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2000.11.28

Revelation:
Print is content

Back in September in this year of our Lord 2000, the Canadian telecom colossus BCE decided to buy a newspaper.

Why should you care?

1. BCE, a traditional telephone company, also owns the perennially bumbling and mismanaged Sympatico “portal” (so banal, flavourless, and bereft of relevance to the greater Web it gives “mainstream” a bad name), along with a business as a national dial-up and DSL Internet service provider.
2. Separately, CTV, a rebroadcaster of American television programming, is in the midst of purchasing Netstar, a holding company that owns, among other things, two successful television networks – the all-guys Sports Network (first-person account), which rakes in astounding buckets of cash from its vulgarian guy programming for guys, and the Canadian licensee of Discovery.
3. Now the scary part: BCE is buying CTV. Why? Convergence.

The whole idea would be mystifying were it not shocking: A phone company that muffed an Internet portal attempts to buy a television network that itself knows nothing about the net. While there’s a lot of programming on CTV and CTV-owned networks that could conceivably be licensed for broadband distribution, the really sexy, high-profit shows are all American, and there ain’t no way the U.S. studios are gonna allow that kind of redistribution (Cf. Offspring vs. Sony).

We will not reiterate our old shibboleths. Devout readers of MogulWatch will be aware that the square peg of television cannot be jammed, hammered, and crowbarred into the round hole of the Web. Everyone knows this except media executives, and of course journalists.

Indeed, we hold journos accountable for refusing to splash cold Evian on the face of these convergence megalomaniacs, acting instead as mere typists. One exception: The surprisingly butch Matthew Ingram.

Merging content – newspapers, TV networks, sports teams, etc. – with delivery systems such as cable or phone networks has become almost a religious principle over the past year or two. Questioning this idea is like raising doubts about whether an object falling off a table will tend to head towards the floor. Suggest that a company might actually be better off not converging, and your mental faculties are open to debate....

[C]onglomeration may have been bad in other industries, but the Internet has changed everything. Newspapers and TV are no longer different businesses with different needs, but are just variations on a single word: “content.” And guess what? Sporting events such as hockey games are also content. Stock quotes? Content. Weather reports? Content. Game shows? Content.

(Article link expired on this one.)

This makes as much sense as saying nurses are doctors because they both know how to use a tongue depressor. But you knew that already.

Enter the Globe

Last summer, Tubby Conrad Black decided to sell off most of his remaining Canadian newspapers to a vulgarian soap salesman of the airwaves, Izzy Asper (MogulWatches passim). Izzy also snagged half of the leading fascist newspaper, the Daily Tubby.

Meanwhile, the Thomson empire had spent the previous three years shafting freelancers on E-rights, selling off small papers hither and yon, and spending ten digits of American dollars buying database empires like Westlaw. The only newspaper of note remaining in the Thomson stable was and is Globe and Mail, a business daily that now seems positively Marxist-Leninist in the shadow of the Daily Tubby.

While Lord Tubby of Fleet was willing to lose a bit of face selling his jewels, and half the crown jewel, to a Hershel Krustofsky–like shill from the prairies, the baronial Thomsons needed a bit more coaxing. What they eventually ended up with is a new company, jointly owned by BCE and Thomson, that will in turn own the Globe, Sympatico, and all the other “convergent” properties. The boss of the venture will be old TV hack Ivan Fecan, itself an unreassuring sign.

(Thomson Himself: “ ‘I do not regard this as the sale of the Globe and Mail,’ said Mr. Thomson, who has a personal fortune of more than US$16 billion. ‘We regard this as a superb partnership.’ ” Note the pronoun shift: We regard it as a partnership. Not a ringing personal endorsement.)

“Branding”

Why go to all the trouble? Well, the central convergence myth, of course, but also branding, according to some industry analyst or other:

“Once they can present all the disparate elements in one front, it does, I think, put BCE in a fairly enviable position,” [said the analyst].

“Being able to have all the elements present is great, but if you can’t make them work together, then in some ways it’s all for nought.” This will involve such challenges as developing a “commonality in terms of look and feel” as well as a common branding approach for the disparate Web sites The Globe, through Globe Interactive, CTV and Sympatico-Lycos will bring into the marriage. [...]

Globe Interactive CEO Lib Gibson also cited the size of the new operation as a key advantage. “We’ll be part of a media company that is indisputably the leader in the Internet in Canada, and there’s no question that, just like with other media, being the biggest and most significant player is of great benefit.”

And here’s what BCE chair Jean Monty said:

We believe it’s a property that has tremendous growth potential which each of the properties would not have obtained had they remained standalone.... The Internet is exactly where all [the media company’s assets] meet. The Internet facilitates the possibility of cross-selling, cross-promotion and repurposing.

In the same article:

“It’s a great deal,” one Toronto analyst said. “For Thomson, it takes a low-margin business, an orphan business, and puts it in stronger hands. For BCE, no one can argue with the quality of the brands they have in the asset pool.”

Indeed. No one can argue with the “brands.” But brands are like clans: Distinct, and difficult to unite without suffering through years of tense wedding receptions and righteously-abandoned Christmas dinners.

En tout cas, where do we start?

1. In the real world, readers and viewers simply are not aware that People, Wallpaper, and CNNSI are all owned by the same parent. The number of people who do know is measurable in the thousands, and they’re all in the worlds of business or “the media” or are amateur obsessifs.
2. In the real world, people do not know that competing laundry detergents like Tide, Gain, Ivory Snow, and Surf are all manufactured by the same conglomerate. They certainly don’t know that Crest, Duncan Hines, and Febreze are also part of the same “stable.” If you knew that common consumer foods were produced by tobacco manufacturers, would you keep buying them? Those tobacco manufacturers count on the ignorance of the public. Corporate concentration is hard to trace and rather abstract to real people interested in simply making a living.
3. Even those who do know don’t particularly care, unless they’re part of an organized campaign (think of the Nestlé boycott). Indeed, the most attuned potential customers are often the most suspicious.
4. If brands exist at all, they exist individually. You read the Globe, but are unaware of other Thomson “properties”; you Swiff your floors, but do not care that Pledge sells a competing system. The sole exception is Microsoft, which, through its monopolism and bundling practices, has conditioned millions of computer users to expect Excel wherever they find Word (and not 1-2-3 where they find WordPerfect, or any other combination).
5. In media, if “brands” apply at all, they apply individually; the magic is not transferable, even if you retain the same topic. Convergence-manqué efforts like the aforesaid CNNSI – an unholy union of a magazine and a news network – fall flat on their faces: In that case, though the topic was still sports, viewers nonetheless stuck with ESPN. (The story of why ESPN: The Magazine succeeded has to do with generational differences. Think NFL vs. X-Games. The larger page size and vastly more venturesome photography contribute, too.)
6. People will not care that you are “the biggest and most significant player” because they will not know. This isn’t like buying a Pontiac rather than a Daewoo because you know that big ol’ GM has dealers in every city in the country. Breadth of reach isn’t even an item of consideration among civilians.
7. It is inconceivable for an undifferentiated failure of an Internet portal, a retransmitter of American programming, a guys’ sports network for guys, and a business newspaper to find any common ground at all. There is nothing to “co-brand,” because there is no “co-.” (Matters are even worse than that: How do you also combine a French sports network, a science channel, a talk-show station, an alternative and regional sports network, a comedy channel, an also-ran news web, and a station dedicated to outdoor exploits like mountaineering? What is there to brand at all?)
8. Branding these matter/antimatter combinations of “properties” contradicts the reasons all but CTV and the Globe were set up in the first place: Narrowcasting, or serving a defined audience.
9. Just how do you do this “branding”? Through a common colour scheme? CTV has staked out red, the Globe dun, TSN and RDS red (overlap, conflict, or synergy?), Discovery blue, and so on. How about adding a business-English tagline that only a twee Toronto ad executive would love, like “RDS, part of the Sympatico-Lycos-BCE-CTV family”? That’s gonna win over the grandmas in Red Deer. If anything, conspicuous corporate branding will turn off the discerning customer: If they didn’t notice the company’s fingers in multiple pies before, the branding will make sure they finally do.

Trust the only “analyst” we really like (notice how we never quote them by name?), Ian Angus, to speak the truth:

Mr. Angus said he is not convinced by the argument that content will bring sufficiently high margins to compensate for diminishing margins on the connectivity side. “I don’t see any synergies on the management side either,” he added. “There’s an element here of ‘who has the most toys when they die wins,’ ” he said.

What were we saying about megalomania?

(And by the way, if you think we’re excessively tart-tongued here in the land of MogulWatch, we are not alone. Matthew Fraser: “Already, many are wondering how Mr. Fecan is going to make strategic sense out of BCE’s ‘convergence’ gambit – an elitist newspaper, a mainstream TV network and a lacklustre Internet portal.”)

Getting one thing right

From an article quoted above:

“It’s a very smart move for those developing Internet portals also to develop the content, and BCE has done so in a pre-emptive fashion to insure that the cable companies don’t necessarily have access to nationwide content on the print side,” said [yet another industry analyst].

We now come to the only aluminum lining to be found in the cloud: BCE figured out that print is content.

As described ad nauseam before, the essence of the Web is graphic design and text. Audio kind of fits in there somewhere, but video certainly does not.

BCE, having poured zillions of dollars down various gullets to buy into broadcasting (technically, BCE’s ExpressVu satellite-dish service was in that “space” already), may have finally grasped reality. Rather like the Thomsons’ saving face by figuring out a way to unload a prestige paper without really unloading it, BCE may have found an ace in the hole of broadcasting through the acquisition of the Globe.

What’s the problem?

The Globe and Mail already has a raft of Web sites. They’re all ugly as sin – obviously designed on and intended to be viewed only on Windows systems, with their entrenched low-rent tastelessness – and their articles have the annoying habits of sporting 500-character URLs and expiring behind your back, but there’s a lot of there there.

Granted, the sites aren’t like anything we would do with a newspaper “property,” but inside information we’ve received shows that the newspaper culture, steeped in decades of tradition, is quite unprepared to face the reality of the net. (Typical reaction inside the Globe to a mere present-day idea, let alone a futuristic one: “Whoa, whoa, whoa! We’re at least six months away from that kind of thing here!”) The best we can hope for is glorified “repurposing,” which is what the Globe actually offers.

BCE, then, is dealing with a top-down psychosis (the mania for convergence) and a bottom-up instransigence (ink-stained wretches railing against online “re-education”). In the middle are TV producers who cannot figure out how to jam, hammer, and crowbar television into the round hole of the Web. (They can’t figure it out because it cannot be done.)

How is this a recipe for success?

A single voice of reason

David Olive of the Daily Tubby deserves something along the lines of canonization for authoritatively discrediting every single rationale for convergence in a seminal article that will go unheeded by Americans (and which will likely expire from the Tubby Web site in short order).

Apart from proving once and for all that convergence never works by recapping previous failed attempts, Olive goes so far as to ID the true reasons for these acquisitions:

1. “Convergence as exit strategy: Time Warner CEO Gerry Levin candidly acknowledges that his firm’s patient investors, who suffered abysmal returns for most of the 1990s, deserved to profit in high style when AOL came knocking on his door.”
2. “In truth, many of the media entrepreneurs have only a shaky hold on their companies. If it sometimes seems they’re making up strategy as they go along, that’s because while they’re routinely described as revolutionaries of New Media, they’re actually old-fashioned dealmakers. And they make old-fashioned mistakes.”

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