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Old 12-27-2004, 07:27 AM   #415 (permalink)
Cynthetiq
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From today's bylines...a year 2004 recap.

Quote:
Media Moguls Ate Humble Pie in 2004

BYLINE: SETH SUTEL; AP Business Writer

DATELINE: NEW YORK

BODY: Media moguls had some tough times in 2004.

Walt Disney Co. chief Michael Eisner agreed to step aside, albeit on his own schedule, following a shareholder revolt; Mel Karmazin bolted as the No. 2 at Viacom Inc. after years of sparring with chairman Sumner Redstone; and Rupert Murdoch shored up his defenses after longtime ally John Malone moved to grab 17 percent voting control in Murdoch's News Corp.

Even Richard Parsons, whose revival of Time Warner Inc. is winning accolades, is still cleaning up a major mess he inherited - resolving allegations from federal regulators that its America Online unit had faulty accounting practices. On Dec. 15 Time Warner announced a $210 million settlement with the Department of Justice and a proposal for a $300 million settlement with the Securities and Exchange Commission.

Parsons had referred to 2003 as a "reset year" for Time Warner, when the company got back on its feet following the disaster of the AOL merger. For other members of the Big Media family, 2004 turned out to be their own year for a bit of humbling - and getting their own houses in order.

Disney and Viacom both addressed long-looming succession issues, Viacom got rid of its underperforming Blockbuster video unit, and Vivendi Universal SA unwound a disastrous acquisition spree by its former CEO by merging its TV and movie assets with General Electric Co.'s NBC.

Yet even as they responded to investors' concerns, media firms' standing with the public sank to new lows. A drive to further deregulate ownership rules ran into a firestorm of opposition from public interest groups and some in Congress; Janet Jackson's breast-baring episode at the Super Bowl touched off a backlash against what many see as declining moral values on TV; and CBS anchor Dan Rather apologized for a story questioning President Bush's National Guard service.

The repercussions are already being felt. Many ABC stations canceled an airing of "Saving Private Ryan" on Veteran's Day over concerns about the film's language and violence, and ultra-popular radio jock Howard Stern claimed that ever-tightening decency controls led to his decision to abandon broadcast radio for Sirius Satellite Radio Inc., which along with competitor XM Satellite Radio Holdings Inc. so far is out of reach of federal regulations.

It adds up to a challenging environment for media companies in 2005. The Federal Communications Commission is likely to revisit the deregulation of media ownership rules next year after a federal court threw out most of the proposals, but the prospects for major changes are dim. Several media companies are still hoping that a ban on owning a TV station and a newspaper in the same city may be eased, as well as limits on how many radio or TV stations can be owned by the same company in one market.

"The media industry in 2002 was extremely confident that they were going to get deregulation of ownership," said Blair Levin, a media regulatory analyst with the Legg Mason brokerage firm. "I still think it's going to happen, but it's going to take longer than the media thought and it's going to be less significant."

Making matters worse, the industry is still trying to figure out how to adapt to the emerging era of digital recording device such as TiVos, which threaten the traditional advertising model by allowing users to easily skip commercials.

It's not just the threat of ad-skipping - and that's a big one. The blockbuster popularity of the iPod has got the radio industry worried about losing listeners, especially the young adults that advertisers want to reach most.

And as the capacity of media-storage devices like TiVos jumps, that raises yet another concern for media companies: not only do programs have to compete with all the other channels clamoring for our attention, but also with every other program or song that's stored on customers' hard drives.

Levin says protecting their copyrights and adapting their business models to the new realities of the digital age are the biggest challenges facing the media industry going forward.

"There's really a change in the network architecture," Levin said. "In five years will a TiVo be able to store 500 movies? That tells us that the competition is getting tougher, because you're not only competing with more channels, you're competing with any program that was made over time."
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