How Media Giants Are Reassembling The Old Oligopoly
Two years ago, Mattel Inc. gave CBS a choice. The network had refused to broadcast the toymaker's movie "Barbie in the Nutcracker" in prime time. So Mattel threatened to pull millions of dollars of advertising from the Nickelodeon cable channel -- owned by CBS parent Viacom Inc.
Viacom, which had spent a decade bulking up with acquisitions, now wielded its new clout, according to people familiar with the situation. If Mattel made good on its threat, Viacom said, it would be blacklisted from advertising on any Viacom property -- a wide swath of media turf that also includes MTV, VH-1, BET, a radio broadcasting empire and even billboards. Mattel backed down, and the Barbie movie ended up running during a less-desirable daytime period.
Neither company will comment on the scrape, but Viacom says Mattel remains a "valued advertising partner." More generally, President Mel Karmazin in an interview is blunt about his company's strategy: "You find it very difficult to go to war with one piece of Viacom without going to war with all of Viacom."
Viacom and its big media peers have been snapping up cable channels because they're one of the few entertainment outlets generating strong revenue growth these days. More broadly, the media giants have discovered that owning both broadcast and cable outlets provides powerful new leverage over advertisers and cable- and satellite-TV operators. The goliaths are using this advantage to wring better fees out of the operators that carry their channels and are pressuring those operators into carrying new and untried channels. They're also finding ways to coordinate promotions across their different holdings.
Entertainment giants such as Viacom, NBC parent General Electric Co. and Walt Disney Co., which owns ABC, now reach more than 50% of the prime-time TV audience through their combined broadcast and cable outlets. The total rises to 80% if you include the parents of newer networks -- such as News Corp.'s Fox and AOL Time Warner Inc.'s WB -- and NBC's pending acquisition of Vivendi Universal SA's cable assets, estimates Tom Wolzien, an analyst at Sanford C. Bernstein & Co.
The big media companies are quietly re-creating the "old programming oligopoly" of the pre-cable era, notes Mr. Wolzien, a former executive at NBC. Of the top 25 cable channels, 20 are now owned by one of the big five media companies.
The idea of owning broadcast networks as well as cable channels is "comfortable for people like ourselves," says Bob Wright, chairman of NBC, which two weeks ago signed a preliminary agreement to acquire Vivendi Universal's USA and Sci-Fi cable channels, along with the Universal film studio, bolstering a stable of cable channels that includes Bravo, MSNBC and CNBC.
For the past several years, Viacom and other media companies have pressed the Federal Communications Commission to relax restrictions on owning local TV stations. One of their main arguments: Their audience is shrinking as cable booms and the TV audience fragments. The original three broadcast networks now capture only 33.7% of the prime-time television audience, down from 69.3% in 1985-86. Cable now boasts a 49.3% share, compared with 7.5% in the mid-'80s, according to a Cabletelevision Advertising Bureau analysis of data from Nielsen Media Research.
But with the wave of consolidation and the increased reach of the media giants, some cable systems are fighting to keep restrictions on TV-station ownership in place. Cox Enterprises, parent of the fourth-biggest cable operator, Cox Communications, has argued that the big broadcasters are abusing protections granted them under federal law. The broadcasters, Cox argues, are using those protections to charge cable systems more for their cable channels. Cox and others have complained to the FCC that media companies make them accept less-popular cable channels in exchange for carrying their broadcast networks.
Media companies counter that their consolidation only puts them on a level playing field with cable operators, who are themselves merging into giants. Comcast Corp.'s acquisition of AT&T Corp.'s cable division last year gave it a reach of more than 21 million homes, for instance, almost 30% of homes served by cable. Comcast has already begun to tell cable channels it wants to save money on what it pays for programming, setting the scene for increasingly contentious negotiations with big media companies.
"There has been so much consolidation" among the distributors that "unless you are equally big ... you risk a situation where you can be marginalized," says Viacom President Karmazin.
Following the Money
In buying up cable channels, the media conglomerates are simply following the money. The music business is shrinking rapidly as piracy eats into sales. Universal Music Group, the world's biggest, is now thought to be valued at $5 billion to $6 billion, less than half what it was a few years ago. The film business is volatile, with a quarter's performance dependent on whether movies bomb or not. The publishing business is steady but grows at a slow pace. Broadcast television's audience is shrinking, and its business model is entirely dependent on advertising revenue, a cyclical business.
Cable channels are gushing cash because they generate revenue from two sources -- subscriptions and advertising. The subscriptions don't come directly from customers, but through cable-TV services, which operate the vast array of wires and pipelines connected to homes, and through satellite-TV services that beam the signal. For the right to carry the programming on their systems, these cable-operating companies pay a range of monthly fees, from 26 cents a subscriber for VH-1 to more than $2 for ESPN. These fees, for the most part, increase every year, providing a steadily rising annuity for the channel owners.
As cable viewership has increased, so has advertising. Since 1980, cable-channel ad revenue has risen from practically nothing to $10.8 billion in 2002, according to the Cabletelevision Advertising Bureau. Some channels, meanwhile, are cashing in on strong brand names. Nickelodeon, for one, is a merchandising powerhouse, with products including Dora the Explorer backpacks and SpongeBob SquarePants videogames.
The result has been an explosion in profits. MTV earned just $54 million in 1989, estimates Kagan World Media, but is expected to make more than 10 times that much this year. QVC, the home shopping channel, generates so much money that Liberty Media recently agreed to buy full ownership of the channel at a value of about $14 billion -- the same value put on all of Vivendi Universal's film and TV assets.
Cable channels' surging profits have transformed the bottom lines of their parent companies. E.W. Scripps Co., the 125-year-old Cincinnati newspaper publisher and TV-station owner, now relies on its cable division for much of its profit growth. In 1994, Scripps launched the Home and Garden channel on the initiative of a TV executive, Ken Lowe, amid widespread skepticism. One Scripps newspaper publisher approached Mr. Lowe at the time to complain "a lot of the cash that I'm making here is being shipped to you.... You better know what you're doing," Mr. Lowe recalls.
Nine years later, HGTV has become one of the most popular cable channels, with shows such as "Design on a Dime" and "House Hunters." Scripps added a controlling stake in the Food Network in 1997. In the second quarter of this year, the impact of cable channels, including the Home and Garden channel and the Food Network, was clear: Newspaper and broadcast-TV profits both fell, while cable-channel profit jumped 70%, helping Scripps's net profit more than double. Scripps stock is trading near its 52-week high of $90.65, up almost 30% for the past 12 months.
The publisher who had complained about the cable-channel investment recently thanked Mr. Lowe, now Scripps's CEO, noting that the rise in Scripps's stock price would put his three children through college, Mr. Lowe says.
Since 1990, almost half of the top 50 cable channels have changed hands. Among the big deals: Disney's $19 billion acquisition of ESPN's parent, Capital Cities/ABC, and Time Warner's $6.7 billion purchase of CNN parent Turner Broadcasting, both negotiated in the summer of 1995. In 2001, Disney bought the Family Channel from News Corp. for $5.2 billion.
Last year, NBC bought Bravo for $1.3 billion. CBS, owner of The Nashville Network (now Spike TV) and Country Music Television, itself was gobbled up in 2000 by MTV's longtime parent, Viacom. Viacom has since added channels such as BET and Comedy Central.
Mr. Karmazin recently boasted to investors that the company's broadcast and cable outlets reach 26% of the nation's viewers in prime time, a significantly bigger share than any other company. Having such a big market share is "real important for lots of reasons, in terms of dealing with advertisers and our cable partners," he told investors.
Ad sales and marketing executives from the CBS and MTV Networks divisions meet regularly to share information and plot cross-promotional opportunities. In January 2001, MTV staged the halftime show for the Super Bowl, which was broadcast on CBS, featuring performances from Aerosmith and Britney Spears.
Last fall, CBS helped stem a slide in young women viewers of its reality blockbuster series "Survivor" with a documentary on the series that ran repeatedly on MTV before the new season of Survivor premiered. The premiere episode of "Survivor" on CBS saw a 23% jump in its young female audience, says George Schweitzer, executive vice president of marketing for CBS. CBS promoted its sitcom "King of Queens" through a special last Friday on Viacom's Comedy Central cable channel.
Protecting One Another
The broadcast and cable sides of Viacom generally don't try to sell ads jointly, but the common ownership allows them to protect each other's flanks. At a presentation to advertisers last spring, MTV executives compared the audience reach for most of MTV Networks with ABC, NBC, Fox and WB -- but CBS's figures weren't included in the breakdown, so that MTV didn't siphon ads from its corporate cousin.
Meanwhile, Disney's ownership of both ABC and ESPN allows it to spread out the cost of expensive sports packages such as its deals with the National Football League and the National Basketball Association. ABC Sports is, in fact, overseen by the same executive who runs ESPN, George Bodenheimer, and the two operations regularly promote each other's programming and share talent.
Joint ownership of cable and broadcast is particularly valuable in negotiations with cable operators. A 1992 law allows broadcasters to regularly renegotiate the price for carrying TV stations' signal on cable. While broadcasters could charge a cash fee, they usually offer the broadcast stations free in exchange for carrying a new cable channel they've launched. Few viewers would subscribe to cable if ABC, CBS or NBC weren't on the channel line-up, so the cable operators have little leverage.
The strategy lets broadcasters add more cable channels, including many narrowly focused networks. Since 1993, big media companies have launched at least 35 new cable channels by bartering the right to carry their broadcast stations, estimates George Callard, an attorney with Cinnamon Mueller, a law firm that is counsel to the American Cable Association.
Using such a strategy, cable operators say, Disney has shoehorned its Soapnet cable channel, which features reruns of soaps such as "General Hospital," into services reaching 33 million homes. Disney argues that fewer than half of those homes have the channel as a result of a barter arrangement.
Cox Enterprises complained in a filing with the FCC in January that Cox Communications had to agree to carry Soapnet nationally in exchange for the right to offer ABC stations in just a few of its markets. A Disney spokesman says Cox is a "savvy negotiator" that "wouldn't have signed the deal unless they found value in it."
Catalina Cable, a cable-TV operator on Catalina Island off the California coast, has only 1,440 customers. Ralph Morrow, Catalina's owner, says he was asked to carry Soapnet when he tried to renew his right to carry a Disney ABC affiliate for the beginning of 2000. He says he suggested paying cash for ABC instead. Disney's response was that the cash fee for ABC would be "really high," he says. "They made it clear to me" that he didn't have that option "at a reasonable price." A Disney spokesman says Mr. Morrow mischaracterized its offer, noting that Disney offers operators "multiple options, including a stand-alone cash offer which we believe to be a fair offer and fair value."
Mr. Morrow, who says he doesn't see the need for a soap-opera channel, now pays Disney 11 cents a subscriber for Soapnet. Disney responds that surveys of viewers have shown Soapnet to be popular. The channel drew 97,000 viewers in July and August, according to Nielsen. In the same period, HGTV -- which is available in about two and a half times as many homes -- averaged 457,000 viewers.
美国媒体业再显寡头垄断模式
两年前，Mattel Inc.让哥伦比亚广播公司(CBS)作出选择。该广播公司此前拒绝在黄金时段播放这家玩具生产商的电影《芭比与胡桃钳的梦幻之旅》(Barbie in the Nutcracker)。因而Mattel威胁说，将从哥伦比亚母公司维亚康姆(Viacom Inc.)旗下的有线频道Nickelodeon中撤出数百万美元的广告。
据知情人士透露，维亚康姆在经过10年之久的收购后不断壮大，现已开始重新发挥其巨大影响。维亚康姆称，如果 Mattel将威胁付诸实施，它将被维亚康姆旗下任何一家媒体公司剔除出广告名单之外。维亚康姆还拥有MTV、 VH-1、BET等频道、一个庞大的电台网络，甚至还有广告牌。Mattel只好屈服，那场电影最终在不太理想的白天时段播出。
两家公司都不愿就此次摩擦发表评论，但维亚康姆称 Mattel依然是“一家宝贵的广告合作伙伴。”而维亚康姆总裁梅尔?卡曼金(Mel Karmazin)在接受一次采访中就该公司策略问题直言不讳地指出，若与维亚康姆下属的一家公司作对，就很难不与整个维亚康姆作对。这番话似乎更具普遍意义。
维亚康姆和其大型媒体同行一直在大举收购有线频道，因为这些资产是时下收入能够强劲增长的为数不多的娱乐资产之一。更重要的是，这些巨头已经发现，同时拥有广播电视和有线电视频道将为它们在与广告客户及有线和卫星电视运营商进行谈判时增添新的有力砝码。
这些大公司目前正利用此项优势来向使用它们频道的这些运营商收取更高的费用，并迫使它们开播新的、未曾尝试过的频道。这些巨头还在寻找方法，对旗下不同公司之间的促销活动进行协调。
目前，维亚康姆、全国广播公司(NBC)的母公司通用电气(General Electric Co.)和美国广播公司(ABC)的母公司沃尔特-迪斯尼(Walt Disney Co.)这些公司总共拥有的广播和有线电视在黄金时段的观众拥有率超过50%。Sanford C. Bernstein & Co.的分析师汤姆?沃西恩(Tom Wolzien)称，还有诸如新闻集团(News Corp.)的福克斯(Fox)和美国在线时代华纳(AOL Time Warner Inc.)的华纳兄弟(WB)，以及NBC计划收购的Vivendi Universal SA旗下的有线资产这类较新业务。他估计，若加上这些业务的母公司，拥有率将达到80%。
沃西恩是NBC的前管理人士。他指出，这些媒体巨头正在悄然重建有线时代之前的“古老的寡头垄断模式”。目前的前25大有线频道中，有20家为5大媒体公司所把持。
NBC董事长鲍勃?赖特(Bob Wright)称，对于他们自己这类人而言，同时拥有广播网络和有线频道这一主意让人宽心。该公司于两周前就收购Vivendi Universal所属的有线频道USA和Sci-Fi以及电影公司Universal签订初步协议，这将进一步增强这家现拥有Bravo、MSNBC和CNBC等有线频道的公司的实力。
过去几年内，维亚康姆和其他媒体公司力劝联邦通讯委员会(Federal Communications Commission)在本地电视台的所有权方面放松限制。其主要理由之一是，随著有线电视的兴起及电视观众的日益分散，它们的观众在不断减少。3家最早的广播网络目前在黄金时段的电视观众拥有率仅为33.7%，远远低于1985-86年时的69.3%。Nielsen Media Research的有线电视广告部(Cabletelevision Advertising Bureau)提供的报告显示，目前有线电视的观众拥有率达49.3%，远高于上世纪80年代中期时的7.5%。
但在合并浪潮的推动下，这些媒体巨头的触角得到延伸， 因此一些有线运营商目前竭力要求监管机构将电视台所有权方面的限制维持不变。第四大有线运营商Cox Communications的母公司Cox Enterprises声称，这些大型广播公司在滥用联邦法规中对其提供保护的有关条款。Cox称，这些大公司通过这些规定对使用其频道的有线运营商收取更高的费用。Cox和同类其他公司已向FCC表示，媒体公司让它们使用其广播网络时，常常以它们接受收视状况较差的有线频道有条件。
媒体公司则反击道，合并只是使它们与有线运营商处于公平的竞争环境下，因为后者本身也在通过合并而成为巨型公司。比如说，康卡斯特(Comcast Corp., CMCSK)去年对美国电话电报公司(AT&T Corp., T)旗下有线业务的收购使得其用户超过2,100万户，几乎为美国有线电视用户总数的30%。康卡斯特也已开始告诉有线频道，希望节省节目播出的费用，从而为其与巨型媒体公司之间日趋激烈的谈判埋下了伏笔。
维亚康姆总裁卡曼金称，在节目分销领域中出现了太多的整合，除非公司的规模大到与这类分销商势均力敌的程度，否则，很可能面临受到排挤的危险。
媒体巨头大量收购有线频道仅仅是为了追求金钱。音乐业务受盗版行为侵蚀销售额的影响而快速萎缩。世界最大的音乐集团Universal Music Group目前估计价值50亿-60亿美元，较几年前缩水一半以上。电影业务也相当不稳定，1/4的业绩依靠影片热销与否。出版业务虽然稳定，但增长缓慢。广播电视的观众正日益减少，并且其商业模式完全依靠广告收入，周期性很强。
而有线频道之所以能带来大量现金，是因为其收入来自两个渠道，即订阅和广告。其中，订阅费不直接来自电视用户，而是来自有线电视和卫星电视运营商，前者通过庞大的线路和管道来为家庭提供电视接入服务，后者则通过发射信号来提供服务。这两类公司要想为各自的系统获得电视节目的播放权，每月必须替每个用户支付一定的费用，具体收费从VH-1的26美分到ESPN的2美元以上不等。总体而言，这些费用每年都在上涨，从而为频道所有者提供每年都能稳定增长的收入来源。
随著有线频道观众人数的增长，广告也在增加。Nielsen Media Research的有线电视广告部称，自1980年以来，有线频道的广告收入从几乎一无所有增至2002年的108亿美元。其间，一些频道利用名牌产品赚钱。例如，Nickelodeon频道就发布大量商品广告，包括Dora the Explorer牌背包和电子游戏Sponge Bob Squarepants等。
结果是利润剧增。根据Kagan World Media的估计，MTV在1989年仅赚了5,400万美元，但预计今年的利润将是该数字的10倍以上。家庭购物频道QVC的利润也极其可观，以致于Liberty Media最近同意斥资约140亿美元获得该频道的全部权益。而Vivendi Universal的电影和电视资产的总价值也在同样的数目左右。
有线频道大幅增长的利润改变了其母公司的利润状况。 E.W. Scripps Co.位于辛辛那提，是一家拥有125年历史的报纸发行商，并拥有电视台，目前，该公司利润增长在很大程度上都依赖于其有线业务。1994年，Scripps接受电视台管理人士肯?劳(Ken Lowe)的建议，在人们广泛怀疑的目光中推出Home and Garden频道。
劳在回忆这段往事时称，当时有一位发行商找到他，抱怨道：“我赚的很多钱都给你拿去用，你最好知道自己是在做什么。”
9年之后，Home and Garden已成为最受欢迎的有线频道之一，其节目包括《小家设计》(Design on a Dime)和《觅房踪迹》(Househunters)等。
Scripps又于1997年获得了Food Network的控制性股权。今年第二季度，包括Home and Garden和Food Network在内的有线频道的功绩非常明显：报纸和广播电视业务的利润均下滑，而有线频道的利润飙升70%，并帮助Scripps的净利润增加一倍以上。
Scripps目前的股价接近52周高点90.65美元，该股在过去12个月内上涨了将近30%。
劳称，这家出版社曾对这项有线频道投资提出抱怨，但最近向他表示感谢。劳现为Scripps的首席执行长。他表示，Scripps的股价上涨将使他能够供3个孩子上完大学。
自1990年以来，前50大有线频道中的近一半都已易主。最大的几项交易包括：迪斯尼以190亿美元的价格收购ESPN的母公司Capital Cities/ABC，时代华纳(Time Warner)出资67亿美元收购有线电视新闻网(CNN)的母公司Turner Broadcasting，这两项交易都在1995年夏季达成。2001年，迪斯尼出资52亿美元从新闻集团(News Corp.)手中买下Family Channel。
去年，NBC出资13亿美元收购了Bravo。Nashville Network(现为Spike TV)和Country Music Television的拥有者哥伦比亚广播公司本身则在2000年为MTV长久以来的母公司维亚康姆所吞并。其后，维亚康姆又增加了BET和Comedy Central等频道。
Karmazin最近自豪地向投资者表示，该公司的广播电视和有线电视频道在黄金时段拥有全国观众的26%，该比例远远超过其他任何一家公司。他称，就与广告客户和有线合作伙伴之间进行谈判而言，拥有如此高的占有率非常重要。
哥伦比亚广播公司和MTV Networks的广告销售和营销部门管理人士定期就信息共享和开发交叉促销机会举行会谈。2001年1月，MTV在由哥伦比亚播出的超级杯(Super Bowl)比赛的中场休息期间，播出Aerosmith乐队和小甜甜布兰妮(Britney Spears)的节目。
去年秋季，在真人秀系列剧《幸存者》(Survivor)新一季度节目播映前，哥伦比亚广播公司在MTV频道上反复播放有关该畅销剧的一部纪录片，从而抑制住了收看该剧的年轻女性观众下滑的局面。该公司负责营销的执行副总裁乔治?施韦策(George Schweitzer)称，结果，《幸存者》首映的年轻女性观众人数猛增23%。该公司上周五还通过维亚康姆的有线频道Comedy Central的特别节目播放其情景喜剧 《后中只王》(King of Queens)。
通常来说，维亚康姆的广播和有线业务不会试图联合招揽广告业务，但母公司相同这一点使得二者可以互相保护。 MTV管理人士去年春季在向广告客户介绍情况时，将MTV Networks的观众覆盖率与ABC、NBC、Fox和WB进行了对比，但哥伦比亚广播公司的数据未在其中，因此MTV并未从像哥伦比亚这样同属维亚康姆的公司手中夺取广告业务。
同样，迪斯尼同时拥有ABC和ESPN，这使得该公司可以将其与全国橄榄球联合会(National Football League)和全国篮球协会(National Basketball Association)之间协议引起的巨大成本予以分散。事实上，ABC体育节目正是由同时经营ESPN的乔治?博登海默(George Bodenheimer)来负责，这两项业务定期相互推广各自的节目，并实行人才共享。
同时拥有有线和广播业务这一点在与有线运营商进行谈判时尤为有用。1992年通过的一项法律允许广播公司定期就其向有线运营商收取的节目播放费用举行重新谈判。虽然广播公司可以以现金的方式收费，但它们通常会免费提供节目，但要求有线运营商使用它们新推出的有线频道。如果ABC、CBS或NBC都不在频道之列的话，很少有观众会订阅有线电视，因此有线运营商几乎毫无讨价还价的余地。
这项策略使得广播公司得以增加更多的有线频道，包括内容较为狭窄的网络。据来自Cinnamon Mueller的律师乔治?盖勒德(George Callard)估计，自1993年以来，大型媒体公司已通过换取电视节目播出权的方式推出了至少35个新的有线频道。他所在的这家公司是美国有线行业协会(American Cable Association)的法律顾问。
电信运营商称，迪斯尼就通过此类策略，将以重播像《总医院》(General Hospital)这类肥皂剧为主的有线频道Soapnet通过运营商而提供给3,300万个家庭。
迪斯尼则表示，通过交换播放权的方式而获得的电视用户数量不到该数字的一半。
Cox Enterprises于1月份向FCC提交报告称，Cox Communications为换取在其众多市场中为数很少的几个播出ABC的电视节目的权利，不得不同意在全国范围内播放Soapnet频道中的节目。迪斯尼的一位发言人称，Cox是位“精明的谈判家”，如果未看到潜在价值，是不会签订该协议的。
有线电视运营商Catalina Cable位于加州卡达林那岛，其客户仅有1,440户。该公司的老板拉尔夫?莫劳(Ralph Morrow)称，当他试图就获得ABC一关联公司的节目播放权从2000年初续约时，后者要求他使用Soapnet频道。他称，他当时建议支付现金。
他称，迪斯尼的反应是播出ABC节目的现金费用“非常高”，他们的表态很清楚：他当时无法获得“一个合理的价格”。迪斯尼发言人称莫劳的描述有误，并表示，迪斯尼一向为运营商提供多种选择，包括该公司相信合理的现金价格。
莫劳称，他认为本无需使用一个肥皂剧频道，现在他要替每位用户向迪斯尼缴纳11美分。迪斯尼的反应则是，调查显示，Soapnet受到观众的欢迎。Nielsen公布的数据显示，该频道在7、8月期间的观众人数为9.7万人。同一时期，用户数约为Soapnet 2.5倍的Home and Garden频道的平均观众人数为457,000人。
