Technology continues to threaten the media industry
As technology continues to change the way we access the media, media companies continue to try and cope with technology that threatens their business.
Before reaching a settlement a week ago, Gannett Co. Inc. was threatening to pull its television stations off of satellite TV provider Dish Network Corp., apparently over a dispute about DVR technology.
Gannett operates 23 TV stations in 19 markets, including NBC affiliate WTLV TV-12 and ABC affiliate WJXX TV-25 in Jacksonville.
Gannett and Dish both issued one-sentence news releases last Monday saying they had resolved their dispute, without giving details.
But the previous Friday, Dish issued a news release saying that Gannett was going to pull its stations off the satellite provider “unless Dish agrees to pay massive penalties or stop its customers from using Dish’s new commercial-skipping AutoHop feature.”
AutoHop is a feature of Dish’s digital video recorder, or DVR. Users can program their DVR to record all prime-time programming on ABC, CBS, Fox and NBC and if they activate the AutoHop feature, the recordings automatically skip the commercials.
It’s become a hot topic in the TV industry, but Dish defends it.
“Consumers have had the right to skip commercials since the advent of the remote control. We are simply providing consumers with the choice to watch what they want, when they want,” said Dave Shull, Dish senior vice president of programming, in a news release.
I have to agree. Particularly because of the current assault of political spots, I watch everything except live sports through my DVR so I can skip through those ads. The Dish technology just makes it easier.
I like to use a little-known button on Xfinity’s DVR remote that allows you to skip ahead 30 seconds, without fast-forwarding. With four clicks, you can quickly skip through a two-minute commercial break.
The company doesn’t talk about it, but a lot of people have posted instructions on the Internet on how to program your Xfinity remote to use that feature. Just Google it.
Still, I do sympathize with our local TV stations that rely on commercials for nearly all of their revenue. As ad-skipping technology becomes more efficient, why would advertisers want to waste their money on commercial time?
According to Dish, Gannett wanted compensation for that. Dish said the company had agreed to pay Gannett “a significant increase in fees” to continue carrying the stations, but Gannett wanted even more “for the expressed reason that our customers have access to AutoHop.”
Gannett never commented on that, and neither side commented on how the dispute was resolved a week ago. You can bet we’re going to be hearing more about this issue as technology continues to advance and more companies negotiate fees with Dish and other television providers.
Media General sells off last newspaper
Speaking of technology threatening an industry, Media General Inc. last week sold its one remaining newspaper, the Tampa Tribune, to a private investment firm for $9.5 million.
That’s a paltry sum for a major metropolitan area newspaper, but it shows the state of the industry as people turn from print to other technologies for their news.
Media General tried to move ahead of technology a decade ago by pioneering a concept called “convergence,” in which newspapers and TV stations pooled their resources to provide news coverage.
Tampa was the cornerstone of the strategy because Media General also owned a TV station there and it consolidated the newspaper and TV operations into one building.
Media General tried to spread convergence into most of the markets where it owned television stations, but one city where it didn’t really fit was Jacksonville.
The company owned WJWB TV-17 (now known as WCWJ) but the station didn’t have a news operation, so there was no opportunity for convergence.
Media General put the local CW network affiliate up for sale in 2007 and finally sold it to Nexstar Broadcasting Group Inc. in 2009.
Apparently, the convergence strategy didn’t help the profitability of its newspaper business. Media General in May announced an agreement to sell 63 daily and weekly newspapers to a subsidiary of Berkshire Hathaway Inc. for $142 million, leaving it with only the Tampa Tribune.
With the sale of the Tampa newspaper, Media General is purely a broadcast and digital media company, with 18 television stations mainly in Southeastern markets.
By the way, the newspaper and TV station in Tampa plan to continue working together, even though they now have different owners.
Citigroup ‘favours’ CSX
Another earnings season for Jacksonville companies kicks off this week with CSX Corp. scheduled to report its third-quarter results Tuesday.
Analysts have had some differing views on CSX recently as they speculate about the impact of coal and other freight shipments on its rail lines. But at least one group of analysts thinks very highly of the company.
According to a report on the Wall Street Journal’s MarketWatch website, CSX is one of seven U.S. companies on Citigroup’s list of “20 most favoured global stocks.”
The list was part of a report by Citigroup analysts that expressed great optimism for U.S. stocks, forecasting that the Standard & Poor’s 500 index will finish the year 12 percent higher than it is now.
Besides CSX, the other U.S. companies on Citigroup’s list were Aetna Inc., Goldman Sachs Group Inc., Google Inc., Qualcomm Inc., Starbucks Corp. and AES Corp., according to MarketWatch.
EverBank a ‘top idea’ at Goldman Sachs
While Citigroup favors CSX, analysts at Goldman Sachs & Co. say Jacksonville-based EverBank Financial Corp. is one of their four “top ideas” to benefit from improved housing markets.
In a report on America’s banks, the Goldman Sachs analysts said a pickup in housing is not currently reflected in bank stock values.
“The housing market is markedly improving, and despite the year-to-date rally, this is not fully priced into bank stocks. Banks have significantly underperformed other sectors with leverage to housing, despite similar earnings upside. This makes bank stocks the last inexpensive way to play an improvement in the housing market,” they said in the report.
“EverBank has considerable leverage and revenue upside to an improving housing market given its large concentration in housing related loans (2 times peer average), out-sized mortgage origination business (20 percent of 2013 revenue or 4 times peers), lower housing related credit/workout costs, and potential recoveries on the Bank of Florida marked loans,” they said.
The last part of that is a reference to loans EverBank picked up when it acquired the failed Bank of Florida in a government-assisted deal in 2010.
Besides EverBank, the three other banks cited by Goldman Sachs are Citigroup Inc., Regions Financial Corp. and Wells Fargo & Co.
International Speedway reports loss
NASCAR racing apparently isn’t seeing the same turnaround as the housing market.
International Speedway Corp. reported an unexpected net loss of 2 cents a share for the third quarter ended Aug. 31, with revenue falling 23 percent to $115.9 million.
The Daytona Beach-based company, which operates the Daytona International Speedway and 12 other motorsports facilities, said the drop in revenue was due in part to a shift in timing of some stock car racing events. But even without the changing schedule, revenue was down 3 percent, it said.
“We remain encouraged with many aspects of our business despite the ongoing effects of the sluggish economy, which continues to impact on our attendance-related revenues,” CEO Lesa France Kennedy said in a news release.
International Speedway said that excluding two special charges to earnings, it would have recorded net income of a penny a share in the quarter. But that was still well below the average forecast of 8 cents a share by analysts surveyed by Thomson Financial.
The company also said it expects earnings for the full fiscal year ending Nov. 30 to be below its previous guidance of $1.50 a share. It had adjusted net income of $1.61 a share in fiscal 2011.