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Last year Guardian Media Group decided to exit the UK radio broadcasting business. Stations operating the Real Radio and Smooth Radio brands were put up for bid. Global Radio, the biggest UK commercial broadcaster, offered most in the auction, about GBP 70 million. The acquisition, obviously, would make Global Radio even bigger.
Those outbid, Bauer Media, owner of the Magic franchise, and UTV, owner of the TalkSport franchise, were not pleased for all the expected competitive reasons. Advertising people weren’t especially thrilled with the possibility of fewer choices and higher spot rates. And so the UK Office of Fair Trading referred the transaction to the Competition Commission late last year. Anybody watching carefully sensed this gamble might go badly for Global Radio, which had offered to sell off three stations this past March to appease the authorities.
But it didn’t. The Competition Commission (CC) approved (May 22) the transaction with a very big caveat. Global Radio needs to sell stations in seven of nine regions, perhaps the Real or Smooth stations or the Capital or Heart stations. Stations in London and the southwest could be kept but, well, Global Radio needs to find buyers for those stations largely in the north of the UK and Wales. Pending the appropriate approvals the Real and Smooth stations have been operated as a separate company owned by Global Radio.
“Radio advertising prices are negotiated and smaller and medium-sized companies in particular rely on the presence of competing commercial stations in their local areas to negotiate a good deal,” explained the CC. “In each of the seven areas, the merger would mean the loss of either the only main competitor or one of the three main alternatives. These smaller advertisers would stand to lose most from this loss of rivalry.”
“The CC's insistence on the sale of stations in seven regions won't be popular with Global,” said ad association ISBA media director Bob Wootton, quoted by Media Week (May 22), “but it will go a long way in reassuring advertisers who buy commercial spots, and pay for sponsorship and promotional airtime. Especially the smaller and more local ones that may perhaps not be able to look after themselves so well.”
Be that as it may, Global Radio chairman Charles Allen has a problem and it could be expensive. The stations in those seven regions provide the lions-share of cash flow to pay the banks on the deal. And, too, for radio deals in the UK it’s a buyers market. A bit of due diligence goes a long way. (JMH)
Media advertising revenue in Germany, Europe’s biggest ad market, adhered generally to established trends, according to 2012 figures released this week by ad association Zentralverband der deutschen Werbewirtschaft (ZAW). Total net advertising revenue fell 3.2% to €18.42 billion, about €600 million less than 2011. German ad people were quite distressed that gross ad spending – media spending plus agency and production costs – dropped 0.9% to €29.74 billion.
“The source of the current monetary weakness of the German advertising market does not arise from a dwindling importance of advertising for advertisers,” said ZAW chief executive Manfred Parteina, quoted by W&V (May 22). “Political manipulation of the advertising industry is increasing.” (See more on media in Germany here)
The only media segments showing ad revenue increases in 2012 were television, radio, online and cinema ads, allowing private broadcasters association VPRT bragging rights. “Advertisers are taking into account the high and rising levels of television and radio usage as well as the effects and efficiencies of combining video and audio,” said VPRT development manager Frank Giersberg in a statement. “We expect this trend will continue.” (See VPRT statement here)
Net TV ad revenues grew to 4.05 billion, up 1.8%, increasing ad market share to 22%. Net radio advertising was up 1.5% and, naturally, net online ad revenues were up 9%. All German media watchers noted that the growth radio for online advertising has slipped under double digits. Net ad revenues for daily newspapers were off 9.1% with direct mail off 4.1%. (See the updated figures on the Germany – Market Data page in Resources)
Public television in Europe is widely diverse with channels offered for regional audiences. This model is highly developed in Spain where public broadcaster RTVE has 13 regional channels.
“Can we afford that model?” asked RTVE communications director Alfonso Nasarre at the Television in Crisis conference at the University of Valencia (May 20). Just five of the 13 regional RTVE channels have audience levels above 10%, he noted. RTVE has endured drastic budget cuts in recent years. (See more on media in Spain here)
Audience size shouldn’t be the major criteria for regional public broadcasting, countered regional public broadcasting association FORTA (Federación de Organismos de Radio y Televisión Autonómicos secretary general Enrique Laucirica during the debate. A threshold of 10% audience share would “ostracize” a “worthy audience,” he said, quoted by diariodesevilla.es (May 21). “The public television project was created to give voice and vision to those who never had it.”
The advertising window of local and regional public broadcasting channels benefits advertisers, said Sr. Laucirica.
Panel participants agreed that Spain’s economic crisis will help control prices and costs, especially sports rights. (JMH)
Ad revenues for media in France dropped sharply in the first four months of 2013. Whatever the reason – the weather has been terrible and retail sales suffered – the pain was felt across all platforms.
“We expected bad figures,” said Institut de Recherches et d'Etudes Publicitaires (IREP) president Zysla Belliat, quoted by Les Echos (May 20), a decline in advertising spending in the range of 6% to 7%, but not such a drop.” IREP’s report for the period January through April showed ad spending in France at €2.194 million, down 9% from the same period in 2012, which had showed a 4.5% increase over the 2011 period. The IREP report did not measure internet and mobile advertising figures though it suggested those sectors lost about 8%.
Cinema advertising fell hardest, down 28.8%, supporting the bad weather theory. Daily national newspaper ad revenue dropped 14%, magazines and free sheets down 10.8% and regional newspapers off 8.4%. “There is a lot of dynamism in this area, particularly between online and print,” said Mme Belliat. “But the situation continues to be very difficult.” (See more on media in France here)
Even with the arrival of six new digital channels – or maybe because of it – TV ad revenue dropped 9.4% with broadcasters discounting, said Les Echos, up to 60%. Direct mail advertising was down 8.5% and outdoor advertising was off 6.2%. Radio advertising nearly escaped the plunge dropping only 2.5%. IREP forecasts a 3% to 4% drop for full year 2013 ad revenues but indicated a possible revision.
Public broadcaster Czech Radio may have a new broadcast platform. Actually, it’s an old platform: shortwave. Members of the Czech Parliament media committee have put forward an amendment to allow domestic use of shortwave frequencies, reports mediar.cz (May 20). Czech Radio is promoting the idea because new talk channel Czech Radio Plus has been relegated to medium wave.
”The reason for the amendment is to extend public service broadcasts to very short waves,” said the media committee statement on the Czech Parliament website. “Due to the relatively large availability of this spectrum…this process will take place gradually, depending on whether the frequencies will be released by some users. (Czech) radio previously announced that it intends to use their own frequencies.”
The proposed amendment would prohibit advertising and teleshopping from the shortwave frequencies. Czech Radio could, it seems, broadcast other channels on shortwave. The National Council for Radio and Television Broadcasting (RRTV) will study the possibilities. (JMH)
Two journalists covering a political rally Saturday afternoon in Kiev were set upon and beaten by thugs, reported Pravda (Ukraine) (May 18). A third photojournalist who attempted to intervene in their defense was also roughed up. All of this happened under the watchful eye of local police who simply looked on.
Channel 5 reporter Olga Snitsarchuk and Kommersant-Ukraine photojournalist Vladislav Sodel were attacked by about “a dozen young men wearing tracksuits.” Ms Snitsarchuk was busted in the face, knocked to the ground, her mobile phone stomped with her hand still on it. Photos from the scene – available on the highly regarded web portal telekritika.ua – include a close-up of one of the attackers, a very scary looking guy, stomping Ms Snitsarchuk. (See more on media in Ukraine here)
The journalist community in Ukraine was outraged both at the attack and inaction by police officers standing around as Ms Snitsarchuk and Mr. Sodel pleaded for intervention. There’s a painful history in Ukraine of attacks on journalists, including murders. Under pressure from international organizations President Viktor Yanukovych set up a rapid response unit to investigate such attacks as part of legislation protecting journalists. It has, said the presidential website, opened an investigation. (See more on press/media freedom here)
The Ministry of Internal Affairs also opened an investigation “regarding the inaction of police officers,” said a spokesperson, quoted by telekritika.ua (May 20). For their part, Kiev police have asked Kommersant-Ukraine to explain what exactly its photojournalist, Mr. Sodel, was doing at the rally, reported Kommersant editor-in-chief Valery Kalnysh.
In October 2010, a Kiev court found Ms Snitsarchuk quilty of libel for referring to a member of parliament as a “renegade” in a news report. Channel 5 appealed the decision and the MP dropped the lawsuit. Channel 5 is owned by billionaire Petro Poroshenko and has been widely credited for bringing independent news coverage to Ukrainian television. (JMH)
Sweden’s all-news TV channel TV4 News is headed for closure, said owner TV4 Group last week (May 16). The ambitious offering launched in January 2012 and reportedly lost SEK 30 million, roughly €3.5 million, this year already. News, television or otherwise, is expensive and TV4 Group, owned by publisher Bonnier and investment house Proventus, threw in the towel.
“TV viewership hasn't increased as quickly as we expected when we started the channel,” said Nyhetsbolaget CEO Asa Tillberg in a statement 8May 17). “I don't see that TV4 News in its current format has the possibility to become profitable.” Two of Sweden’s big newspapers expressed a certain concern. Expressen and Svenska Dagbladet have been taking video feeds from TV4 News, all content for which has been subcontracted to Nyhetsbolaget (News Company) and about 20 jobs will be eliminated.
“I regret that TV4 News ceases to exist,” said Expressen editor-in-chief Thomas Mattsson, quoted by medievarlden.se (May 17). “The partnerships we have with TV4 and Nyhetsbolaget is about exchanging video material and TV4 will continue to be a great and important player in television news.”
“We have an agreement with Nyhetsbolaget not TV4 News,” said Svenska Dagbladet web chief Fredric Karén. “Possibly this means fewer live clips for us. It remains to be seen. If so, we have something to discuss with Nyhetsbolaget.” (JMH)
The first anniversary of that awesome Facebook IPO inspired a torrent of comment from each and every corner. A billion people have signed up for the social media portal, though 10% are said to be “non-human”. Its founders, some at least, are billionaires. Company executives write and speak about everything essential for life in the social media world.
“Dislodging Facebook as the premier general purpose social network will require something that’s not just better, but much, much better,” observed TechCrunch hyperbolically (May 17). “It’s now a fundamental utility for most of the world.” Facebook users have shared nearly twice as much content in the last year and ad revenue producing monthly mobile active users are up by half. (See more on social media here)
The world of high finance generally shrugged, the less than error-free IPO a distant memory. The IPO that raised US$16 billion “will be the foundation of case studies for years to come but may have been so unique that it provides little in the way of insight,” said Forbes (May 17). Facebook’s NASDAQ share price dropped precipitously through the first three months and has never gotten close to the initial offering price. Getting in on the Facebook IPO was sold by deal-runners as the cool thing to do.
Taking to Twitter like a social media maven Rupert Murdoch chimed in. “Look out Facebook!” he or his minder tweeted, noted by the LA Times (May 17. “Hours spent participating per member dropping seriously. First really bad sign as seen by crappy MySpace years ago.” Mr. Murdoch bought the early-stage social media portal in 2005 for a mere half billion dollars and dispensed with it two years ago for the legal fees when it didn’t set the world-according-to-Rupert on fire.
Facebook and the rest of social media’s milieu may or may not be generating the share price spikes investor’s hoped for but they are creating business. The American Academy of Facial Plastic and Reconstructive Surgery polled its members and found “social media is leading consumers to have a more self-critical eye,” reported Time (May 16). The happy face-lift and Botox guys in the US have seen a 31% increase in business traced to Facebook vanity. (JMH)
From Last Weeks ftm Tickle File
Bold action means broadcaster takeover
The march of Time Warner
If “expect the unexpected” rules the media sphere, it’s wise nonetheless to expect the expected. US-based media giant Time Warner has, according to several sources, notified the European Commission late last week of its intention to raise its stake in Central European Media Enterprises (CME) to 75% (mediaguru.cz) or 100% (new-business.de). CME recently floated a share and bond offering to cover mounting operating losses. Time Warner has gradually increased its stake in CME to 49.9% and an agreement giving founder Ron Lauder voting rights for Time Warner shares expires in June. Time Warner’s takeover of CME has been widely anticipated.
The European Commission DG Competition began circulating a questionnaire to “the relevant market” and should report back in mid-June. CME operates primarily television channels in the Czech Republic, Croatia, Slovakia, Slovenia, Bulgaria and Romania. Corporate credit reporting agency Standard & Poor’s raised CME’s long-term credit rating from CCC+ to B (May 14). (See more on CME here)
On release of first quarter 2013 financials (April 29) CME CEO Adrian Sarbu said “2013 is a year of bold actions.” Net loss rose dramatically to US$109 million from US$13.8 million in the first quarter 2012. The company then extended Mr. Sarbu’s contract – US$1.8 million annually – through 2016. (JMH)
Employees to take over bankrupt station
squatter’s rights?
Employees of Athens news-talk radio Flash 96 will be allowed to take over the bankrupt station. Media regulator National Council for Radio and Television (NCRTV - ESR) set conditions, according to radiofono.gr (May 15), for employees owed back salaries to form a new company by paying €500 each. The regulator’s decision came at its regular April 30th meeting but only made public this week (May 14).
If approved by the Greek government, as expected, the new company will take over the station’s existing license rather than receiving a new issue, which it will not be allowed to sell to a third party. The decision is the first instance of a Greek radio station license in bankruptcy passed to employees as creditors, according to local sources, with three others eying the process. Under Greek law employees owed back wages by a bankrupt company can petition to take over the company for a nominal sum. Private broadcasters association objected to the NCRTV decision.(JMH)
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So complex are economics that multi-lateral trade agreements are best negotiated in good times. Big agreements are hard to put together anytime as countries fight for want they want with all the leverage they can muster. Every export is favored and every import is resisted. But trade is important for stagnant economies and the media sector has come into play once again.
With resigned entente it’s accepted that advertising as media’s primary revenue source is slipping away. Advertising in newspapers and magazines fell to the internet first and fastest, readers attracted more to the web’s cornucopia and media buyers following. Television advertising held steady until viewers strayed, the web offering more, sooner, everywhere. Publishers and broadcasters answered by building paywalls. Then internet advertising began slowing.
The Elegance Of Simple Strategy
A Quick Phrase Well Placed Turns The Coin
From The Right Track To Off The Rails
Sports Should Be Done By People Who Can Do It
