Time for Zucker to Man Up

Economists are famous for their two-handed comments, but now media executives are employing the famous hedging technique..

NBC Universal chief Jeff Zucker declared in Davos just two weeks ago:

“It’s clear we are in a recession in the United States, and we’re going to have to manage our business accordingly,” he said...“Sometimes you see the world from a different perspective when you’re flat on your back”.

But in what has either been one of the fastest economic turnarounds in history, or the biggest flip-flop, Zucker's recession talk all but disappeared in a conference call yesterday with SellSide analyst Stephen Tusa. According to a research note issued by J.P Morgan:

No signs of recession yet. Advertising, theme park attendance an new release DVD sales, whic are good leading indicators of NBCU, have not been signaling an economic slowdown. There has been no pullback in ads, with the exception of auto (not a surprise), the theme parks are showing record attendance, and new release DVD's remain strong. While certainly not immune, we believe the business is better positioned today to weather a downturn than it was during the last recession, as <50% of sales are tied to advertising (vs. 85% before the VUE acquisition). In any event, the year should benefit from political campaign dollars and the Olmpics, which is set to begin August 8th.

But the propaganda wars continue, and perhaps CNBC is seeing some signs of distress. As Silicon Alley Insider noted, CNBC's 25-54 target demo seems to have gone AWOL, which has us scratching our heads. But the numbers seem to be in freefall, assuming they are accurate:

CNBC’s advertisers only care about the 25-54 demographic, and in that demo CNBC was down double-digits across the board, which hits the network’s bottom line.

In the meantime, CNBC Jan. 2008 vs Jan. 2007 ratings in 25-54, according to Nielsen:

Squawk On The Street -19%
The Call -23%
Power Lunch -40%
Street Signs -34%
Closing Bell -29%
Fast Money -31%
Mad Money -32%
SAI

It is probably too early to pin this deterioration on CNBC’s new partnership with the New York Times. But the Times has many cooks in its kitchen. Their latest spat with hedge funds, over the direction of their digital media strategy, might prove distracting. How much assistance will they provide to CNBC in countering the blitzkreig from Rupert Murdoch’s combined properties?

Indeed, in the News Corp. earnings release yesterday, the losses from the start up of Fox Business were barely a blip, and the combination of their various business news initiatives should begin provide a boost by this time next year as Murdoch devotes resources to the Wall Street Journal and begins to chip away at CNBC’s dominance in business cable television.

Although the company was able to get the better of Google at the negotiating table, as witnessed by its arrangement with MySpace, the stock of News Corp. is getting about as much respect as the nascent Fox Business Network:

Larry Haverty, a fund manager at Gamco Investors Inc. in Rye, New York, comments on earnings at News Corp., the media company controlled by Rupert Murdoch.

The company reported higher second-quarter profit and raised its annual forecast, citing growth from Fox TV channels and the MySpace Web site.

``They did $1.8 billion in operating cash flow in the quarter,’’ said Haverty, helps manage $30 billion in assets, including almost 15 million News Corp. shares. ``Five years ago they only did $839 million. So this company has grown very rapidly. The stock has gotten really very, very little respect.

``It’s, among media companies, the fastest-growing company in terms of revenue and operating profit,’’ Haverty said in an interview with Bloomberg Radio. ``Most of this has been organic, although Rupert has hurt the multiple by making acquisitions which have turned out to be very strategically effective.

``This company is firing on all cylinders. The Fox entities in film production and cable television and the stations are just doing fabulously. They raised their guidance, they collected $250 million on the Super Bowl.’’

The stock is attractive at around 7.5 times cash flow, he said.

``This looks like a terrific situation here, and clearly the best of the bunch in terms of the large media companies.’’ Bloomberg

A recesssion might be the least of Jeff Zucker’s problems. With Murdoch’s digital business media efforts likely to gel in the year ahead, Zucker and CNBC will soon have the wind in their face.

And if teaming up with Pinch is the best they can manage, even the fair weather bloggers and talking heads who have been in bed with CNBC might begin to jump ship.

This battle will soon begin to unfold on internet time. Is Zucker equal to the task?

CNBC’s Ratings: Not So Rockin’
SAI

News Corp. `Is Firing on All Cylinders,’ Gamco’s Haverty Says
Bloomberg
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Murdoch on Earnings, etc

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The content contained represent the opinions of 1440 Wall Street. This commentary in no way constitutes a solicitation of business or investment advice. It is intended solely for the entertainment of the reader, and the author.

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