Our most advanced economies facilitate the lifestyle of media consumption, whether it be print media (newspapers, magazines), television, movies, video games, or even the Internet.
I have begun to genuinely appreciate the creativity and foresight that a lot of these media producers and directors have been pushing forth. Among the TV shows, it is obvious that television series’ from HBO of Time Warner (NSYE: TWX) are leading the pack. Below is a trailer for their upcoming show called ‘Ballers’:
On the other side of the ‘pond’, we’ve got AMC, Channel 4 and Kudos releasing “Humans,” a TV series that depicts a parallel present which integrates synthetic robots into the lives of their host: a family. It is based on the Swedish drama “Real Humans.”
As we have seen in Luther and other British series, watch the above Humans trailer until the end.
On the Charter-Time Warner Cable merger: after earlier bids by both Charter and Comcast, the merger was announced on May 26th, 2015. This was after the FCC raised concerns that a Comcast-TWX merger would lead to an anti-competitive environment. This brief point should give the Chinese a reason to boost transparency about the marketplace which exists inside China, which is also starting to eat up the marketplace in the rest of the world.
Transparency leads to legitimacy, something that the CCP is arguably striving to maintain, especially as the 26th anniversary of the Tiananmen Square is coming up on June 4th, 2015. On the FCC’s website, you can find the ‘Transaction Quick Links’ tab, which has M&A, Major Transaction Decisions, Archived Transactions, Process Overview, FAQ, and a contact for the FCC Transaction Team. For the proposed Comcast-TWX merger, the FCC makes public the timeclock of the case, an overview of the merger case, and others.
As Howard Homonoff puts it in his May 29th column, “There are several reasons why a wave of media mergers and acquisitions are now in the offing (beyond the need for more banking industry revenues to offset the string of mortgage crisis-related fines).” If you skip past the silly ‘name game’, he points out three reasons:
- “Conventional wisdom would suggest that the U.S. media market is heavily concentrated,” however, Homonoff points out that “the U.S. still has a long way to go to match the levels of media concentration in other parts of the world.” But does Homonoff insinuate that a concentrated media industry is good?
- His second point slightly contradicts his first point by stating, “Audience fragmentation is accelerating – We are decades into the explosion of viewer choices in television as we moved from three (then four) broadcast networks to hundreds of cable networks, and years into the proliferation of digital video platforms, from video on demand to YouTube to an increasingly diverse array of over-the-top video providers from Netflix to Amazon Prime to DISH Network’s Sling TV to HBO Now.” Although a bit of a mouthful, Homonoff is right in saying that there has been an increase in the diverse array of media consumption, but does this justify the concentration of TV media companies?
- Homonoff states that “the “middle” [of the media industry] is an increasingly precarious place to be in the media world, especially among cable networks.“
However, a quick look at the 2014 annual report (PDF) of TWX gives me a bit of anxiety that the resulting merger will lower the quality of HBO shows henceforth. As we are indeed in a ‘recessionary’ period, it seems advertising budgets have taken a hit, or there are more lucrative forms of advertising rather than through TV.
Where is the advertising expenditure alternatively being spent? Perhaps the ‘TrueView’ ads by Google’s YouTube might have been a culprit. However, many sources have claimed that the revenue contributions from YouTube only just break-even its cost, as their 2014 annual report states, “Content acquisition costs primarily related to payments to certain content providers from whom we license their video and other content for distribution on YouTube and Google Play (We share most of the fees these sales generate with content providers or pay a fixed fee to these content providers).”
It seems that Google wants you to access http://www.YouTube.com directly and not through paid-click ads. As a Business Insider (a BS media outlet) article states, “That’s why the company has poured big bucks into helping its original content creators, like Michelle Phan, Bethany Moto, and Epic Rap Battles of History, build their followings and create better videos.” While this investment pay-off? The WSJ supports the rhetoric that YouTube generates around 6% (in-line with the projections in the image below) of overall revenues, but admits that the bottom line is that it was “roughly break-even.”
Although Google’s annual report does not directly disclose YouTube’s revenue and cost of revenue, Forbes seem to believe eMarketer in their analysis that YouTube does generate positive cash, but then again, there is a reason why you chose to study ‘marketing’ instead of something worth actually learning at university.
Nevertheless… it seems TWX may need some slim-fit, Rimowa carrying, consultants or even better, a person with real knowledge and a degree in engineering psychology, to help out with their much needed advertising revenues. The TimeWarner upcoming AGM on June 19th (webast link) may give you a better insight to what’s up(coming) for the company during its MD&A.