June 2012

With the Federal Reserve continuing to clamp down on interest rates, scavenging investors are starved for yield. Telecommunications companies, with their ripe dividends, are one likely place to look for sustenance.

One question for the really ravenous investor, though, is weather AT&T or Verizon will do a better job increasing its dividend in coming years? AT&T has steadily raised its dividend for 28 years and supplements this capital return with stock buybacks. But when it comes to the possibility of accelerated dividend increases, Verizon looks better-positioned than its rival. A larger-than-normal dividend rise isn't likely to come this year. But analysts at Macquarie say Verizon shareholders could see a one-time, 10% increase in the dividend in 2013 or 2014. AT&T is more likely to continue with its regular but more-sedate pace of dividend increases.

The battle between the government and broadcasters over a pop star’s profane slip of the lip or a TV drama’s brief flash of nudity is far from finished in the wake of the Supreme Court ruling on the FCC’s indecency rules.

The court essentially handed the hot potato back to the Federal Communications Commission by punting on the free speech issues in the case. “The Supreme Court decision leaves the big issues for a different day,” said Andrew Jay Schwartzman. “If the FCC chooses, there will be more fines and litigation that will go on for years. This is potentially a Pyrrhic victory.” The court did level a new layer of pressure on the FCC to amend its policy. In the SCOTUS majority opinion, Justice Anthony Kennedy signaled that tweaks are in order. But what — if anything — the FCC does is still an open question. Some observers say the FCC’s most logical move would be to retreat to its practice before 2001, when the commission generally declined to sanction fleeting and isolated uses of expletives, except in very specific circumstances. “If they were to go back to the light touch, that would be one way to resolve this,” a broadcast source said. “In terms of constitutionality, that would be the smart thing to do.”

Wealthy investors including Sam Zell and Philip Falcone have swooped into the troubled newspaper industry in recent years, trying to call the bottom. Few have seen success. Now Warren Buffett is diving into print. Has he waited long enough to get real value?

On June 22, the Omaha World-Herald, a division of Buffett's Berkshire Hathaway, agreed to buy the Waco Tribune-Herald, which sells 34,000 copies daily. Earlier this month, it snapped up another Texan newspaper. This comes after Berkshire's purchase of 63 small-market papers from Media General in May and December's acquisition of the World-Herald, adding to longtime holding the Buffalo News. While Buffett has been vocal about the secular deterioration of the newspaper business, he has expressed a belief that small, local papers have a strong future. And as an ultra-long-term investor, he likely has the stomach to navigate all of the digital turmoil before they get there. While metropolitan dailies have been crushed by declining advertising and falling circulation, small-market papers have found some protection. Coverage of community events, local sports and local politics remains tough and expensive to replicate. And Buffett appears to have chosen papers with monopoly local positions.

Note to marketers: Television advertising is not post-racial. That’s the message that a newly formed consortium of the country’s largest African-American media outlets wants to send to marketers, who have largely shunned black media in favor of placing ads on general outlets.

BET Networks, Black Enterprise, Johnson Publishing (the publisher of Ebony and Jet magazines), the National Association of Black Owned Broadcasters and others will join with media-buying agencies to introduce a campaign intended to educate advertisers about the importance of black media and its increasingly deep-pocketed audience. Called #InTheBlack (using the Twitter hash tag), the campaign will begin with print advertisements in major newspapers (including The New York Times) and trade magazines like Broadcasting & Cable and AdWeek. It will expand to a long-term joint effort that includes social media and direct outreach to marketers.