Online move tough for old media firms

Some sectors still appealing to investors, Abry chief says

For private equity players in the media space it's also tough slogging.

That was the view of the co-founder and president of Abry Partners, a firm that has invested some $20 billion over the last 20 years in companies in the sector.

The most troubled or challenged at the moment? Not hard to figure: radio, newspapers and local TV stations, all of which have seen their advertising plummet and their approaches to digital not yet pay off.

"Papers are migrating online but for very trivial ad dollars; radio has been hard hit by the recession and local stations as well," Royce Yudkoff told the Media and Money conference Friday in New York.

Sub-sectors that are interesting to investors right now, per Yudkoff, are non-advertising-dependent areas like information and data distributors (Moodys, Dunn & Bradstreet, etc.) and the for-profit college textbook biz, which is rapidly and profitably going electronic.

He cited Getty Images as one of the main success stories of a company with deep content that has benefited greatly from digitization. For newspaper publishers, Yudkoff thinks, it'll be five to seven years before things shake out and we see "a smaller, tougher, lower-margin business of fewer players."

Radio is simply misvalued and mis-structured but ultimately will rebound, he thinks.

Local stations, which are particularly hard hit, have to do several things: double up in most markets, develop viable Web sites that have new inventory and are hyper-local, and get their share of retransmission fees for cable carriage.

As for those media companies that are highly leveraged by equity players -- think Univision, Clear Channel, MGM, Nielsen -- Yudkoff said some will play out reasonably well while the most highly leveraged (he didn't specify which) will have a harder time.

Asked by interviewer and Wall Street Journal reporter Peter Lattman what the "new normal" for publishers was, Yudkoff suggested it was very hard "to retrain the consumer to pay for content." But, he added, it was a good thing that journalists can now relate more efficiently and directly with readers online.

As with several other speakers and panelists during the sessions Friday, the accent was on not just how difficult it is to successfully monetize the online experience -- but also to change the habits of old media companies.

"Change doesn't reflect well in profit margins," is how one panelist, Deep Focus CEO Ian Shafer, put it during a session called "The Advertiser's Perspective: Harnessing Social Media."

Nonetheless, most speakers on that panel thought that money would soon start moving dramatically out of traditional media and onto the Web, particularly toward the social-media experience, in the next couple of years.

For Clear Channel exec vp John Partilla it's imperative now to think of the consumer differently -- no longer even with that word: "Now they co-create, they engage, they distribute." Successful branding and promotions have to be more all-involving and authentic experiences, he and others agreed.

"Challenging," in short, was the most-used word in all the conference sessions.

Now in its third year, Media and Money is co-sponsored by THR parent the Nielsen Co. and by Dow Jones.
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