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Content Anywhere: Stern, Oprah, Olbermann, Sheen, Beck and the Future of Media Disruption

Richard Greenfield, managing director and media analyst at BTIG, examines how the distribution of content is being redefined, with the potential to disrupt the balance of power in the media industry.

The pace of change in the media industry is accelerating with actors, artists, and content creators able to take far greater control of their franchises than ever before. Technology is knocking down barriers to entry with distribution platforms proliferating. New web-based platforms offer content creators the ability to build their brands outside the traditional content gatekeepers with greater creative freedom and the potential for generating more wealth in the long-term (albeit, likely means sacrificing near-term rewards).


Recent examples have been limited, but they provide a sneak peak of a trend we expect to become far more common in the near-intermediate future:

  • In December 2005, Howard Stern left his nationally syndicated terrestrial radio show and launched a dedicated channel on Sirius (now Sirius XM) satellite radio (currently reaches Sirius’ 20 mm subscribers).
  • In November 2009, Oprah Winfrey told her fans that she would end her nationally syndicated talk show on broadcast television in September 2011 to devote all her energies to her cable TV channel, OWN (80 million subscribers) which launched in early 2011 and  Oprah is using Twitter to highlight new programming to over 5 million followers and engage her audience.
  • In January 2011, Keith Olbermann quit MSNBC and shortly thereafter announced he was moving his talk show to Current TV, a fledging cable network (in 60 mm homes), fully-integrated with its website
  • In March 2011, Charlie Sheen was fired by Warner Bros. Television from his CBS television show Two and a Half Men.  Sheen has since reached out to his fan base via live broadcasts on Ustream, via 3 million Twitter followers and has launched a live-entertainment tour. 
  • Yesterday, Glenn Beck announced he was leaving Fox News later this year.  While Beck has not yet revealed his future plans, he has built a multi-platform media business that goes well beyond his Fox News show spanning radio (10 million weekly listeners), publishing (1.1 million books sold in 2010), the Internet (3 million monthly unique visitors to, 3 million uniques to the, including 80K-plus paid subscribers at $9.95/month), and live events (14 stage shows in 2010).  Beck is likely to either launch his own web-video program and/or rebrand an existing network (similar to Oprah’s OWN).  

Money Has Been the Key Barrier to Entry. 

Historically, broadcast networks were the only ones capable of investing the significant dollars necessary to finance television shows and to market content in an increasingly fragmented media world (usually at a steep loss upfront, in hopes of significant syndication profits on the back-end).  The continued growth of multichannel television has enabled Pay TV networks to finance an increasing array of original programming (HBO, Showtime and now Starz), with basic cable networks leveraging their sub fee base to enter the original programming arena (from TNT to Discovery to MTV to Food Network to even the History Channel).

  • Not only do networks spend weeks promoting a show/series ahead of its actual airing (across a wide array of other networks at a considerable financial expense, but we have seen networks go as far as giving away dry cleaner bags with the slogan “Everyone Has a Little Dirty Laundry” to launch  ABC’s Desperate Housewives).

Web-Based Content and Programming Has Failed-to-date. 

Marshall Herskovitz tried to enter original programming online in 2007, distributing Quarterlife on both Myspace and YouTube. (now defunct) launched several web-only series such as WhoWhatWearDaily distributed across a host of online video sites in 2008.  Even American Idol’s Simon Fuller has taken a shot at online video with ICanDream distributed via Hulu last year.  There are probably two core reasons why online video original programming has failed to-date: 

  • Consumers were forced to watch on their computers where they tend to “snack” vs. consume whole portions of content.
  • Financial backing.  Nobody has been willing to invest $1-2 million/episode, let alone $3-$4 mm/episode to create high quality content in a web-only world, not to mention the serious resources needed to make consumers aware of the content.  Splitting ad revenue is simply not enough to create and market content on a scale that can effectively compete with traditional platforms – there is simply too much risk in the model.  

Technology’s Perfect Storm Enables the Rise of Internet Content. 

New distribution platforms are proliferating (YouTube, Netflix, Hulu and XBox Live); the rapid rise of social networks (led by Facebook and Twitter, which are platforms as well) have rapidly decreased the cost to market to consumers and increased the speed at which you can reach them (content essentially finds you, versus needing to search for it); broadband pipes are becoming far more robust (both wired and wireless) improving the consumer experience of online video; and the IP-enabled home is allowing us to view content in our living room on a big screen HDTV (via IP-enabled TV’s, Blu ray players, video gaming systems, AppleTV/Airplay, Roku, Boxee Box, etc.).  These same trends are playing out globally with platforms such as Youtube and Facebook global themselves, enabling content creators to reach a global audience without the vast array of “middlemen” that currently control content distribution around the world.    

Against this backdrop, new platforms are increasingly interested in investing serious dollars in original online content/programming – going well beyond an ad revenue share model:

  • Netflix, armed with over 20 million subscribers and available on virtually every IP-enabled device imaginable, is reportedly spending $1-$2 mm/episode for David Fincher’s House of Cards in late 2012, content you would normally expect to see on pay or basic cable. 
  • YouTube is looking to invest heavily in original programming (up to $100 mm according to the WSJ)  to move well-beyond its user-generated content roots (recently acquired NextNewNetworks and is expected to reorganize its site around channels later this year, including premium channels with professionally created content).  YouTube has a massive global reach and a user-interface that is compatible across an array of platforms. 
  • Hulu is launching a web-only series starring Keifer Sutherland later this month, as it seeks to step-up its original programming efforts and to increase consumer interest in Hulu Plus (subscription service, which enables Hulu on Tablets and IP-enabled TVs).  

What Happens Now?  

Consumer recognizable content that begins its life on the web and where ownership does not ultimately reside within a content gatekeeper company controlled by Bewkes, Iger, Malone, Murdoch, Redstone, Roberts, or Stringer is coming… 

  • Does Jon Stewart really need the Daily Show?  Does Does Conan really need TBS?
  • Can Netflix make an original movie or TV show successful because it knows its audience has an affinity for this type of show and/or specific actors/directors – meaning it can use its recommendation engine to drive exposure?
  • Could the Huffington Post start its own web-based cable network to compete with CNN, in addition to the newspapers with whom it already competes?
  • While Charlie Sheen’s initial foray into web video has been crude at best, the potential is there.  Imagine if he received funding to do an original web-based series, distributed over Youtube or Hulu?  Twitter and Facebook would quickly get the message out and he would have distribution to a vast global network of devices and platforms.  

It may still be a bit too early for any of the above to concepts to occur and/or be successful.  However, we sense they are all becoming increasingly realistic by the day and that none of these concepts are years away.  The result will be more competition for talent/content – driving up costs for the established media industry players with traditional media viewership negatively impacted (lower ratings) over time.

From a consumer standpoint, the disruption of the historic media ecosystem should be a positive.  Consumers have already benefited from a wider array of content choices (such as when cable networks launched original programming to compete with broadcast).  Now the prospect of competition from web-based platforms should only help to further increase content choice for consumers.  


Appendix: Analyst Certification and Other Important Disclosures

Analyst Certification

I, Richard Greenfield, hereby certify that the views about the companies and securities discussed in this report are accurately expressed and that I have not received and will not receive direct or indirect compensation in exchange for expressing specific recommendations or views in this report.

I, Brandon Ross, hereby certify that the views about the companies and securities discussed in this report are accurately expressed and that I have not received and will not receive direct or indirect compensation in exchange for expressing specific recommendations or views in this report.

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