by admin on December 7, 2009
Aol. starts life as a new public company this Wednesday. Not as the once all conquering AOL, but as the newly re-branded, seemingly apologetic Aol. As it departs from the Time Warner stable, I can imagine the TW sentiment is somewhere on the harsh side of “good riddance to bad rubbish”. It would be impossible to calculate the opportunity cost at TW over the past decade by the countless failed attempts at integrations, acquisitions, management shuffles and divisional reorganizations. Even as Aol. stumbles toward its reimagined future, it remains burdened by its legacy, and looks to jettison a third of its workforce – 2500 employees – in the countdown to its IPO.
Back in the post-merger honeymoon period, and just before the crash in March 2000, AOL commanded a market cap of $176 billion US. In 2005, Google acquired a 5% stake for $1 billion, slashing AOL’s valuation to $20 billion – effectively dropping more than $31 billion per year over that 5 year period. In July 2009, AOL bought back Google’s 5% stake for $283 million, taking a further downgrade to peg its valuation at $5.66 billion. In recent weeks, with revelations about the degradation of their Access business (despite accounting for 60% of their EBITDA) and their weak ad revenues, the new Aol. has lowered the IPO mark to a mere $3.2 billion. In 2000, AOL was yes, wildly overvalued and ranked as the number 9 company in the US by market cap in the table below. If it enters the market at $3.2 billion, it will land around number 428 – down over $17 billion per year in that period… a decline that makes GM’s fall look like a slight stumble in comparison.
| Company |
2000 Rank |
Market Cap 03.2000 |
2009 Rank |
Market Cap 03.2009 |
| Microsoft |
1 |
586,196 |
3 |
163,319 |
| GE |
2 |
474,955 |
10 |
106,765 |
| Cisco |
3 |
308,964 |
13 |
97,866 |
| Wal-mart |
4 |
285,152 |
2 |
204,364 |
| Intel |
5 |
277,095 |
19 |
83,596 |
| Exxon |
6 |
265,893 |
1 |
336,524 |
| Lucent |
7 |
237,667 |
- |
- |
| IBM |
8 |
201,014 |
9 |
129,995 |
| AOL |
9 |
176,266 |
~428 |
3,200 |
| Citigroup |
10 |
169,917 |
133 |
13,854 |
(Market Cap in $mm US)
As the new Aol. launches this week, the continued deterioration of its access business as consumers migrate away from dial up is inevitable. AOL has only managed to make money from Access, and has only maintained users through Access, the stickiness and switching challenges of an AOL e-mail address and AIM. Content as a standalone is not a driver for their customers, only on the back of Access. Lose the Access customers, lose the eyeballs for content and the corresponding ad revenue. I’d like to see if, and how Aol. could turn it around at this point, but lacking positive momentum, unique and proprietary IP, the allure of some mystical reality distortion field or viral expansion loop, I suspect Aol. will continue to see a decline in their valuation beyond their December 9th IPO.
by admin on December 4, 2009
Lots of blogging about the lackluster track
record of media mergers in the wake of the official announcement of the Comcast/NBC Universal deal. My POV differs from that of Michael Wolff’s assessment on Newser, although I’ve ordered The Curse Of The Mogul cited in his blog. This is a merger that will work, and will redefine the template of a media merger and the partners that need to come together to make it work.
Let’s look at Comcast. First off, they’re not ditchdiggers like many of their cable company contemporaries. They haven’t spent most of 2009 in Chapter 11, like Charter. Their principles aren’t in jail, like Adelphia’s Rigases. So in their peer group, it’s easy for Comcast to be the shining star. But Comcast has pushed the envelope in services, technology and infrastructure. Their web property comcast.net (Comcast Interactive Media) is ranked number 31 on Alexa – dead even with Hulu – while Time Warner’s rr.com is 59 and ATT’s att.com is 69. Backed by The Platform, Fancast is easily competitive with Hulu for features and content. Comcast has done a commendable job in transforming VERSUS from it’s non-entity status as OLN. Their other cable properties – E! and Style are category leaders. With respect to the distribution businesses, Comcast’s cable service, quality, uptime and their VOIP service is the best in the country. While they’re missing a presence in mobile, Comcast clearly knows how to monetize and manage the pipeline, and create the content to push through it.
On the other side, NBCU is aligning itself with a partner whose core businesses complement their own best-of-breed cable and broadcast properties. Comcast is neither a French water utility (Vivendi) nor an industrial and appliance manufacturer (GE). Comcast’s toolkit gives Jeff Gaspin and Lauren Zalaznick, (the best programmers in broadcast and cable) the ability to tap the audience directly through the distribution channels – something Viacom could never achieve for them, nor NBCU under GE.
Financially, it means that Comcast will not be held hostage in NBCU carriage fee negotiations – giving them some leverage over the HBO, Disney and Viacom teams, and potentially prime channel placement for the NBCU properties. The NBCU channels complement Comcast’s cable holdings, so while there will be an opportunity to create shared resources – in sales and infrastructure – the creative teams will only benefit from having more outlets to repurpose their content. This will allow the JV to generate more cash as a combined entity than each of the separate business are doing currently.
This is not AOL/Time Warner – the Comcast and NBCU cultures are more aligned, the potential is more symbiotic. This isn’t some fantasy ten years out. This is about now… content and distribution, owning them both, being smart and making it work.
by admin on November 11, 2009
This past Saturday, I competed in the Ironman Florida event in Panama City.
It was my second IM distance race (2.4 mile swim, 112 mile bike ride, 26.2 mile run). I managed to set a new PR of 11:00:13 and knocked 20 minutes off my time at an IM distance from October 2008. Overall, I was pleased with my performance in the race, and afterward I can typically see places where I could have shaved off even more time, as the clock is relentless. Plus, you learn during the race – about the course, and about yourself.
My training had been more rigorous than a year ago, when I had competed in a number of shorter distance and 70.3 races leading up to the IM. This year, I took a different tack. No short races, and instead I focused on distance training – building up my running distance to a peak of 180 miles over three weeks in late September/early October, which was a new personal distance record for that period. And I worked on my mental fitness for the perseverance required in the Ironman, I did a long run of 20 miles (just over 80 laps) around a track one Saturday. Add to that, several 100 mile rides on the weekends, and Tuesday/Thursday rides of 30 miles with a 6 mile run off the bike, or a 4 mile run before the ride, then 6 miles after. And more time in the pool – a lot more time in the pool!
So I felt my race prep was solid – I’d had a good taper, had put together an achievable race plan, and the S-Works was tuned and ready, and I’d studied the course, current and weather patterns and prevailing winds. Panama City is a beach resort town, on the Gulf, which meant clear aqua waters, white sand and the inevitable beach attractions – it reminded me of Blackpool, England – with sort of a carnival atmosphere, but it was evident that the recession was hurting their primary industry. In spite of that, the volunteers (supposedly 3500 in total) were the best I’d ever encountered at any structured triathlon or marathon I’ve raced in. They were clearly appreciative of the 2500 athletes and their families and went beyond the call to assist in the pre/post and race support. Any negatives about the event would be the responsibility of the organizers, as we had to wait over 1 1/2 hours to check in at the athlete registration. 
Race morning was cool (by Miami standards) and windy. There were breakers rolling in, and long period swells of about 2 feet in height out in the ocean. I’d tested the water the day before and it was flat and fast, but in open water swims, the conditions are always changeable. The 2500 Age Groupers (including me) took off in a mass start at 7AM Central for the two lap swim. It was immediately obvious it was going to be a tough swim, but after finishing my first lap in 37 minutes, I wasn’t disappointed. The swells picked up and the second loop was slower for most of the competitors – 42 minutes in my case. I threw away some time in T1, (probably 90 seconds) getting into arm warmers – next time I’ll try them under my wet suit. And then it was onto the bike.
I’d ridden the first 10 miles and the return previously, so that cut the “unknowns” down to 90 miles. And I expected that we’d have a headwind for the first 50 miles or so. Panama City is renown for drafting on the bike course. Above all, I want to run a clean race, so I avoid other riders, and pass them quickly when I come up on them. I’m well accustomed to the relentless pedaling and headwinds of Florida riding, where there are few opportunities to coast, and equally few hill climbs. I maintained my target pace of 20.5 mph on the first 50 miles of the ride, where as expected we turned and got a break from the headwinds. While there was still some battling of head and crosswinds on the second half, I was able to maintain a 21+ pace on the return. I found the bike segment to be well officiated, with packs in the penalty tents, serving their time. The cool weather, however, presented somewhat of a paradox. In hot weather training in Miami, you’re forced to take in huge amounts of fluids to offset dehydration on long rides. But at Panama City, I found that I was forcing myself to drink, and was worried about over or under hydrating in the cold. You’re always learning in this sport – especially on race day! My bike split was a 5:24 – a new PR and 6 minutes ahead of my race plan. I had wanted to be off the bike and on the run in 7 hours. I was one minute off.
I started the run strong – between 7.7 and 8.1 mph but cramped at mile 7, when the over-hydration from the bike caught up to me. I walked for a few minutes, while I waited for the race to come back to me, then gradually picked up the pace. I didn’t eat anything other than ice until mile 19, when I saw that the aid stations had oranges. A couple of those and I immediately felt stronger and turned up the pace. All the support stations and volunteers were fantastic, stocked and enthusiastic, and I loved the two-loop run course. My 3:58 run was well off my best (3:16), but decent given the hard ride and swim. As I came around to the finish straight, I saw the timing clock click over from 10:59:59 to 11:00:00 so cutting a sub-11 will have to wait until the next attempt. All I could think of was the places I’d left 14 seconds out on the course and in the transitions. This race was about being passed by people in the first 90 minutes, then spending the next 9 1/2 hours gaining all those positions and more back.
Now, the 2009 race season is wrapped up – I’ll probably do the A1A marathon in February, and a few prep races before the Couer d’Alene Ironman in June. I’ll be in the pool a lot over the winter… and I think I’ll be back in Panama City next year to take back those 14 seconds!