Vivendi Is this any way to run a water utility?

[slider]

I probably improperly posted this on "good side". Since we aren't supposed to rain on the happy parade, I will put this here.


Trying to add to the factual side of the discussion.

The decision to go to series must be heavily based on fianancial considerations. Vivendi is the current owner of Universal and Sci Fi Channel. Vivendi is a French water utility whose CEO went on a buying spree and purchased Universal. This put the company in over $30 billion of debt at the end of 2001. Furthermore Vivendi had been charged with fraud.

http://story.news.yahoo.com/news?tmpl=story&u=/nm/20031224/bs_nm/media_vivendi_sec_dc_2


WASHINGTON (Reuters) - French media group Vivendi Universal (EAUG.PA)(NYSE:V - news) settled fraud charges with U.S. regulators on Tuesday and its former Chief Executive Jean-Marie Messier agreed to forfeit the severance package he had fought for.

There are plans of a merger with General Electric and NBC that has not been approved yet.

http://story.news.yahoo.com/news?tmpl=story&u=/ap/20031219/ap_on_en_tv/eu_nbc_vivendi_2


Under the deal reached in October, NBC will own 80 percent of the new company, while Vivendi the remaining 20 percent. NBC is paying Vivendi $3.8 billion in cash and is assuming $1.7 billion of Vivendi's debt in the deal.

The deal will allow cash-strapped Vivendi to complete its $20 billion asset disposal program by the end of next year and reduce the company's heavy debt load to under $5 billion.

expect to close the deal "as early as possible in the first half of 2004."



Vivendi has a massive $10 billion dollar debt load. Vivendi owns Sci Fi channel and is struggling with liquidity to service this debt load. They are going to be very tempted to use money from Sci Fi to avoid bankruptcy. Bankruptcy will continue to be a risk at least until the GE NBC deal is approved sometime in the first half of 2004.

Vivendi for the time being is Sci Fi's owner. They can do whatever they want to with Sci Fi or it's assests. The French love Jerry Lewis. They can play endless reruns of Jerry Lewis movies if they want to. They can fire Bonnie Hammer or declare her the Queen of outer space and Battlestar Galactica.

Sci Fi's decision probably has a lot more to do with these financial factors than ratings or anything else.

And now this just came in. The situation has been complicated by this news today. I am sure Sci Fi will spend a lot of time making this decision.
http://story.news.yahoo.com/news?tmpl=story&u=/usatoday/20031231/bs_usatoday/nbcvivendimergerhitspossiblesnag
[QUOTE]

NBC, Vivendi merger hits possible snag
Wed Dec 31, 6:30 AM ET

NBC and Vivendi Universal Entertainment's seemingly problem-free merger has hit a snag because internal NBC documents have antitrust enforcers worried about the effect the deal could have on consumers, people familiar with the deal say. [/QUOT

[SpyOne]

Remember, ratings is how a tv channel makes money.

The more people who watch, the more who buy the sponsors' products. The more people who buy the sponsors' products, the more the sponsors will pay for their ad time.

In the end, running a tv channel is a very simple equation: you want to pay as little as possable for shows that will attract as many viewers as possable from the best demographics possable.

Sci-Fi could go to all Jerry Lewis all the time, but if people don't watch that then Vivendi will go bankrupt. Vivendi is not going to push Sci-Fi to not spend money (since nobody wants to buy ad time on dead air), but they are going to push Sci-Fi to spend money only on things that will have a rapid return on investment. Making the original investment plus 1% in 6 months beats making 200% of original investment but no money comes in for at least a year.

So, Vivendi is only interested in buying a BSG series under 2 situations:
1) It won't begin production soon, so that they don't have to pay for it soon. Delay it 6 months and NBC pays the bill.
2) It will be ready immediately and start raking in massive advertising dollars.
Most likely, a mixture of the two. Buy 5 episodes right away and hope that keeps the fans happy for 6-9 months. :)

[slider]

Well, I am sure Sci Fi Channel is looking at all possible options. It is a very unusual time for the entertainment industry. Peter posted this Variety story earlier today at the CA forum.


HOLLYWOOD (Variety) --- Bruised and battered after a fall season from hell, network TV execs are no doubt hoping 2004 will be the year the Big Six bounce back.

Unfortunately, 2003 was less a fluke and more likely a sneak peek at the pain to come for Broadcast Row.

Forget about the temporary influx of ad revenue to come from the 2004 election and, at least for NBC, the Athens Olympics. Given the rebounding national economy, it's even possible the nets could somehow set another record in May, when advertisers shell out upfront coin for the fall.

These rays of light can't mask the fact that webheads are in for a world of woe over the next five to 10 years.

Consider what happened this fall.

As they have for decades, the Big Six shelled out hundreds of millions to produce and market nearly three dozen new primetime series. Some of the biggest names in the business --- Jerry Bruckheimer, David E. Kelley, Dick Wolf, Danny DeVito (news), Darren Star --- were behind the frosh efforts.

Viewer reaction to the parade of new programming? Overall ratings are down roughly 8% among adults 18-49, more than a dozen shows have already been killed, pulled or pushed --- and, perhaps most disturbingly, not a single new scripted series launched since September has emerged as a bona fide breakout hit.

As Fox topper Sandy Grushow bluntly puts it: "Anybody who says or believes that the network television business isn't under siege has their head stuck firmly in the sand."

There will be more changes in the coming years, as cable nets grow more powerful and digital video recorders rewrite the rules of advertising income. Digital broadcast TV will eventually become a reality, giving auds even more choices.

And the networks' woes will eventually trickle down throughout the industry.

With ratings dropping and profits still sketchy at several webs, the money's just not there any more to make pricey overall deals or blind pilot commitments. That has already hit studios and agencies where it matters most: their pocketbooks. The declining international marketplace and weak off-net syndie landscape has also dealt a blow to profit participants.

There's still money to be made in the TV business --- but those Brinks trucks have a little less cash tucked inside.


I won't quote the entire article to save bandwidth but you can read it at:
http://story.news.yahoo.com/news?tmpl=story&u=/variety/20040102/va_ne_al/primetime_pickle_1


An additional quote from the end of the article, I thought was interesting.


"The point is, this is a business that's headed for a perfect storm," one veteran exec said. "You've got PVRs, DVDs, more cable choices and young viewers who don't know the difference between them all. What happens when all of that converges, and there's not the same money in the ad marketplace there is now?
...


The article also points out the new ways to distribute TV shows like immediate release DVDs, broadband downloads, Video on Demand, and paid subscriptions for shows. Perhaps a way could be found to make different versions for both sets of Battlestar Galactica fans.

As far as the merger news, there was a story that GE NBC was considering a merger with Time Warner. This could have caused the FCC to look harder at the NBC acquistion of Vivendi's Universal and the Sci Fi Channel. However there are reports that Time Warner is looking at a merger with MGM studios instead. I would imagine the NBC Vivendi deal will go through the Republican controlled FCC without too many problems. The quicker Vivendi is out of the picture the better. But your cable rates may be going up with all the mega mergers going on.

I am relieved that Sci Fi is taking time to consider all the options. I hope they also consider some of the new technology that could allow real science fiction shows instead of Mad, Mad House and Crossing Over nonsense.

[Darth Marley]

Any thoughts that maybe adverts will blend in with the program like it did in the golden age of television?

[slider]

I would be willing to pay to get rid of the commercials. I don't like watching Sci Fi Channel now because of the unending commercials.

I hope the new technology will allow me to focus where I spend my money. There are only a few basic cable shows I watch. I would rather pay for the stuff I watch and get rid of the shopping channels, food channel, and other junk. The signal to noise ratio on cable and broadcast networks is mostly noise. Advertisers make it worse.

I hope broadband and compression technology develop to the point where I can go to a website, give them my credit card number, and download HDTV versions of my favorite shows. Screw waiting for HDTV antennas and broadcasters, network executive approvals, advertisers, and all the other middlemen. Spend money for the shows you actually enjoy.

I would purchase right now commercial free downloads of Firefly, Farscape, or Battlestar Galactica. My eyes wouldn't glaze over waiting for the commercials to end.

[shiningstar]

I thought that little additional 'quote' was interesting too Slider.

[SpyOne]

I just dug out an old magazine, a Not Of This Earth fromt he early 90's that had a huge article on Battlestar Galactica.

One of the things they talked about was that ratings were not what did Galactica in. It was consistantly in the top 15.
What did it in was the cost to ratings ratio. Sitcoms are cheap and easy to make, but Galactica cost $1 million per episode. While it could turn a profit at that cost, it cost more than every shoe that got better ratings. Why spend $1 million dollars an episode for a 26 market share when Mork and Mindy is getting better ratings at a fraction of the cost?

You know what's cheaper than sitcoms? Reality shows.
I fear commercial programming is doomed.

[shiningstar]

Thank you SPY ONE ......a lot of People are forgetting that
it was the COST of the show and not the ratings that did
BSG in.