Nine Notes on Media Business

As I train down to D.C. for the Online News Association conference (moderating a panel hopefully titled, Optimize and Monetize - if you're there, say hello), the dizzying news industry news of the last week raises more questions than answers. Here's my top nine of the moment. Feel free to add to them:

• As we keep one eye out for the WSJ.com re-launch Sept. 16, I'm wondering why there's no WSJ -- or Marketwatch or Barrons -- app in the iPhone App Store. It's the place to be and be seen, show the flag and at least seem au courant. So far AP is there, with deep local, NYT has a strong, if straightforward presence, Internet Broadcasting has put together a decent aggregation product and Express is porting over its useful Palm/Blackberry product. But news company participation beyond that is weak, and not well-niched. Will a mobile iPhone app be part of the 9/16 re-do?
• How much more prominent will video be on the WSJ site? It's halfway down now on the home page now, though still a bit higher than NYT's video display. Both text-based companies are starting to master video, but their sites seem to say: text and photos. And, though, we know the Washington Post is doing massive video training, led by Chet Rhodes, here, too, we see little front-and-center placement. News customers are getting beyond a world of "content types" -- text, story, photo, audio, video, bar chart, etc. -- and just expect to get all the relevant info delivered on a single page, with best coverage (regardless of type) highlighted.
• New York's tabloids had a field day with the lipstick-on-a-pig nonsense. Will the Post be right with its data box head, "Slim pickins"? Indeed, did one of globe's top three rich guys buy at a suitably low-price, considering? Considering among other things that the New York Times (NYT) is still the top newspaper brand in the world, and that it has barely tapped markets around the world. There are about 900 million English speakers here and there, and yet the Times today derives only about 4% of its revenues from outside the US (mainly International Herald Tribune-related.) That's a big potential upside. Slim's confidence in the Times also underscores the difference in value in national/global brands (like the Times and Dow Jones, as compared to local and regional papers). The big question here is how much the buy is a strategic, long-term one, with hands largely off, and how much a Harbinger-like one, pushing for greater short-term change and divestment of non-Times brand properties?
• As newspaper market caps plummet, how great a percentage of those valuations are now built on real estate? Sam Zell's people probably know more about the land under his holdings in L.A., Chicago, Baltimore and Florida than they do about what's going on top of the land. NYT has taken criticism for its airy new HQ, which has been valued for as much as $1B. For the industry as a whole, with goodwill being discounted daily and future revenues highly uncertain, these real estate holdings are getting to be a prominent piece of newspaper valuations.
• If Gary Pruitt's not setting the table today, then how soon will tomorrow come? The McClatchy (MNI) CEO issued a statement to tamp down journalists' and analysts' saying his stepping apart from four family trusts may signify financial restructuring and/or going private. Maybe that's so -- and the move is long-planned and coincidental to the company's current stress. Pruitt had to know that the trustee change would be found by journalists, and that would start speculation. So why not get out ahead of it, with a statement? Yes, the means of restructuring are tough, but something is going to give somewhere at McClatchy, and it's hard not to see this move as one part of setting the table for it.
• Isn't Dow Jones' touting of the "Heard on the Street" expansion just another volley in the budding all-out war between WSJ (NWS) and NYT over business news? WSJ made some news, gleefully talking staff expansion and iconic Heard on the Street expansion as the Times has had to mainly talk about cutbacks. Heard's expansion, and the folding in of the WSJ's "The Skeptic" blog, makes sense. It's strategic journalism, taking a well-known column, turning it into a brand, turning loose staffers to follow the business sun around the globe and expanding its presence in print and digitally. Online, Heard still seems more newspaper-like than blog-like (how will it be handled in the redesign?). We don't get the sense of constant updating by its newly assigned staff of 12. NYT's Andrew Ross Sorkin's Dealbook is the growing competing brand -- and it may get a boost as the Times moves forward with a business and tech news upgrade of its own the end of this month.
• As the long-awaited, much-planned-for and much-trained-for Yahoo ad platform rolls out later this month with the San Francisco Chronicle and the Mercury News, how much will the platform separate the growers from the shrinkers? Many consortium companies -- more than 40% of US circulation -- have invested in sales training and re-training. Some have hired anew, all for the purpose of making the most out of the behavior-tracking Yahoo (YHOO) platform. They believe its power will up their local rates and gain them substantial revenue streams from selling Yahoo inventory. The rub, though, is, as is often the case, execution. Case in point: in phase one of the Yahoo/newspaper ad deals, in which buys have been enabled more manually, a few newspaper titles have gone to town, well into deep six figures, while others have practically no new revenue to show. As consortium members look at consortium benchmarks over time -- the rollout of news sites on the platform won't be completed until the end of 2009 -- they'll see how well, or poorly, they're performing compared to peers. As we see quarterly earnings from 2Q, 2009 on, we'll all see who's making most of the Yahoo Bump.
• How soon before Yahoo-owned video service Maven is integrated into the consortium ad play, at least as an option? Just as readers are getting more content-type agnostic, ad buyers increasingly want more centralized ways to buy audience, whether behavioral-targeted display or pre-roll.
• How COOL is that? COOL, as in expense reduction through: Clustering (having close-by properties share services), Outsourcing (you name it!), Offshoring (ad production plus) and plain old Letting Go, as in people, buildings, distribution trucks, etc., could be the budget regimen for 2009. More on COOL soon.

Disclosure: No positions.

Comments

[WALTER521:]

Response to ... "LEHMAN IS JUST THE THIN EDGE OF THE WEDGE".
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Ask the experts: Multi-sourcing
How can Chief Information Officers use external service provision to boost business? (FANCY WORDS FOR “OFFSHORING AMERICAN JOBS TO INDIA WORKERS OF MULTIPLE DIFFERENT COMPANIES. SOLVES THE PROBLEM OF INCOMPETENCE IN ANY SINGLE INDIA COMPANY.”)

Written by Mark Samuels
Computing Business, 19 Jun 2008
www.vnunet.com/computi...

Long-gone are single-supplier deals, where a user trusted its systems with one service provider. More companies are now entering into multi-sourcing deals, where firms can benefit from the expertise of niche providers in specific business areas. How can chief information officers (CIOs) use external service provision to boost business?

Replies from the experts:

Outsourcing is never far off the radar for any CIO. It is a constant measure against which to benchmark your company, its skills, productivity and value. Firms which earlier outsourced everything to do with IT have mostly come to realise that they also outsourced the control and direction of a key part of their business model and they need to redress the balance.

It is essential first to understand your company’s future business needs for IT. Then you can assess which skills and activities you should retain and which could be outsourced. Keep hold of the strategy and direction of your IT.

Aim to retain business-facing skills such as project management and business analysis. Ensure you have a well-developed career path for staff and can offer them interesting, challenging projects.
(LYING SNAKES.
YOUR STAFF HAD “WELL DEVELOPED CAREER PATH” UNTIL YOU HAD THEM TRAIN THEIR INDIA REPLACEMENTS.
THEN THE PATH WENT OFF A CLIFF WHEN YOUR CHIEF-INFORMATION-OFFI... LAID THEM OFF. )

Denise Plumpton, director of information, Highways Agency
(OF WHICH STATE ?
WHICH STATE THAT DOES OFFSHORING OF INFORMATION SYSTEMS JOBS. REMEMBER, HIGHWAYS ARE PAID FOR BY TAXPAYERS?)

Globalisation will continue to exert its influence over CIO sourcing strategy, and could take on new relevance as the economic climate cools. As well as the need to expand into new international markets, businesses stand to gain access to the lower-cost skilled labour pools that exist in the emerging economies and captive outsourcing arrangements offer genuine competitive advantage.

We know that 19 of the top 20 software companies have captive operations, with their own subsidiary software factories in India. And a new trend we expect to see develop among our members is the use of captive IT, and business process outsourcing units.

GE Capital is perhaps the most successful example, but we can also point to Lehman Brothers and BA (BRITISH AIRWAYS) as companies that have developed approaches in this area. (MULTI-SOURCING TO DIFFERENT INDIA SOFTWARE COMPANIES.)

Nick Kirkland, chief executive, CIO Connect

This is a topical question for me as I have recently taken 40 IT professionals to India to understand outsourcing and offshoring at a supplier’s site. One comment that summed up the general reaction was that “the real experience of the country, the culture, and the supplier campus and way of work could not be made anywhere else.”

Not every company can afford the financial and time investment to give such exposure to their IT professionals. However, the results emphasised the importance of covering the hard processes and skills as well as the soft values and cultural aspects. Both are needed for collaborative supplier relationships.

What the group took away was the need to build strategic and customer-facing skills, such as architecture and business analysis. They realised they must take ownership to ensure that requirements are being met, particularly with multiple suppliers.

Sharm Manwani, associate professor, Henley Management College

Multi-sourcing has been lauded as a way to avoid the risk of a single-supplier deal. In the construction industry, it is normal to look at what a project requires and to then create an alliance of companies, with each focused on their specialised area. This approach spreads operational risk, with the real advantage being access to the best-of-breed suppliers.

The obvious difficulties are that many IT suppliers are still not used to working in partnership with their competition. Multi-sourcing is not successful if people are squabbling over work, so not all suppliers are ready to work this way.

And do not forget that the more companies in the mix, the more complex it is to manage. There is a reason that some companies still prefer single-supplier sourcing.

Mark Kobayashi-Hillary, (PRO-OFFSHORING) director, National Outsourcing Association

In a highly competitive business environment, IT chiefs outsource for two main reasons: to access specialist services or to take advantage of economies of scale when using skills that have become globally available.

CIOs concentrate on the areas of the IT operation that optimise efficiency or offer competitive advantage. These differ for every firm, but the objective of rapid response to business need is ubiquitous. It is just not viable for most to develop and keep that capability in-house. Multi-sourcing is the obvious answer.

Outsourcing will and does affect the profile of the IT department, but a career IT professional should view the change as an opportunity to learn new skills, take on new challenges and additional responsibilities such as the management of outsource suppliers in their area of technical expertise.

Ollie Ross, head of research, The Corporate IT Forum

CIOs deploy outsourcing to drive down IT costs or improve performance and in a recession, outsourcing has boomed. (BACKWARDS. WE ARE IN A RECESSION BECAUSE OF OFFSHORING. ALL THOSE AMERICANS WITHOUT JOBS CAN’T PAY THEIR MORTGAGES. ALL THOSE AMERICANS WITHOUT JOBS CAN NOT PURCHASE FORECLOSED PROPERTIES FROM BANKS.) But the outsourcing market is changing, with new vendors and models emerging. The tie into the economy is not so clear.

Outsourcing is now an endemic part of the IT landscape, with simple cost-based outsourcing models evolving into mature, strongly governed and value-focused relationships. To benefit from new outsourcing frameworks and the vendors that use global delivery, CIOs must bring maturity and process discipline to IT sourcing.

Investing in a vendor management office, for example, ensures internal IT professionals work effectively with third-party service providers in a structured and measured way.

Strong lifecycle governance of the sourcing contract, alongside great communication, ensures business users are connected to IT strategy and solves the tensions internal technology professionals often face.

Euan Davis, senior analyst, Forrester Research
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2008 Sep 14 11:58 AM