In the run-up to the annual Reuters Media Summit, taking place in New York and London next week, we have been asking experts and executives how they think media companies should reinvent themselves for the 21st Century.

Will the big need to get bigger? See Comcast's bid for a controlling stake in NBC Universal.

Or will it be a question of being slimmer and more focused? Like Time Warner,  which is now essentially a pure content company after spinning off Time Warner Cable in March and AOL next week.

All these businesses are heavily impacted by the Web as a distribution tool and they are doing various things to counter that. But it won't be easy, say analysts in our Summit preview. While content will continue to be extremely valuable, content owners will need to figure out how to make money from the Web and other new platforms of distribution.

Stephen Prough, of Salem Partners, a boutique investment bank that has backed several Hollywood deals, said the models are still not clear:

I think it's great that people are experimenting with content for the Web. In theory, that's a great concept. Right now, I haven't seen a business model that works for original content for the Web. The experience of companies that repurpose content for the web is they're generating per viewer.

Over at IAC/InterActiveCorp, Ricky Van Veen, founder of Collegehumor.com and CEO of Notional productions, thinks that developing original content that moves seamlessly between the Web, TV, and wireless devices will be key for the modern media company.

The crucial parts are the advertiser's brand, the content creator and the consumers. What if it was the brand getting the content to the consumer rather than a cable company? With the Internet, you don’t really need a lot TV networks, film studios and cable operators. In the future you have a great idea they’re going to be able to get the content to consumers on their own or with the help of a brand. That’s what’s interesting to me.

IAC chief Barry Diller has spent the last year building and then sitting on a pile of cash, which rose to $2 billion in the first quarter — only some $400 million less than its entire market cap of $2.4 billion. Journalists and Wall Street have asked Diller repeatedly how he intends to use the cash. A big M&A move perhaps? A generous one-time dividend maybe? Or share buybacks?

Diller is focused on adding to his empire of Internet units in small increments rather than making major acquisitions. That empire includes dating site Match.com, search engine Ask.com, event planning site evite and many others.

Here’s Diller back in April on the first quarter conference call with analysts: “While I can’t say what we’ll do, obviously, other than invest in the businesses we have, because we believe they’re worthy of investments, relatively small scale, we’re open but I am actually not optimistic about being able to extensively spend the enormously large amounts of cash that we have. It could change on a dime, but there it is at the moment.”

True to his word Match.com said on Tuesday it has signed an agreement to buy People Media, an operators of targeted dating sites for $80 million in cash from American Capital Ltd.

People Media owns 27 dating sites incluing BlackPeopleMeet.com, SingleParentMeet.com and SeniorPeopleMeet.com with a combined 255,000 paying subscribers.  IAC said People Media generated $11.6 million in earnings before interest, taxes, depreciation and amortization (EBITDA) in 2008.

Safe haven. Two magical — and mysterious — words. Cable and satellite companies didn’t fit the safe haven bill in 2008, but 2009 just may be there year.

According to a Reuters story out today, “cable and satellite service providers now hold the promise of strong free cash flow growth as they retain old customers but spend less on deploying set-top boxes and digital video recorders due to a fall in new subscriber growth.”

Remember, however, that before the economy fell apart, a number of investors considered the pay TV industry “recession proof.” The argument went that even in the toughest of times, Americans would stay home and watch TV, saving money on trips to movies or out to dinner.

But this argument overlooked a number of factors that have really undermined the industry. For example, fewer people are moving into new homes, and those that do aren’t likely  to spend their savings on discretionary channels like HBO.

Before jumping on the bandwagon, however, it may be wise to take a look at some of the earnings coming up over the next couple weeks. Start with Time Warner Cable tomorrow, that should be a good gauge of whether these guys really can provide shelter from the storm.

Keep an eye on:

• The age of Obama dawned with a wake-up call to the U.S. television industry to get serious about Internet-based sources of revenue (Reuters)
• Barry Diller’s Internet media company IAC/InterActiveCorp posted a fourth-quarter profit on Tuesday after benefiting from the sale of a Japanese TV shopping channel last December (Reuters)
• Sirius XM Satellite Radio later this month will have to find a way to handle $174.6 million in debt that is coming due (Wall Street Journal)

(Photo: Reuters)

IAC Chief Executive Barry Diller took several groups to task at the Reuters Media Summit, but he reserved special disgust for CEOs at profitable companies who add to the country's rising unemployment rate.

Also targeted by the former Hollywood executive were "incredibly, shockingly stupid" Big 3 auto executives, the Internet's strange and growing dictionary, and Hollywood's lack of creativity.

Diller said companies had a higher obligation, especially in tough times like these:

"The idea of a company that's earning money, not losing money, that's not, let's say 'industrially endangered,' to have just cutbacks so they can earn another $12 million or $20 million or $40 million in a year where no one's counting is really a horrible act when you think about it on every level. First of all, it's certainly not necessary. It's doing it at the worst time. It's throwing people out to a larger, what is inevitably a larger unemployment heap for frankly no good reason."

A few seconds later, he added:

"It's not that you don't want to earn as much money as you can -- it is your obligation, of course -- but companies have obligations beyond that and they certainly have obligations beyond that at certain times, in the times in which they operate. And they also certainly ought to know that meeting and beating expectations is probably yesterday's game and it will be increasingly so, which would be by the way very healthy for companies. Running a company that meets and beats expectations, and that runs their company accordingly, are companies that I would question why anyone would invest in."

Diller was equally confounded by the top three U.S. auto executives, who recently were criticized for separately flying corporate jets to Washington before hearings to request a $25 billion taxpayer bailout.

"It's incredibly, shockingly stupid if you're going, when you think about it. On that count alone I wouldn't give them any money. And not because of any reason other than why would I give money to someone so dumb to go to Washington to ask for money and fly in a Gulfstream. You'd say, 'You're not qualified. Unless you leave, I'm not giving you money.'"

Other topics:

* When discussing social networking: "Think of the bimbo words this Internet has created: portal, social network; I could riff on .... networking, horrible word too."

* Hollywood: "Margins used to be very good in the movie business. They're now, what, 4, 5 percent in a decent year, so where's the joy in that? Is there really a joy in 'Superman 17' or "Iron Man 2'?"

* Movie studio executives: "'Mogul' is yesterday. It just doesn't apply. You use the word 'mogul' and what you do is conjure up the fantasy, the memory of when there were actual movie moguls who made their decisions, believed in what they did, were outsized personalities. There's no outsized personalities in the movie business anymore."

* Indiscriminate spending: "There is a reluctance, even with people who have vast resources. Right now, it just isn't the order; it isn't the day. You're not going to see a birthday party for three million bucks. I don't care how many billions you have or paying Mick Jagger $3 million to come and sing for your birthday. I notice this with my friend. I just notice this as a condition of this period."

To hear the always entertaining Diller riff, go ahead and click on the links...

(Photo: Reuters)

 NBC is putting up big numbers so far in the Olympics.

Start with the opening ceremony. While some complained that the event couldn’t be seen live in the United States, the move to delay the broadcast and run it during prime-time paid dividends. Some 34 million viewers tuned in, up about 35 percent since the last summer games.

Indeed, helped by the splashy opening ceremony and the star power of swimmer Michael Phelps, NBC is setting the stage for what could be record Olympic viewership in America.  Over the first two days of its coverage, NBC has attracted a record 114 million total viewers - 4 million more than Atlanta in 1996 and nearly 20 million more than Athens in 2004.

Those numbers suggest that Web coverage hasn’t taken away from NBC’s TV audience.

As the Wall Street Journal writes:

In the first two days of the games, 90% of viewers watched the Games on TV alone, with nearly 10% watching on TV and online, according to Alan Wurtzel, NBC’s president of research. Only 0.2% watched on the Internet alone, Mr. Wurtzel said.

“The streaming will not diminish the ratings,” said Neal Pilson, a sports-media consultant who advised the International Olympic Committee in negotiations for broadcast rights. “It encourages viewers and provides them with information. There will be no dilution or fragmentation of the national audience.”

The results so far are likely a big relief for NBC, which, as MarketWatch points out, is hoping for a spillover effect from the Olympics:

The Beijing Games will have far-reaching benefits, NBC fervently hopes. The network believes that the widely watched and discussed Games will serve as the ideal lead-in for NBC’s fall prime-time line-up. In addition, Walt Disney’s ABC morning and evening news programs have been nipping at the heels of NBC’s pace-setting “Today” and “Nightly News” shows.

Keep an eye on: 

• WPP says that German market researcher GfK was misleading the market about its intentions to acquire British rival Taylor Nelson Sofres (Reuters)
• Internet conglomerate IAC/InterActiveCorp is moving ahead with plans for splitting up the company, saying spin-offs of its divisions would occur on August 21 (Reuters)
• A major shareholder says cable television operator Cablevision Systems Corp should sell one of its units to raise cash for an aggressive stock buyback rather than break up the whole business (Reuters)

(Photo: Reuters)

Call it the new simplicity. IAC’s businesses are better off on their own in the market than trying to work with a strategic partner, according to chief mogul Barry Diller.
    
Recently empowered by a court decision that says he can do what he wants with IAC with little limitation from controlling shareholder Liberty Media, Diller said today a plan to spin off four major IAC units probably won’t involve any partners and that he was on track to complete the separation in August. 

Here’s his comments from a conference call to discuss quarterly earnings. We’re wondering how much of this may still be a negotiating position, or should we expect to see one big IAC, and four little IACs, trading on the Nasdaq before Thanksgiving: 
    

What we’re not discussing is the possibility of a so-called swap transaction with Liberty. While the potential for such a deal exists just by the nature of our relationship, I think it’s very unlikely that one will occur. 
 
Relative to private equity, we’ve had lots of discussions, we have lots of people knocking on the door and coming in and talking about different schemes and ideas. The truth is as we go through this, I think we’re not probably going to do any of them. I think that the best thing to do is simplicity. We may do one or some modified thing but I don’t think we’re going to do anything that would particularly engage (the) private equity world. 
    
The best thing is to get these companies spun out and to get them into the public markets, get their managements out there, so to speak, and taking care of their own businesses and talking to the investment community. I think that’s probably the better step forward for us at this point. 

For those watching at home, Liberty was mulling a swap for IAC’s HSN shopping channel, or maybe a smaller asset. Firms such as Quadrangle and Elevation Partners were also among the parties who have discussed taking a stake in another IAC unit.

(Photo: Reuters)