Epicenter of Media (Saber) Rattling

The topography of the television business was symbolically mapped out in decidedly hilly San Francisco last week, because everyone involved agrees that there is no smooth ride ahead.

On one side of the city, the question of who is entitled to subscription revenue-and how much-was the topic du jour. Not far away, the future, both near- and long-term, of the advertising game was being planned despite the absence of a clear road map.

CBS Corp. chief Leslie Moonves and Cablevision CEO Jim Dolan were at the Morgan Stanley investor conference talking about retransmission consent, which is a major opportunity or a threat, depending on whom you ask. Meanwhile, at the transformation-themed American Association of Advertising Agencies conference, Madison Avenue was sketching out the beginnings of a new way of buying television as addressable advertising starts to scale.

And the takeaways from both were similar: forecasts of more near-term uncertainty and debate, with the hope it will all lead to a return to something resembling the halcyon days of the media business. Or at least just better times. The nagging issue, of course, is the lack of just how the business is going to get there.

As Cablevision and Disney were digging in and trading barbs over their carriage agreement in New York, the retrans consent topic was equally hot across the country as industry execs agreed that recent retrans battles were precedent-setting.

One senior television executive observing the action at both conferences told B&C that News Corp.'s deal with Time Warner Cable, a pact that sees the conglom getting paid for Fox network for the first time, should be viewed as a game-changing negotiation for all involved. For all the we-can-work-it-out talk on Disney's earnings calls, its rupture with Cablevision was nothing short of volcanic, according to insiders. And Disney's newly available shows on Hulu.com are a particular bone of contention for Cablevision.

Moonves, long a loud voice for broadcasters on retrans, never passes up a chance to sound his clarion call, as he is expected to do again this week at the Credit Suisse 2010 Global Media and Communications Convergence Conference in Palm Beach. Fla.

"The game has now changed," he said. "Fox is getting paid by Time Warner [Cable], we're getting paid by Time Warner. We recently concluded a deal with Cablevision. We have a deal with Dish. We have a deal with Verizon. We have a deal with AT&T-to get paid a second revenue stream. So, no longer can it be ‘network is doomed' because they only have a single revenue stream, while cable is a much better business because they have two revenue streams. Now we are achieving that dual revenue stream as well, and that's going to be significant as we move toward the future. I think it's now a given that retrans is part of the game."

Right in the middle

Sitting in the middle of both the subscription and advertising worlds is Comcast COO Steve Burke, who spoke at the ad confab. On a positive note, he said that while there were few indicators of an economic recovery in general, advertising was picking up for the company.

While the Cablevision/ABC spat wasn't discussed in Burke's Q&A session, moderated by MediaLink's Michael Kassan, he offered this much about managing change: "You get in trouble if you do nothing....Now more than ever, content and distribution put together can really change everything as long as you're willing to lean forward."

The lack of progress perceived by some on the part of Canoe Ventures, owned by the six major cable operators, was brought up at the event. But Burke came to the defense of Canoe CEO David Verklin, explaining it was the "plumbing" that was holding things up rather than any disagreements among its partners or lack of funding.

He said the partners had committed $100 million to the venture. Canoe has promised to bring a national platform to media buyers looking to target particular zones with their ads, but so far has had little to show for its Herculean efforts.

That's all about to change, say some close to Canoe, noting that developments and announcements are expected in 2010.

Tracey Scheppach, VP and video innovation director at Starcom, acted as a kind of Joan of Arc for addressable advertising, evangelizing from the podium. "We can do it. Start looking at other marketing dollars on platforms bigger than the Internet," she told TV executives. "Think about how to bring a portion of that $50 billion spent on direct marketing and bring it to TV. Stop being defensive about money migrating online."

When asked about the slow progress in the field of addressable advertising, Scheppach said: "It's obvious why it hasn't happened yet. The people in control don't care, and the people who care have been essentially in denial or playing defense."

Scheppach said that Comcast's purchase of NBC Universal would change the dynamic since it would move Comcast toward a bigger dependence on advertising. Indeed, Burke suggested that the deal for NBCU was "a bet that the advertising business will remain robust."

If there were a buzzphrase for the 4A's event as a whole, it was a toss up between "data and analytics" and "waste management." Thought leaders such as McCann Worldgroup CEO Nick Brien called for a "new blueprint" for the business, while GroupM's Marc Goldstein suggested that there be "new benchmarks."

And with more targeted measurement developing, optimists will say that demos and gender buys are so last decade. They're already being replaced by descriptors such as "women with children who earn more than $100,000 and live in a particular geography." Good news for boomers: Your age will no longer define whether marketers care about you. Goodbye, 18-49s, and hello to insights that identify a target market of existing and potential customers of whatever age.

Goldstein also talked about how CPM pricing will morph beyond recognition once fresh value systems emerge, and that ad executives will be prepared to pay more to hit the right people.

For those on the agency side, the future cannot come quickly enough. Addressable advertising appears to be one way to satiate the procurement people who ax deals and cut costs at every turn. But the question then remains whether talk of cutting waste and targeting slimmer niches can do good for the TV executives on the other side.

Agencies argue that TV executives have much to gain from selling the same airtime to multiple clients. Exactly what effect addressable advertising will have on the type of content TV channels decide to broadcast remains to be seen.
But for now, it's baby steps toward a new future, according to John Lowell, Starcom senior VP and director of research and analytics. As Lowell puts it: "We're trying to build scaffolding."