Even before Steven Spielberg's newly reformulated Dreamworks SKG makes its first film, his studio is moving – well, sort of. BusinessWeek has learned that movies made by Dreamworks, headed by Spielberg and producing partner Stacey Snider, will be moving from the Starz pay TVLMDIAto Showtime (CBS).
The move, which has yet to be announced, is being driven by the Walt Disney Co.(DIS), which signed on to distribute Spielberg and Co.'s films in February. That deal included a provision by which Starz would distribute Disney's films under an existing agreement by which Starz distributes all of Disney's films to its pay TV customers. Now, it appears that Starz doesn't want to distribute Dreamworks movies to its cable and satellite viewers, and is pressuing Disney to find someone else to do it instead. Enter Showtime.
Why wouldn't Starz want to show films from the hitmakers at Dreamworks or, more importantly, give up a shot at Spielberg flick? Starz, Dreamworks and Showtime aren't commenting. But try to follow Starz' reasoning, if you can: pay channels like Starz get a piece of the annual $10-12 a month that a cable operation collects from customers who get the channel. So, let’s say that Starz has 18 million subscribers, the last number Liberty reported to the SEC. If it gets, say $5 a month from each of those subscribers, it generates revenues of $90 million a month or about $1.1 billion a year. The problem comes in the payout to Disney. Pay channels pay studios a fee on the number of films they get from the studio, but the fee escalates as the film does better at the box office.
Roger Neal, the general manager of BusinessWeek’s online operations, is the third top executive to resign from his post following the announced sale of the magazine to Bloomberg LP in mid-October.
BusinessWeek staffers learned of Neal’s departure through a memo sent out by Norman Pearlstine, Bloomberg’s chief content officer. “We are grateful for the tremendous foundation that he has built for the digital properties,” Pearlstine said. “Roger’s digital team will report to Bloomberg’s Kevin Krim.”
Earlier, BusinessWeek President Keith Fox and Editor-in-Chief Stephen J. Adler announced they would be leaving the magazine. Fox will remain at BusinessWeek’s parent, McGraw-Hill Cos.
Neal was recruited to BusinessWeek from eBay in 2006 where he served as director of strategic partnerships. During his tenure at BusinessWeek, traffic to the magazine’s website grew from 6.4 million average monthly unique visitors to more than 10 million. Among Neal’s other initiatives was to create the Business Exchange, a social networking site for the business community in which McGraw-Hill invested more than $20 million. While accounting for 16% of digital revenues so far in 2009, BX has yet to meet online traffic and revenue goals.
"I'm enormously proud of the great strides we've made growing Businessweek.com, launching Business Exchange, and finding a great home for the franchise at Bloomberg," said Neal, who was directly involved in presentations during the sales processs. "There is enormous potential in the continuing evolution of digital media and I'm very excited to pursue new opportunities in this arena."
In other personnel news, Pearlstine said BusinessWeek publisher Jessica Sibley would remain in her job following the transition to Bloomberg, as will Carl Fischer as head of marketing and communications. Tania Secor, BusinessWeek’s vice president of finance, will also be retained and fill a larger finance role with Bloomberg News, including at BusinessWeek and at Bloomberg Markets magazine.
Pearlstine said executive editors Ellen Pollock and John Byrne and managing editor Ciro Scotti would continue in their roles. He also reassured the staff that the majority of BusinessWeek employees would be hired by Bloomberg.
The search for a new editor-in-chief of BusinessWeek continues, said Pearlstine.
Sometimes even a wheeler-dealer like John Malone outsmarts himself. That’s seems to be the situation at DirectTV. (DTV), where the razor sharp media baron seems to have dealt himself out of installing his own choice as CEO of the satellite TV giant despite once owning 57% of the company’s stock. Instead, he controls 24% of the company’s votes, but seems to have been bottled up by a very independent DirecTV board.
Those are the details that are emerging from a recent SEC filing by DirecTV. The satellite company clearly wanted to stop Malone, who buys and sells companies faster than most people change socks, from exerting too much control over the company. So in what has to have been a wing ding of negotiations, the DirecTV board swapped the DirecTV stake that Malone’s Liberty Media (LMDIA) once held for shares in DirecTV that Liberty will distribute to its shareholders. In addition, DirecTV took a $2 billion loan off Liberty’s hands that it used to buy those shares in the first place, but took Liberty’s 65% stake in the Game Show network and three Fox Sports regional networks. Malone got super-voting shares that are capped at 24% of the company’s voting shares.
What motivated DirecTV’s board to do the deal? They were angling for “the elimination of a single shareholder …with the ability to veto change of control provisions,” the company said in its SEC filing. More important, the board wanted to “reduce the level of influence that Malone could exert,” they added. Anyone need more of a roadmap than that?
Why’d Malone do the deal? Mostly for tax reasons, which seem to drive much of what the media baron does. The stock-for-stock swap allows him to avoid a ton of taxes on the appreciation in DirecTV’s stock in 2006. DirecTV sweetened the deal by giving Liberty shareholders a 5.6% premium on top of that tax-free treatment. DirecTV’s shareholders will vote on the transaction on Nov. 12.
On Monday night, 150 or so of the media elite gathered at the Thomson Reuters headquarters in New York’s Times Square to listen to a panel discussion focused on one basic notion: how badly they’ve all screwed up.
The panel was assembled to help promote a new book, “The Curse Of The Mogul, What’s Wrong With the World’s Leading Media Companies,” in which the co-authors skewer media executives for their companies’ poor financial performance over the years and for propagating a “myth” about the necessity to do mergers. Needless to say, there was no shortage of opinion on Monday night.
Lead panelist and co-author of the book, investment banker Jonathan Knee, kicked it off by saying that media executives have essentially tried to merge their way to excellence by “convincing the world there is something special and magical about media.” To hear more from Knee, click here
Universal Music Group CEO Doug Morris is quietly making plans to bring in a successor to help run the world’s largest music company , BusinessWeek has been told. Sometime this summer, Universal intends to elevate its international chief Lucian Grainge to take over Morris’s CEO slot for the company whose artists include U2, Elton John and Mariah Carey. Morris, who will be 71 in November, is expected to remain as chairman and has told intimates that he does not intend to retire.
Details are still be worked out, according to those with knowledge of the arrangement, but it is being portrayed internally as a promotion for the 49-year old Grainge, who is highly regarded by executives at Universal’s Vivendi parent company. When they signed Morris to a four-year contract extension last year, Vivendi top executives encouraged their long-time Universal chief to bring in a successor, BusinessWeek has been told. Morris will continue to work on key projects for Universal, but will turn over day-to-day operations. Morris expects to maintain his seat on the Vivendi management board, which includes top executives from the French conglomerate’s business units.
Morris, a one-time songwriter with wrote the 1966 Chiffon’s hit “Sweet Talking Guy,” was a record producer before becoming president of Atlantic Records in 1980 and president of Warner Music (WMG) in 1994. In 1995, he moved over to Universal Music’s predecessor, MCA Records, as its chairman and CEO. The company was renamed Universal the next year, and acquired Polygram in 1998. That deal gave Universal labels like Motown and A&M Records. Universal currently sells more than one-third the music sold in the U.S..
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