Last week's week in review

Hi there. I posted this review on the Total Content and Media web site last Friday. For the record I'm putting it here, too. If you are interested in seeing it on the site, or to read fresh news for this week, click here.

The week ending 12 January was dominated by news coming out of two technology trade shows in the U.S.—the Consumer Electronics Show in Las Vegas and the MacWorld Show in San Francisco.

But first a look as some other interesting things this week: HarperCollins is following in the footsteps of other News Corp subsidiaries and investing in the digital world. If it’s half as prescient as Fox Interactive with its MySpace buy, it’s picking a winner in NewsStand.

EMI is continuing to bleed. This week’s news is even lower than expected profits after a dud Christmas and the departure of two of its top executives. Will someone please put this music giant out of its misery already?

YouTube got barred, and then re-released, on the Brazilian market. I point this story out because of the uproar it caused when it was banned (for running a racy video clip), and to show how hard it is still to control content on these very popular sites, and to show how easy it is to simply shut them down.

And in the still young IPTV world, a few little beeps: BT hired an ex-Sky executive to beef up its sports coverage, and Deutsche Telekom seems to be having some problems getting subscribers to its TV service. Some are pointing out that IPTV is a doomed business, but I’m sure that both of the aforementioned operators hope they can do as well as one of their smaller neighboring incumbents, Belgacom.

Now on with the shows…. In Vegas, the story was all about the digital, connected home, which according to reports is finally becoming a reality.

That top-line story was bolstered by an avalanche of announcements from media companies, device makers and every one in between about deals, new services and new products. (Type in CES in our search window to get the full whack.)

Yahoo seemed to be particularly rampant on the news front, with lots of releases concentrating on mobile phone deals as well as key agreements to provide its hitherto Internet-only content to television, and vice versa. I suppose it has a lot of catching up to do to get close to Google again.

It’s a testament to the power of Apple right now that the MacWorld show had almost as much heft in terms of media coverage—mainly because of Apple launching two products that has all other consumer electronics rivals and practically everyone else in the digital media value chain watching closely: a new phone, currently being called the iPhone—which is not really a phone but a multimedia device; and a product called the Apple TV--which is not really a TV but something that links to your set to let you watch all your digital content there.

The phone seems to have attracted the most attention, most likely because it looks like it could potentially become be a successor to the hugely famous iPod—not only can you play music on it, and use it as a phone, but you can effectively use it like a little portable computer, complete with wifi access and even Apple’s operating system behind it all.

People of course are citing all sorts of reasons why the iPhone will need a lot of tweaking before it flies off the shelves—price and form factor being the two main areas of criticism. But even if Apple does not stay on top with this particular product, it is pushing the boundaries for what other portable device manufacturers should be fervently developing next.

Apple’s new baby has also attracted some secondary attention, in the form of a lawsuit that’s been filed by Cisco, who says it owns the name iPhone. Given the numerous announcement that came out in advance of the MacWorld show about how Cisco is going to try to become a Big Name in the consumer market, specifically for digital/connected home products, I can’t help but wonder if Cisco’s suit was another way of it trying to steal a little bit of the limelight being generated by its Bay Area neighbor.

Particularly since many observers suspect the whole kerfuffle will be settled out of court anyway.

The week in review

It’s been a somewhat quiet week, with the masses slowly returning from holidays and getting their heads around 2007. In the US, media types are gearing up to storm Las Vegas for the annual Consumer Electronics Show, which seems to be getting more converged and content friendly as the years go on. Here are some other highlights of what happened in the world of media business this week:

In television, apart from the news that US broadcaster Fox is axeing The OC in February, there has been little from the US. One interesting piece that came over the wires today concerned a dispute between cable operator Mediacom and broadcaster Sinclair. Sinclair had been asking for cash payments upfront for channels that are put out over Mediacon’s network. Usually, such payments are based on cuts from advertising sales and made in arrears. This week, the FCC has officially endorsed Sinclair’s demand. Given the general downturn that television advertising has been facing of late, this could have an impact on dealmaking in the cable industry for many other players.

Over in Europe, Vivendi, TV1 and M6 completed the merger of their pay-TV stations. The merged group, which will be controlled by Vivendi, becomes one of Europe's biggest broadcasters, so one needs to watch this space.

In the UK, ITV seems to be having a few weeks break from the M&A rumour mill. The UK's largest commercial broadcaster is using the breathing space to announce the appointment of Annelies van den Belt as the new managing director for its broadband portal. Van den Belt has spectacular web credentials, having revamped the sites to great acclaim at UK newspapers The Times and The Telegraph. His hiring could not have come at a better time for ITV, whose web success has been pretty flat to date with slower growth at Friends Reuinted since being bought by them one of the more recent problems.

UK satellite broadcaster BskyB, which is owned by News Corp. and now has a stake in ITV, has beaten its own targets for selling set-top boxes for its premium Sky+ service: it’s now sold 2 million of them. The company says its next big thing will be offering a 'placeshifting' service that lets users access their recorded or on-demand programming from anywhere, a la Slingbox.

Over on the silver screen, the film industry loves the post-holiday season. They get a big bump in theatre traffic, lots of people buy movies, and devices to play them, as presents, and the producers begin the big push for consideration in the awards season.

This was also a good news week for them in more technical parts: it appears that there has finally been some agreed standard for digital movies copyright protection, in the form of the content scrambling system (CSS), developed by Sonic Systems and approved by all major video parties. And it looks like there will be several new products coming out, not just from consumer electronics companies but also from the content/distribution camp, that will offer the dual-format of Blu-ray and HD-DVD, the respective (and thus-far rival) offerings of high quality video from Sony and Microsoft/Toshiba.

In the print world, publishers are continuing to cut costs and sell off assets, underscoring the pain and suffering they’re all experiencing in their advertising and circulation departments. The new owners of the once-mighty Philadelphia Inquirer started a long-expected round of layoffs in the newsroom, numbering 68 in a staff of 415, as part of a plan to shave $20 million off operating costs.

The New York Times Company looks like it is trying to stave off any big asset or personnel cuts by taking out small, non-strategic parts of the business first. This week it sold a group of television stations for $575 million to Oak Hill Capital Partners. Taken together, the stations number eight; were in ‘non-core’ markets for the NY Times; and made up only 5% of the group’s operating revenue. But they are profitable.

Meanwhile, in Chicago, the fate of the Tribune Company is still up in the air. The latest is that one of the media company’s strategic shareholders, the Robert McCormick Foundation, has hired the Blackstone Group to look over the books. Reports are that this is either to decide how to handle their investment, or possibly for them to make a buyout offer for the group, which comprises newspapers, television stations and the Chicago Cubs baseball team. The foundation has a long and local association with the Tribune, so they, rather than a PE or another large publisher, may well be the most sensitive to how best to carry the group without breaking it up altogether.

Last but not least, in the Internet sector, Google had a shot of cold air blasted on it in a recent article that pointed out it’s honeymoon period with search-advertising might be over. Bascially, the popularity of its search advertising among advertisers has meant that it’s getting harder and harder for them to get their ads seen—in other words, more advertisers mean less chance of their individual products coming up with a keyword search. So they are finding that they need to spend more and more budget on Google to get more of their ads into the system. On top of that, the conversation rate of ads to sales for many advertisers is pretty bad. Typically it is 5% for online advertisers, but with some Google Adword users it seems to be much lower. The sceptics forecast that Google’s revenue growth will slow to 47% this year from 80% last year, and much of their revenue comes from this advertising model, so a drop in advertising will hit the company hard.

Unsurprisingly, and in light of this news, the media giant is continuing to look for new markets, both vertically and geographically, in which to extend its business. This week’s Google move: China, where it has tried but not yet succeeded to supercede homegrown titans like Baidu (once an investment for Google…). Google has struck a deal with China Mobile for loading its search tools onto its phones. And it made an investment in Xunlei Network Technology Co., which provides video and game downloads, signalling that Google may yet have another trick beyond search up its sleeve.