Content isn't always king on Wall Street

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The old content-versus-distribution debate resurfaced Monday on Wall Street as Bear Stearns analyst Spencer Wang suggested that the much-discussed "long tail" in today's digital world means that "aggregation and context and not (necessarily) content are king."

Modern technology is making content creation easier for everyone and leads to an increase in the supply of content, Wang said. The long tail theory — made popular by Chris Anderson's recent book — argues that consumer demand moves from big hits to the more esoteric tail end of the spectrum of content offers.

"Our quantitative analysis of the evolution of increased choice in TV suggests that this theory will be true in the broadband world," Wang said in a report. "This increases the value of 'middle men' or packagers of content that can filter out the 'noise' associated with unlimited choice and connect users with content that appeals to their interests."

Traditional content creators might see "slowing growth," even though they "may be able to offset this by rereleasing library content," he said.

Overall, Viacom Inc. seems "best positioned" in this market thanks to its strong exposure to the middle of the entertainment supply chain, followed by Time Warner and the Walt Disney Co., with News Corp. having extra growth potential thanks to MySpace.

Also on Monday, Merrill Lynch analyst Jessica Reif Cohen said at the Reuters Media Summit here that she expects more consolidation in the media industry despite a proliferation of new technologies, with particular deal momentum in the distribution space. Phone companies Verizon Communications and AT&T Inc. could buy satellite TV firms DirecTV Group or EchoStar Communications Corp., which also could combine to boost their strength, she said. "We would expect there'll be consolidation on that side," Reif Cohen said.

Reuters contributed to this report.
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