Entertainment Industry

Category: IAC\Interactive Corp.

Aereo likely to face fight over its plans to distribute broadcast TV

Barry Diller is betting on Aereo
It's hard to tell who has more to potentially worry about from Aereo -- a new service that enables  consumers to get broadcast TV without a cable -- the broadcasters or the cable industry. 

Aereo is a distribution service launching later this spring that will give people access to broadcast television via smartphones and tablets and Internet-friendly TVs. It does this with a tiny antenna that picks up the over-the-air signals of broadcasters.

Aereo, originally called Bamboom, unveiled plans Tuesday to offer its service in New York City on March 14. The company also announced that it had completed a $20.5-million round of financing led by IAC/InterActiveCorp., the Internet company headed by Chairman Barry Diller. Diller, the architect of the Fox Network, is also joining Aereo's board of directors.

Aereo will charge customers $12 a month. For that, they get an antenna to receive not only broadcast TV signals, but also a digital video recorder in the sky that can store up to 40 hours of shows. Cable channels are not available because their content is transmitted through wires and satellites and not over the public airwaves.

For cable programmers and distributors, any new service that provides people a reason to cut the cord is bad news. Aereo is no doubt banking on people being frustrated with rising cable bills and willing to pay less for broadcast signals, figuring they can eventually catch cable content via Netflix or another streaming service, or on DVD. 

But broadcasters will also be wary of Aereo. Although consumers can get broadcast TV free, most Americans get it through their multichannel video program distributors, such as Time Warner Cable or DirecTV. The networks now charge cable and satellite operators fees to carry their content.

The development of this crucial second revenue stream is what the broadcast networks are counting on to cover rising programming costs -- particularly of sports -- at time when their audience is shrinking.

IAC's Diller, who prior to building the Fox Network for News Corp. was a top executive at ABC and Paramount Pictures, called Aereo a "potentially transformative technology" and "revolutionary product."

The broadcasters and their lawyers are likely working on other phrases to describe Aereo as copyright thieves. The networks protect their signals the way the Colts used to protect Peyton Manning and are expected to launch a legal assault as soon as Aereo goes live.The broadcasters have been successful in the past when it comes to shutting down companies trying to stream their signals.

Aereo is banking on a 2008 decision by the United States Court of Appeals in New York's Second Circuit to thwart any efforts to derail its plans. That ruling cleared the way for the New York-based cable operator Cablevision Systems Corp. to offer its subscribers a remote DVR, as opposed to a DVR built into the cable boxes in their homes. That may solve their cloud DVR plans but perhaps not the reselling of broadcast TV signals.

The broadcasters -- ABC, CBS, NBC and Fox -- declined to officially comment about Aereo. However, one network legal eagle said the Cablevision case won't wash here.

For starters, Cablevision already had negotiated permission to distribute the content to its subscribers, which Aereo has not. Furthermore, this executive noted that Aereo is not just taking its signals out of the air but is rather manipulating the signals to offer them on platforms other than a traditional television set without permission or payment. That, the executive said, may not fly in court.

In writing about Aereo's plans last April, Los Angeles Times editorial writer Jon Healey opined that it is a "lawsuit waiting to happen."

While the lawyers will rake in big fees fighting Aereo, it remains to be seen if there will be a consumer demand for it. If people are so frustrated with cable costs then they can get their own antennas to receive broadcast signals.

The DVR in the sky is a nice add-on. But at $12 a month, that's roughly what one from a cable operator costs. For another $100 or so you can also get tons of channels. As Healy put it, "maybe it's a solution to a problem not many people are eager to solve."

BTIG analyst Rich Greenfield said Aereo could be a game changer in the media industry that could radically alter the economic models of the business. It is "distribution at its finest" Greenfield wrote, before adding, "if Aereo is in fact legal."

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-- Joe Flint

Photo: Barry Diller. Credit: Bloomberg

Irving Azoff consolidates power at Live Nation, assumes chairmanship

Concert behemoth Live Nation Entertainment on Monday said it purchased the remaining 25% of Front Line Management Group that it didn't already own for $116.2 million from Irving Azoff and Madison Square Garden. Founded in 2004, Front Line represents Christina Aguilera, Aerosmith, Jimmy Buffett and numerous other musicians.

Michael Rapino and Irving Azoff In addition, Azoff, chief executive of Front Line, becomes Live Nation's chairman, consolidating his power at the Beverly Hills entertainment giant, which last year merged with the country's largest ticket seller, Ticketmaster, in a deal worth $889 million.

With Front Line fully in the corporate fold, Live Nation is able to manage talent, book concerts, issue tickets and sell artist-related merchandise.

The announcement is the denouement of a corporate power struggle that played out last year between Azoff and Barry Diller, who stepped down as chairman of Live Nation on Jan. 28 after announcing his departure in September.

Diller's departure was largely seen as payback for having crossed John Malone, chairman of Liberty Media, which owns roughly 18% of Live Nation. The two, who were once close business partners, sued each other two years ago in a bitter dispute over control of IAC/InterActiveCorp., which once owned Ticketmaster, the Home Shopping Network and Match.com. Malone and Diller formally parted ways in December, with Diller resigning as CEO of IAC and Malone selling his remaining shares in the company for $360 million.

As part of Monday's announcement, Live Nation said Liberty Media CEO Greg Maffei has joined its board of directors, replacing Malone.

Azoff, 62, assumes control of Live Nation at a time of declining concert attendance as consumers dial down discretionary spending. It sold 10% fewer tickets during the first nine months of 2010 compared with a year earlier, according to the latest figures released by the company. The dip occurred even though Live Nation staged more concerts -- 15,049 events in the first nine months of 2010, compared with 14,933 a year earlier.

Live Nation shares rose 32 cents, or 3%, to $10.80 on Monday.

-- Alex Pham

Photo: Live Nation Chief Executive Michael Rapino, left, and Irving Azoff at a 2009 congressional hearing on the proposed merger between Live Nation and Ticketmaster. Credit: Kevin Wolf / Associated Press.

Former MTV executives Tony DiSanto and Liz Gateley form studio within Ben Silverman's company

There is life after MTV.  

Two longtime executives of the youth-oriented network, Tony DiSanto and Liz Gateley, on Monday unveiled their new venture -- DiGa -- which they described as an independent production studio housed within Ben Silverman's company, Electus, a business unit of Barry Diller's IAC. The firm will be based in New York, but they said they will open a production and editing office in Los Angeles.

DiSanto and Gateley said they plan to develop scripted and unscripted prime-time TV shows to sell to networks and cable channels, including MTV. They already have several projects in development, including a potential comedy series starring the personality Amanda Diva; a fashion series from Jill Martin, author of "Fashion for Dummies," and a few projects from Jackhole Industries, a collaboration of Jimmy Kimmel, Adam Carolla and Daniel Kellison.

"Liz and I are thrilled to partner and form DiGa, the next logical step in our career as we look to expand on the work we did together at MTV as producers and executives," DiSanto said in a statement. "We look forward to creating and developing content in a variety of mediums and for new outlets, while also continuing a great relationship with MTV Networks, our long-time home."

DiGa means "speak" in Spanish and is also a combination of DiSanto's and Gateley's last names. DiSanto started as a production assistant at MTV in 1989 and rose through the ranks, working on some of MTV's most successful programming, including "Total Request Live with Carson Daly," and "Jersey Shore."  He became president of programming in June 2009 and left the network at the end of 2010. Gateley joined MTV in 2003 as a development executive and was deeply involved in the creation of "Laguna Hills," "America's Best Dance Crew," "16 and Pregnant" and "Teen Mom." She also departed the network at the end of last year.

It had been rumored that the pair would go into business with Silverman, the former William Morris agent, producer and NBC programming executive. Silverman's Electus will retain distribution rights to shows that DiGa produces.

-- Meg James 

 

Barry Diller is out, John Malone is in at Live Nation

John Malone John Malone, the chairman of Liberty Media, apparently doesn't get mad. He gets even.

Two years after losing a bitterly fought courtroom battle with his onetime business partner Barry Diller, Malone has succeeded in replacing Diller as chairman of the board of Live Nation Entertainment -- at least for now.

Diller's exit from the post was widely expected after he announced his intent to step down last month. Leslie Cafferty, Diller's spokeswoman, said he would remain on the Live Nation board but would not issue a statement on the matter.

Live Nation, the Beverly Hills concert promoter that in January merged with Diller's Ticketmaster to create a live music conglomerate, on Friday made the announcement that Diller has officially stepped down. Malone, who snagged a spot on the board when he purchased 14% of Live Nation's stock, has been named "interim" chairman.

Sixteen days ago when news of his planned departure from the Live Nation board broke, Diller said there was "no rush" to name a new chairman since, as he added during a tech conference that day in San Francisco, he planned to step down by the end of the year.

Barry Diller Malone is chairman of Liberty Media Corp., which owns or has investments in technology and entertainment companies including QVC, Starz Entertainment and Diller's IAC/InteractiveCorp.

Bad blood simmering between Malone and Diller stems from Diller's plan several years ago to spin off IAC/Interactive's businesses, including Ticketmaster. Malone objected to the breakup plan, arguing that it would dilute his controlling shares in the new companies. Each sued the other, and a judge in 2008 decided in Diller's favor.

An e-mail to Malone's spokeswoman was not immediately returned. 

-- Alex Pham

Top photo: John Malone, chairman of Liberty Media. Credit: Andrew Gombert / EPA. Bottom photo: Barry Diller, CEO of IAC/InterActiveCorp. Credit: Gregory Bull / Associated Press.

Barry Diller sets his sights on brick-and-mortar video game retailers


Barry Diller

Bob Iger has Club Penguin. Sumner Redstone has Rock Band. Barry Diller has ... InstantAction?

Since buying the company in 2007 for tens of millions of dollars, Diller's IAC/InteractiveCorp. has been mum about its plans for the online game platform, called Garage Games. 

Turns out, Diller renamed the company InstantAction and moved it to Las Vegas (though not for reasons you might imagine). In July, he hired Lou Castle, a gaming veteran whose Westwood Studios was acquired by Electronic Arts and who helped EA create and launch Steven Spielberg's game, Boom Blox.

Castle has since worked to broaden the company's ambitions, from publishing independently produced online games to being a launching pad for big, AAA titles for top publishers. To get an idea of Castle's plans, check out our post on the Times' Technology blog.

-- Alex Pham

Photo: Barry Diller, chairman of IAC/InterActiveCorp. Credit: Raul Vasquez / Bloomberg News

Barry Diller and Ben Silverman looking into fitness

Media moguls Barry Diller and Ben Silverman want to get Fit.

DILLERBIKE The two have proposed acquiring a piece of FitTV. They would like to enter into a joint venture with Discovery Communications, which owns the channel, according to one industry source who is knowledgeable about the situation.

None of the companies involved wanted to discuss the talks, which are said to be extremely preliminary.


FitTV is one of Discovery's smallest channels; it was launched in late 2003 and is available in 50 million homes. But the half-pint network has ambitions to tone up, and it bills itself as an interactive channel that "inspires consumers to improve their fitness and well-being -- on their own terms."

Sounds like a good fit for Diller and Silverman, who are looking to bulk up their media holdings. And some would say they like things to be "on their own terms." Discovery, meanwhile, has shown a willingness to enter into joint ventures. It is famously partnering with Oprah Winfrey to launch OWN: The Oprah Winfrey Network early next year on what is currently Discovery Health. It also entered into a joint venture with Hasbro Inc. and the two companies plan to rebrand Discovery Kids as "The Hub" later this year. 

BenSilverman Since he left NBC Universal last summer, Silverman has been gearing up his new company, Electus, which is part of Diller's IAC. And Silverman knows a thing or two about positioning fitness. One of the most successful shows produced by his former company, Reveille, is "The Biggest Loser," which continues to be a heavyweight in the ratings for NBC.  

And once, while Silverman was having lunch at the Burbank eatery Mo's, he sent a hapless waiter back to the kitchen when he attempted to serve Silverman and his party gourmet burgers with buns. Silverman said with disdain: "Do we look like people who eat buns?"

-- Meg James

Upper photo: Barry Diller. Credit: Douglas Pizac / Associated Press

Lower photo: Ben Silverman. Credit: Dan Steinberg/ Associated Press

Barry and Ben in business together again

Mogul Barry Diller, who last week at an industry conference warned that the transition from old media to new media will get "bloody," is betting on Ben Silverman to figure it all out.

Cutting through all the industry speak about platforms, silos, integrated content and 360 degrees that fills the press release announcing their new company, what we basically have is an advertising and marketing agency.

DILLER Silverman, who is ending a stormy two-year run as co-chairman of NBC Entertainment and Universal Media Studios, said in an interview he wants to build "big-time opportunities that transcend any single medium." He added that "More and more of the advertisers need help to get attention" and that he wants to "break down walls" and "connect dots." Silverman has coined his new venture a combination of Warner Bros. and BBDO, the giant ad agency.

In a statement, Diller said the new venture's goal is to "create a truly integrated and truly interactive new media production entity ... that bridges the gap between traditional television and the Internet."

The new entity reunites Silverman with Diller, who was an investor in Silverman's old production company Reveille. His stake was later bought out by NBC Universal for $8.2 million. The as-yet-unnamed company will be a privately held venture that will count Diller's IAC/InterActiveCorp. as an investor. Other investors will be brought in as well, including possibly NBC Universal.

SILVERMAN2 In Silverman, Diller gets a well-connected, globe-trotting entrepreneur with a knack for packaging shows and advertisers, particularly in reality shows such as NBC's "The Biggest Loser" and Bravo's "Blow Out."

He also gets an executive whose personality was never a good fit for corporate life at General Electric Co.'s NBC Universal. Silverman's tenure at the network was more notable for the compelling drama going on in the executive suites than it was for the programming on the air. His brief reign was filled with gossip about missed meetings, a late-night lifestyle and constant fights with agents and producers.

Much of that would have been overlooked if NBC's ratings were better, but the network is still stuck in fourth place in viewers and the key adult demographics that advertisers covet. Silverman wasn't helped by the fact that much of his time as head of NBC Entertainment was marred by labor strife.

"At end of the day, all that matters is results and obviously NBC is not where they want to be," said Peter Tortorici, global CEO of GroupM Entertainment, a unit of the large media buying firm GroupM.

Acknowledging that his style didn't mesh at NBC, Silverman said, "being able to create a culture is probably what I'm best suited to do as opposed to trying to change a culture, which is a lot harder than I thought." He added, "In these senior executive jobs you become a manager a lot more than an idea generator."

-- Joe Flint

Photos: Top left: Barry Diller. Credit: Joe Tabacca/Bloomberg. Bottom right: Ben Silverman. Credit: Mitchell Haaseth/NBC

Diller warns that media's transition to new era will get 'bloody'

IAC/InteractiveCorp CEO Barry Diller predicted that the Internet is headed toward a three-revenue stream business: advertising, subscriptions and transactions.

It won't be a smooth process though. Diller, who was speaking at the Fortune magazine Brainstorm Tech Conference in Pasadena, warned that the years ahead are not going to be easy for producers of content. Diller

"We are transitioning from an old form to a new form and those things are always bloody," he said. Diller added that the Internet is still in its infancy and while the initial approach of media was putting content out there for free, it was with the intent that dollars would follow.

As for his news website, "The Daily Beast," Diller said that the site has "done a very good early job" creating compelling content, adding that the site is "not a hard thing to finance" but "it's going to have to earn its way."

The mogul also flashed some wit during his interview with Fortune's Andy Serwer. Asked about churn on his dating site Match.com, Diller cracked, "what often happens is it doesn't work out."

As for Twitter, which Diller has been downbeat on as a business, he said, "it's a great communications device" that doesn't seem like a "natural" for advertising. His pet peeve with Twitter, he said, is people describing the minutia of their lives.  "People expect you to do something."

As for Facebook, he said, "I don't have any friends."

-- Joe Flint

Photo: Barry Diller earlier this month at Allen & Co.'s media mogul conference in Sun Valley, Idaho/Nati Harnik/AP


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