Sam Zell Buys............Tribune Or "Content"?
This may be my only post this week because of the holiday and travel. Maybe one more interesting post I have queued up if I can get to a PC later this week.
Sam Zell, the real estate billionaire, just bought the Tribune Company. While the Tribune is recognized as a newspaper company, they own other content franchises as well including television. This at a time when newspaper companies are considered dinosaurs by many including those who work in the industry. Newspaper stocks have been going down for years yet newspapers are still very large money makers. There was a very interesting article at The New York Times online in February about a Norwegian business newspaper that had successfully transformed its business model to include very significant success on the internet. The link to the article is here; While Others Struggle, Norwegian Newspaper Publisher Thrives on the Web. You have to sign up to read the article but doing so is free. It has been over a month since I read the article but as I recall the CEO brought in alot of fresh thinking from nontraditional sources including McKinsey. One must be willing to think outside of the box and newspaper editors and owners have been too rigid in their thinking. McKinsey, IBM, Booz Allen, Accenture, etc are companies who thrive by unleashing creative destruction. They live every day to turn client's business models on their head through transformational change. Newspaper minds aren't exactly experts at doing so or taking calculated risks. Eventually, all successful content providers are going to figure out how to make money on the internet. I can imagine a tremendous amount of opportunity for the New York Times that is not being exploited today. That includes video content and many new ways at exploiting their brand and advertising revenues. I'm not sure why it hasn't happened but it will.
The battle for net supremacy has not even begun. We are still in a stage of extremely crude development and applications. I wrote on here some time ago that the internet comparative to business network and intranet development is by some measures decades behind. And, that future development of the internet could, and likely would, follow some measure of technological development of the corporate world where technology is typically deployed first. In other words, very little of what is considered new technology when rolled to the consumer is new. Streaming content, distance learning, collaboration, social networking and search are five examples of very old technology yet all are just gaining traction on the net. Just a few examples of many.
So, to prematurely declare Google and Apple winners in this marathon race is very foolhardy. Neither own any content and provide low value-added capabilities. At some point, their business models too will require transformation to remain relevant. When content providers respond, the landscape of the net could be very different than what we see today. Google and Apple might be playing defense and find that teaming with content providers is required to survive. This is why I've long argued Google blew it when they hired a lab guy to run the company. It should have been Barry Diller who is one of the most brilliant content minds on earth. Marry that ability with the nerds who founded Google and you have one hell of a formidable force to build a long term business model around content.
Sam Zell's move may simply be an attempt to buy an undervalued asset, ie newspapers, or it may be that he and other investors see the true potential of a mispriced asset, that being content. Some may ask what a real estate developer knows about newspapers. Well, ironically alot. In Zell's world content is extremely analogous to the three keys of real estate success: location, location, location. You own the location and you are nearly guaranteed success. In the future, those who own content will nearly be guaranteed success. What's the difference between content and location? It's the same concept using different terminology. In the long run content will be king.
Sam Zell, the real estate billionaire, just bought the Tribune Company. While the Tribune is recognized as a newspaper company, they own other content franchises as well including television. This at a time when newspaper companies are considered dinosaurs by many including those who work in the industry. Newspaper stocks have been going down for years yet newspapers are still very large money makers. There was a very interesting article at The New York Times online in February about a Norwegian business newspaper that had successfully transformed its business model to include very significant success on the internet. The link to the article is here; While Others Struggle, Norwegian Newspaper Publisher Thrives on the Web. You have to sign up to read the article but doing so is free. It has been over a month since I read the article but as I recall the CEO brought in alot of fresh thinking from nontraditional sources including McKinsey. One must be willing to think outside of the box and newspaper editors and owners have been too rigid in their thinking. McKinsey, IBM, Booz Allen, Accenture, etc are companies who thrive by unleashing creative destruction. They live every day to turn client's business models on their head through transformational change. Newspaper minds aren't exactly experts at doing so or taking calculated risks. Eventually, all successful content providers are going to figure out how to make money on the internet. I can imagine a tremendous amount of opportunity for the New York Times that is not being exploited today. That includes video content and many new ways at exploiting their brand and advertising revenues. I'm not sure why it hasn't happened but it will.
The battle for net supremacy has not even begun. We are still in a stage of extremely crude development and applications. I wrote on here some time ago that the internet comparative to business network and intranet development is by some measures decades behind. And, that future development of the internet could, and likely would, follow some measure of technological development of the corporate world where technology is typically deployed first. In other words, very little of what is considered new technology when rolled to the consumer is new. Streaming content, distance learning, collaboration, social networking and search are five examples of very old technology yet all are just gaining traction on the net. Just a few examples of many.
So, to prematurely declare Google and Apple winners in this marathon race is very foolhardy. Neither own any content and provide low value-added capabilities. At some point, their business models too will require transformation to remain relevant. When content providers respond, the landscape of the net could be very different than what we see today. Google and Apple might be playing defense and find that teaming with content providers is required to survive. This is why I've long argued Google blew it when they hired a lab guy to run the company. It should have been Barry Diller who is one of the most brilliant content minds on earth. Marry that ability with the nerds who founded Google and you have one hell of a formidable force to build a long term business model around content.
Sam Zell's move may simply be an attempt to buy an undervalued asset, ie newspapers, or it may be that he and other investors see the true potential of a mispriced asset, that being content. Some may ask what a real estate developer knows about newspapers. Well, ironically alot. In Zell's world content is extremely analogous to the three keys of real estate success: location, location, location. You own the location and you are nearly guaranteed success. In the future, those who own content will nearly be guaranteed success. What's the difference between content and location? It's the same concept using different terminology. In the long run content will be king.
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