/ By Clive Minchom /
Billionaire Media Mogul Chairman of IAC Corp Barry Diller is In the News Twice this Week. First, his new-media investment vehicle IAC/Interactive Corp has announced that Newsweek is up for sale, after continuing to lose large amounts of money. He bought it in 2010 to merge with his successful internet news property The Daily Beast. Newsweek had been losing circulation for years and despite dropping the print edition entirely, post-acquisition, and turning it into an on-line only property he has been unable to turn it around. It is not clear who might bid for it either as he has made a number of quite unflattering remarks about it himself in recent months – in April remarking: “I don’t have great expectations, ” Mr. Diller told Bloomberg TV at the Milken Global Conference in Beverly Hills, Calif. “I wish I hadn’t bought Newsweek. It was a mistake.” It now transpires its on-line performance had continued to slip badly going from 2.9 unique viewers in January to just 1.9 million in April.
Second, the latest of IAC’s internet ventures to create a buzz is Aereo, a very clever television streaming idea that by-passes the broadcasting and cable companies completely. It takes the free signals out of the air, as any private individual can with a “rabbit ear” antenna, and then streams them to their subscribers’ computer, tablet or smart phone as desired. All for just $12 a month with recording services as well. Because of a clever trick in how it is done, by making antenna farms of thousands of tiny, dime-sized, individual antennas in company-owned warehouses each individual re-braodcast circumvents US copyright laws that prohibit public re-transmission.
Yesterday at the All things Digital 11 Conference Barry Diller was talking about the future of television with Walt Mossberg, together with CNN President Jeff Zucker. Talking about his taking signals off the air for Aereo Diller said “I don’t want to beat up the broadcasters, I want to move things from closed systems to internet systems”. Then referring to lawsuits that have already been filed against him but so far been thrown out by the courts: “Any incumbent wants to guard their wall as aggressively as they can, ” said Diller about the resistance that Aereo has been facing from traditional broadcast. “I’m kind of happy they sued us in a noisy way because it’s helping Aereo get known.”
But, when asked frankly about customers, Diller acknowledged that “we have very few.” Aereo is now set to spread out to 22 cities in the next few months, from its current opening phase in New York, and Diller says “it’s just beginning”…. “If it works, and it gets a reasonable amount…15-20 million homes, we’ll have a billing relationship with them and we’ll be able to generate our own programming, ” said Diller. Original programming has become a major theme, with Amazon, Netflix and Hulu all working their way out from re-broadcasting to bespoke shows. And who knows what Apple may be up to.
Diller says that Aereo isn’t pulling money out of broadcasters’ pockets because a larger audience will equate to more reach for TV advertisers, which is where their revenue comes from. Diller also spoke on the future of media consumption, stating that a la carte programming is the future of consumption. Young people, he says, aren’t interested in subsidizing other content that they aren’t interested in, which is the way that cable is currently set up.
Aereo is badly scaring both the broadcast networks and the cable companies, in particular, so the legal and commercial struggle is now being joined in earnest. So far the US Federal Court of Appeals for the Second Circuit has sided with Aereo and denied an injunction which had been sought against them. Just to make it more byzantine, if you thought it was already complicated enough, a different US Federal Court of Appeals, the Ninth Circuit, has earlier ruled against such services in a similar case brought against a company called Aerokiller.
About Barry Diller
Barry Diller has been on the cutting edge of Hollywood, television and the new forms of electronic media since dropping out of university studies at UCLA at the start of the sixties to go to work in the Mail Room of the William Morris Agency. He moved to ABC, then became CEO and Chairman of Paramount Pictures for ten years from 1974-1984. Under his watch were produced such television hits as Taxi, Cheers and Laverne & Shirley and movies such as Raiders of the Lost Ark, Saturday Night Fever and Grease. Then he spent almost eight years at Fox also as its Chairman and CEO before setting out as an independent investor purchasing a $25 million interest in QVC Shipping network. After selling this he ended up controlling Home Shopping network itself and and has since progressively moved into internet forms of investment as well under his umbrella group IAC/Interactive Corp which includes travel company Expedia of which he is also Chairman, and also the Daily Beast. Apparently Diller was “the highest-paid executive of 2005 fiscal year” according to a report by The New York Times on Thursday, October 26, 2006 with a total compensation package in excess of $295 million. In response to this in an opinion article in the New York Times of Nov 7, 2006, Nicholas D. Kristof awarded him his annual Michael Eisner Award, consisting of a $5 shower curtain, for corporate rapacity and laziness (source Wikipedia).
The bottom line is Barry Diller is a very shrewd investor and a billionaire who, perhaps uniquely, knows his way equally well around Hollywood, the movie industry, television, and the internet. This did not stop him from investing in Newsweek which he now must be profoundly regretting, not just for the money he has lost but for the lack of focus it has entailed within the Daily Beast where for a time they tried to integrate it unsuccessfully.