Mr. Bank: I cover large-cap media, so I cover Disney, News Corp, Viacom. I cover some of the smaller names, like Lions Gate (LGF) and Marvel, and Playboy (PLA) and Martha Stewart (MSO). And I cover satellite radio, I cover Discovery; I cover a broad swath of media and entertainment.
TWST: In general, how does the sector look to you right now?
Mr. Bank: I think the sector is very much in transition. Most prominently, we are seeing a transition in the manner in which content is being distributed. That is resulting in some interesting opportunities from a digital perspective, and some fairly disruptive and probably negative forces on the traditional distribution side for things like home video, and more open-ended questions on how do people ultimately consume their content on a more over-the-top basis? Or do they continue to consume it in the more traditional and up through the cable company, through the cable company manner? It's really all about content. This is an issue of the value of content, and we are seeing them in all different kinds of ways from the media conglomerates. One issue used to be that the network and its affiliates - owned-and-operated affiliates as well its non-owned affiliates - would get carried on cable systems through the desperation of the network saying, "We have really got to get carried here, we need the law on our side to make sure that we are actually carried on cable systems." I think you are seeing the movement to a complete role-reversal, where the broadcast networks are actually saying, "Look, if you want to carry us, you are actually going to have to pay us. If you want the Super Bowl, you're going to have to pay us; if you want ÔDesperate Housewives,' if you want ÔLost,' if you want ÔAmerican Idol' - which is what people are subscribing the cable systems for - you're going to start paying us." I think that's a really interesting evolution that's in process. Lastly, people are getting used to consuming digital content. They are used to consuming analog content digitally for free. So newspaper content online, for example - people are used to going to the Web site and not having to pay to pick up a print copy of a newspaper and get it for free. And I think Rupert Murdoch is trying to usher in a new age of better monetizing content, something he has successfully done with The Wall Street Journal. So there are other examples we can point to. I think part of what else is going on in the movie business is we are seeing probably bigger movies, bigger, more risky bets in terms of budgets, more of a swing for the fences. But probably making fewer of them and trying to have, in a sense, a higher probability of success by taking more known franchises, more known quantities, either through actual intellectual property franchises - like something, I think, that would drive the Disney purchase of Marvel - or through known quantities of talent or production capability. So making something like the "Avatar," probably the most expensive movie that's ever been made, are enormous, enormous, enormous, enormous budgets and big bets. So at a time when the studios are actually cutting back output in sheer numbers of films to reduce individual marketing costs and to a certain extent production costs, they are making bigger movies, and that's really interesting.
Tickers included in this excerpt: CBS, CMCSA, CSTR, DIS, DISCA, GE, GOOG, MVL, NFLX, NWSA, VIA
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