Innovation

Bob Iger (Disney) Comments on Disney’s New Streaming Services and the unbundling of Cable TV content (short video)

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In this short video, Bob Iger, Chairman and CEO of The Walt Disney Company, discusses Disney’s New Streaming Services and the future of Digital Media and the unbundling of Cable TV content.

Bob Iger has something to say about how Disney is looking ahead at this inevitable future. Disney owns some (most?) of the most valuable entertainment content assets out there and from that perspective, Bob Iger’s comments are invaluable. Disney, which also includes ABC, ESPN, Pixar, and the new Star Wars and Marvel franchises, according to Bib Iger, is well-positioned for the general move towards cable unbundling. However, the major Pay-TV providers business current models around bundling, including Disney, are certainly being disrupted by OTT (digital over the top). As we all know, OTT has been touted as the Holy Grail for the future of TV and video.

Which would prefer? Pay for only the content you consume or overpay for content bundles that include programming that you don’t care about? Sounds like a no-brainer so why not cancel your cable subscription in favor of Netflix, Amazon (Prime) or Hulu? Perhaps ~$10 a month vs. ~$70 a month? According to Tech Crunch “In a simplistic generalization, unbundling would remove the subsidization of pay TV, banishing the requirement for every pay TV subscriber to bear the cost of content that only a portion of the subscriber base actually wants and consumes, e.g., sports content, typically the most expensive channels.”

Watch this short video to hear what Bob Iger has to say about unbundling contnet, the current and future state of the entertainment industry, and what Disney’s position is on all of the above.

“Bob Iger (Disney) Comments on the unbundling of Cable TV content)” is also available on 4thWEB’s Facebook Channel

Net Neutrality

HBO is launching a stand-alone streaming media service in 2015

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4thWEB curated content from The Washington Post
By Cecilia Kang (see full article)

HBO is set to launch a stand-alone online streaming media service in 2015 that will not require a cable or satellite subscription. (Reuters)

HBO will launch a streaming media service in 2015 that doesn’t require consumers to have a cable or satellite subscription, the company said Wednesday, in a move that could roil the television industry and pave the way for vastly more choices for consumers.

With HBO’s announcement, television fans have been given one more reason to drop their expensive cable subscriptions, a growing trend in recent years as viewers have enjoyed more choices online through streaming media services like Netflix, YouTube and Hulu.

Up to now, many households have decided to continue paying for cable since they value live sports on ESPN and wildly popular shows on HBO, such as “Game of Thrones”– all content they can only get through a cable box.

But HBO’s move could change that calculus.

“This is an enormous breakthrough; consumers will be able to get to pick what they want and they will finally have content companies selling directly to them,” said Gene Kimmelman, president public interest group Public Knowledge, which has fought for regulations that would force the unbundling of cable television channels for consumers. “The question is, ‘Who is next’? That’s trickier because this speaks to the power of HBO’s brand to be able to break from the cable bundle.”

HBO chief executive Richard Plepler, who announced the plan in an investor meeting held by parent company Time Warner, did not say how much the streaming media service would cost or what content it would offer exactly. He said starting next year, the service will be available to U.S. subscribers and to consumers in two other countries before expanding to its entire international footprint.

Plepler was careful to describe the streaming media service as complementary to cable, rather than something aimed at busting the industry’s business model. He said HBO is targeting the 10 million homes in the U.S. that have high-speed Internet but don’t subscribe to cable or satellite television already.

“It’s time to remove the barriers to those that want HBO,” Plepler said.

The way things works now, cable firms and HBO have enjoyed a highly profitable and close relationship. HBO charges cable firms hefty fees for the right to carry their programming; cable companies in turn charge consumers additional money–say, $10 or $20 per month–to add HBO to their selection of cable channels. The linchpin of this arrangement: HBO agreeing to offer its content exclusively to cable companies.

But in recent years, HBO has grown impatient with its cable partners, saying many have not done a good job of marketing the premium channel. Plepler said “hundreds of millions of dollars” have been left on the table through untapped distribution rights and poor marketing for new subscribers. And studies show younger viewers — particularly millennials — are choosing online video subscription services over cable TV.

In May, Amazon and HBO announced a deal in which Amazon Prime members could watch a slew of HBO shows, films and miniseries–mostly past seasons of old shows like “The Sopranos.” When asked by an analyst if the plan will hurt HBO’s cable business, Plepler said: “I don’t think this is either or,” adding that 85 percent of Netflix’s users also subscribe to cable or satellite television. He said the HBO online service would be offered in partnership with Internet service providers, who are also their cable partners.

The announcement Wednesday is a striking reversal for parent company Time Warner, whose chief executive Jeff Bewkes in 2010 famously dismissed the threat of Netflix, equating it to “The Albanian army” or a “200-pound chimp.”

But with an online streaming media service, HBO is taking a page directly from Netflix and will soon compete head-to-head with the rival streaming service. HBO has 30 million subscribers in the United States; Netflix has about 37 million.

Netflix has modeled itself after HBO with its mix of exclusive award-winning original shows like “House of Cards” and movies. “We have to become more like HBO before they become like us,” Netflix CEO Reed Hastings said in an interview last summer, referencing a favorite saying of the company’s chief content officer, Ted Sarandos.

With HBO stripped away from the cable bundle, Netflix loses one of its advantages over its rival. The company, which reported Wednesday that it added fewer subscribers than anticipated, saw its shares tank about 25 percent in after-market trading.

As much money as HBO makes from cable companies–the company made $4.9 billion in revenues last year, mostly from fees paid by cable firms–the future of watching television is clearly online. According to a report by Comscore this week, four out of ten online users subscribe to a service like Netflix or Amazon Instant Video.

“I find it hard to believe that HBO is going to offer something that will make [cable companies] angry,” said Deana Myers, an analyst for research firm SNL Kagan. She said the key will be how much the online streaming media service is priced.

streaming media service

The big question is how much HBO charges for the online service. If the company sets the price too low, many consumers will drop their cable subscriptions and eat into the firm’s profits from that business. But set it too high, and viewers used to the roughly $10 per month charged by Netflix and Hulu Plus will balk.

The availability of more online content will provide more choices for consumers. But it won’t necessarily reduce costs. Cobble together HBO, Netflix, MLB.tv and a few more services and being an online-only viewer adds up.

And even though HBO’s announcement weakens the hand of the cable industry, firms like Comcast still enjoy a huge advantage: exclusive live sports.

As a result, consumers like Avi Greenberger won’t stop paying for the monthly streaming media service. The 25-year-old Brooklyn resident subscribes to HBO, sports channels and online services such as Hulu Plus. “I hate double paying for both cable and online services,” Greenberger said. “But with the Rangers on MSG and the Yankees on Yes Network, it’s hard to give up on cable.”

Will there be football and basketball streaming online for people who don’t pay for cable or satellite? Not anytime soon.

This month, ESPN and TNT inked deals to retain rights to show NBA games through the 2024-25 season. And the National Football League and ESPN have a deal to keep “Monday Night Football” on the sports network through 2021.

Innovation

Best-Performing CEOs in the World November 2014

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4thWEB curated content from Harvard Business Review
By Adi Ignatius (see full article)

Leaders for the Long Term

A few years ago I sat down with Starbucks founder Howard Schultz in his Seattle office to discuss the challenges of being a CEO. At one stage I asked whether he felt there was a disconnect between the person he would like to be and the persona he needs to project while running a public company. Serving as a CEO, he said, “has been difficult—and lonely.” Yet he’d found that it was indeed possible to be values-driven while also winning Wall Street’s respect. “But the only ingredient that works in this environment is performance—so we have to perform.”

ceos Schultz has delivered on both fronts. He has become increasingly progressive, speaking out on topics ranging from presidential politics to gay marriage. And though that might make some shareholders cringe (and others applaud), he has resoundingly—and consistently—come through for investors. As a result, Schultz has earned a spot (#54) on our list of the 100 best-performing CEOs in the world. It’s a varied ranking, whose honorees represent 22 nationalities and countless personal values and styles. Another Seattle-based CEO, Amazon founder Jeff Bezos, comes out as #1.

Top 100 The Rankings Best-Performing CEOs in the World November 2014

1 Jeffrey Bezos, Amazon
2 John Martin, Gilead Sciences
3 John Chambers, Cisco Systems
4 David Pyott, Allergan
5 David Simon, Simon Property Group
6 Lars Rebien Sørensen, Novo Nordisk
7 Hugh Grant, Monsanto
8 J. Michael Pearson, Valeant Pharmaceuticals
9 Mark Donegan, Precision Castparts
10 William Doyle, PotashCorp
11 Tadashi Yanai, Fast Retailing
12 David Novak, Yum Brands
13 Michael Wolf, Swedbank
14 Pablo Isla Álvarez de Tejera, Inditex
15 Marc Benioff, Salesforce.com
16 Oscar Gonzalez Rocha, Southern Copper
17 Stephen Wynn, Wynn Resorts
18 James Taiclet Jr., American Tower
19 Elmar Degenhart, Continental
20 George Paz, Express Scripts
21 Tsai Ming-Kai, MediaTek (tie)
21 Paolo Rocca, Tenaris (tie)
23 Reed Hastings, Netflix
24 Ronald Havner Jr., Public Storage
25 Michael Balmuth, Ross Stores
26 Daniel Hajj Aboumrad, América Móvil
27 Debra Cafaro, Ventas
28 James Gallogly, LyondellBasell
29 Christopher Connor, Sherwin-Williams
30 Djalma Bastos de Morais, Cemig
31 Paul Bisaro, Actavis
32 Jon Fredrik Baksaas, Telenor (tie)
32 Renato Alves Vale, CCR (tie)
34 Alexander Cutler, Eaton (tie)
34 Stephen Luczo, Seagate Technology (tie)
36 Gordon Nixon, Royal Bank of Canada
37 Kent Thiry, DaVita
38 H. Lawrence Culp Jr., Danaher
39 Charles Davidson, Noble Energy
40 George Scangos, Biogen Idec
41 Ulf Schneider, Fresenius
42 Dan Dinges, Cabot Oil & Gas
43 Simon Wolfson, Next
44 Michael Ward, CSX
45 Fujio Mitarai, Canon
46 Carlos Alves de Brito, Anheuser-Busch InBev
47 Ed Clark, Toronto-Dominion Bank (tie)
47 Joseph Papa, Perrigo (tie)
49 Philip Pascall, First Quantum
50 John Wren, Omnicom
51 Carol Meyrowitz, TJX
52 Nick Hayek Jr., Swatch
53 John Hammergren, McKesson
54 Howard Schultz, Starbucks (tie)
54 Blake Nordstrom, Nordstrom (tie)
56 Frank Hermance, Ametek
57 Bruce Flatt, Brookfield Asset Management
58 Jeffrey Sprecher, Intercontinental Exchange
59 Wolfgang Reitzle, Linde
60 Robert Iger, Walt Disney
61 Benoît Potier, Air Liquide
62 William Rhodes III, AutoZone
63 Monty Moran, Chipotle Mexican Grill
64 Ajaypal Banga, MasterCard
65 Richard Cousins, Compass Group
66 Terry Lundgren, Macy’s (tie)
66 Benjamin Steinbruch, Companhia Siderúrgica Nacional (tie)
68 Randall Hogan, Pentair
69 Gregory Case, Aon
70 André Desmarais, Power Corporation of Canada (tie)
70 Paul Desmarais Jr., Power Corporation of Canada (tie)
72 Ola Rollén, Hexagon
73 Herbert Hainer, Adidas
74 Lars Rasmussen, Coloplast
75 George Weston, Associated British Foods
76 Mark Parker, Nike
77 David Zaslav, Discovery Communications
78 Ed Heffernan, Alliance Data Systems
79 Peter Rogers, Babcock
80 Gregory Henslee, O’Reilly Automotive
81 Fabrizio Freda, Estée Lauder
82 Scott Saxberg, Crescent Point Energy
83 Tsai Eng-Meng, Want Want China Holdings
84 Eric Wiseman, VF
85 He Guangbei, BOC Hong Kong
86 Gregory Johnson, Franklin Resources (tie)
86 Michael Mussallem, Edwards Lifesciences (tie)
88 Jean-Paul Clozel, Actelion
89 Martin Winterkorn, Volkswagen
90 Kari Henrik Stadigh, Sampo
91 Lars Renström, Alfa Laval
92 Michael Kowalski, Tiffany & Company
93 John Finnegan, Chubb
94 Jacques Aschenbroich, Valeo
95 Jean-Paul Luksic, Antofagasta
96 Edward Matthew Tracy, Sands China
97 Gregory Goodman, Goodman
98 Franck Riboud, Danone
99 Brian Jellison, Roper Industries
100 Willard Oberton, Fastenal

How do you measure a CEO’s worth? We decided to approach the task scientifically, basing the ranking on hard data, not on reputation or anecdote. Specifically, we looked at the increase in total shareholder return and market capitalization.

How We Calculated the Rankings
We also focused on long-term—or at least longish-term—results. Our rankings consider the performance of active CEOs over their entire stints, and we’ve included only those who have been in their jobs for at least two years. (The median term for all the CEOs we studied is seven years.)

The top CEOs have undeniably been effective. The top 50, on average, have delivered total shareholder returns of 1,350% (adjusted for exchange-rate movements) during their time on the job. That translates into an annual return of 26.2%. Adjusting for industry effects, average total shareholder returns for the top 50 are 1,161%, and for country effects, 1,087%.

We acknowledge, of course, that being a good CEO is about far more than just investment performance. Leading a company and creating value depend on many skills that are hard to measure—strategic vision, authenticity, long-term planning. And investors certainly aren’t the only stakeholders that need tending to; the best-run companies connect effectively with customers, employees, and the communities where they operate.

But we want this ranking to be as objective as possible, so we’ve put a premium on what we can measure precisely. Someday, we hope that there will be equally concrete ways to account for “intangibles”—environmental impact, employee satisfaction, customer engagement—so that we can confidently add that data to the formula. Until then we can only supplement this list with parallel data that tries to track some of these “softer” attributes.

Along those lines, we asked the Reputation Institute, a reputation management consultancy, to rank our top 100 CEOs in terms of these other skills—work environment, citizenship, governance, leadership, and so on. The results suggest, I’m afraid, that doing well doesn’t correlate much at this stage with doing good. That said, a few superstars scored high across the board, including Bezos, who, despite Amazon’s well-publicized entanglements with publishers and authors, was #4 on the Reputation Institute list. (Schultz finished in the middle of the pack.)

What else do we know about the CEOs on this list? Most are men—only two women, Debra Cafaro of Ventas and Carol Meyrowitz of TJX, made the top 100—and the median age is 59. (This is similar to what we see in the entire group studied, in which 3% of CEOs were female and the median age was 58.)

Thirteen CEOs are of nationalities that differ from their companies’. (Though it’s still not a global market for CEOs, that figure is more than double what it was in the 2013 version of this ranking.)

And while the top 100 have each experienced their own unique journeys to success, there do seem to be two preferred pathways. Over a quarter of the CEOs have MBAs, and nearly as many had studied engineering.

We also looked at CEO pay, to see how that related to performance. To do so, we worked with Equilar, a company that collects information on compensation, to tally the most recent pay packages for the top 100. These elite CEOs are very well paid, as are most CEOs. But on average the executives on our list receive more of every form of compensation than their peers do.

Disney’s Bob Iger, #60 on our list, is the highest paid among our 100, with a total package of $34.3 million. That doesn’t make him the world’s best-paid CEO. In fact, according to Equilar, 13 CEOs earned more, led by Charif Souki of U.S. gas developer Cheniere Energy, whose 2013 compensation totaled $141.9 million.

So what’s the ultimate takeaway from this ranking? In many ways, Bezos’s place atop the list says it all. Here’s a CEO who has frequently underperformed in the short term while continuing to make big bets on the future. Amazon often reports quarterly losses, even as sales continue to rise. And though the company is subject, like many firms, to dramatic share-price swings, Amazon and Bezos have a long-term track record of delivering shareholder value that is second to none.

Why Engineers Make Great Leaders

Twenty-four of HBR’s 100 best-performing CEOs have undergraduate or graduate degrees in engineering, compared with 29 who have MBAs. (Eight CEOs have both degrees.) At technology or science-based companies, it’s not a big surprise to find an engineer at the helm. But engineers thrive at the top of other kinds of firms, too: Examples include Carlos Alves de Brito of brewing giant Anheuser-Busch InBev, Jeffrey Sprecher of the financial services firm Intercontinental Exchange, and Kari Stadigh of the insurance company Sampo.

What makes an engineering degree useful to people leading a business? “Studying engineering gives someone a practical, pragmatic orientation,” says Nitin Nohria, the dean of Harvard Business School, who holds an undergraduate degree in chemical engineering from the Indian Institute of Technology, Bombay. “Engineering is about what works, and it breeds in you an ethos of building things that work—whether it’s a machine or a structure or an organization. Engineering also teaches you to try to do things efficiently and eloquently, with reliable outcomes, and with a margin of safety. It makes you think about costs versus performance. These are principles that can be deeply important when you think about organizations.”

Executive recruiter James Citrin, after examining the list’s numbers, notes an interesting trend: CEOs who were hired into firms as outsiders were more likely to have an engineering degree than insiders who were promoted into the job. “That connects with my experience,” says Citrin, who leads Spencer Stuart’s North American CEO practice. “When boards are making decisions, and they know it’s riskier going outside, it often gives them comfort if a candidate has studied engineering.” Why? Citrin says engineers excel at “architectural thinking” and logical problem solving. The only downside of an engineering background, Citrin says: It might be a small strike against a candidate who wants to lead a company in a creative field such as fashion or advertising.

How They Stack Up on Pay

One of the downsides of a global CEO ranking is that it’s difficult to offer a comprehensive comparison of these leaders’ pay, because countries require different levels of transparency with executive compensation. With help from the compensation analysis firm Equilar, we compiled pay data on 68 of our top 100 CEOs. (The remaining 32 are based in countries that lack public data on executive pay.)

This is a small segment of this article. To see the full article click here.