Business

Changes to business digitisation brings

  • Channel 4.5?

    Channel 4 and five (formerly Channel 5) in the UK have been looking at the benefits a merger between the two channels would bring, particularly in the face of new competition from ITV plc.

    Carlton and Granada merged last year to become ITV plc, placing pressure on the remaining commercial channels to compete for advertising: ITV now has a single huge advertising sales mechanism.

    Five is jointly owned by United Business Media and Germany’s RTL – but as Channel 4 is publicly owned, any change of this scale must be approved by an act of parliament.

    Naturally both Channel 4 and five dismiss the reports of talks as speculation.

    “Channel 4 might be interested in it because they are declining and we are growing” said a five spokesperson. Five claim a 6.5% share of all viewers – three quarters of the UK population watch Channel 4 in the course of a week.
    More about Channel 4’s ownership

    More about five

  • Microsoft Rethinks Japanese Contracts

    Microsoft has announced changes to its contracts with PC suppliers in Japan after its Tokyo offices were raided in the middle of the week.

    The part of the contract that the Fair Trade Commission was so concerned about related to a clause preventing manufacturers from suing Microsoft over patented technology. If manufacturers did not agree to the clause, then they could not sell PCs with Windows preinstalled.

    Microsoft’s statement

  • Microsoft’s Tokyo Offices Raided

    Microsoft (MS) received a visit from fifteen members of Japan’s Fair Trade Commission (FTC) at 9am Tokyo time. The FTC are looking for evidence of unfair and monopolistic practices in the company’s dealings with PC suppliers in Japan. It’s actually their second visit – the FTC last knocked on MS’s doors in 1998, when they confiscated documents relating to their OS range, browser and office suite.

    This second raid isn’t too surprising – over the months Microsoft has had the same thing happen in the US and Europe, and its operating system and software bundling deals with PC hardware manufacturers have long been regarded as anti-competitive in Japan. After a slow start, the country is now the third largest market for PCs in the world, with annual sales of about 13m units.

    In Europe, Microsoft could face millions of Euros in fines in March when it reaches an agreement with officials over the way that Windows Media Player is tied to its range of operating systems. Microsoft claims its legal bills for such cases came to US$1.55bn in 2003, though the recent US Department if Justice settlement is regarded as ineffective by many in the industry.

    The BBC on the Raid

  • Eminem Sues Apple Over Unauthorised Use of Song

    Because of what seems to be a rather surprising error by Apple, rap star Eminem is suing the computer company for featuring lyrics from the song “Lose Yourself”, sung in the advert by a ten year old boy, in their 2003 campaign for the iTunes music service.

    Eminem’s company Eight Mile Style said “Eminem has never nationally endorsed any commercial products and … even if he were interested in endorsing a product, any endorsement deal would require a significant amount of money, possibly in excess of $10 million”.

    The ad was shown multiple times on MTV, and it seems odd that Apple would feature the song without first seeking permission. Apple Computer has yet to comment.

    Slashdot on Grey Tuesday, Slim and Apple

  • Vodafone’s Connect Card Wins at Cannes

    Vodafone’s Mobile Connect Card, launched in April 2003 has won the Best Mobile Application or Service: Corporate Market at the 2004 GSM Association Awards in Cannes.

    The card is essentially a rebadged Option Globetrotter with a Vodafone data service and software suite. The package is designed to provide simple and secure access to company networks and the internet, and is plug and play thanks to the Vodafone dashboard and software.

    Vodafone’s new version of the card, the Mobile Connect 3G/GPRS datacard will be available in many areas of Europe in the next month.

    ZDNet’s review of the card

  • Comcast Make Surprise Bid For Disney

    In a move that surprised a lot of people, Comcast has put in a hostile bid for the entire Walt Disney Corporation, appealing to shareholders suffering from “Eisner fatigue”.

    Things have been troubled at Disney for a while – Roy Disney recently resigned after describing the company as “soulless” (copy of the resignation letter here.), they have not had a decent traditional animation hit in years, and the parks were suffering even before 9/11. In all, Disney has a net debt of some US$11bn.

    Comcast on the other hand, have been doing quite well for themselves. They have more than 21 million subscribers, out of the 40 million homes they pass, and their operating cash flow was over US$2bn in 2003. Amongst the other assets they own they have ten local TV stations, the ABC Television Network and 72 radio stations. Acquiring Disney will give them vast, high-quality content production facilities – giving them control over the whole commission/produce/broadcast chain. We think they will ditch the theme parks fairly quickly as they seem less relevant to Comcast’s plans.

    The US$66bn bid (let us just write that out in longhand for you: US$66,000,000,000.00) is ambitious, and there will be obvious comparisons with the ill-fated AOL/Time Warner merger, but if the deal goes ahead it will be interesting to see what kind of company it will create.

    Steve Burke, President of Comcast Cable says in their press release: “I know Disney’s businesses very well, and I am confident that when we put those great brands and programming assets together with our distribution, there will be significant opportunities to produce compelling returns for shareholders.”

    Rupert Murdoch has already said that the deal would make the company a competitor to NewsCorp., but who else might step forward with a bid?

    Comcast estimate that the market capitalisation of the combined company would be around US$122bn, with revenues of US$45bn, and an EBITDA of US$10bn. Accountants are said to be stockpiling hoards of zeros in case there is a worldwide shortage after the deal.

    Comcast’s statements

    The FT’s comments

  • Viacom Looking to Sell its Stake in Blockbuster

    Viacom are hoping to sell their 81% stake in Blockbuster Entertainment, making the video rental giant an independent company.

    Said Blockbuster CEO John Antioco: “We believe Blockbuster will compete very effectively as an independent company and that separation from Viacom will enable us to better pursue our unique strategic vision and significant avenues for expansion.”

    But what does the future really hold for Blockbuster? They managed to embrace the move to DVD admirably, but many see renting DVDs a dead end. It’s no secret that there’s a slowdown in the video rental business: consumers would much rather use video on demand (VOD) if they could, rather than trudge down to the video shop on a rainy Monday night to return that copy of Three Week’s Notice that you didn’t get a chance to watch. With broadband coverage improving, speeds increasing, and pay-per-view services flourishing, then Blockbuster’s customer base will rapidly diminish.

    Even if they did reinvent themselves as a VOD company, they will lose an important part of their revenue – it has been speculated that as much as 20 – 30% of Blockbuster’s income is comprised of late fees, and you can’t charge those on a stream.

    Hoover’s on Blockbuster

  • Midem Report: Focus on the Mobile Music Forum

    By Paul Hosford, partner, New Media Law

    In another crammed auditorium full of music industry and mobile phone industry delegates, keynote speaker, Takeshi Natsuno, MD of i-mode strategy at Japan’s NTT DoCoMo in revealed that its straightforward, entertainment-based service had attracted 40 million users to its subscription based model, because it is an utterly consumer focused offering. He urged his European and North American counterparts to leave behind current industry specific perspectives and to develop viable marketplaces for mobile content, where the key to overall success would be equal roles for all types of hardware manufacturers, content providers, and service providers.

    His advice to the music content owners was to translate pricing models into the world of the packaged IT product – lower price higher volume, but to consider that the mobile operators need business models that address their industry’s concerns as well. Service providers should stay user-centric ensuring that even the most unsophisticated user is comfortable with, and enjoys using the product, for it to be properly commercially viable. DoCoMo’s model is to only take 9% commission on sales for themselves – preferring that “the revenue must go to the content providers”. In fact Natsuno said when other people within his organisation had suggested that they took a higher percentage, “I fired them”. This is a refreshingly different approach to current income sharing with many mobile service providers, particularly in the UK, where the operator takes as much as 40% of some services. His expectation is that their 40 million paying subscribers in Japan and 1.5 million active subscribers outside Japan will grow to a target of 100 million by 2010.

    “Making Money from Mobile Music, Today” panel
    In the panel session “Making Money from Mobile Music Today”, these different industry perspectives were apparent in the lively discussion of how ringtones and their increasingly musical offspring, “Hi-Fi tones”, had proved to be massive money spinners for the mobile operators. HiFi tones are near perfect reproductions of music. Representatives from T-Mobile International (Germany), Comverse (Israel), Musiwave (France), EMI Music Publishing (UK), Sony Music (UK), and Faith West (US) debated the future growth of “real” mobile music content with the development in mobile technology and the increase in personalisable ring-tones of various kinds beyond the mono and polyphonic tones that most of us are used to hearing. From the music industry’s side, as the quality of ringtones reproduction increases, record companies and publishers will overcome their initial reluctance to put their music on what they say has, up to now, been a platform with inadequate reproduction quality (they say they have been protecting their artists from low quality renditions of the music). The operators and service providers view is that it is clear that business models that take into account airtime and subscription considerations may or may not work for the rights owners. The record labels and publishers whilst obviously keen to collect revenues for themselves and artists from this potentially massive distribution opportunity will have to continue to develop open licensing policies across many territories. And if the operators follow Takeshi Natsuno’s advice, they will lower resale rates from the 10 to 40 % currently talked about.

    Conclusion
    As in the online environment, the on-demand mobile music world that will come to consumers in the near future will require the multiple rights relationships that exist within the music industry to be simplified and standardised – this in itself is a large task. As ever, what is all too apparent is that there are many expecting their slice of the pie – at an extreme the list could be as long as record company/label, music publisher, possibility the artist (depending on their contract), content aggregator, mobile service provider and payment system provider. One of the challenges facing the mobile music industry is whether the pie will be as big enough for everyone to get their slice.


             

  • Viacom May Bid for EchoStar

    A strange twist of business fate may lead to Viacom becoming a suitor for EchoStar reports mergers and acquisitions specialist publication, MergerMarket.

    The reason for the surprise is that Viacom and EchoStar are currently locked in legal action. EchoStar Satellite is claiming that Viacom is illegally trying to force EchoStar to buy Viacom-owned MTV and other cable channels at unfair prices in exchange for the right to carry 18 CBS-owned stations in 15 big-city markets. One effect of the dispute might be that 1.6m EchoStar subscribers will not get to see the Super Bowl this coming Sunday.

    Researching the pieces, Rick Appin at MergerMarket took a sounding from the markets and found that they felt it was inevitable that EchoStar would be taken over due to large debts and a lack of programming.

    Unnamed sources close to the situation said Viacom would only interested in acquiring cable programming, television and radio stations, broadcast properties and outdoors advertising. They saw the benefits of the merger being savings on distribution and fees. Once merged it would also bring Viacom the strength it feels it needs to compete against Rupert Murdoch. News Corp recently to a 34% stake in US satellite company, DirecTV.

    There is also speculation that SBC Communications could be eyeing EchoStar, but the timing might right, with SBC having posted lower quarterly earnings on Monday.

    Clearly the pursuit of EchoStar would not be a one horse race. One analyst felt others might enter the bidding fray, saying “What is likely to happen is the ignition of a bidding war with the likes of SBC, Viacom and even Disney making a play for it”

    Merger Market

  • TiVo Consumes StrangeBerry

    TiVo has announced that it has acquired a company called StrangeBerry. The stock-for-stock deal actually took place on 12 January but the details have only just emerged due to a recent SEC-filing by TiVo. No real details have been released by TiVo as to why they have bought it, but in the filing TiVo describe it as

    a small Palo Alto based technology company specializing in using home network and broadband technologies to create new entertainment experiences on television

    Very little is known about StrangeBerry and the products they have been working on since its inception in April 2002. What is know is there are only a handful (five) of signed deals with companies like Coke & Fox to place promotional videos on TiVo’s and given TiVo has over one million paid up users, handling this would require a highly scalable solution. StrangeBerry could bring these skills.

    Time will tell – but it sounds interesting.

    TiVO SEC filing

    TiVo announcment about StrangeBerry