Before turning to the fortunes of his own company, Chase Carey, deputy chairman, president & COO of News Corp (NYSE: NWS). offered some thoughts on what a match-up between NBC Universal (NYSE: GE) and Comcast (NSDQ: CMCSA) might mean for the regulatory landscape and the M&A media market in general. In a Q&A with WSJ reporter Shira Ovide (she introduced him saying, “yes, he’s technically my boss”) at the Dow Jones/Nielsen Media & Money conference, Carey said he thought that NBCU would benefit tremendously from Comcast’s wide distribution network as the number one cable operator. But he was particularly intrigued by how the regulatory eyes in Washington DC would look on it. “I don’t think they’ll have to sell any assets, but we are in a different regulatory environment these days,” Carey said. “We’re entering uncharted waters on a range of issues, particularly on net neutrality.”
Does the talks of merger between NBCU and Comcast say anything about the M&A market for media? Carey: “I wouldn’t call it a hot market. But there is a lot of pent up activity, but I don’t think anybody’s bullish about the market right now. Most of the deals are done because of specific, unique issues related to the companies involved, rather than a wider movement.”
Carey also Asked about why broadcast networks can’t survive on advertising alone anymore. “About 40 to 50 percent of America still watches broadcast, but it’s competing against cable, which has a much healthier business model. Having a dual revenue model allows us to compete, in a world that continues to fragment and the notion of event TV is diminishing.”
Taking a page from the previous panel on charging consumers for media, Carey noted that it all starts with having premium content. “Quality journalism has a value and people will pay for it. But it also depends on how you window it and what it costs. Availability and scarcity are part of the moving parts you have to deal with.
Ovide pointed to MySpace’s loss of traffic and asked how to get it back on track. “We’re going to create key content strengths. We don’t want to compete with Facebook and Twitter. We can provide something that is distinguished for people who want a social experience and entertainment experience.” He demurred on offering a time frame, saying he expects to make headway in the next few quarters. “That’s how measure progress — from quarter to quarter. The music area has come the furthest, for example, and is giving us a foundation.”
Carey also doesn’t see much conflict between cable and online. “The richness of the experience provided by cable and satellite is not comparable online. It will take a while. HD added a whole new dimension and adding more experiences that will make it valuable in the home, while integrating the content online, will tie it all together. With Hulu, it will always be a free experience. But I think all these mediums will have to deliver a dual revenue stream.”
SAI: Speaking of online subscriptions, Carey doesn’t think much of the WSJ’s pay wall model. The current pay method lacks consistency because readers can access the site’s articles for free through the Google (NSDQ: GOOG) news index, while coming up against the subscription wall when clicking on item on the WSJ’s site. Upon encountering the pay wall, users can just search the headline in Google news and get what sometimes amounts to a free pass, Carey said. “We don’t want people going though a backdoor, or other channels,” he said, though he didn’t indicate whether the company would be addressing the problem anytime soon.

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