September 27, 2020

Advertising: Univision Reset Sights After Ratings Win Over NBC

Univision was emboldened by February sweeps numbers showing that it beat NBC, coming in fourth place with adults in the 18- to 49-year old demographic, while NBC finished fifth. As a result, network executives spent less time focusing on their Spanish-language competitors at the presentation and more time taking direct aim at their competitors on network and cable television.

“By the end of the week you’re going to have a tough time pairing which shows go with which networks,” said Steve Mandala, the executive vice president for advertising and sales at Univision, commenting on the crush of offerings during upfronts week, the New York event when cable channels and network television present next season’s shows to advertisers. “They all seem to be asking for more in the face of declining audiences.” Mr. Mandala stressed Univision’s young “DVR-proof” viewers who watch a majority of the network’s programming live.

The highlight of the presentation, held at the New Amsterdam Theater, was the announcement that Univision would team up with the El Rey Network cable channel, created by the filmmaker Robert Rodriguez and FactoryMade Ventures, a media development and consulting firm.

El Rey was born out of a series of conditions that Comcast had to meet before completing its deal to take control of NBCUniversal. The conditions, mandated by the Federal Communications Commission in 2011, required Comcast to promise to carry several channels owned by minorities to win approval for the deal. Univision will be handling advertising sales and other day-to-day operations for El Rey.

The partnership, which is aimed at second- and third-generation Latinos, allows Univision to further expand its footprint among Hispanics in the United States with English as their dominant language. It is the most significant expansion into that space since the creation of Fusion, a joint venture between ABC News and Univision, announced last year. Though a full slate of programming for Fusion is expected later this year, there was only a passing mention of the channel at the upfront.

Mr. Rodriguez, with Randy Falco, the chief executive of Univision Communications, said in an interview before their presentation to advertisers that his vision for El Rey was to create “cutting-edge, high-quality, expensive programming for young adults, competing with all the English-language networks.” The first show announced will be a serialized version of Mr. Rodriguez’s 1996 film “From Dusk Till Dawn.” El Rey is expected to have its debut in December and be distributed by Comcast.

“It’s something that we think is important to the future,” Mr. Falco said. “Our main aim is to service all Latinos in this country. That includes English-dominant.”

On the Spanish-language side, however, Univision did not stray from its roots, presenting a predictable slate of steamy telenovelas, sports and other event programming.

Cesar Conde, the president of Univision Networks, presented a lineup that included “La Tempestad,” (“The Storm”), a Televisa production featuring the former Miss Universe Ximena Navarrete and the actor William Levy, who were both at the presentation. Other shows included “La Viuda Negra” (“The Black Widow”), based on the life of Griselda Blanco, known as the Cocaine Godmother, a prominent figure in the drug trade of the 1970s and ’80s. “Gossip Girl Acapulco” and “Metastasis” are both Spanish-language versions of the popular English-language shows “Gossip Girl” and “Breaking Bad” that will be shown on UniMás, the Univision network aimed at a younger Latinos.

Executives at a Univision competitor, Telemundo Media, a division of NBCUniversal, were ramping up for their upfront presentation on Tuesday evening. In a preview for the media last week, network executives made a series of programming announcements including the debut of a multiplatform media studio called Fluency, which the network would use to develop bilingual programming for Hispanics.

Telemundo also announced a partnership with Ryan Seacrest Productions for a variety show where two musicians will compete before a panel of judges and a second season of the children’s version of the popular NBC show “The Voice” called “La Voz Kids.” Executives also announced five prime-time telenovelas with titles like “Dama y Obrero” (“The Lady and the Worker”), “Camelia la Tejana” (“Camelia the Texan”) and “Reina de Corazones” (“Queen of Hearts”).

“We are healthy, we are growing and we have a great business that’s really thriving,” said Emilio Romano, the president of Telemundo Media. “The fact that we are able to produce the content for the U.S. gives us a unique advantage.”

Mun2, Telemundo’s sister station, which is focused on a younger, bilingual and bicultural Hispanic audience, made its presentation to advertisers last month. It included 200 hours of programming for the 2013 and 2014 seasons that focused mainly on celebrity-infused reality shows.

Another Hispanic media company taking an aggressive stance during its upfront presentation this week was Discovery U.S. Hispanic, a division of Discovery Communications that operates two cable channels for Spanish-speaking viewers, Discovery en Español and Discovery Familia.

On Tuesday afternoon, Ivan Bargueiras, general manager for Discovery U.S. Hispanic’s networks, described how ratings for his channels were “steadily growing,” with ratings for Discovery en Español up 18 percent last year compared with 2011.

Discovery en Español will add programming aimed at car lovers, including series like “El duo Mecanico,” and will increase soccer on its schedule. Discovery Familia will add series that include “Limpieza Obsesiva” (“Obsessive Cleaners”).

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Cable TV Helps News Corporation Increase Profit

Net income at News Corporation climbed to $2.85 billion, or $1.22 a share, compared with $937 million, or 38 cents a share, in the same period last year, the company reported on Wednesday. Revenue increased by 14 percent, to $9.54 billion, largely on the strength of an 11 percent increase from domestic television affiliates and a 2 percent increase in advertising revenue at its cable channels, which include FX and Fox News.

News Corporation is expected to complete a split of its entertainment assets and publishing divisions into two publicly traded companies by the end of its fiscal year this summer. But the company’s third-quarter results already read as if they came from two distinct companies, with the publishing assets dragging on overall profits.

That division, which includes The Wall Street Journal, The New York Post and HarperCollins, had a $45 million decrease in operating income compared with the same period a year ago, largely because of weakness at the company’s Australian newspapers. The company’s cable channels reported an increase of 17 percent, or $147 million, in operating income, to $993 million.

FX, with original series like “The Americans,” about Russian spies hiding in plain sight in suburban America, and National Geographic both reported double-digit growth in advertising revenue.

Rupert Murdoch, chairman and chief executive of News Corporation, said in a statement that the company was on track to complete the split. “I am more confidant than ever of the long-term value the separation will unlock for the company and its shareholders,” Mr. Murdoch said.

Earnings reflected $25 million in costs related to the proposed separation, which will create two companies. One will be called 21st Century Fox and will include Fox Broadcasting, FX and the Hollywood studio; the other, smaller company will retain the name News Corporation and will include newspapers and a handful of Australian pay television assets.

The company spent $42 million on costs related to the closure of The News of the World, the British tabloid that was shuttered nearly two years ago after reports emerged that reporters had hacked into the cellphone of a murdered schoolgirl. News Corporation does not break out results for individual papers, but said the Sunday edition of The Sun, introduced in Britain after News of the World ceased publication, represented a bright spot.

The entertainment company, 21st Century Fox, will not be without its own challenges. Operating income increased by 15 percent at Fox Broadcasting to $196 million, in large part because the fees cable and satellite operators pay to carry the station nearly doubled. But the network reported lower national and local advertising attributable to declines at “American Idol,” now in its 12th season.

On Monday, Fox will hold a session for advertisers known as an upfront, at which it will introduce its new fall TV series. “It’s not been a great year for the broadcast business overall,” said Chase Carey, president and chief operating officer at News Corporation.

In the third quarter, the company’s movie studio reported $289 million in operating income, up from $272 million last year, mostly because of the success of “Life of Pi.”

News Corporation pointed to a decline in quarterly advertising revenues at Fox News, saying that they suffered in comparison to last year because there were no presidential primaries this time to help attract advertisers. Still, Mr. Carey said: “Fox News has been a success story second to none.”

The coming Fox Sports 1 cable sports channel has garnered a disproportionate amount of attention from Wall Street analysts who predict the channel may eventually compete with the Disney juggernaut, ESPN. Mr. Carey said sports were the “driving force” behind the company’s channels business, but he also cautioned that sports should not “cloud the importance” of Fox News, FX and other channels.

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2 Networks Hint at Leaving the Airwaves

While viewed largely as saber-rattling, the idea that the networks could be converted into cable channels gained attention in the television world because such a move would have wide-reaching implications for viewers and station owners.

The possibility had not been publicly broached by a major broadcaster until Chase Carey, the chief operating officer of Fox’s parent, News Corporation, spoke at a conference of broadcasters on Monday morning.

Later in the day, Haim Saban, the chairman of Univision, lined up with Fox, calling Aereo a pirate and saying, “To serve our community, we need to protect our product and revenue streams and therefore we, too, are considering all of our options — including converting to pay TV.”

One week ago, a federal appeals court rejected broadcasters’ attempts to shut down Aereo. The service uses an array of tiny antennas to pick up free signals from stations in New York, including two owned by News Corporation, and streams the stations to paying subscribers’ devices.

Aereo is promoted as an alternative to cable, with only a fraction of the channels but at a fraction of the cost, and it allows for easy viewing of live TV on phones and tablets.

Aereo says its service is legal because each viewer has an individually assigned antenna, not unlike viewers with rabbit ears hooked up to their TVs. But owners of local stations disagree. Aereo is backed by Barry Diller, who founded Fox with Rupert Murdoch nearly 30 years ago.

“Aereo is stealing our signal,” Mr. Carey said Monday, repeating what owners have said since a group of them sued the service a year ago. He said the stations would keep up their legal battle, though he did not specify how.

He said that although News Corporation is committed to the broadcasting business model for now, it could abandon the airwaves if Aereo remains intact.

The comments seemed aimed at lawmakers who might side with broadcasters in responding to the perceived threat posed by Aereo. The threat is specifically aimed at retransmission fees, which have become a crucial second source of revenue for stations as ad losses mount.

The appeals court ruling in favor of Aereo could lead cable and satellite operators to set up their own antenna arrays and use them to avoid retransmission fees, or at least threaten to do so.

Reacting to Mr. Carey’s comments, Aereo said in a statement, “It’s disappointing to hear that Fox believes that consumers should not be permitted to use an antenna to access free-to-air broadcast television.” Aereo invoked the origins of TV, when Congress handed over valuable public airwaves “with the promise that they would broadcast in the public interest and convenience, and that they would remain free-to-air.”

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Advertising: Using ‘Sponsored Content’ to Keep Viewers Watching

The reason behind those efforts to keep consumers interested in ads rather than avoiding them is economic. In the coming “upfront” negotiations, marketers will be asked by the networks and channels to buy commercial time — and, in all likelihood, pay more for it. But marketers may be reluctant to do so if viewers do not make time to watch commercials.

The new buzz phrase on Madison Avenue for the creation of sponsored content is content marketing, although it is also being called content advertising and native advertising. More familiar terms for the trend include branded content, branded entertainment and advertorials.

Among the purveyors of programming that are most active in developing commercials for marketers is Scripps Networks Interactive, the parent of cable channels that include DIY, Food Network, HGTV and Travel Channel.

As the company starts a series of 2013-14 upfront presentations, in markets like Boston, Chicago, Detroit, Los Angeles and New York, a primary selling point of its executives is to create commercials that are styled like program content — some even featuring the hosts of shows who appear on the channels.

“Each spring, we have lots and lots of account-specific meetings with agency folks, and sometimes the client is in the room,” said Jonathan LaConti, vice president for ad sales at the New York office of Scripps Networks Interactive. “We create solutions to meet their needs.”

In making a commercial composed of sponsored content, “we want to be really careful,” Mr. LaConti said, that it “looks really natural” rather than like a sales spiel. And if a host of a Scripps Networks Interactive show is involved, the sponsor ought to be “closely aligned with his brand,” he added, to prevent perceptions of selling out.

As a result, the production of such spots can be “terribly complicated,” said John Dailey, senior vice president of Eastern region ad sales for the home category at the New York office of Scripps Networks Interactive.

And “a lot of nail biting” can occur, he added, describing “a day in November when, if we did not get a signed talent agreement” for a host who was to appear in a commercial, “we would not have been able to get it on the air in time for the date we’d identified.”

But the additional work is worth it to marketers, Mr. Dailey said he believed, because they “feel that cuts through the clutter,” particularly when “consumers can access the content across a number of touch points,” meaning online as well as on television.

And the additional work is worth it to Scripps Networks Interactive, which during the upfront market before the 2012-13 season, booked consolidated ad sales of more than $1 billion, said Jon Steinlauf, executive vice president for ad sales and marketing at the New York office, the first time that milestone was reached.

Some deals the company makes to produce customized commercials for marketers are valued at more than $10 million apiece. They include an elaborate agreement with the Scotts Miracle-Gro Company in which the MEC media agency, part of the GroupM unit of WPP, was “a terrific collaborator,” Mr. Dailey said.

That deal involves, in addition to commercials on four cable channels that are to begin this week, online ads and advertorials in two magazines, Food Network Magazine and HGTV Magazine, published by a unit of the Hearst Corporation in a joint venture with Scripps Networks Interactive.

“The zapping is getting easier and easier,” said Jim Lyski, chief marketing officer at Scotts Miracle-Gro in Marysville, Ohio. “For our brands to thrive in the new media world, we have to put a lot of effort into content creation and content curation.”

“When we do, the ads are remembered and break through and are considered highly relevant,” he added, because consumers “are almost volunteering to watch” the customized commercials, which they perceive as “in the context of what they’re already watching; it flows naturally.”

Another marketer that has teamed with Scripps Networks Interactive for a significant content-creation agreement is the Land Rover brand sold by the Jaguar Land Rover North America unit of Tata Motors, working with two WPP agencies, YR and Mindshare.

The deal includes customized commercials for television and the Web, under the rubric “Travel Channel’s Road to the Unexpected,” featuring a Travel Channel host, Don Wildman, driving Land Rovers in Bolivia, Britain, Jamaica and Quebec, and accompanying teasers — yes, commercials for commercials — to promote the spots.

“When you co-create with Travel Channel, they bring the perspective of their consumers to the project and help us begin a dialogue with them,” said Danielle Koffer, managing director for client leadership at Mindshare in New York,

“This is the fruits of our labors from last year’s upfront,” she added. “We’ll be looking to do more in this year’s upfront.”

Kim McCullough, brand vice president at Land Rover in Mahwah, N.J., said, “We’re looking for extended partnerships that can provide content throughout the year, not only on TV but also online, and gives us content for social media.”

For instance, Mr. Wildman, on his Twitter feed last week, told his followers, “In my next life I’m coming back as a Range Rover.” The comment was subsequently reposted by Land Rover from its Twitter feed.

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Media Decoder Blog: Cablevision Sues Viacom Over Bundling of Little-Watched Channels

1:30 p.m. | Updated In the escalating battle between media companies and cable and satellite providers, Cablevision filed a lawsuit against Viacom on Tuesday, accusing the media company of forcing it to carry 14 little-watched cable channels.

The lawsuit filed in federal court in Manhattan alleges that Viacom illegally bundled its channels, forcing Cablevision to pay for Palladia, MTV Hits and VH1 Classic, in order to offer consumers the company’s more popular cable channels like MTV, Comedy Central and Nickelodeon. The cost of carrying those smaller channels is passed on to customers’ cable bills, Cablevision said.

“The manner in which Viacom sells its programming is illegal, anticonsumer and wrong,” Cablevision said in a statement. “Viacom effectively forces Cablevision’s customers to pay for and receive little-watched channels in order to get the channels they actually want.”

In a statement, Viacom said it would “vigorously defend this transparent attempt by Cablevision to use the courts to renegotiate our existing two-month-old agreement.”

Viacom said that like other programmers, it does not explicitly require distributors to bundle all of its channels together; rather, the company provides financial incentives to bundle by offering lower prices when smaller channels are grouped together with bigger channels.

In its statement, Viacom said that it had “long offered discounts to those who agree to provide additional network distribution” and that most distributors view these arrangements as “a win-win and pro-consumer.” Federal courts have upheld these arrangements in the past, Viacom said.

Cablevision, which is controlled by Charles F. Dolan, said in a statement the dispute would not result in an immediate disruption in programming. The company said the lawsuit was filed under seal, so it will not be accessible to the public.

The lawsuit represents a turning point in the debate over “bundling,” or the practice of selling channels to cable and satellite providers in a package. Partly because of the rising cost of cable, pressure has been mounting on the bundling system for years. But there has been little if any structural change — both channel owners and distributors have found it in their best interests to keep it intact.

Class action lawsuits against bundling have failed in the courts to date. But the lawsuit on Tuesday was different, since it was filed by a distributor. Antitrust experts could not immediately recall a similar suit.

Time Warner Cable, the second biggest cable company in the country behind Comcast, supported Cablevision in a statement on Tuesday that read, “We frequently have pointed out that there are serious problems with the current programming environment. We think this lawsuit raises important issues, and we look forward to their resolution in the courts.”

For Cablevision, the lawsuit may be a way to garner public support for its point of view and simultaneously tar Viacom. Cable distributors like Cablevision have been trying to portray themselves as pro-consumer and resistant to price increases, even while carrying out those very same price increases. They have argued for years — more and more loudly of late — that channel owners like Viacom are the ones requiring them to raise the monthly cost of television service.

The channel owners rebut that position by pointing to the big profits that distributors report on a quarterly basis.

The number of disputes between the two sides have increased in recent years, partly due to concerns about the aforementioned price increases. Last summer DirecTV pulled Viacom’s channels for nearly three weeks after the companies could not agree on a new contract. Around the same time the Dish Network took down AMC, IFC and WE tv, all channels owned by AMC Networks. Dish claimed that AMC required the company to carry its low-rated channels in order to get AMC, the channel that televises “Mad Men” and the zombie thriller “The Walking Dead.” Dave Shull, the senior vice president for programming at Dish, said at one point during the nearly four-month programming blackout that “AMC Networks requires us to carry low-rated channels like IFC and WE tv to access a few popular AMC shows. The math is simple: it’s not a good value for our customers.”

But AMC said the blackout was due not to a bundling dispute, but rather to an unrelated lawsuit involving allegations of breach of contract between Dish and VOOM, a former subsidiary of Cablevision. That suit was settled in October, and the channels were restored at that time.

Meanwhile, some customers continue to agitate for the right to pick and choose which channels they receive from distributors, an idea sometimes called “a la carte,” while others say they are content with the buffet of channels they currently receive. The issue came up again just last month, when Suddenlink, the No. 11 distributor in the country in terms of subscriber base, proposed to Fox Networks, the cable unit of News Corporation, that Fox could set prices for each of its channels, big ones like FX and tiny ones like Fox Soccer and Fuel, and then customers could choose to pay for only the ones they wanted.

The two companies were at odds over the terms of a new contract. Suddenlink publicized the offer, calling it “an attempt to respond to what our customers have said they wanted.” But Fox refused the offer. Four hours later, the companies said they had reached an agreement in principle to keep all the channels — and thus keep the system intact.

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Media Decoder Blog: Comcast Buying G.E.’s Stake in NBCUniversal for $16.7 Billion

6:03 p.m. | Updated Comcast said Tuesday that it has agreed to acquire General Electric’s remaining 49 percent stake in NBCUniversal for approximately $16.7 billion, completing a sale process that was expected to take several more years.

The acquisition will wrap up by the end of March, Comcast said in a news release. The move reflects Comcast’s optimism about NBCUniversal going forward, from its highly profitable cable channels to its theme parks and Web sites and the flagship NBC broadcast network.

Comcast also said that NBCUniversal would buy the NBC studios and offices at 30 Rockefeller Plaza, as well as the CNBC headquarters in Englewood Cliffs, N.J. Those transactions will cost about $1.4 billion. With the office space comes naming rights for the General Electric building, according to a GE spokeswoman. So it is possible that the giant red “GE” sign atop 30 Rockefeller Center could be replaced by a Comcast sign.

“This is an exciting day for Comcast as we have agreed to accelerate the purchase of NBCUniversal,” Comcast’s chief executive, Brian Roberts, said in a statement. “The management team at GE has been a wonderful partner during the past two years and their support has been very valuable. Our decision to acquire GE’s ownership is driven by our sense of optimism for the future prospects of NBCUniversal and our desire to capture future value that we hope to create for our shareholders.”

Comcast took control of NBCUniversal in early 2011 by acquiring 51 percent of the media company from General Electric.

At the time, Comcast committed to paying about $6.5 billion in cash and contributed all of its cable channels, including E! and some regional sports networks, to the newly established NBCUniversal joint venture. Those channels were valued at $7.25 billion.

The transaction made Comcast, the single biggest cable provider in the United States, one of the biggest owners of cable channels, too. NBCUniversal operates the NBC broadcast network, 10 local NBC stations, USA, Bravo, Syfy, E!, MSNBC, CNBC, the NBC Sports Network, Telemundo, Universal Pictures, Universal Studios, and a long list of other media brands.

The sale ends a long relationship between General Electric and NBC that goes back to before the founding days of television. In 1926, the Radio Corporation of America created the NBC network. General Electric owned R.C.A. until 1930. It regained control of R.C.A., including NBC, in 1986, in a deal worth $6.4 billion at the time.

Comcast had another five years to buy out General Electric’s interest in NBCUniversal, according to the terms of the original deal.

“We didn’t have to do it; GE didn’t have to sell now,” Mr. Roberts noted in an interview on CNBC on Tuesday. “But we came to an understanding that I think works out well for everybody. They get a lot of cash … and our shareholders have 100 percent of the upside here.”

Asked about a possible logo swap on the building, Mr. Roberts said, that’s “not something we’re focused on talking about today.”

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Media Decoder Blog: The Breakfast Meeting: A Digital Kingdom and the Future of TVs

The Breakfast Meeting

What’s making news in media.

Walt Disney World plans to begin introducing a vacation management system called MyMagic+ in the coming months that will drastically change the way Disney World visitors — some 30 million people a year — do just about everything. Visitors will wear rubber bracelets encoded with credit card information allowing them to buy everything from corn dogs to Mickey Mouse ears with a tap of the wrist. Smartphone alerts will signal when it is time to ride Space Mountain without standing in line. The ambitious plan, as Brooks Barnes reports, moves Disney deeper into the hotly debated terrain of personal data collection. Like most major companies, Disney wants to have as much information about its customers’ preferences as it can get, so it can appeal to them more efficiently. The company already collects data to use in future sales campaigns, but parts of MyMagic+ will allow Disney to track guest behavior in minute detail for the first time.

The future of the television will be on display this week at the Consumer Electronics Show in Las Vegas, where television makers like Samsung, Sony, LG and Panasonic will try to grab the attention of convention attendees otherwise occupied with the latest smartphones, laptops and tablets. To answer the challenge, the television makers will display new products with supersize screens and quadrupled levels of detail in their images. As Brian X. Chen reports, the manufacturers will also continue to push the idea of “smart” sets by adding applications and other interactive elements. For the electronics industry, the television is an important but increasingly difficult product to sell.

Obscure cable channels are feeling the heat from major cable distributors that increasingly are talking about dropping underperforming channels from their lineups. As Brian Stelter reports, distributors have talked for years about belt-tightening, but two things are different now: potential Web competitors are creeping up and programming costs are soaring, particularly for sports channels and broadcasters. Independently owned channels are more imperiled than low-rated channels owned by media conglomerates like the Walt Disney Company and Viacom. VH1 Classic and ESPNU are not going away any time soon, but on New Year’s Day, Verizon FiOS yanked Youtoo TV, a fledgling channel that features videos submitted by viewers, and Time Warner Cable dropped Ovation, which bills itself as an arts and culture channel. At the same time, in a move criticized by the programmers of some low-rated channels, distributors continue to give new and unproven channels a chance. Time Warner Cable, for example, started to carry BBC World News and RLTV, formerly called Retirement Living TV, in the last few months.

Edward Wyatt reports that the Federal Trade Commission’s decision to drop its two-year investigation into Google has drawn criticism from some observers who believe the commission’s inquiry focused on the wrong area. Instead of considering harm to people who come to Google to search for information, Google’s competitors and their supporters say the government should have been looking at whether Google’s actions harmed its real customers — the companies that pay billions of dollars each year to advertise on Google’s site. In its reports, the F.T.C. did not detail how it defined harm or what quantitative measures it had used to determine that Google users were better off. But interviews with people on all sides of the investigation — government officials, Google supporters, advocates for Microsoft and other competitors, and antitrust experts and economists — show that many of the yardsticks the commission used to measure its outcomes were remarkably similar to Google’s own. Not surprisingly, they cast Google in a favorable light. F.T.C. officials said they considered data from a wide range of sources — those with interests aligned with Google as well as against it. The officials also bought quantitative data about Internet usage and conducted interviews with experts who were independent of all sides.

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It’s the Economy: The ‘Mad Men’ Economic Miracle

For AMC, the network that broadcasts “Breaking Bad,” it will be a very profitable one. Cliffhangers may have been around for more than a thousand years — since at least the composition of “One Thousand and One Nights” — but no one has monetized them as brilliantly as cable networks. In order to get paid, Charles Dickens had to sell the next chapter of his serialized novels; in order to sell advertising, ABC had to order more episodes of its hit show “Lost.” But for the next several months, AMC is converting our eagerness into millions of dollars without showing a single new episode.

Cable TV has developed one of the most clever business models in our modern economy. Until recently, AMC was a basic-cable backwater known for “Threes Stooges” marathons. But a few years ago, it tweaked its business and began offering two or three hours of original programming on a few dozen nights a year. Starting with “Mad Men” in 2007, the network landed hit shows that developed small but obsessive followings. Soon after, it began making larger financial demands of the cable and satellite providers, like Comcast and DirectTV, that carry the network. AMC now charges these providers about 40 cents a month for each subscriber, including the millions who will never watch “Mad Men” or “Breaking Bad.” These providers can refuse to pay up, but doing so would infuriate legions of vocal viewers. (Last summer, the Dish Network played chicken with AMC and lost.) AMC collects $30 million a month in fees alone on a base of 80 million subscribers, which is pretty good considering that the last episode of “Breaking Bad” had fewer than three million viewers.

This business model, perhaps as much as artistic creativity, is responsible for TV’s current golden age. Networks have effectively entered into a quality war. Basic-cable channels have to broadcast shows that are so good that audiences will go nuts when denied them. Pay-TV channels, which kick-started this economic model, are compelled to make shows that are even better. And somehow, they all seem to be making insane amounts of money. This year, NBC Universal’s cable operations are expected to bring in around $5 billion, half of which is profit. Viacom’s revenue will be more than $8 billion, with 49 percent profit. Apple had one of its best years ever in 2012, but its profit margin is expected to be only 37 percent, which is still well above its 23 percent average over the past five years. An auto company would be thrilled with something in the high single digits.

At first, the cable industry’s ascendance into arguably America’s single-most-profitable big business makes almost no economic sense. Not long ago, three major networks controlled all of our viewing. Now dozens of channels reach a fraction of that audience. According to the basic rule of supply and demand, the revenue and profits should plummet. But those rules break down when an industry operates as a near monopoly.

In 1992, Congress made it illegal for municipalities to grant a monopoly to local cable providers. But it was already too late. Most companies thinking of beginning a new cable system balked after realizing the significant barriers to entry — the cost of digging up roads and sidewalks and hiring a fleet of technicians to draw wire to new customers’ homes. Worse, a new cable competitor would have to entice customers by entering a price war, erasing any potential profit. Verizon and ATT actually tried this but found that fiber-optic cable was profitable only in the most dense, urban areas. Satellite offers some competition, especially in rural settings, but many people decline a service that fails whenever it’s too cloudy outside.

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Media Decoder Blog: Cable Networks Help Time Warner’s Quarterly Profit

“Revolution,” a popular NBC show, was produced by Warner Brothers, a Time Warner unit.Brownie Harris/NBC “Revolution,” a popular NBC show, was produced by Warner Brothers, a Time Warner unit.

A strong quarter at Time Warner’s suite of cable channels contributed to a 1.9 percent increase in net profit for the third quarter, but revenue was offset by continued weakness at its magazine and movie divisions.

On Wednesday, Time Warner reported net income of $838 million, or 86 cents a share, compared with $822 million, or 78 cents a share, in the period last year. Revenue at the company fell 3 percent, to $6.84 billion.

The company’s networks division, which includes cable channels like TNT, TBS and HBO, reported its strongest quarter ever, with $1.22 billion in operating income, a 12 percent increase from 2011.

Revenue at the division grew 4 percent, to $3.34 billion, largely because of an increase in subscription revenue and in the number of subscribers to HBO.

Jeffrey L. Bewkes, chief executive of Time Warner, called the networks business the “highlight” of the quarter and said the strength of the cable channels “illustrates that our investments in content and technology are paying off.”

He pointed out that while NBC was being praised for its ratings turnaround in the fall season, most of the shows that have contributed to its success came from Time Warner’s Warner Brothers studio.

“The overall story is that the top two nonsports shows on NBC, ‘The Voice’ and ‘Revolution,’ are Warner productions,” Mr. Bewkes said.

One continued albatross for Time Warner is its CNN cable news channel, whose ratings have declined in recent months. But Mr. Bewkes praised the channel’s coverage of the presidential election and said it benefited from the political season. “CNN won the night last night,” Mr. Bewkes said in a conference call with analysts.

The third-quarter results for Time Warner show the same gap between divisions that exists at other major media conglomerates, including News Corporation.

Cable television remains a strong and lucrative business for these companies, while legacy publishing units continue to lag.

Ratings at TBS were up 35 percent in prime time for viewers aged 18 to 49, for example, while at subscription revenue at Time Inc. fell 6 percent and its advertising revenue fell 5 percent.

Overall revenue fell 6 percent, to $838 million at Time Inc., the publisher of People, Sports Illustrated and Entertainment Weekly among other magazines. Operating income at Time Inc. increased by 2 percent, to $126 million, largely because of cost-cutting.

The company’s Warner Brothers studio also had a sluggish quarter, mostly because of comparisons to the three-month period last year, which included revenue from hits like “Harry Potter and the Deathly Hallows: Part 2” and syndication revenue from “The Big Bang Theory.” Revenue at the film and television division fell 12 percent, to $2.9 billion, and operating income fell 37 percent, to $328 million.

Mr. Bewkes was bullish on the studio’s coming movie “The Hobbit” and said word-of-mouth had helped the suspense thriller “Argo” deliver solid box-office results. “Over all, I’m very confident about how we’re positioned heading into the next year and beyond,” he said.

This post has been revised to reflect the following correction:

Correction: November 7, 2012

An earlier version of this post carried an incorrect byline. The post was written by Amy Chozick, not Amy Harmon.

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Media Decoder Blog: Cable Channels Set to Begin Election Year Coverage

5:17 p.m. | Updated America’s trifecta of cable news channels, Fox News, MSNBC and CNN, are just about ready to show off their election year staffs.

Each channel plans to cover the one-night Iowa caucus for a stretch of several days, maximizing both their investments in the state and the ratings potential of a Republican presidential campaign.

On caucus night, Jan. 3, each channel will replace its usual prime time schedule with special reports. The extensive coverage plans highlight the importance of politics to the bottom lines of the cable news channels.

Past ratings indicate that the more seriously the channels treat events like the Iowa caucus, the more viewers tune in. So the networks are starting early.

Candy Crowley, the chief political correspondent for CNN, will report from Iowa starting Wednesday. Chris Matthews will anchor his MSNBC show, “Hardball,” from there starting Thursday, and the MSNBC anchors Chuck Todd and Andrea Mitchell will be there starting Friday.

But the coverage will be most visible starting Sunday, when the weekly public affairs programs like “Fox News Sunday,” anchored by Chris Wallace, and “State of the Union,” anchored by Ms. Crowley, will emanate from the state. On Sunday at 8 p.m. Eastern, both Fox and CNN will have caucus previews.

On Monday, the day before the caucus, more cable anchors will plant themselves in Iowa, including the Fox News anchor Shepard Smith and the cast of MSNBC’s “Morning Joe.” Sean Hannity also will have his radio show and prime time Fox show there.

A new generation of anchors have stepped up since the last presidential election, so the coverage this year will look quite different than it did on Iowa caucus night in 2008. Back then, Brit Hume and Mr. Wallace led Fox’s coverage; this time, the co-anchors will be Bret Baier and Megyn Kelly.

They will both be in Iowa beginning Sunday. On Tuesday, they will be on from 8 to 11 p.m.; Mr. Hannity will then be on until midnight.

Similarly, in 2008, Keith Olbermann and Mr. Matthews led MSNBC’s coverage; this time, Rachel Maddow will be the main anchor, joined by Mr. Matthews and the channel’s other three prime time hosts, Ed Schultz, Lawrence O’Donnell and the Rev. Al Sharpton.

They will be on from 6 p.m. until midnight; then Chris Hayes, a weekend host, will be on until 1 a.m.

Current TV, the upstart competitor to MSNBC, has scheduled four hours of special caucus coverage on Tuesday starting at 7 p.m.

CNN’s top two anchors back in 2008, Wolf Blitzer and Anderson Cooper, will be on again this year, but joined this time by Erin Burnett, who joined the network earlier this year from CNBC. They will also be joined by Ms. Crowley and John King, who will be stationed at his “Magic Wall.”

They will be on from 7 p.m. to midnight, when Piers Morgan will take over for an hour.

CNN, which generally is lower rated than Fox or MSNBC, but benefits from big periods of breaking news, seems to be positioning itself as a nonpartisan option for viewers who perceive Fox to favor Republicans and MSNBC to favor Democrats.

In a news release on Wednesday, CNN’s Washington bureau chief, Sam Feist, said, “As the only cable news channel that has not chosen a side in this election, CNN will tap into the expertise of our anchors, reporters and analysts to equip viewers with information to decide for themselves about the candidates.”

The main anchors for the network news divisions also will be in Iowa for the caucus. Additionally, CBS says that Bob Schieffer, the Sunday morning “Face the Nation” host, will be an anchor on “The Early Show” on the morning of the caucus. “The Early Show” is being replaced a few days later by a new morning program called “CBS This Morning.”

CNN, meanwhile, is using the caucus to introduce its new morning team. On Tuesday, Ashleigh Banfield and Zoraida Sambolin will start their new 5 to 7 a.m. shift, and Soledad O’Brien will start her new 7 to 9 a.m. shift.

The public affairs network C-SPAN has already started talking about the caucus; its morning call-in program, “Washington Journal,” was transplanted to Des Moines on Wednesday morning and will stay there through next Tuesday.

On the actual caucus night, C-SPAN and its sister channel C-SPAN2 will televise caucus events in central and western Iowa, respectively. C-SPAN will show results, speeches and reactions afterward.

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