Conference Presentation, Panel
The Big Picture for Global Media (updated)
Milken InstituteGale Anne Hurd, Michael Lynton, Leslie Moonves, Robert Pittman, Julia Boorstin, Les Moonves
- Panelists and Core Theme: The panel, featuring CEOs Bob Pitman (iHeartMedia), Les Moonves (CBS), Michael Lynne (Sony Entertainment), and Gail Berman (AMC/Sony), addresses the "dramatic shift" in media driven by mobile, social, digital distribution, and evolving financing models, with Sumner Redstone's principle that "content is still king" remaining central.
- Advertising Challenges: Bob Pitman identifies the primary challenge as convincing advertisers to follow consumer migration to digital channels, noting that radio and outdoor sectors are currently "forgotten children" that underperform relative to their usage patterns due to slow advertiser adaptation.
- Creative Pressures: Les Moonves highlights the difficulty of balancing content expansion with protecting core assets, noting that audiences have become more sophisticated and demand constant freshness, making it risky to rely on past formulas.
- Social Media's Impact on Viewing Habits:
- The Walking Dead: Gail Berman explains that social media addiction prevents DVR usage for the show, driving live viewership and "water cooler" activity rather than cannibalizing it.
- Live Events: Live broadcasts like the Super Bowl and Grammy Awards benefit from social media's communal aspect, with attendees more likely to tune in if they know a real-time conversation is occurring.
- Word of Mouth: Bob Pitman describes social media as a mechanism that scales natural word-of-mouth behavior, citing the iHeartRadio Music Festival's "billion social impressions" and rapid ticket sales as evidence of its power.
- Risk Amplification: Pitman warns that the downside of social media is that negative word-of-mouth travels faster and is "more brutal," as a single bad experience can reach thousands rather than the traditional hundred.
- Digital Distribution and Aereo:
- Legal Stance: Les Moonves states CBS is aggressively pursuing Aereo legally in New York and California, viewing the service as illegal and noting its mere 2,000 subscribers make it a negligible threat.
- Alternative Strategy: If legal remedies fail, CBS has invested in "Syncback" to offer a local television streaming service with dual revenue streams (advertising and subscriptions), serving as a potential replacement for Aereo.
- Cable Contingency: Moonves warns that if Aereo is forced to operate via a legal workaround, CBS might move to a cable model, which could exclude 10-15% of the U.S. population from free over-the-air access to major sports and news.
- Netflix and Streaming Economics:
- Pricing Power: Michael Lynne notes that the entry of Netflix and Amazon has created a competitive bidding environment globally, significantly increasing the price of content licenses.
- Frenemy Status: Les Moonves characterizes Netflix as both a "friend and an enemy," acknowledging their high payments for library content while noting they compete directly for subscribers with CBS's own cable channels (e.g., Showtime).
- Creative Renaissance: Gail Berman credits Netflix and DVR technology for enabling the "binge-viewing" model, which allows for complex, long-form storytelling (e.g., House of Cards) that was previously impossible with weekly episodic constraints.
- Cord-Nevers: Les Moonves dismisses the threat of "cord-nevers" to CBS, asserting that live sports and news require linear broadcast distribution that cannot be easily replicated by streaming-only services.
- Mobile and Device Trends:
- Connected Individual: Bob Pitman notes a shift from the "connected home" to the "connected individual," with consumers spending 30% more time in cars and 80% of their day outside the home, driving mobile content consumption.
- Device Separation: Pitman reveals that less than 10% of iHeartRadio users utilize both PC and mobile platforms, indicating that mobile and PC audiences function as distinct markets requiring separate product strategies.
- Second Screen: Les Moonves emphasizes the growing importance of the "second screen" experience, where viewers use mobile devices to interact with broadcast content simultaneously, creating new advertising inventory.
- International Markets:
- Global Revenue Share: Michael Lynne states that international revenue now accounts for upwards of two-thirds of the box office for major "tentpole" films, making the U.S. a single territory rather than the sole market.
- Global Launch Strategy: Gail Berman notes that The Walking Dead benefited from a simultaneous global launch in 122 countries to combat piracy, a model she predicts will become standard for high-demand serialized content.
- Market Growth: Michael Lynne highlights booming sales in previously difficult territories like Latin America, Eastern Europe, and the Far East, driven by the decline of single-screen theaters and the rise of multiplexes.
- Content Strategy and Mid-Market Films: Michael Lynne argues that mid-budget ($50 million) films remain viable if they target specific, well-defined audiences, whereas "no man's land" films targeting everyone fail.
- Piracy Perspective: Michael Lynne advocates for a "shrinkage" approach to piracy, comparing it to retail theft, and argues that fear of piracy should not hinder innovation, citing the successful rollout of CDs despite initial industry fears.
- Future Outlook and M&A:
- Unpredictability: Bob Pitman concludes that no one can predict the next disruptive technology, noting that social and mobile arrived so quickly they were unforeseen, and the best strategy is to remain prepared rather than try to forecast the future.
- Consolidation Cycle: Les Moonves and Michael Lynne suggest that the industry will continue to cycle through periods of consolidation and de-consolidation, with no immediate major M&A activity expected from CBS or Sony.
- Hulu Outlook: The panel generally agrees that Hulu will likely evolve into a subscription-based competitor to Netflix, with networks eventually reclaiming their content for direct-to-consumer platforms.