MediaFile

Sun Valley: When will YouTube make a profit?

That question has got louder and louder from investors and Wall Street analysts concerned that YouTube owner Google is racking huge profit-hindering costs to be the free online video platform for the world. It seems Google’s top guys don’t know the answer either — or if they do, they’re choosing not to share it with reporters on Thursday.

Google CEO Eric Schmidt told a media briefing at Sun Valley that he believes YouTube, which his company spent $1.65 billion to acquire three years ago, will come good thanks to its recent launch of new advertising formats such as pay-to-promote and pre-roll ads. “We’re optimisic that YouTube will be a strong revenue business for us because of these products,” he told reporters.

But the problem is investors are more concerned with the huge costs involved in streaming millions of videos globally everyday with a very small percentage of them covered by advertising. In other words when will YouTube make money from its dominance?

“We don’t make predictions,” said Schmidt. But then co-founder Larry Page piped in “It’s not that important.” Really? “I’m not worried it will be profitable, we want it to be very profitable,” Page said.

For Schmidt, an important part of YouTube’s future will involve more premium content from small three-man production teams to Hollywood studios. He acknowledged he’d like for YouTube to have some of the content of Hulu.com, which now features Disney-owned shows as well as NBC and News Corp programming. All three companies own Hulu. “We think we need premium content,” he said.

CBS chief digging Leno’s move to primetime

CBS Chief Executive Les Moonves doesn’t sound particularly worried about NBC’s decision to put Jay Leno in the 10:00 pm timeslot five nights a week. In fact, he sounds a bit giddy about the whole thing.

The way Moonves figures it, CBS could bank millions in additional revenue from the switch. Moonves described his thinking on a call with investors, using what he acknowledged were “ballpark” figures to make his point.  Essentially he said that even if Leno does well the show simply will not attract the kind of advertising dollars of, say, “CSI”. That means CBS will take an even bigger share of the advertising money in primetime.

“Assume we were the No. 1 at 10:00 last year and we took in 38 percent of the revenue available at 10:00 on broadcast television. Remember, there are only three networks [Ed: Fox doesn't run competing programming at that hour] And assuming Jay Leno does great, does what he’s doing now. Suddenly, that 38 percent will turn into 45 percent, maybe 47 percent. So you take 10 percent more revenue in that time period. And 10 percent of an arguably many hundreds of millions of dollars pie is a lot of money.

NBC says upfront market too tough to call

Las Vegas should have a line on the upfront market, particularly this year. What’s the over/under on total dollars? What are the odds the networks will hold back big chunks of inventory? How quickly will everything be decided?

Every year the networks’ sales executives and the media buyers talk their books. Fair enough. But this year, many seem to be shrugging their shoulders when asked about the upfront market.

On the one hand, maybe advertisers are ready to open up their checkbooks; after all, they don’t want their brands left out if the economy rallies and consumers start to spend again. On the other hand, do they really believe the economy is about to rally and consumers are about to start spending again?

NBC Universal’s Zucker: Olympics still a winner

News broke this week that Anheuser-Busch has told NBC that the brewer will spend only about half as much on advertising packages during the upcoming 2010 Vancouver Winter Olympic Games and 2012 Summer Games in London, compared to previous years.

Over at 30 Rock, they aren’t too worried about it. NBC Universal Chief Executive Jeff Zucker, who won wide praise for the company’s coverage of the Beijing Olympics, feels that there are plenty of advertisers ready to step in and replace any company that wants or needs to cut their spending on the sporting event.

When we asked Zucker about the Anheuser-Busch situation, he said, “The interest in the Olympics — because it’s such a unique event — has been extraordinary. Where certain companies decide it doesn’t work for them anymore, it provides an opportunity for their competitors to come in. That works out just fine for us.”

Bravo back with more housewives, fashionistas, crazies

Bravo unveiled its new TV lineup at its upfront breakfast on Tuesday– and it’s chock full of more of those grating characters and train-wreck scenarios that have proved so successful for the cable network.

At the breakfast in Manhattan’s Russian Tea Room, executives played down the recession, played up a recent New York Times article and announced that a cable network known for its unscripted shows is developing two scripted dramas, “Blueprint” and “30 under 30.”

So how is Bravo doing? Sales executive Susan Malfa said Bravo accounted for 14 of the top 15 product placements last year, added 100 new advertisers, and posted its best sales year to date. She and other Bravo executives then unveiled the cable network’s largest slate of returning shows, new shows and programs in development.

Now showing: The cable show

The big story in the media for the rest of the week is the annual National Cable Telecommunications Association Show, or “the cable show,” as its commonly called.

This year’s primary topic looks like it will be how the big, traditional operators in the business will adapt to an age when the Internet is giving people more options to watch shows, and not always in a way that feeds the bank.

Here is our own take on the show from the Reuters wire:

Both sets of companies will be brainstorming on how to cope with or benefit from disintermediation: consumers can now watch decent-quality video online whenever they want, and often for free.

Twitter invites all shades of green

Twitter is now free for all, but it may not be for much longer. According to co-founder Biz Stone, the micro-blogging site plans to offer commercial accounts for businesses to pay a fee to receive an enhanced version of Twitter starting some time this year.

The move is part of Twitter’s accelerated plan to start seeking revenue in 2009, despite the economic downturn and cutbacks in advertising spending online. The company recently closed a round of venture capital financing pegged at $35 million by media reports, following two earlier funding rounds totaling $20 million. The recent round valued Twitter at $255 million, according to The Wall Street Journal.

Stone says:

We think there will be opportunities to provide services to commercial entities that help them get even more value out of Twitter. If these services are valuable to companies, we think they may want to pay for them.

Is NBC Universal worth $30 billion?

French conglomerate Vivendi this week joined a long list of media and entertainment companies that have been forced to write down their book values after suffering a sharp drop in advertising revenue and tumbling share prices, with no immediate turnaround visible on the horizon.

But what caught our eye was a new valuation for NBC Universal implied in the writedown. Vivendi said in its results report that it took 1.503 billion euros off the value of its 20 percent stake in NBC Universal. It didn’t say what the stake was now worth, so we asked our colleague in Paris to check with the company. A Vivendi spokesman said it wrote the NBC stake to around $6 billion in 2008 accounts. By our math, that would value NBC Universal at about $30 billion.

So is NBCU worth $30 billion? What would the TV network, movie studio and theme park owner fetch on the market if GE/Vivendi ever put it up for sale? We’ll leave you to decide, but here’s a graph of the financials for some of the biggest U.S. media companies for comparison.

Step aside, here comes Google

Google just keeps on truckin’. The Internet powerhouse posted results yesterday that show advertisers haven’t completely cut their spending — at least not on search.

Excluding one-time charges, profit was $5.10 a share, beating the average analyst forecast of $4.95 according to Reuters Estimates.

Revenue rose 18 percent to $5.7 billion — a shadow of the 50 percent growth levels that Google used to enjoy, but considered by analysts to be a robust performance given the weak economy and corporate cutbacks in advertising spending.

Jay Leno to NBC’s Rescue

How odd is it that perhaps the most exciting story in network television is not about “Lost”, “Fringe” or some other edgy, expensive small-screen phenomenon, but instead, about a veteran night time talk show host moving to prime time?

According to reports, NBC is set to announce today that Jay Leno, who relinquishes his “Tonight Show” gig next May, will get a new show at 10 p.m. each night “in a format similar to “The Tonight Show.”

This news comes as last-place NBC tries to cut costs during the economic slowdown. It wants to streamline creative decision-making. I suppose you can’t streamline it any more than putting the same gab-fest on every weekday night to compete with everything from legal and espionage yarns to hospital dramas and time travel shows.