April 2015

Newspaper future is one (or $1) vexing question

[Commentary] This week came word that Cablevision had offered one dollar -- yep, just one -- to buy the Daily News. We also learned that The New York Times, known for many things but hardly its brevity, is going to be producing one-sentence stories, "specially crafted for small screens," for Apple Watch users. At first blush, the offer of a single dollar to acquire a newspaper that once sold nearly 5 million copies each Sunday seemed like the ultimate insult to the struggling newspaper business. Really? Has it come to this? But there is the fact that the paper is reported to lose as much as $30 million a year. That's real money, and no doubt why the owner, wealthy developer Mort Zuckerman, is at last unloading it. You can't blame someone for not wanting to pay too heavily for the privilege of swallowing all that red ink. So given all the highly publicized travails of the newspaper industry, which has been thoroughly disrupted by the digital maelstrom, where are we now? Are there reasons for hope?

I posed that question to Caroline Little, who announced that she's stepping down Aug. 31 after four years as president and CEO of the Newspaper Association of America. Little doesn't sugarcoat the problems the industry faces, as advertising has declined sharply along with print circulation. It definitely remains a business in transition toward a digital future. "We're still working toward a business model that will work," she says. But Little is encouraged by the advent of new revenue streams: paid digital circulation; newspapers setting themselves up as marketing consultants; events; and native advertising. And she is heartened by the overall size of the audience, which includes substantial numbers of digital readers on top of what remains of print circulation.

Sens Booker and McCaskill urge a more tech-savvy Senate

Sens Cory Booker (D-NJ) and Claire McCaskill (D-MO) sent a letter to the Senate Rules Committee, pressing to make it easier to approve new vendors, adopt cloud-based technology and publish legislative information in simple, universal formatting, among other things. "Our aim is to remove unnecessary barriers to technological creativity while best serving constituents and saving taxpayer resources,” they wrote in a letter to Chairman Roy Blunt (R-MO) and Ranking Member Charles Schumer (D-NY). They asked the committee to rewrite rules that deal with lawmakers’ use of bulk e-mails to constituents. The current rules, they say, were written before the use of electronic communication and do not always translate. They want more access to vendors and new rules that govern the language and images that can be used in the e-mails.

Separately, they want the Senate to pre-approve a number of already popular content management systems, like WordPress. To bring the Senate rules in line with the House, they also want to be able to use their franking privileges -- traditionally used to send letters through the mail without charge -- to buy online ads to promote events and constituent services. The senators also want more authority to track their social media statistics with the help of outside companies -- a particular interest to Sen Booker, who is likely the most prolific Twitter user in the chamber. They also want the Senate to set up a website that tracks the running action on the Senate floor and to publish bills, amendments, testimony and transcripts in XML formatting, which would make it easier for outsiders to analyze the information in bulk.

Sprint settles US class-action lawsuit for $131 million

Sprint has agreed to a $131 million settlement of a class-action lawsuit accusing the wireless carrier of defrauding investors about problems dating back to its $36 billion merger with Nextel Communications in 2005.

The all-cash settlement made public resolves claims that Sprint, former Chief Executive Gary Forsee and other officials fraudulently inflated the company's stock and bond prices between October 2006 and February 2008. Investors said the defendants falsely touted that Sprint was receiving billions of dollars of benefits from the merger and improving its subscriber base by tightening credit standards. Instead, investors said Sprint was struggling to integrate its cellular networks and was losing hundreds of thousands of subscribers, culminating in a $29.7 billion goodwill writedown in February 2008. All of the defendants denied liability in agreeing to settle the 6-year-old lawsuit, according to settlement papers filed with the federal court in Wichita (KS). The preliminary accord requires court approval.

Verizon's 'managed services' plan for video streaming could violate net neutrality rules

Verizon is aggressively moving forward with a streaming pay-TV service targeted to younger mobile video enthusiasts. This service will leverage the wireless giant's 4G cellular network, and Verizon will have to remove data caps from what it classifies as a "managed service" in order for its customers to use the offering. The question: Can Verizon legitimately classify such a video product as managed service without running afoul of new Federal Communications Commission mandates? "It would be a very provocative move," analyst Craig Moffett said. "I don't think the FCC would be pleased." If the FCC were to have issues with Verizon's strategy, the wireless giant would seem to have company, with AT&T also preparing a streaming service that will rely heavily on its cellular network. For its part, AT&T is building its service around an app-based sponsored-data model, whereby data charges are billed to a sponsoring company and not the customer. Analysts say this strategy appears to have less risk of running afoul of the FCC.

FCC Commissioner O'Rielly at the Association of National Advertisers

As I review the policy issues that [the Association of National Advertisers] and [its] members care most about, it is evident that a number of them closely intersect with activities at the Federal Communications Commission. These days that can be a very dangerous thing. From wireless and wireline Internet Service Providers to over the-top video providers to traditional outlets and everywhere else, almost every media platform your companies use to advertise to consumers has come under assault recently at the Commission.

The people in this room understand better than almost anyone how rapidly our media environment is evolving, and how consumers are driving and following these trends. With online ad revenues now outpacing those of broadcast television, and mobile ad revenues set to exceed desktop ad spending by early 2016, there are more ways than ever to reach consumers with advertising that is specifically tailored to their needs and interests. But many potential pitfalls lie ahead for all forms of media as the Commission tries to expand its authority intouncharted territory. And, be warned, FCC involvement occurs at the speed of regulation, not innovation.

FCC’s Pre-Adoption Process Also Needs Work

I want to draw attention to yet another Federal Communications Commission procedure that warrants significant review: the FCC’s pre-adoption process for Commission meeting items. For those who may not be familiar, Commissioners receive meeting items from staff, on behalf of the Chairman, not less than three weeks in advance of a Commission Agenda Meeting (this is the sole, additional document I believe can and should be made public at the time of its circulation inside the Commission). During the first two weeks, outside parties may meet with Commissioners and staff to advocate their views and seek changes, if necessary. The last week of the three-week period is the Sunshine period. During that time, parties may not proactively lobby the FCC, but Commissioners and staff are permitted to ask them questions. The Sunshine period allows Commissioners time to contemplate the complex issues, discuss matters with other offices, and respond to any issues raised during the prior two weeks. It is patently unfair to expect Commissioners to promptly read and provide feedback on an item when staff is working on a substantially different document to be provided later -- sometimes not until late the night before a vote. I hope that the Process Review Task Force and those considering FCC reauthorization and reform issues in Congress will take a serious look at pre-adoption procedures. In the meantime, I will continue to suggest ways to improve the workings of the FCC, and I welcome feedback and suggestions.

Comcast Makes (Small) Business Case for Merger

Bill Stemper, president of Comcast's business services unit, took to the Web to make a business case for the Time Warner Cable merger. Stemper is definitely in agreement with Vice President Joe Biden, who has pitched broadband as a way to help small businesses be more competitive. "One of the most important benefits of our transactions with Time Warner Cable and Charter will be providing our services to more businesses and the introduction of increased competition among communications companies, resulting in innovation and cutting-edge products and services," Stemper said.

Stemper argues combining the Comcast and TWC networks will give small-business broadband subscribers more choice and faster broadband, as well as enhanced phone service. "Many companies have gone on the record to voice their support for this transaction, and once it closes, Comcast will offer more advanced and innovative products to business customers throughout the combined footprint with greater scale -- and that means operational efficiencies to better serve our business customers both large and small," Stemper wrote.

Bright House gains much-needed leverage with programmers through Charter buyout

The Wall Street community has reacted positively to Charter Communications' decision to pursue a $10.4 billion purchase of Bright House Networks, sending the multiple-system operatori's stock up 5.3 percent as of the close of the Nasdaq on March 31. Privately owned by billionaire Si Newhouse, Jr.'s Advance Media, Bright House also received a notable nod from investment bank Jefferies, noting that the MSO needed to be purchased by a bigger cable operator because it's about to lose a valuable resource if the federal government approves Comcast's $45.2 billion purchase of Time Warner Cable. As part of the deeply interwoven relationship between Bright House and TWC includes the latter uses its sizable video services reach to negotiate program deals for the former.

The Mobile Election: How smartphones will change the 2016 presidential race

The new mobile reality is changing the state of news and advertising, and it will also change the dynamic of American politics -- especially during the 2016 campaign season, journalists and political operatives said. On the consumption side, the rise in mobile will "change politics the same way it is changing American life broadly," said Ben Smith, the editor-in-chief of BuzzFeed. "People will organize and persuade on mobile devices and apps, the same way they live on them more broadly." On the media side, the rise in mobile usage will increase the number of citizen reporters, whose influence on recent political campaigns has been quite significant. Video footage of an errant remark -- from George Allen's "Macaca" moment in 2006 to Mitt Romney's "47 percent" moment in 2012 -- can have more influence on a political campaign than any traditional news report. At the most basic level, the rise in mobile usage will speed up the entire political process. Voters will have faster and more frequent access to campaign news and information, and campaigns will have better access to voters and their data.

With Frontier 2Fast, Frontier Takes on Cable with Symmetrical Broadband Tiers

In today’s broadband wars, symmetrical broadband, or the same download and upload speeds, has been a weapon used by fiber based broadband providers over their cable competitors. Verizon has used it effectively with FiOS. You can now add Frontier, who has unveiled their 2Fast symmetrical broadband tier in Washington and Oregon markets. The service will eventually be available in all Frontier FiOS markets. Fiber based broadband services creates this symmetrical competitive advantage over HFC/DOCSIS based competitors, so it’s no wonder fiber providers like Verizon and Frontier are taking advantage.

Benton

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