Apple’s iTunes Pitch: TV for $30 a Month

appletvWould you pay $30 a month to watch TV via iTunes?

That’s the pitch Apple has been making to TV networks in recent weeks. The company is trying to round up support for a monthly subscription service that would deliver TV programs via its multimedia software, multiple sources tell me.

Apple (AAPL) isn’t tying the proposed service to a specific piece of hardware, like its underwhelming Apple TV box, or its long-rumored tablet/slate device. Instead, it is presenting the offer as an extension of its iTunes software, which already has a huge installed base: A year ago, Apple said it had 65 million iTunes customer accounts.

A so-called “over the top” service could theoretically rival the ones most consumers already  buy from cable TV operators — if Apple is able to get enough buy-in from broadcast and cable TV programmers.

That’s a big if: Apple has told industry executives it wants to launch the service early next year, but I have yet to hear of a single programmer that has made a firm commitment to the company, which has tasked iTunes boss Eddy Cue with promoting the idea.

But industry executives believe that if anyone jumps first, it will be Disney (DIS), since CEO Bob Iger has shown a willingness to experiment with Apple and iTunes in the past: In 2005, Disney was the first player to sell its programming on iTunes, via a la carte downloads. And Apple CEO Steve Jobs is Disney’s largest single shareholder, a result of Disney’s 2006 acquisition of Jobs’ Pixar animation studio. Apple didn’t respond to requests for comment.

Network executives I’ve talked to are intrigued with the idea — they are eager to find new revenue streams — but are also wary, for multiple reasons.

Cable networks, for instance, don’t want to threaten existing relationships and subscription fees from cable providers like Comcast (CMCSA). And programmers are also worried about the effect a subscription service would have on advertising revenue: Even if the service didn’t distribute TV programs until after their initial air date, that could cut into ratings, which now measure viewership over the course of several days.

But the move to deliver TV and movies over the Web is already well under way. Netflix (NFLX), for instance, already bundles free streaming movie and tv along with itsdisc-by-mail subscription service. iTunes and Amazon (AMZN) rent movies on a one-off basis, and Google’s YouTube (GOOG) is trying out the same thing. And Hulu, the joint venture between GE’s NBC (GE), News Corp.’s Fox (NWS) and ABC, is figuring out how to launch a paid service that may include rentals, paid downloads or subscriptions.

So Apple’s proposed subscription service, which the company has floated in the past, is no longer a huge stretch. Says one executive briefed on the company’s plans: “I think they might get it right this time.”

Hearst’s UGO Gets New Blood, Still Needs CEO

Hearst’s dude-centric UGO site, which has been without a permanent CEO since June, is still looking for a new boss. But in the meantime, it has some new blood: The company has brought in Hearst veteran Christopher Johnson to run programming and product strategy, and it has hired Julie Shumaker to run 1UP, the gaming site it bought earlier this year.

Shumaker comes to Hearst from DoubleFusion, the “in-game” advertising company, where she ran sales for its core games group, and was at Electronic Arts (ERTS) prior to that. Johnson spent the last three years building Hearst’s magazine sites (, etc), then took off this summer to run something called; he has also put in time at IAC (IACI) and Time Warner’s AOL (TWX).

UGO is one of many players trying to capture a piece of market for 18-34 who like girls, funny things and video games, and the company, which claims 13 million monthly uniques, is often mentioned as an M&A candidate.

But Hearst says it is still looking to hire a new CEO for the spot that opened up once co-founder J Moses left in June. Hearst Interactive president Ken Bronfin is still running the unit on an interim basis.

Apple Ad Guru: I’m Not Going Anywhere

Lee Clow, who gets credit for a couple decades worth of Apple’s iconic advertising campaigns, wants us to know that he isn’t going anywhere.

His agency, TBWA/Media Arts Lab, is shuffling people around, however. If you’re reading this story on this Web site, you probably don’t care about the details, but you can find them here and here. The takeaway: Clow isn’t retiring, he’ll still have a hand in Apple (AAPL) campaigns, and he’s a bit bemused by the way the Internet has treated his org chart shuffle.

“Look at how the blogosphere decided to make it a conversation about me,” he writes in an letter distributed to his staff.

Psst! Big secret here: The blogosphere doesn’t really care about Lee Clow.

It cares about Apple, Apple, Apple. And if it’s an Apple, Apple, Apple story that gives the blogosphere the chance to embed some Apple advertising, too? Then the blogosphere really likes that!

BusinessWeek’s Future is Cloudy, But Better Than it Could Have Been: The Grim Non-Bloomberg Scenario

clint-escapesBusinessWeek employees are waiting to hear if they’ll have jobs once Bloomberg takes over the publication, and I’m told that staffers expect to hear their fate shortly after Thanksgiving. “Either you’ll get an offer or you won’t”, is the conventional wisdom among the 400 staffers, an employee tells me.

That has to be unnerving, but I can at least offer a little bit of comfort: The worst-case scenario the employees would have been facing had they been purchased by private equity firm ZelnickMedia, who was also bidding for the publication

The short version: Almost everybody gets fired.

Here’s the longer version of the plan, provided to me by a person familiar with the ZelnickMedia’s bid. It sounds like a plausible idea for a PE group that specializes in turning around distressed assets — and a chilling one for anybody who draws a paycheck at BusinessWeek:

  • Wind down BusinessWeek’s print business “as profitably as possible” — the company would have to honor existing subscriptions, and could still sell ads in the magazine. But the focus would be on building up BusinessWeek’s web site, which has a decent-sized footprint, though not a huge one.
  • Dump almost all of the company’s newsgathering staff, and outsource most almost all of that work to ThomsonReuters (TRI).
  • Employ a small handful of editorial employees — perhaps 20, down from the 200-plus that are there now.  Some of them would run a Huffington Post-style aggregation site that produces no original content, and some more expensive hires would produce a smattering of high quality reporting and writing designed to burnish/sustain the BusinessWeek brand. “Just to give it uniqueness and sizzle”, my source tells me.
  • Dump most of the existing business side, as well, but overhaul and bulk up the sales force.

The insult-to-injury kicker: Under ZelnickMedia’s proposal, it wouldn’t pay a dime for the publication it intended to rebuild. Instead, McGraw-Hill would pay the fund to take the publication off its hands. If that sounds implausible, consider that McGraw-Hill just announced that it will save up to $25 million next year by not owning the title.

Given the above terms, it’s easy enough to see why McGraw-Hill ended up going with Bloomberg. For starters, the winning bidder actually paid cash for the magazine, and McGraw-Hill will end up netting a $5.9 gain, after taxes, on the deal.

Also important: McGraw-Hill won’t have to anguish as it watches one of its flagship properties get dismantled.

So what will happen to BusinessWeek now that Bloomberg owns it? Nothing nearly as drastic, at least in the short-term. For now, Bloomberg is talking about bulking up the title, not shredding it, so that’s a good sign for both employees and readers.

Alas, Bloomberg can’t take on all of the magazine employees looking for jobs, and that pool is only going to get bigger.

Forbes slashed deep into  its staff this week, and next week Time Warner’s Time Inc. (TWX) will lay out some of its layoff goals. I’ve heard Time Inc. employees refer to layoff plans as “tree-trimming” or “surgical”, but I think they’ll feel much blunter to the folks who lose their jobs. The publisher’s cost-cutting plans include hundreds of layoffs — something likely similar to the cuts the publisher went through last year, I’m told.

The New York Post’s Keith Kelly reports today that Time’s News and Finance unit, which includes Time, Fortune and Sports Illustrated, will be particularly hard hit, and I’ve confirmed that myself.

UPDATE: No surprise here — BusinessWeek publisher Keith Fox is stepping down. Mild surprise: He’s staying on at McGraw-Hill. Here’s his memo:

When we announced that McGraw-Hill was exploring strategic options for BusinessWeek, I promised to communicate with you as openly and often as I could. In this spirit, I wanted each of you to know that I will be remaining with McGraw-Hill after the deal with Bloomberg is closed. I will continue to play a role in the integration post-close and plan to take on a new role at McGraw-Hill in 2010.

During this process, our collective goal was to find the best buyer for BusinessWeek. I am proud that I played a role in ensuring that BusinessWeek has a new home at Bloomberg, where it will thrive under the leadership of Norman Pearlstine. I am committed to the transition and helping in any way that I can.

It’s been a privilege to be the President of BusinessWeek. I thank Terry McGraw for his confidence and trust in me and Glenn Goldberg for his support, direction, clarity, and sense of humor. I’ve also been a member of an amazing team which has navigated the transformation of the media environment with agility, focus, passion, and integrity.

The team – Steve Adler, Jessica Sibley, Tania Secor, Linda Brennan, Roger Neal, and Carl Fischer – is the best in the industry. Like BusinessWeek, they have bright futures ahead of them. I will miss the daily interaction, but I am wiser (and a little grayer) because of their collaborative spirit and desire to make BusinessWeek the global leader in business that it is today.

I also have a special thanks to Patricia Hipplewith, my assistant, who juggled my calendar, protected me from solicitors, and kept me on schedule and well fed! She is the personification of commitment and integrity.

I am humbled by BusinessWeek’s 80-year history. Thank you for allowing me to play a small part in it.


Bad News From the Washington Post: Ad Sales Slide Again

newspaperlessLast week, the New York Times (NYT) offered investors some cheer with an earnings report that indicated that its ad sales slump may have slowed. No such luck from the Washington Post Co. (WPO), whose flagship newspaper saw ad sales worsen over the last quarter.

The publisher said its newspaper revenues dropped 20 percent in the third quarter, and ad print ads dropped by 28 percent; both those numbers are worse than Q2, which saw revenues drop by 14 percent and print ads drop 20 percent.

No relief from Web ads, either: Internet revenue dropped 18 percent, a decline from the 9 percent drop in Q2. And online display ads, which had been more or less flat for the last few quarters, fell off a cliff, dropping 14 percent.

Don’t be duped by headlines reporting a drop in the newspaper division’s losses, by the way. That’s due to one-time accounting charges the previous year. If you look at operating revenue and expenses via a less formal, but more practical lens, the results are very unpleasant — losses increased by 55% (click to enlarge):

wpo q3 newspaper operating

Want more bad news? OK: The company’s magazine group says revenues dropped 33 percent, driven by a staggering 48 percent drop in ad sales at Newsweek.

If you’re at, say, Time Warner’s Time Inc. (TWX) and want to whistle past the graveyard, you can try blaming the drop on the title’s unsuccessful overhaul. But I find it hard to believe that Newsweek’s woes don’t reflect a larger magazine malaise. We’ll see next week.

The good news, as always: The big difference between the Post and many other publishers is that its parent company doesn’t depend on print media. The company’ core education business, which is what has sustained it for many years, continues to do well.

Surf’s Up? News Corp. Mulling Sale of “Action Sports” Channel Fuel TV.

fuel.tv_logoNews Corp. (NWS) is reportedly interested in purchasing the Travel Channel from Discovery (DISCA) for something like $800 million. Here’s one way to help pay for a small piece of that deal: Sell off its Fuel TV cable channel.

Murdoch and company are mulling a sale of the “action sports” cable channel, prompted by inbound requests, industry sources tell me. No comment from News Corp., which owns this Web site.

If News Corp. does part with the channel, it won’t be a whopper of a deal: Fuel TV, which features skate and surf-themed programming like “The Adventures of Danny and the Dingo” (I know. Me either) boasts just 25 million subscribers–about half of what cable networks need to get taken seriously by operators and advertisers.

Just as telling, perhaps: I’ve queried three different Wall Street analysts to get a ball park price for the network, and none had a clue–and only one had heard of Fuel at all.

So here, for everyone’s edification, is some Fuel TV programming: Danny and the Dingo’s (who are snowboarding stars, apparently most recent hijinx.

Layoffs Come to the Wall Street Journal, Too: Boston Bureau Closing

The layoff axe swings close to home today: The Wall Street Journal is closing its Boston bureau, which will result in up to 9 job losses. News Corp. (NWS) which owns the Journal as well as this site, has been pouring resources into the paper, but the Journal certainly isn’t immune to the pressures that all print publishers are under these days. Here’s the internal memo from Journal editor in chief Robert Thomson:

From: Thomson, Robert
Sent: Thursday, October 29, 2009 11:25 AM
To: WSJ All News Staff; Newswires_USERS
Subject: Boston

Today we told our team in Boston that we are closing the bureau in its present form. The economic background to the closure is painfully obvious to us all. An investigative function will remain in Boston, but the core reporting team will be disbanded, though all nine reporters affected will certainly be able to apply for openings elsewhere on the paper. Coverage of the Boston mutual fund industry will switch to the Money and Investing team and we are creating an enhanced New York-based education team.
Any such decision inevitably stirs apprehension and uncertainty, but there are no plans, nascent or otherwise, to close any other U.S. or international bureau. Meanwhile, the Newswires bureau and the MarketWatch team in Boston will remain at their present staffing levels.
That there has been truly great reporting under the generalship of Gary Putka out of Boston over many, many years is not in doubt. But we remain in the midst of a profound downturn in advertising revenue and thus must think the unthinkable.