Post by Moses on Jan 5, 2005 4:00:45 GMT -5
www.businessweek.com/magazine/content/05_02/b3915441.htm
....One immediate result of the turmoil is consolidation. MGM itself was sold recently to a Sony USA-led consortium, and more such deals are inevitable. "It is the only way they can grow," Yemenidjian says. Indeed, with the rise of cable and satellite behemoths such as Comcast Corp. (CMCSA ) and Rupert Murdoch's DirecTV (DTV ), the pressure for rivals to merge will rise. Bankrupt Adelphia Communications Corp. (ADELQ ) is expected to be auctioned off in '05 -- with its systems likely being divvied up between Comcast and Time Warner (TWX ). Charlie Ergen's EchoStar Communications Corp. (DISH ) satellite service also may be on the block, says UBS Warburg analyst Aryeh Bourkoff, who figures Comcast might buy a film or TV studio to beef up its video-on-demand business.
And after a tumultuous 2004, expect more drama at Walt Disney Co. (DIS ). By June, the besieged board is expected to name a successor to CEO Michael D. Eisner; early odds favor Disney President Robert A. Iger, but support is growing for both Viacom Inc. (VIA ) Co-President Leslie Moonves and News Corp. (NWS ) President Peter Chernin. The victor will have to deal with the Pixar factor. Disney's 13-year alliance with Steve P. Jobs's blockbuster factory, Pixar Animation Studios, (PIXR ) has expired. Jobs has tested the waters with Warner Bros. and Fox Entertainment Group Inc. (FOX ). But insiders say he'll wait to make a deal with the successor to Eisner, with whom he has battled over sequels in the past.
THE DVR THREATÂ <br>Media companies that depend on advertising also will see shifts in a market that will grow by 6.4%, to $280.6 billion, predicts Universal McCann forecaster Robert J. Coen. The biggest increases will go to booming, ad-driven businesses on the Net, such as Google Inc. (GOOG ) and Yahoo! Now that both the Olympics and the presidential race are over, ad revenues at the Big Four TV networks will grow only 2%, to $16.8 billion, predicts Coen.
Part of the problem is competition from cable and from video games. These siphon off viewers of network TV, dampening rate increases. Another potential drain is the rise of ad-skipping DVRs, whose installed base is expected to double to roughly 11 million, or about 10% of TV households, estimates Forrester Research Inc. (FORR ) principal analyst Josh Bernoff. To find ad growth, TV execs will load up on product placements.
The rise of the DVRs also will accelerate the trend toward consumer customization of entertainment channels -- never a good sign for the networks. DirecTV will offer video magazines, allowing viewers to see several news or sports channels at once on their screens. That and cut-rate prices will help DirecTV and EchoStar subs continue to grow, jumping 12%, to $27.7 million, according to digital forecaster Carmel Group. To compete, cable will roll out services satellite can't offer, adding 1.5 million customers of cable-based telephone services and 4 million high-speed data users, says analyst Jea Shim at Tradition Asiel Securities Inc.
Elsewhere in media, there will be an emphasis on new markets. Networks will begin offering content for mobile devices, such as Fox's planned one-minute versions of its TV series, 24, for cell phones. The music industry should sell more than $3 billion in music ringtones for cell phones worldwide, Warner Music Group Chairman Edgar Bronfman Jr. recently told investors. "We're no longer confined to the TV and the movie screen," says Sony Pictures Entertainment Chairman Michael Lynton. "We can't be."
But media giants are taking no chances: Several are likely to buy companies in the $8-billion-a-year video game software business, following Warner's acquisition of Monolith Productions. Viacom probably will buy Mortal Kombat maker Midway Games (MWY ). Another studio could buy Activision Inc. (ATVI ), known for its Tony Hawk skateboarder games. It's the Hollywood way: If you can't fight 'em, buy 'em.
By Ronald Grover in Los Angeles, with Tom Lowry in New York
....One immediate result of the turmoil is consolidation. MGM itself was sold recently to a Sony USA-led consortium, and more such deals are inevitable. "It is the only way they can grow," Yemenidjian says. Indeed, with the rise of cable and satellite behemoths such as Comcast Corp. (CMCSA ) and Rupert Murdoch's DirecTV (DTV ), the pressure for rivals to merge will rise. Bankrupt Adelphia Communications Corp. (ADELQ ) is expected to be auctioned off in '05 -- with its systems likely being divvied up between Comcast and Time Warner (TWX ). Charlie Ergen's EchoStar Communications Corp. (DISH ) satellite service also may be on the block, says UBS Warburg analyst Aryeh Bourkoff, who figures Comcast might buy a film or TV studio to beef up its video-on-demand business.
And after a tumultuous 2004, expect more drama at Walt Disney Co. (DIS ). By June, the besieged board is expected to name a successor to CEO Michael D. Eisner; early odds favor Disney President Robert A. Iger, but support is growing for both Viacom Inc. (VIA ) Co-President Leslie Moonves and News Corp. (NWS ) President Peter Chernin. The victor will have to deal with the Pixar factor. Disney's 13-year alliance with Steve P. Jobs's blockbuster factory, Pixar Animation Studios, (PIXR ) has expired. Jobs has tested the waters with Warner Bros. and Fox Entertainment Group Inc. (FOX ). But insiders say he'll wait to make a deal with the successor to Eisner, with whom he has battled over sequels in the past.
THE DVR THREATÂ <br>Media companies that depend on advertising also will see shifts in a market that will grow by 6.4%, to $280.6 billion, predicts Universal McCann forecaster Robert J. Coen. The biggest increases will go to booming, ad-driven businesses on the Net, such as Google Inc. (GOOG ) and Yahoo! Now that both the Olympics and the presidential race are over, ad revenues at the Big Four TV networks will grow only 2%, to $16.8 billion, predicts Coen.
Part of the problem is competition from cable and from video games. These siphon off viewers of network TV, dampening rate increases. Another potential drain is the rise of ad-skipping DVRs, whose installed base is expected to double to roughly 11 million, or about 10% of TV households, estimates Forrester Research Inc. (FORR ) principal analyst Josh Bernoff. To find ad growth, TV execs will load up on product placements.
The rise of the DVRs also will accelerate the trend toward consumer customization of entertainment channels -- never a good sign for the networks. DirecTV will offer video magazines, allowing viewers to see several news or sports channels at once on their screens. That and cut-rate prices will help DirecTV and EchoStar subs continue to grow, jumping 12%, to $27.7 million, according to digital forecaster Carmel Group. To compete, cable will roll out services satellite can't offer, adding 1.5 million customers of cable-based telephone services and 4 million high-speed data users, says analyst Jea Shim at Tradition Asiel Securities Inc.
Elsewhere in media, there will be an emphasis on new markets. Networks will begin offering content for mobile devices, such as Fox's planned one-minute versions of its TV series, 24, for cell phones. The music industry should sell more than $3 billion in music ringtones for cell phones worldwide, Warner Music Group Chairman Edgar Bronfman Jr. recently told investors. "We're no longer confined to the TV and the movie screen," says Sony Pictures Entertainment Chairman Michael Lynton. "We can't be."
But media giants are taking no chances: Several are likely to buy companies in the $8-billion-a-year video game software business, following Warner's acquisition of Monolith Productions. Viacom probably will buy Mortal Kombat maker Midway Games (MWY ). Another studio could buy Activision Inc. (ATVI ), known for its Tony Hawk skateboarder games. It's the Hollywood way: If you can't fight 'em, buy 'em.
By Ronald Grover in Los Angeles, with Tom Lowry in New York