CLASSIC JACK: We Forecast Murdoch Station Sales in 2000

Originally Published: October 3, 2000

In October 2000, Jack Myers Media Business Report took a look ahead. It's almost scary how prescient we were. In light of CBS chief Les Moonves threatening to pull programming if cable operators refuse to pay retransmission fees, Rupert Murdoch announcing the sale of nine TV stations, digital broadcast conversion in 2009, and cable/satellite competition, we're proud of this 2000 look 12 years into the future. Some of the forecasts haven't yet occurred and may not, but directionally, this makes for interesting reading.

A Force To Be Reckoned With: Murdoch-Malone
Originally Published: October 3, 2000

There was an industry earthquake last week. As cataclysmic as the AOL/Time Warner deal may have been, the combination of Liberty Media's John Malone and News Corp.'s Rupert Murdoch will have far greater long-term industry impact.

This is the new force that will serve as a catalyst for change in cable and broadcast, industries that are inert rather than embracing new technologies and reacting to the reality of competition. Those who have invested their futures in a commitment to interactivity, broadband and digital media can now be assured that the power of the force has combined with the dark side for a total victory against the past.

Follow this logic:

1. Malone and Murdoch successfully acquire a controlling interest in DirecTV.
2. Together they bring programming and advanced technology to the satellite TV service, creating consumer values that significantly enhance distribution into U.S. homes.
3. Wireless technology advances, assuring additional cross-platform benefits between satellite and wireless providers.
4. Cable operators feel competitive pressures from satellite, causing them to increase their commitments to digital broadband. Two-way interactivity becomes the significant competitive advantage for cable over satellite.
5. Local broadcasters, led by Fox, develop digital multiplex strategies in tandem with satellite distributors, advancing satellite-based local program distribution into major markets. Satellite technology improves to create back channels and telephone connectivity for two-way interactivity.
6. AOL Time Warner and AT&T/Liberty Media aggressively expand Internet and cable connectivity and invest in original programming featuring interactive elements. (It is strange to see Ted Turner's underwriter in the 1980s and 1990s -- John Malone -- team with Rupert Murdoch, Turner's nemesis. It will be fun to watch the forces of AOL Time Warner and the forces of Murdoch/Malone as they compete and form unholy alliances in the next decade.)
7. Broadcast erosion accelerates as the average number of channels in American homes grows from 62 to 180 in the next five years. Leading broadcasters exert pressure on cable operators to pay retransmission consent fees as current deals expire.
8. Broadcasters are pressured by the government to more aggressively adopt digital technology.
9. Cable markets two-way interactivity and media convergence to enhance commerce-based revenues and compete with a surging satellite and wireless empire.
10. Fox sells its local broadcast outlets and moves all its network and local programming to cable and satellite distribution.
11. Throughout this time (about 12 years), technology empowers viewers to control their viewing experience through personal television (digital video recording devices). Advertisers are forced to adopt new strategies. Networks must restructure traditional concepts of scheduling.
12. Year 2012: Pundits look back and recall the good old days when programs were actually scheduled and viewed at a specific time; when commercials were 30-seconds long and viewers couldn't eliminate them or interact with them; and when the Internet was more an information than an entertainment medium.

They also recall when the average American had a television, VCR, DVD, stereo with CD player, cable set-top box and computer all separated as distinct devices and each with its own remote control (and mouse), compared to a 2012 household with a high definition Internet-friendly television set, one set-top device, a single wireless video controller operating all built-in components, plus a television-compatible computer.