10 Updates

Comcast-TWC Merger Butt Slaps Content Kings

Feb 19 2014, 6:24pm CST | by

CBS and Viacom’s majority shareholder, Sumner Redstone , coined the phrase “content is king.”  And the 90-year-old mogul has put his money where is mouth is by outrageously overpaying his content-...

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22 weeks ago

Comcast-TWC Merger Butt Slaps Content Kings

Feb 19 2014, 6:24pm CST | by

CBS and Viacom’s majority shareholder, Sumner Redstone , coined the phrase “content is king.”  And the 90-year-old mogul has put his money where is mouth is by outrageously overpaying his content-producing kings Les Moonves , CEO of CBS, and Philippe Dauman, CEO of Viacom.

Moonves and Dauman’s compensation in 2012 (2013 figures haven’t been released as of the date of writing this post) was $62.3 million and $37.43 million respectively.  These two content kings are outrageously overpaid if you look at the ratio of CEO compensation to the market cap of their companies in the rank-order list below (the higher the number the worse the deal is for stockholders):

1. Les Moonves , CEO CBS ($62.3 m) – 0016
2. Philippe Dauman, CEO Viacom ($37.2 m) – 001
3. Jeff Bewkes, CEO Time Warner ($25.9 m) – 00046
4.  Chase Carey, CEO 21st Century Fox ($24.7 m) – 000335
5. Robert Iger, CEO Disney ($34.3 m) – 000247
6. Robert Marcus, CEO Time Warner Cable ($9.9 m) – 00024
7. Brian Roberts, CEO Comcast ($29.1 m) – 0002/>/>/>/>/>/>

Moonves’s ratio of compensation to market cap is 800 times greater than Roberts’s.  So, you could say that Roberts is 800 times more valuable to shareholders.  But, at any rate, Moonves is clearly the worst value and Roberts the best value.

The ratio list indicates that the content guys (media companies don’t overpay women) make more than the distribution guys.

But Roberts is about to balance the content-distribution teeter-totter by attempting to consolidate the distribution business.  Comcast’s profit-focused strategy is a three-legged stool:

1. Pay less for content.
2. Charge more for broadband.
3. Invest whatever it takes to influence regulation./>/>

Pay less for content: That means having more leverage in retransmission negotiations with local TV stations.  The merger will give cable distribution monopolies in 19 of the 20 largest markets.  Retransmission payments  do not go to the broadcast networks, but to their owned-and-operated TV stations.  CBS owns 16 local TV stations that are affiliated with CBS, which carries the NFL games of the AFC conference.  FOX owns 18 local stations affiliated with FOX, which carries the NFL games of the NFC conference.  NBC owns 10 local stations affiliated with NBC, which carries NFL “Sunday Night Football,” the highest rated of the NFL games.  ABC (owned by Disney) owns only eight local TV stations, and it doesn’t carry any NFL games.  I mention NFL games because they are the highest-demand programming and, thus, the biggest bargaining chips the local TV stations have in negotiating retransmission fees.

For the big-four broadcast networks, their owned-and-operated TV stations are by far their biggest profit centers, in no small part because of the increases over the past few years in retransmission payments from cable companies.

The overpaid Les Moonves has been the most vocal content king about how wonderful and profitable retransmission receipts have been, so Brian Roberts’s butt slap might be, unconsciously of course, aimed at him.

Charge more for broadband: Roberts obviously sees that broadband is the future of distribution.  The rise of Netflix, Hulu and, especially, YouTube and the chord cutting driven by the wide availability of video on the web has made broadband Internet access a household necessity, and, of course, where the profits are.  Margins on broadband for Comcast and Time Warner Cable are up to 100 percent.

Invest whatever it takes to influence regulation: Susan Crawford’s excellent book, “Captive Audience: The Telecom Industry and Monopoly Power in the New Gilded Age,”  exposes in exquisite detail Comcast’s multi-million-dollar lobbying expenditures, which mostly go to Democrats.  Comcast’s head lobbyist, David Cohen, has greased the skids with Comcast’s money to ensure favorable treatment by the Democratic-controlled FCC and the Obama administration.

The Justice Department’s Antitrust Division could throw a monkey wrench into the works, but if you’re a betting person, give long odds on the deal going through. Money talks in Washington.

The best thing we can hope for (“we” because I’m a Time Warner Cable subscriber) is that the FCC and/or Justice Department will put some conditions on the merger that will require Comcast to upgrade its broadband speed by, let’s say, 500 percent, which might get us about even with Romania.

And the regulators will probably smile as they approve the deal, knowing that the outrageously overpaid content king Les Moonves, for one, is getting butt slapped by distribution king Brian Roberts and Comcast.

The Media Curmudgeon (Charles Warner) teaches in the graduate Media Management Program at The New School and is the author of Media Selling, 4 th  Edition.

Source: Forbes Business

 
Update
10

6 weeks ago

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Jun 9 2014 7:54am CDT | Source: Business Times Malaysia

Cambodia's Famous Battambang Circus
KUALA LUMPUR: About RM47 million of contributions in the Teachers Provident Fund (KWSG) still remain unclaimed, the Dewan Rakyat was told t ...
Source: Business Times Malaysia   Full article at: Business Times Malaysia
 

 
Update
9

6 weeks ago

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KANGAR: A gold shop owner lost almost RM1 million after after the safe on in his shop was broken into b ...
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6 weeks ago

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Federal Aviation Administration Bans All US Flights To Israel
KUALA LUMPUR: AN emergency motion to debate the losses incurred by Malaysia Airlines last year, amounting to RM1.2 billion was rejected by the D ...
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Update
7

6 weeks ago

MH370 Tragedy: Hisham: RM27.6 mil spent on 1st phase of SAR

Jun 9 2014 2:11am CDT | Source: Business Times Malaysia

KUALA LUMPUR: Malaysia spent some RM27.6 million in its first phase of the search operations for missing Malaysia Airline flight MH370, said Acting Transport Minister, Datuk Seri Hishammuddin ...
Source: Business Times Malaysia   Full article at: Business Times Malaysia
 

 
Update
6

6 weeks ago

9.1m litres of diesel seized in a month

Jun 8 2014 1:11am CDT | Source: Business Times Malaysia

INDIA-CHINA-DIPLOMACY-TRADE
PUTRAJAYA: The Domestic Trade, Cooperatives, and Consumerism ministry has seized some 9.1 million litres of diesel and property worth RM58 million since mounting ‘Operasi Diesel Selatan’ in the southern states last month. ...
Source: Business Times Malaysia   Full article at: Business Times Malaysia
 

 
Update
5

7 weeks ago

Girl, 9, awarded RM2.78m compensation for medical negligence

Jun 6 2014 4:56am CDT | Source: Business Times Malaysia

Government Weekly Cabinet Meeting
KUALA LUMPUR: A nine-year-old girl who suffered brain damage during her birth at a government hospital was awarded over RM2.78 million in compen ...
Source: Business Times Malaysia   Full article at: Business Times Malaysia
 

 
Update
4

7 weeks ago

Malaysia's total trade in April up 12pc

Jun 5 2014 11:52pm CDT | Source: Business Times Malaysia

KUALA LUMPUR: Malaysia's total trade in April 2014 rose by 12 per cent from a year ago to RM123.86 billion due to growing trading activities, International Trade and Industry Minister Datuk Seri Mu ...
Source: Business Times Malaysia   Full article at: Business Times Malaysia
 

 
Update
3

7 weeks ago

Works Ministry to spend RM20m for upgrading works at 50 accident black spots

Jun 4 2014 11:35pm CDT | Source: Business Times Malaysia

Iskandar Johor Open - Previews
JOHOR BARU: The Works Ministry will implement upgrading works at 50 accident prone locations in the country that have been identified this year involving an allocation of R ...
Source: Business Times Malaysia   Full article at: Business Times Malaysia
 

 
Update
2

7 weeks ago

Najib launches loan scheme for Ramadan traders

Jun 4 2014 10:24pm CDT | Source: Business Times Malaysia

EurAsia Cup presented by DRB-HICOM - Day One
PUTRAJAYA: Prime Minister Datuk Seri Najib Razak today launches RM45 million Ramadan B ...
Source: Business Times Malaysia   Full article at: Business Times Malaysia
 

 
Update
1

7 weeks ago

Residents bring up objection against Kidex to Suhakam

Jun 4 2014 4:49am CDT | Source: Business Times Malaysia

PETALING JAYA: A group of 20 Petaling Jaya residents held a meeting with the Human Rights Commission of Malaysia (Suhakam) over their objection against the proposed RM2.2 billion Kinrara D ...
Source: Business Times Malaysia   Full article at: Business Times Malaysia
 

 

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