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No Time For Games – US-FOREX.US

Forex-Publisher — Fri, 14 Aug 2009 23:50:23 +0000

Another month, another hit to an industry that once seemed immune to the financial distress afflicting broad segments of the economy. Sales of video games, both hardware and software, fell 29% in July compared to the same month in 2008, according to research group NPD. That’s the fifth consecutive monthly decline, although a smaller one than June’s 31% drop. Year-to-date that brings industry revenue to 8.2 billion, a 14% decrease in the first seven months of the year. But there’s reason to think the games industry is in for a rebound this fall.One unavoidable factor contributing to the steep decline in revenues this year are the game consoles. Machines like the Nintendo
Wii, the Sony
PlayStation 3 and the Microsoft
Xbox 360 are showing their age and their price. Hardware sales fell 37% in July, to software’s 29%. Some of that drop-off is to be expected: typically, a new generation of consoles will generate strong sales for its first few years before tailing off as more homes already have one in the living room. But the recession is also playing a role here: the three consoles still cost between 250 and 400 while consumers are cutting back on big discretionary purchases this summer. Games, in contrast, cost 40 to 60. .”Hardware sales have slowed considerably to date on nearly every platform,” writes NPD analyst Anita Frazier. The lone exception is the Xbox 360, which is up for the first seven months of the year.Analysts who cover the gaming beat are predicting that the console makers will likely reduce prices this fall to lure bargain-hungry shoppers. That should also benefit the publishers who make the games themselves and plan a slate of blockbuster titles to coincide with the console discounts. Among the releases industry watches are looking forward to are a Beatles version of the popular music game Rock Band, another installment in the action series Halo and another sequel to the war game Call of Duty. All three should be strong sellers.For the record, July’s biggest sellers heavily favored Nintendo, which has consistently surprised analysts with the popularity of its casual and easy-to-learn games. Wii Sports Resort was the month’s top seller with over 500,000 games sold. Nintendo heavily teased the game at this year’s E3 games expo, boasting of the new motion controller that comes with the title and lets players accurately simulate archery and other sports. .Publisher Electronic Arts
scored the second and third sports with NCAA Football 10 for the Xbox and PlayStation. Nintendo took the remainder of the top five with its Wii Fit training program and Mario Kart racing games for the Wii and the mobile console Nintendo DS. The PlayStation 3 garnered only one of the top ten this month as Sony’s high-priced, but high performance, game system continues to lag the competition.

Threes A Crowd For Microsoft – US-FOREX.US

Forex-Publisher — Mon, 10 Aug 2009 16:46:18 +0000

Microsoft is in a friendly mood. A few weeks after striking a 10-year agreement with search engine Yahoo!, the software company has announced a five-year strategic alliance with French advertising agency Publicis, as well as plans to sell its digital ad unit Razorfish to the French company for 530 million. Although there doesn’t seem to be any direct link between the two partnerships, Microsoft may end up uncorking some indirect benefits-and conflicts-as a result of its ties to Yahoo!.As part of the alliance, Microsoft
is granting Publicis favorable rates for search and display advertising in exchange for a minimum allocation of advertising money. Although the companies didn’t say exactly what this minimum figure would be, Datamonitor analyst Adrian Drury estimated that it could be around 170 million annually; he obtained the number by subtracting Publicis’ 530 million purchase price from a reported rival bid of 700 million from Japan’s Dentsu.A Microsoft spokesman would not comment on the estimate but said there were “multiple bids,” which included Dentsu and Publicis. A source close to Publicis
told Forbes that no actual minimum numbers had yet been agreed on, given the need for client flexibility, but Datamonitor’s Drury said he would be “very surprised” if the companies had not hit upon some working figure.An exclusive flow of ad revenues would be pretty good news for Microsoft and Yahoo!
on the surface, as they look for ways to snatch share away from Google
. Their alliance only covers search advertising, rather than the display ads that enthusiastically try to grab Web surfers’ attention across the Internet, but the bulk of Publicis’ minimum spend is likely to go on search. Gartner analyst Andrew Frank says that the proportional market share of search and display is 42% and 30%, respectively, and that the gap has been widening.But Frank adds there could be a potential for conflict between Microsoft and Yahoo! as the Publicis deal seems to contradict the terms of their alliance. The July 29 proposal made Yahoo! the “exclusive” seller of premium search advertising, which involves important clients making big bulk orders, while the Publicis alliance only mentions Microsoft. In other words, it looks like Microsoft is going behind Yahoo!’s back and making a deal with a premium agency.Microsoft’s spokesman countered that the Yahoo! and Microsoft proposal had not yet been approved yet as an official partnership, and that he was “fairly certain” that no deal would have been struck with Publicis if it ran counter to the Yahoo! partnership. A representative for Yahoo! was unavailable for comment.
What about the customers? Will they face having to sell heaps of ads to Microsoft’s “Bing” search engine, which has a 9% share of the market, when they would rather go with Google, which has around 80%? So far it seems that those clients who were consulted had no objection to the partnership, but there’s a lot of uncertainty ahead. It’s not until Publicis goes to each customer with a media plan and pricing that it will be able to get a sign-off-along with a tidy cut for Microsoft.

Pearson Passes The Test – US-FOREX.US

Forex-Publisher — Mon, 27 Jul 2009 13:46:00 +0000

British publisher Pearson is speeding ahead. The publisher of the Financial Times, Penguin Books and school materials in the United States beat market expectations for the first half despite declining newspaper sales and a deteriorating U.S. school publishing market. In upgrading its guidance for earnings per share the company is betting on stronger sales than last year-when it posted a loss-to help make up for the weaker dollar when it translates its profits into British pounds. Shares of Pearson
, which have underperformed the FTSE index by around 6% in the year to date, rose 9.8%, or 59.50 pence , to 665.50 pence on Monday morning in London. Pearson was the leading stock on the FTSE 100 in the first hours of trading.”Market conditions are tough and may stay that way, but we are confident that we will perform well this year and next,” said the company’s chief executive, Marjorie Scardino, adding that the business would benefit from “global growth trends in education.” Yet some are still worried about the outlook for the U.S. school publishing market, as most of Pearson’s sales and profits in the second half of the year derived from its new academic year business. The company admitted that the impact of U.S. economic stimulus measures on its North American education business remained unclear.”Market guidance [for Pearson's U.S. education business] in 2009 is for a slowdown from 2008, however a large rebound is expected in 2010,” Citigroup said in a note on Monday. Pearson’s education business accounts for around 80% of its total sales.Exane BNP Paris told clients: “The uncertainty on spending by California and other states on textbooks leads us to remain cautious on the stock going into the third quarter.” And Alex DeGroote, an analyst with Panmure Gordon in London, was surprised that Pearson was still taking market share in an increasing difficult environment in the U.S.
“State budgets are under pressure as taxes are down in the U.S. and the market for education will remain tough for maybe 12 or 18 months, there is no quick fix for this issue,” DeGroote said. There is still hope that the Obama administration’s strong emphasis on education could benefit Pearson. “Around 6 billion from the U.S. stimulus package will go into books and materials. This will definitely benefit Pearson,” said Lorna Tilbian, an analyst at Numis.Pearson said that despite the weaker U.S. dollar, it was upgrading its 2009 guidance for adjusted EPS of at least 57.7 pence by 3 pence . “This tells the market that Pearson is relatively confident,” DeGroote said. Pearson’s forecast assumes the current rate of 1.64 to sterling prevails in the second half. But analysts admitted it was almost impossible to say whether currency movements would work in the company’s favor.Sales of the Financial Times newspaper represented 14 million pounds , or less than 10% of Pearson’s sales for the first half as traditional print outlets remained under pressure.On Thursday, Citigroup rated Pearson as “medium risk” and had a target price of 800 pence per share.
Thomson Reuters contributed to this article.

Time Warner- US-FOREX.US

Forex-Publisher — Fri, 24 Jul 2009 21:46:05 +0000

Time Warner is hoping the magic of the movies will act as a counterweight to falling advertising revenue.Wall Street expects the company to report second-quarter earnings of 37 cents per share on Wednesday, nearly half of the 72 cents it pulled in a year ago. Since the New Year, Time Warner
‘s stock has remained relatively flat, falling 8.6%. Peers such as Walt Disney
and News Corp.
have risen 17.1% and 8.8%, respectively. CBS
meanwhile, has slipped 4.4%. The company, which recently spun off Time Warner Cable
, is expected to benefit from its big- budget movie productions. Studios like Warner Bros. and Paramount are outperforming expectations, filling the summer season with big-banner blockbusters. Warner Bros.’ Alan Horn has sought safety in big budgets during the economic downturn, opting to spend more per film, yet on fewer films. Warner Bros. angered fans when it decided almost at the last minute to push Harry Potter and the Half-Blood Prince from its original November 2008 opening date to July 15, 2009. The move will likely prove to have been very savvy.

Fears On Pearsons Outlook- US-FOREX.US

Forex-Publisher — Thu, 23 Jul 2009 21:45:56 +0000

British publisher Pearson has so far left competitors eating dust. Pearson’s Financial Times circulation sales have grown steadily and the publisher has gained steady market share in its education business in the U.S. But the picture of a solid business might be very different for the second half of the year, some analysts warned on Thursday, ahead of the company’s first half results next week.
Pearson
‘s sales won’t be particularly meaningful for investors as the firm doesn’t make too much money in the first half of the year but analysts will be scrutinizing its ad sales for its FT business and its U.S. education textbooks business to create a clearer picture for its outlook for the second half.
Citi
Group rated Pearson as “medium risk” on Thursday based on its assessment of the troubles affecting the media industry. Advertising sales throughout the media industry have dropped dramatically as a result of the fall in consumer spending. Citi analysts believe visibility for advertising for the FT will remain low. And some analysts estimate advertisement could drop as much as 20% for the business newspaper and experts said operating profit for the group is expected to fall as a result of advertising revenues drying up.Separately, Pearson’s core business of education publishing has also been performing well but Citi fears that a pressure on pricing of college material, which could require publishers to lower prices on books. “If the impact of these factors is greater than we anticipate, then the stock would likely have difficulty in reaching our target price,” Citi said in a note to investors. The company has a target price of 800 pence per share.Currency pressures are not likely to work in Pearson’s favor either as most of its sales are made in dollars. The company has been benefiting from a strong dollar against the British pound and its revenue would have fallen around 7% had it not been for very positive currency effects. But its current estimates were set when the pound traded at 1.4 against the dollar, the valuation is now nearly 1.7. “The pound fell a long way against the pound and that brought good news for Pearson but that’s not longer the case,” Colin Tennant, an analyst with Nomura International in London. Analysts warned that, given the volatility of the currency markets, it is hard to predict whether these movements would work in favor of the company or not.
Shares of Pearson
, which have underperformed the FTSE index by 6% a year to date, fell 1.1%, or 7.00 pence , to 621.50 pence on Thursday in London.

Gannetts Reckoning – US-FOREX.US

Forex-Publisher — Tue, 14 Jul 2009 22:46:21 +0000

Weak, weak, weak, that’s the outlook for media and advertising company Gannett, says JPMorgan Chase analyst Alexia Quadrani. She has a neutral rating on the stock as Gannett report earnings Wednesday.Though noting that Gannett Co.
is “one of the cheapest stocks in our universe,” Quadrani writes, “we see no positive near-term catalysts for GCI stock.” Quadrani also notes that Gannett has debt coming due and an underfunded pension plan and that it doesn’t look as if the global advertising markets that Gannett relies upon have even bottomed yet.Gannett’s golden digital property is CareerBuilder, a job search engine that loses some of its utility when companies are firing rather than hiring in most industries. As unemployment is expected to continue to climb well into next year and perhaps into 2011, Gannett can’t count on its Internet division to help it pull through.Gannett recently closed down some media properties such as the Detroit Free Press and forced employees to take unpaid furloughs, but, notes Quadrani, “ad revenues are still declining at a rapid pace, resulting in continued pressure on margins.”Quadrani notes that Gannett is the first newspaper company to report earnings. But most of Gannett’s peers have quite different businesses. The New York Times Co.
owns more prestigious papers including The New York Times and The Boston Globe, while News Corporation
has The Wall Street Journal but is also more of a cable and entertainment company than it is a newspaper conglomerate.With the outlook for Gannett’s stock bleak, attention will turn to the company’s debts. Its current liabilities are 1.5 billion against assets of 1.6 billion. Total debt, including long-term debt, is 4.3 billion.

The Beeb Makes A Billion – US-FOREX.US

Forex-Publisher — Tue, 14 Jul 2009 17:46:05 +0000

Here’s a media company making money for a change: BBC Worldwide, the main commercial arm of the public service British Broadcasting Corp., managed for the first time to post sales of more than 1 billion pounds , rising 9.6% from a year earlier, while profits before taxes fell, due to one-off writedowns.
The BBC, which is funded by television license fees paid by the British public, said its commercial arm’s profits fells due to the collapse of retailer Woolworths and the decision by competition authorities to block a video-on-demand venture.
The broadcaster, which also makes money from its own travel publisher, Lonely Planet, said net profit dropped to 40.8 million pounds in the year ended Mar. 31, from 77.6 million pounds in the previous year. Sales from outside Britain rose from 49% to 51% of its total income, while online sales grew from 2.7% of total sales to 4.6%.
BBC Worldwide took a 15-million-pound hit from the loss of its DVD publishing joint venture, 2entertain, with collapsed retailer Woolworths. The decision by regulators to veto Kangaroo, its proposed online video venture with Channel 4 and ITV, cost it another 9.1 million pounds .
But the British media institution said key TV brands, such as Dancing with the Stars, the international TV show based on Britain’s Strictly Come Dancing, had delivered “particularly good returns.” “In spite of volatile conditions and heavy investment in several parts of the business, we remain encouraged by the growth prospects and performance of our core operations and brands around the world,” said John Smith, chief executive of BBC Worldwide.
BBC Worldwide also said that profits took a hit from an increase in investment in its overseas TV channels, Web sites and production capability.
To cope with the drop in profits, the broadcaster said it was banning executive board bonuses indefinitely. The decision also follows public outcry against exorbitant executive pay at the BBC.

Private Equity Moonwalks Back Into Music – US-FOREX.US

Forex-Publisher — Wed, 08 Jul 2009 15:46:20 +0000

In the summer of 2007, private-equity firm Terra Firma bought ailing record label EMI for 4.9 billion, evidently hoping a program of cost-cutting and digital investments would help turn the company around. But Terra Firma ended up writing off nearly half of its investment earlier this year, a sign that even the wizards of private equity would have trouble generating returns in the tough world of recorded music.That hasn’t deterred KKR, one of private equity’s most infamous players, from having a go-and trying something different in the process. Rather than simply buy a record company, KKR announced it would create a joint venture with German media company Bertelsmann to buy and manage music rights. This is a specific segment of the market that will allow the pair to collect some or all of an artist’s or songwriter’s royalties without getting bogged down in record distribution or promotion.”It makes a huge amount of sense,” said Claudio Aspesi, an analyst with Sanford C. Bernstein. “What it does is it bypasses the legacy position of the recorded music businesses, which are all saddled by a contract structure that is highly flawed.”KKR has agreed to put an initial 50 million euros into the joint venture-with an additional 200 million euros to be invested over the next few years-in exchange for 51% of the equity, while the rest belongs to Bertelsmann, which is contributing its own music rights management business for 49%. The unit manages the rights to artists such as Kylie Minogue and Roy Orbison, and in total has about 300 contracts signed with songwriters and other rights holders across Western Europe. One aim of the KKR deal will be to expand into the United States, according to a Bertelsmann representative.Aspesi said that KKR and Bertelsmann would be well-positioned to buy catalogs of rights from myriad distressed sellers in the industry, which could include Terra Firma’s EMI. With traditional music distribution still under pressure and potentially years away from recovery, labels are looking for assets to sell. Meanwhile, those who hold the rights to music stand to reap the benefits of the proliferation of online music stores and content-streaming Web sites.KKR has also wisely decided to leave Bertelsmann management in charge, bowing to the German firm’s experience in the industry. Until last October, Bertelsmann owned 50% of global heavyweight label Sony
BMG, allowing it to cultivate industry relationships and know-how. KKR seems to be trying to avoid Terra Firma’s own experiences, after the buyout company gave the EMI board a thorough clear-out and alienated some artists with its tough, cost-cutting talk.
“The music industry is particularly difficult for outsiders to penetrate,” said Aspesi. “Success is often limited to a long history of personal relationships with artists, managers, lawyers, talent scouts.”