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The Media Equation: For Media Moguls, Paydays That Outstrip Other Fields

May 6, 2013 by Leave a Comment

Leaders in other industries may be well paid, but as the accompanying chart shows, they earn far less than their media counterparts.

Consider: the top 20 companies in the United States ranked by market capitalization include no media companies. But according to figures assembled for The New York Times by Equilar, which compiles data on executive compensation, media companies employ seven of the top 20 highest paid chief executives.

The names are familiar and the numbers are large: Leslie Moonves of CBS ($60,253,647), David M. Zaslav of Discovery Communications ($49,932,867), Robert A. Iger of Walt Disney ($37,103,208), Philippe P. Dauman of Viacom ($33,396,104), Jeffrey L. Bewkes of Time Warner ($25,670,263), Brian L. Roberts of Comcast ($25,087,379), and Rupert Murdoch of News Corporation ($22,418,292).

Mr. Moonves was the third highest paid executive in 2012, bested by Larry Ellison, who made $96.2 million as head of Oracle, and Robert Kotick, chief executive of Activision Blizzard, whose recently announced compensation came to $64.9 million, although much of it is in the form of stock options that vest over five years.

(Activision produces video games like Call of Duty, so depending on how you define media, he might be the highest paid in the industry.)

Mr. Moonves may be in a league of his own, but he is hardly the only chief executive banking hefty compensation. The data indicates that average pay of the 10 highest paid chief executives for media companies was about $30 million, more than the captains of technology or finance and other industries, who average $6 million to $14 million less.

Median pay for the top 20 media executives rose 10 percent in 2012, adding to a very tall stack. Not bad for a legacy industry that is supposedly under sustained attack from insurgents and secular challenges.

Many media companies file their proxy statements at the last possible minute, perhaps part of an effort to avoid ending up on annual surveys of executive compensation, like the one The Times did at the beginning of April. But now that everyone is accounted for, it’s clear that being a king in the media realm comes with a very lucrative crown.

A few important caveats. The margins in the media business can be spectacular when things are going well — operating income at CBS for 2012 was $2.98 billion — which explains in part why the chief executive at Kraft, which is about the same size as CBS and had net earnings of $1.64 billion, makes $6.8 million, not $60 million like Mr. Moonves. Making cheese is fine, but running a media outfit that sells cheese through commercials is where the money is.

Clearly, the market had a crush on media stocks last year. The stock price of CBS rose 42 percent in 2012 while Mr. Zaslav oversaw a 55 percent rise at Discovery. Corporate boards have employment agreements that are usually generous when the arrows on the charts are pointing sharply upward.

“David’s compensation is almost entirely tied to stock appreciation,” said David C. Leavy, a spokesman at Discovery. “With the market continuing to value Discovery’s global growth prospectives, there has been tremendous value creation for shareholders.”

Media companies are prospering by selling their content through all kinds of windows with some raking in cable and retransmission fees that just keep growing. Most major players drove their stock price up 30 percent or more, partly because of excellent results and generous stock buybacks. As might be expected, the vast majority of the compensation comes in the form of performance incentives, as opposed to salary. (Although some of those incentives are very generously structured.)

And it would be churlish to suggest that running a huge company in an industry full of big bets, big egos and big challenges is simple. The media business requires mastering various platforms, multiple divas and, increasingly, myriad foreign markets.

But approving the right projects while monetizing those assets through various channels of distribution is not akin to creating a hardware market, as Apple did, or reinventing the advertising model, as Google has. An average annual compensation of $30 million seems like an entrepreneurial reward being paid out for management execution.

The compensation numbers can add up quickly, especially in an industry that is madly spinning off divisions. Companies may get smaller as they are split into discrete units — Viacom and CBS are two halves of what used to be one orange, as are Time Warner and Time Warner Cable — but the payouts continue to storm along.

E-mail: carr@nytimes.com;

twitter.com/carr2n

Article source: http://www.nytimes.com/2013/05/06/business/media/for-media-moguls-paydays-that-outstrip-other-fields.html?partner=rss&emc=rss

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Winfrey’s Low-Rated Cable Channel Is Poised to Break Through

January 17, 2013 by Leave a Comment

Ms. Winfrey conferred with the co-presidents, Erik Logan and Sheri Salata, about booking a trip to Mr. Armstrong’s hometown, Austin, Tex., reserving airtime for Thursday night and announcing the “get” to the press.

What no one said on the call was that this interview — maybe Ms. Winfrey’s biggest since her 1993 sit-down with Michael Jackson — could be a turning point for OWN, which has been low-rated since its birth two years ago.

Another turning point — perhaps even bigger — came this month when OWN started to pocket substantial per-subscriber fees from some of the biggest cable and satellite operators in the country. Some of these deals were done before OWN even premiered. The operators agreed to pay just a penny or two per subscriber a month until January 2013, and then start paying nearly 20 cents a month on average, according to people with direct knowledge of the deals who asked for anonymity because the details were confidential. The fees increase over the span of several years.

Multiply those dimes and quarters across most of the 83 million homes in which OWN is available (but not all — at least one deal is still pending) and the value for Ms. Winfrey and Discovery Communications is plain. Discovery, OWN’s other owner, has said that the channel will turn a profit for the first time in the second half of 2013. Discovery has invested more than $400 million to date.

Paul Maxwell, who runs MediaBiz, a television industry reporting and consulting firm, said OWN was now where Discovery hoped it would be at birth. “They’re not satisfied. They see a lot more to do,” he said. “But they think they’re on the right track now.”

The OWN story is a reminder that cable is a niche business, one built on serving loyal but often small groups of fans.

Ms. Winfrey remains just as well-known now as she was three years ago, her last full year hosting “The Oprah Winfrey Show” on local television stations, said Henry Schafer of Marketing Evaluations, a research firm that publishes proprietary Q Scores for celebrities. But her emotional connection to consumers is not nearly as strong as it was then.

Her Q Score — a combination of both traits — dipped to 22 in 2012 from 31 in 2010 among adult women. Although Ms. Winfrey remains above the average of 16, “she’s been out of focus for a while,” Mr. Schafer said.

Big scoops like the sit-down with Mr. Armstrong can bring her back, at least temporarily. OWN is trying to capitalize on the interview by spreading it out over two nights, by raising advertising rates and by running some ads for other programs on the channel. To make sure people can find the interview in the first place, OWN is running Internet and print ads and promoting a channel finder tool.

“When Oprah does what you know she’s going to do — get the big gets — it just provides a big spotlight on all the good that’s been going on,” said Mr. Logan, who cited two successful reality shows, “Welcome to Sweetie Pie’s” and “Iyanla: Fix My Life,” and an Emmy Award for Ms. Winfrey’s “Super Soul Sunday.”

Success for OWN is relative. Last year, only 325,000 people watched the channel on a typical night, 160,000 of whom were 25 to 54 years old. About 50 broadcasters and cable channels had a bigger audience. But OWN was up about 30 percent over its first year, 2011.

Publicly, the low point for the channel seemed to come in March 2012, when the channel decided to lay off 30 employees, about 20 percent of its work force. The layoffs and the cancellation of a daily talk show by Rosie O’Donnell helped the channel to save $50 million a year and achieve profitability more quickly.

Article source: http://www.nytimes.com/2013/01/18/business/media/winfreys-low-rated-cable-channel-is-poised-to-break-through.html?partner=rss&emc=rss

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Trolling Overseas for TV Concepts to Mine

November 21, 2011 by Leave a Comment

As giant companies like Time Warner and Discovery obtain a growing portion of their revenue from overseas markets, they are homing in on a handful of relatively small foreign production houses.

They value these companies because they own what the industry calls “formats” — entertainment concepts like reality or game shows that can be plopped down in almost any country and find audiences regardless of cultural divides.

Though it is shedding assets in the United States, Time Warner made a $1.4 billion bid this month for Endemol, the Dutch production company behind reality stalwarts like “Big Brother,” “Wipeout,” and more recently “Love in the Wild,” a dating show set in a jungle.

Also this month Discovery Communications acquired an outside production company for the first time when it paid an estimated $16 million for Betty, which makes “Freaky Eaters” and other British television shows.

Based in London, Betty does not carry the same cachet as a Hollywood entertainment enterprise with high-end television shows and big-name producers, but for Discovery it offers something even more valuable: intellectual property.

Unlike a finished show that studios export to local partners who add subtitles or dubbing, a format is simply a piece of intellectual property. Local producers buy the rights to make, for instance, the Ukrainian version of “Wipeout” or the Nigerian edition of “Big Brother,” and big media companies take in revenue without having to invest much, if anything, in the productions.

These global hits can bring in hundreds of millions in revenue over years.

Because they are typically reality series or game shows, formats cost much less than scripted Hollywood series and are often more popular, since audiences prefer to watch local celebrities or contestants. Also, the intellectual property can be updated or modified and sold over and over again. On Dec. 12, NBC will introduce an updated version of “Fear Factor” after the original show was canceled in 2006.

“It’s not about the production companies, it’s about formats,” said David Bank, an equity research analyst at RBC Capital Markets. Referring to a game show that was a hit on NBC, he said, “ ‘Deal or No Deal’ works in Mumbai. It works in Manila, and you don’t have to produce it.”

Time Warner’s nonbinding cash bid for Endemol could ignite a bidding war as the production company restructures its $3.9 billion in debt. But lenders will most likely find the Time Warner offer low, given Endemol’s strong financial performance, analysts said.

Endemol declined to specifically comment on the bid. “Our goal as a management team is to restructure the debt of the company, not to sell the business,” Endemol’s president and acting chief executive, Marco Bassetti, said in a phone interview Friday.

The battle for Endemol is just the latest in the pursuit of foreign production companies. Last year Time Warner paid $100 million for a 55 percent stake in the British production company Shed Media, best known for shows like “Supernanny” and “Footballers’ Wives.” In February, the News Corporation announced it would pay $674 million for the Shine Group, the British production company known for shows like “The Biggest Loser” and “Masterchef” and founded by Elisabeth Murdoch, the daughter of News Corporation’s chairman and chief executive, Rupert Murdoch.

“Bigger media companies are finally waking up to the trend: even though we live in a global world, people still want television with a local wrapping,” said Ben Silverman, the founder of IAC’s Electus multimedia studio. In 2008, Shine acquired Mr. Silverman’s former production company, Reveille, and its primary assets, “The Biggest Loser” and the United States version of “The Office.”

Article source: http://feeds.nytimes.com/click.phdo?i=e9f76070c186a786292f4f2f0f0d5996

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