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Viacom's plan to reduce ads to boost revenue draws scepticism

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<span class="focusParagraph articleLocation”>Viacom Inc (VIAB.O) is cutting the number of TV advertisements it airs in a bid to boost ratings. But the owner of MTV, Comedy Central and Nickelodeon has drawn scepticism by saying the move will also help it raise ad prices.

A cut in ads would not necessarily improve prices, in part because the media company shows more ads than average in the industry, media buyers and analysts said.

They added that a drop in ads would only put Viacom in line with rivals rather than turn it into a premium, low-ad destination.

By slashing ads Viacom is following some of its leading rivals in an attempt to reverse declining ratings and advertising revenues as ‘cord cutters’ abandon pay television, often for ad-free subscription services like Netflix Inc (NFLX.O).

Domestic advertising revenue at Viacom fell 7 percent in the most recent quarter, the company said on Thursday.

Viacom in October began reducing the number of ads on a number of its networks. In some cases, the ad slots will be filled with short-form programming, promotional spots for other shows or in the cases of original content, longer shows, Jeff Lucas, head of ad sales at Viacom, told Reuters in an interview.

“We expect over time, as the viewing experience improves, that will improve ratings and we do believe there are some pricing opportunities,” Viacom Chief Executive Officer Philippe Dauman told analysts on Thursday’s earnings call.

The New York-based media company said ad rates can rise as it offers fewer ad slots, improves ad targeting with its new Vantage data service, and increases promotional “branded” content through a service called Velocity.

“There has always been demand for our inventory and when we add more value to it, it increases the demand,” Lucas said.

Viacom is not alone in cutting ads. Time Warner Inc (TWX.N) Chief Executive Jeff Bewkes announced last week that its truTV network would cut ads and Twenty-First Century Fox (FOXA.O) has been making similar moves.

Industry analysts and media buyers said it was too early to gauge any effect on prices from the cut in volume, but some were sceptical that Viacom, or any of its competitors, will be able to command a higher price for less inventory unless all networks cut ads. And even then, the price hikes would not necessarily make up for the drop in ad volume.

“If everybody cut their commercials in half, that would have a dramatic impact but it would also result in television bleeding revenues,” said one media buyer, who spoke on condition of anonymity.

In the last quarter, 25.6 percent of Viacom’s viewing time was commercials, up from 24 percent a year ago, according to an analysis of Nielsen data conducted by Pivotal Research analyst Brian Wieser. Industry-wide, ads accounted for 19.5 percent of viewing time, up from 18.8 percent a year ago, he said.

“This makes sense particularly given that they are widely known in the advertising community as having heavy ad loads,” Wieser said.

Reducing ads may increase viewership, but it is not going to help improve advertising revenue, at least in the short-term, said Cowen analyst Doug Creutz.

(Reporting By Jessica Toonkel; Editing by Tom Brown)

Source: R-Entertainment

Sky sees further scope to raise prices in Britain

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Entertainment | Fri Nov 13, 2015 12:16am IST


BARCELONASky Plc SKY.L hopes to achieve higher prices for TV packages in its core British market following years of investments to offer customers more customised bundles and premium content, its chief executive said on Thursday. Sky CEO Jeremy Darroch said neither the rise of low-cost Internet TV competitors such as Netflix (NFLX.O) nor the loss of some football broadcasting rights has dented its capacity to retain customers. Earlier this year, rival BT Group (BT.L) took over the rights from Sky for showing Champions’ League European football matches, which some analysts said could make it harder for Sky to raise prices in the future.

But Sky said it retains dominance in other areas of sport, drama and entertainment. Already, the pay TV broadcaster has made modest price increases in sports and its Sky Atlantic channel.

“I think the opportunity for pricing is good and it is certainly our intention in the UK to do that (raise prices),” Darroch told an audience of fund managers at Morgan Stanley’s annual industry conference.

“We want to do that behind innovation, behind improved service, behind improved content,” he added.

Sky, which now has more than 10 million subscribers in the UK and Ireland, has spent the last seven to eight years moving away from one-size-fits-all pricing, Darroch said.

A decade ago, virtually every Sky pay television subscriber paid for a single bundle of services. Now, customers have an extensive choice which includes basic packages from 6 pounds a month and premium options for 70 pounds a month, Darroch said.

“If we were only a service selling the big bundle today with a very narrow set of services, effectively forcing customers into a one-size-fits-all package, it would be harder,” he said.

Darroch said Sky is enjoying all-time low levels of customer turnover not just in Britain but in Italy and Germany too.

(Editing by Elaine Hardcastle)

Source: R-Entertainment

Dear David: Letters show British PM at odds with own policies

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LONDONIt was a letter like thousands sent to Britain’s local councils each year — an angry resident complaining about cuts to public services.

    But the fact it was Prime Minister David Cameron demanding that his own local council be “more creative” over how to spend a budget hit by austerity measures ordered by his Conservative government has stirred accusations of hypocrisy directed at an expensively educated leader who some say is out of touch.

A newspaper in Oxfordshire, where Cameron and his family have a large stone house in one of its many picturesque villages, revealed the exchange of letters with the county council’s leader, who was taken to task for suggesting cuts to services for children and old people.

    “I was disappointed at the long list of suggestions floated in the briefing note to make significant cuts to frontline services — from elderly day centres, to libraries, to museums,” Cameron wrote to Ian Hudspeth, the Conservative leader of Oxfordshire County Council.

    “The briefing note made no mention of the work that could be done to generate savings in a more creative manner.”

    Hudspeth fought back in a detailed letter in which his message — that the council was struggling to do more with less money — struck at the heart of criticism that a government campaign to reduce spending has gone too far.

    “I cannot accept your description of a drop in funding of 72 million pounds ($109 million) or 37 percent as a slight fall,” Hudspeth wrote to ‘Dear David’ in response to Cameron’s letter dated Sept. 14, according to a copy leaked by the Oxford Mail.

    Hudspeth listed the difficulties in covering the growing cost of social and healthcare cover for children and the elderly with reduced funds from London and an inability to increase local taxes by more than 2 percent.

    Asked for comment, Hudspeth, who backs Cameron’s policy to get rid of Britain’s nearly 100 billion pound annual budget deficit “so that it is not passed on to future generations”, said he did not want to comment on leaked correspondence that wasn’t intended for publication.


“What I can say is that these letters are part of an ongoing discussion with government about how we can protect frontline services while doing our bit in Oxfordshire to tackle the national budget deficit,” he said in a statement.

    A spokesperson for Cameron said: “There is still significant scope for sensible savings across local government to be made.”

“We will be discussing with Oxfordshire how this can be taken forward to help protect frontline services.”

    Cameron’s government, especially his finance minister George Osborne, has championed plans to wipe out Britain’s deficit, a policy which helped spur the Conservatives to a resounding victory over the Labour Party at an election in May.

    Osborne has all but staked his reputation as the front runner to succeed the prime minister on achieving a budget surplus by 2020, and he has promised further cuts.

    But his critics say his pursuit of what some economists say is an unnecessary goal has blinded him to the effects of austerity and he has been forced to backtrack on cuts in benefits for poor families. [nL8N12R11J]

    Both educated at Britain’s elite Oxford university, Cameron and Osborne have often been accused of being out of touch with many of Britain’s 65 million people.

    Cameron’s family has aristocratic roots while Osborne is a multi-millionaire thanks to his family’s wallpaper business.

    “I often ask as to why people who are from wealthy backgrounds decide to sit in government?” asked ‘The Wizard’, a blog contributor to the Oxford Mail website.

    “The answer sure enough, no matter how many people I ask, is always the same. They are there to safeguard their family pile.”

    Other contributors accused the government of not caring about local services because they are not forced to use them.

    For many local governments, deciding where the cuts should fall has become a precarious balancing act, with some feeling they have been handed an unfairly big share of the burden.

(Reporting by Elizabeth Piper; Editing by Giles Elgood)

Source: R-Entertainment

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