The 40th annual UBS Global Media and Communications Conference wrapped up today, and I can’t recall when I’ve seen so little energy at this industry institution. Sessions highlighted the growing fissures between pay TV distributors and programmers. But the debates weren’t filled with passion. There was little gossip about potentially big deals, mostly because companies aren’t making them at a time of so much uncertainty. Big Media execs didn’t even try to dazzle attendees with clips from their upcoming productions. (The movie business seemed to be an afterthought amid the discussions about changes in technologies, business models, and the health of the economy.) There also were several important no-shows at UBS: Comcast, Sony, and Lionsgate didn’t make it. And while Joel Klein provided an enlightening presentation about his new education initiative at News Corp, investors would have appreciated hearing more about what’s happening at a company that’s undergoing a major transition. It may be that CEOs are just exhausted; they now make presentations at investor confabs throughout the year.
Still, several stood out. Here are some of the highlights:
CBS’ Les Moonves: He delivered the week’s funniest line when he referred to actor Angus T. Jones as “that kid on Two And A Half Men who’s getting paid $300,000 per episode to talk bad about me.” (Jones recently called on people to stop watching the show due to its “filth.”) Media’s chief salesman says that ad sales are strong at his broadcast network. Auto and retail companies are helping to drive scatter prices up by mid to high teen percentages over the upfront market, and the Super Bowl is almost sold out with spots going for as much as $4M. Once lawmakers deal with the so-called fiscal cliff, Moonves expects the economy to take off. He also forecasts that ads soon will be sold based on the number of people who watch up to seven days after they air — up from three.
Time Warner Cable’s Glenn Britt: He raised the most eyebrows — and framed the dominant issue of the week — with his warning to networks that keep demanding higher pay TV rates to cover their rising programming costs. “We’re going to take a hard look at each service and those services that cost too much relative to the viewership, we’re going to drop them,” he says. With the economy “bouncing along the bottom,” he adds that “the consumer is telling us that we can’t afford these prices anymore.” Separately, he talked up his company’s creation of public wi-fi spots, an initiative that’s most evident in Los Angeles and will spread to NYC and other markets in the company’s footprint.
Time Warner’s Jeff Bewkes: He offered the most direct challenge to Britt, defending the value of the pay TV bundle and noting that distributors have “a growing pot. They have to decide who gets the money and who drives the value.” It’s an important issue for his company; Bewkes needs to persuade the Street that Time Warner can generate enough cash to cover its rising outlays for content. Bewkes says it can because it produces “high quality” content, and there’s still a lot of demand for that. Even though his programming costs are rising by as much as high single digit rates, he expects to see double digit increase in pay TV affiliate fees from 2013 to 2016, Q4 ad revenues up as much as high single digits, and additional income from digital streaming services such as Netflix.
Disney’s Jay Rasulo: He could have had a far more interesting session if he had opened up even a little about the most surprising media story so far this week: Disney’s new pay TV carriage deal with Netflix. But the CFO decided to keep details under wraps. He also declined to discuss the pacing of ad sales at ABC, another front-burner subject for company watchers. He says that the theme parks are poised to grow again after a “flat” year, with visits and stays especially strong at California Adventure.
Viacom’s Philippe Dauman: He seemed more relaxed than he was last year, when he had to explain (once again) why Nickelodeon’s ratings had hit the skids — and why it was just a temporary problem, not a sign that digital media had upended kids’ TV. Like Bewkes, Dauman had to show that programming costs are under control. He says that the outlays at his networks will be up by high single digits this year. But the rise in affiliate fees could hit low double digits, and ad sales in the scatter market are up by mid-teen percentages over the upfront market, with steady demand.
Verizon’s Lowell McAdam: He made news by indirectly saying that the company’s behind schedule with Redbox Instant — his streaming joint venture with the DVD kiosk company. The partners are still beta testing with employees, and will move to a beta with customers “later this month into the first part of January,” McAdam said describing his view as “cautiously optimistic.” That contrasts with the much more upbeat assessment provided in late October by Coinstar CEO Paul Davis, whose company owns Redbox. The partners were “committed that it will be out before the end of the year,” he told analysts adding that he was “really pleased with the progress.”
Netflix’s Ted Sarandos: I feared that Harvey Weinstein, who conducted the interview, would go easy on Sarandos — blowing an opportunity to generate news from a company that had just announced a major deal with Disney and that’s battling corporate raider Carl Icahn. But Weinstein’s sometimes loopy questioning made the session far more interesting that others led by UBS analysts. The Weinstein Co co-founder asked whether Icahn might be “a good luck charm” noting that Lionsgate had The Hunger Games after tangling with the billionaire. Sarandos said that Icahn had been “publicly supportive of the business and the management team.” As for the Disney deal, Sarandos offered no additional details but said that the arrangement “is going to be a huge step forward for our programming.” The entertainment giant, he added “has managed to build itself into a near perfect media company.”