers including Conde Nast and Hearst Corp, a source with knowledge of the joint venture but no authorization to speak about it told Reuters.

Users of the service would get a digital newsstand where they could buy subscriptions, potentially by the month or year or in other forms, the source said.

The venture would let magazines that have been hurt by a sharp decline in advertising in revenue in recent years get their titles in front of people who increasingly are turning to devices like Amazon.com’s Kindle and Apple’s planned tablet device to read books, magazines and newspapers.

It also would charge readers for their content, something that newspaper and magazine publishers have found nearly impossible to do after more than a decade of being on the Web.

The stakes are high for publishers to find more ways to make money online. Print ad revenue is falling across their titles, forcing some to close and putting the long-term futures of others in doubt. Many reports have speculated that Time Warner could even sell its magazine division, though nothing is imminent, sources have previously told Reuters.

A formal announcement of the venture could come within a month, and the service is expected to launch sometime next year, the source said, adding that many financial details still must be worked out.

The idea originated under John Squires, a Time Inc executive who earlier this year was charged with coming up with ways to help Time Inc and its titles such as Time magazine, Sports Illustrated, People and Fortune make money online as the print business declines.

Parent company Time Warner has been trying to do this in other ways, including the ambitious effort with Comcast Corp to work on “TV Everywhere,” a program to extend cable programming to the Internet.

The idea bears some resemblance to the Hulu online TV project run by General Electric’s NBC-Universal, News Corp and Walt Disney’s ABC, as well as private equity company Providence Equity Partners.

Officials at the publishers were not immediately available for comment. The Media Memo and PaidContent.org blogs and the Financial Times newspaper reported the news earlier on Friday.

People already can use the Kindle to read periodicals, but many newspaper publishers do not like the arrangement because Amazon in many cases claims 70 percent of the revenue from those subscriptions.

The joint venture would let publishers set their own terms for dealing with their readers, increasing their leverage with device makers.

Time has held conversations with publishers, and the publishers in turn have had conversations with several device makers to see what kinds of technology would be most attractive for the publishers, the source said.

One important element, the source said, is finding ways to make the act of turning pages on an electronic device as easy as it is with paper. Another is finding ways to present photographs in ways that are as attractive as they appear in many glossy magazines. Yet another would be adding video.

It is unknown whether newspaper publishers would be involved. If they are not they bloody well should be – this might be the only way to get away for charging for online content without alienating the billion people who are currently online

http://uk.reuters.com:80/article/idUKTRE59207320091003?sp=true