Cover your bets

Hypothetically speaking, if I were to create a media/communications mutual fund, where would I put the money? Given the turbulence of this millennium up until now, I'd have to diversify and attempt to cover all my bets. Media moguls are facing a question much like the above. What is the best way to protect equity in valuable properties and give their value a chance to increase exponentially? People working in the industry are faced with a similar challenge. They have to keep expanding their skill sets so that they remain marketable. Still, it isn't always clear which way the future is headed.

Over the past few years, the stock market has demonstrated a very bullish attitude toward high tech stocks. Prices have skyrocketed in a way that left unproven firms worth unheard of multiples of their earnings. Naysayers keep shaking their heads waiting for an inevitable reversal. In fact, there have been some corrections of late. Is it time to put a period after the dot coms? After all, of 182 Internet stocks in the United States, only 19 made any profit at all in the past year. Is the day of reckoning upon us? I don't think so. As investors say, what goes down must bounce back up again.

Unless I miss my bet, the Net will play a significant role in the future of media and communications. But exactly what forms will it take? A home entertainment/information centre which brings together games, spreadsheets, radio, television, etc.? In this age of mergers and amalgamations, clever men like Ted Rogers are covering their bets with cable, radio stations, television stations, high speed Internet access, etc. Rogers has already grouped different services together for economical sale to the consumer. This sort of arrangement is termed "sticky" since consumers won't likely attempt to disentangle themselves from any component once entering into this attractive proposition. It's simply too much work. On the other side of the equation is Bell, a conservative blue chip firm if there ever was one. Who would have predicted their rebirth as BCE and a brilliant adaptation to new realities which has sent their stock price through the roof?

Even when broadcasters aren't sure of where they want to take their properties, they are stringently defensive. Witness the fate of iCraveTV which, through streamed video, rebroadcast network programming over the Net. They now know what it feels like to be the target of a U.S. bomb.

Here in Canada, license holders are exploring a number of options which will allow them to protect and build their equity. With the change in CRTC ownership restrictions, conglomerates are becoming bigger and bigger, affording them the opportunity to operate more cost effectively. Of course, it will be virtually impossible for an independent to operate in a major market.

The one possible exception to this is private Internet based broadcasters. They remain unregulated by the CRTC. Start up costs are minimal. Established firms have a few ways of answering this challenge. It is inevitable that our analog radio transmission platforms will eventually go by the wayside in favour of more advanced technology. By facilitating the establishment of digital, owners will be working to retain the value of their license.

Digital currently offers a variety of benefits over streaming audio on the Web. It's "point-to multi-point" capabilities serve to illustrate the Web's "point to point" limitations. So much for the big quarter hour audiences. "Digital" offers outstanding sound quality, portability, geographic positioning, traffic and weather information, ad supplements and song credits. Failure to promote consumer conversion to this format could leave license holders with pieces of paper worth about as much as a confederate dollar.

It is still important to cover all bets. Broadcasters should upgrade their Web sites, stream audio over them and create "e-mall" sales packages for local retailers. An existing station's ability to promote its own site is the one immeasurable advantage it has over start up Net-only stations. By the way, this sort of activity could make a firm's stock much more attractive in a high tech obsessed marketplace.

Lastly, it is important to find complementary purposes for new technologies as opposed to viewing each as a threat to the other. Bundle together your e-mall, cable, digital and streaming radio, television, games, ISP and all-encompassing web portal. Maybe throw in a local and long distance phone service. Now that you have all of your bets covered ... throw the dice and see what tomorrow brings.

Broadcasters should upgrade their Web sites, stream audio over them and create "e-mall" sales packages for local retailers