AOL’s Tim Armstrong’s more worried about Main St than Wall St
AOL’s recently appointed chief executive, Tim Armstrong, has only been in place for three weeks but Wall Street is waiting impatiently for his next move. He’s started to shake up the ad team. Investors are focused on when parent company Time Warner will spin off the Internet unit, which has lost favor with Wall Street, advertisers and users alike.
Armstrong, gave his first interview since starting on April 1 to Ad Age Editor Jonah Bloom at the 4A’s advertising conference in San Francisco. Though he has declined doing interviews since he joined, AOL’s communications people said Armstrong was keeping a commitment he’d made while he still at Google.
The three-part interview can be seen at Ad Age here. The fireside chat covered topics like AOL’s branding, AOL’s undervalued ad space, and how Armstrong had to leave Google by the tradesman’s entrance on his last day.
Asked whether AOL’s standalone valuation could once again be worth $20 billion, which it theoretically was until Google wrote down its 5 percent stake in AOL to effectively give it a value of $5.5 billion in January, Armstrong said:
5.5 (billion) in my book is still a lot of money…I’ve said internally to employees Wall Street cares about you, and Main Street cares about you, and until we get Main Street caring about our company everyday (and) every time they touch the product and service, the valuation doesn’t matter because the worst case possible, the thing that happens at Internet companies is, you see, it is that people vote with their clicks and over time unique users go down.
At AOL, one of the things we’re focused on right now is how do you actually turn the unique users around and go in the right direction. More than valuation, more than anything else, if people are voting with clicks about our products and services, that will mean a lot more in the future of the company than the valuation.
Of course, Armstrong recognizes $5.5 billion is a lot of money because many Wall Street analysts now value AOL at between $2 billion to $3.5 billion. The analysts base their valuations on estimates of the terminally declining discounted cash flows from its dial-up business, along with estimates of cash flow from the struggling online advertising sales.
Newspaper Association cuts jobs, ditches print
I suppose that it’s natural that your representatives in Washington should be people who reflect their constituencies. In that spirit, there are reports out that the Newspaper Association of America — a tireless defender of print newspapers even as ad revenue crumbles all around them — is cutting the print edition of its magazine, along with half its jobs.
I’ve left messages with several NAA contacts, but in the meantime, We confirmed the news with the NAA — 39 jobs going away. Meanwhile, here is an excerpt from a report on AOL’s Daily Finance site:
The Newspaper Association of America (NAA) is the not-for-profit organization that represents the interests of over 2,000 newspapers and other print publications. Its roots can be traced back to 1887, and for many years its magazine Presstime has kept members up-to-date on trends in the marketplace. Therefore, it seems sadly ironic that the NAA is killing its print edition of Presstime. The magazine will now be available in an on-line version only.
It also links to this article from Editor & Publisher:
While its members struggle under a punishing economic downturn and a secular transition to digital, the Newspaper Association of America is cutting its staff by 50% and will cease publication of the print edition of the magazine Presstime.
The association trimmed 39 positions this afternoon in response to the downturn in the industry, with 43 staffers remaining. In a memo to employees, President and CEO John Sturm wrote the steps were necessary and were taken at the direction of the board. “To be direct, industry economics compelled this round of staff reductions – to ensure we remain an affordable value to our members,” he wrote.
Sturm also said the association is looking to further reduce member dues.
Sumner Redstone cool with Dauman; theaters hot with buyers
As we previously noted in MediaFile the main takeway from Viacom’s earnings call was that advertising is awful, but it’s not getting worse. But there were a few other highlights, too, so here’s a time-saving rundown:
Sumner Redstone is still a gigantic fan of Philippe Dauman. Even after 12-months in which Viacom’s stock price has dropped 50 percent, Redstone introduced Dauman as “my great friend” and “the greatest CEO of all” while crediting him “capable and insightful leadership.”
National Amusement’s movie theaters are a hot ticket. Redstone said the sale of theaters in the United Kingdom and United States has attracted “substantial preliminary interest” from buyers. “”We are very encouraged by both the number of interested bidders and particularly the prices being discussed.”
Dauman isn’t sweating Epix. Asked what happens to the bottom line, worst case, if the movie network isn’t launched on the terms that Viacom wants, Dauman responded that, “There is not a worst case here. We are quite engaged in discussions. You will see the affiliate agreements being announced as we get closer to launch. So we are in good shape and furthermore, in addition to covering the movie costs on the Paramount side, we are creating a great new asset for Viacom and as well as our partners.
(Photo: Reuters)
On swine flu, Scribd calls itself the “anti-Twitter”
Use Twitter’s name even when you’re dissing it: that could be a good way to ensure some publicity, given the hype around everyone’s current sweetheart. But maybe Scribd, the social publishing startup that lets you upload all kinds of documents online and embed them into blog posts, does have a point about the misinformation that Twitterers could be putting up in 140-character bursts.
After all, at the Society of American Business Editors and Writers (SABEW) conference last week, CUNY J-school professor Sandeep Junnarkar did begin his workshop on Twitter for journalists with a caveat: “Everything you find on Twitter is rumors, false information. That’s the default position.” Kind of like what journalists and students are always told about Wikipedia.
A press release that landed in my inbox from Scribd seeks to distinguish the San Francisco-based startup as “anti-Twitter” — the antithesis of Twitter. Scribd is “quickly becoming a trusted source for unfiltered, detailed information about the swine flu,” the release says.
In support of that contention, Scribd says people can search for comprehensive information in real time from organizations like the WHO, CDC, American Red Cross, New York City Department of Health and Mental Hygiene, The White House and others. Statements, tips and other detailed documents are uploaded to the site every day. What’s more, 80 percent of swine flu-related documents on Scribd have been put up in the past three days, as more and more people become concerned about the spread of the disease.
To cater better to the widespread interest and concern, Scribd has put up a special section on its homepage dedicated to swine flu information from health agencies, including checklists, disease descriptions, public health fact sheets, handouts and other documents. (Check out the WHO swine flu update document here.)
Facebook recently released some trend charts that measure how many of its members are talking about the disease. Meanwhile, on Twitter, the messages continue to be as diverse as ever — an effortless mix of information, opinion and emotion.
One recent Tweet I found: “(Name removed) hopes he dies of swine flu so he won’t have to hear about swine flu anymore.”
Dear advertiser, please come home
Nobody likes to be wrong, including the people who run media companies. That’s why you haven’t heard them say things like, “We think the advertising market is recovering!” At a time when every day might bring a fresh descent into financial hell as financial companies and automakers totter, media companies reeling from ad revenue declines are hesitant to say that they’ve hit a bottom.
But consider some of the comments that Viacom executives made during their conference call with Wall Street bean counters this morning to discuss quarterly financial results. Here they are as they appeared in the alerts we sent out on the wire:
- 08:12 30Apr2009 RTRS-VIACOM INC’S <VIAb.N> CEO SAYS NOT SEEING ANY FURTHER DETERIORATION IN THE ADVERTISING MARKET
- 08:33 30Apr2009 RTRS-VIACOM INC’S <VIAb.N> CEO SAYS CUSTOMERS ARE STARTING TO FEEL MORE CONFIDENT ABOUT A RECOVERY EMERGING LATER IN THE YEAR AND GOING INTO NEXT YEAR
- 08:34 30Apr2009 RTRS-VIACOM INC’S <VIAb.N> CEO SAYS “WE’RE FEELING CONSIDERABLY BETTER” THAN TWO OR THREE MONTHS AGO
That sounds suspiciously like optimism. It also fits in with some of the comments that we’ve heard from newspaper publishers such as USA Today owner Gannett Co Inc. Magazine publisher and local TV station owner Meredith Corp had similar thoughts about the ad outlook.
The general story is: We’re still dealing with ad declines when we look forward to the rest of the year, and we’re not saying we’re all that happy about it, but knowing the rate of decline is not worsening is a good sign… if you think about it.
So, what will Rupert Murdoch tell us when News Corp reports its results next week? Murdoch’s recent statements have been pessimistic, but maybe Viacom Chief Executive Philippe Dauman is laying a path for Rupert to tell his employees and investors something they want to hear.
Keep an eye on
Great piece, what’s the buzz about when this might translate into financial results?
Redstone swears by fish, vodka…and married women
Media mogul Sumner Redstone credits fish, Grey Goose vodka and plain hard work for giving him “the health of a 20-year-old.”
The octogenarian head of CBS Corp and Viacom Inc told CNN talk show host Larry King at the Milken Institute Global Conference that he made a “miracle recovery” from prostate cancer due to his “highly disciplined” consumption of “every antioxidant known to man” even when he doesn’t feel like it.
“My doctor says that he’s seen a lot of men slow down the aging process but I am the only man who has reversed it,” Redstone crowed at the hour-long interview that packed two conference rooms at the Milken Institute Global Conference on Wednesday in Beverly Hills.
Sumner, also repeatedly insisted, to King’s annoyance, that he is 65 years old.
“Suddenly you don’t look so amazing,” King retorted.
Sumner is 85.
That robust health and need for a challenge extends to every aspect of his life: “The most attractive women are married,” the recently divorced Redstone told King. “Sometimes a husband doesn’t count.”
TV Everywhere’s high priest Bewkes keeps preaching
One day soon you’ll be able to watch your TV everywhere: online, on-the-go, your phones, just about everywhere and Time Warner chief Jeff Bewkes wants you to know about it and believe it.
Bewkes, perhaps relieved to talk about something other than how best to get rid of AOL , took the opportunity on Time Warner’s first quarter earnings call to share more of his vision for how he plans to free your favorite TV shows from the shackles of the cathode ray tube box (yes, some of us still own those).
The way Bewkes sees it if you’re already subscribing to a TV channel at home, you should be able to watch it for free on broadband from any provider, wherever and whenever you want.
As he told analysts on Wednesday:
Over 90% of U.S. households already paying for television, programmers will be able to give consumers even more for their money. There’s a tremendous level of interest in TV Everywhere across the industry, and we’re working with several distributors on a trial slated for the second half this year.
But Bewkes was light on the details, such as how you overcome the technical challenge of “authenticating” subscribers’ access to programming when they might take video from one company; Internet from another and wireless connection from a third provider. Bewkes told analysts:
It seems pretty simple from the network’s point of view, it’s also pretty clear any channel network that’s got dual revenue streams has clearly got a benefit in making that channel and brand loyalty move across any platform or device because if I just speak for our company, it’s good for TNT or HBO that if you’ve got it in your home you can watch it out of your home and on (video on demand), and that we can then maintain the subscription payment you’re already making and the ad sales cross platform ability that’s in the media.
Miranda here- I think that TV Everywhere is a ground breaking technology that most people will become users of. With today’s generation being a generation that never stays in one place for to long, this is going to take off. So many people have to travel for work, family and leisure. Why pay for something that you cant take you? Now you don’t have to. I have to say that only a small percentage of users use enough bandwidth to cause pain to ISPs. Thus the reason some companies have implemented usage caps, however most people don’t go near the amount of usage it takes to cause problems to the ISP back-end infrastructure. Being an employee of DISH, I had experience with this function before I even purchased it and now that I did; it runs so much smoother than I initially thought. It all takes knowledge and understanding of what you are getting and how to utilize it to the best way possible. I love it, especially when we go on road trips! It definitely came in handy now during the holidays!
Tech M&A: Going down, down, down
Investment bank Jefferies recently released a report on technology M&A in the first quarter of 2009. As one can imagine, there are few surprises. We may as well give you the highlights here, which point to some signs of recovery compared to the end of last year, but clearly there’s still a long way to go:
- The number of tech deals in North America fell 4 percent to 373 in the first quarter from the fourth quarter of 2008. It’s the lowest level of activity in five years, but at least the drop is a manageable 4 percent — in the December quarter, the number of deals dropped 23 percent from the third quarter of 2008.
- The aggregate value of North American M&A transactions was $4.3 billion in the first quarter, also a 4 percent drop from the prior quarter and an 85 percent plunge from the first quarter of 2008.
- Not a single tech IPO priced in the U.S. market during the quarter.
- The biggest tech deal announced in the quarter was Autonomy’s purchase of Interwoven for $764 million.
- The first quarter of 2009 has only three transactions greater than $500 million, compared to 10 such deals in the year-ago quarter.
The Jefferies survey also looks at tech M&A in Western Europe, which presents a similarly gloomy picture. Nine of the top 10 Western European deals in the first quarter were cross-border, and four of them involved U.S. buyers. The aggregate deal value fell 80 percent to $1.8 billion compared to the fourth quarter of 2008.
But it’s interesting to note that the mix of deals in the software, services and media sub-sector hasn’t changed much quarter to quarter. For example, IT services deals have hovered at about 30 percent of total transactions for the past five quarters, while digital media M&A has ranged from 32 percent to 35 percent of total deals in the same period.
Based on the grim experience of the first quarter of this year, Jefferies predicts there will be fewer than 1,500 deals this year in North America, a decline of 22 percent from 2008, which saw 1,919 deals. In terms of aggregate value, the bank expects only $17.2 billion, a 79 percent drop from last year, and nowhere near 2007, when the total deals announced were collectively worth $191 billion.
(Chart: Jefferies)
Mr. Sulzberger, your son ROCKS
The New York Times’s hyper-energetic reporter Sewell Chan fielded a question in a mediabistro.com Q&A about what it’s like working with Arthur Gregg Sulzberger on his City Room blog staff at nyt.com. Sulzberger is the son of Times Publisher Arthur Sulzberger Jr. and an heir apparent to the Times company.
Regardless of Sulzberger’s talent at City Room or in his previous reporting gig at The Oregonian, I’m not sure Chan had many options on how to answer the question. Here’s what he said:
Arthur Gregg Sulzberger joined the Times staff as a reporter, and he’s been working continuous news. He’s already been working with metro, and he’ll continue to work with metro. He has been absolutely impressive, gracious, smart as a whip, hardworking, full of energy, full of ideas, and has a great sense of language. His writing sparkles, and he’s a charm and a pleasure to work with.
It’s an especially good answer when Times salaries are about to get cut by 5 percent this year — part of cost-cuts to keep the paper alive — and layoffs are not off the table, at least according to the tentative agreement between the TImes management and union that we reported on Tuesday.
Sorry Washington Post if my memory is working correctly now.
Tribune Co papers hit where it hurts, Baltimore Sun slashed
Tribune Co keeps the layoffs coming at its newspapers as the media company moves through the bankruptcy court process.
The Sun: Over in Baltimore, we heard from a source that 21 editors — including most of the metro editing staff and two top editorial editors — were herded into offices and told they had to exit the building immediately. Editor & Publisher confirms this report and says more cuts might be coming as soon as today. Perhaps there’s a strategy in there, but it’s hard to tell what it is when most big-city dailies have abandoned their ambitious overseas reporting goals, saying their real value to the community is their local reporting franchise. UPDATE: Looks like at least 40 more people are getting laid off as we speak, according to two sources I just spoke to at 3pm eastern.
And another UPDATE: A Washington-Baltimore Newspaper Guild memo says a whopping 27 percent of the Sun’s staff is getting laid off.
Excerpt from the memo:
“Tribune, through careless management practices, has saddled itself under $13 billion in debt and now Baltimore is paying a price,” said Cet Parks, Executive Director of the Washington-Baltimore Newspaper Guild. “Tribune is siphoning good jobs from Baltimore and sending work that talented editors, reporters, photographers, copy editors and designers have done here to its home base in Chicago. That is not right.”
Tribune plans to lay off the 40 newsroom employees by May 27. Targeted employees, who include four columnists, photographers, critics and copy editors, received hand delivered letters Wednesday afternoon signed by Monty Cook, senior vice president and editor. Also, in the last two weeks The Sun has laid off seven employees in other departments including advertising and customer service.
Chicago Tribune: The paper said last week that it would cut 11 percent of its newsroom staff. Today’s edition of the Gorkana business journalist career moves e-mail shows that, among others, the Tribune is losing Joshua Boak, financial exchanges and energy reporter. We don’t know if it’s because of the layoffs or if he’s just leaving, but either way, it’s a heck of a time to lose the exchanges beat reporter at one of the hometown papers of the world’s largest futures exchanges.
I still enjoy reading the newspaper with a cup of srong coffee in the morning—apparently generation X does not.
Chili, Baltimore
I actually think AOL is overvalued right now. THey have been shedding customers and ad revenue is dropping so where is the value?