Evolving Media: Will Content, Distribution or New...

Evolving Media: Will Content, Distribution or New Platforms Dominate?

Mike Milken Chairman

Milken Institute

Chase Carey Deputy Chairman, President and COO

News Corp.

Charlie Ergen Chairman and Co-founder

Dish Network

Robert Pittman CEO, Clear Channel

Communications

International Phone Call: ~$12/Minute

1957 America

2012 $.01

1975 $10

Cost of a 1-Minute Phone Call from the U.S. to India

Telecommunications cost to business approaches zero.

Computer Storage: $2 million per megabyte

1957 America

IBM System 370/168 in 1976

• 8 megabytes for $8 million

• Cost per megabyte: $1 million

Apple iPad 3

• 64 gigabytes for $699

• Cost per megabyte: $0.01

Blockbuster $4.5 billion

Netflix $0.16 billion

28 Netflix = 1 Blockbuster

Blockbuster vs. Netflix - 2002 Market Value

Blockbuster vs. Netflix Market Value

Netflix $16 billion

7/13/2011

Blockbuster $0

Source: PBS; EW; CNN Money

• Netflix lost $2 billion in value within 8 hours following announcement to split services (Sept. 2011)

• Netflix lost 800,000 subscribers in Q3 ’11, most of them DVD subscribers

Blockbuster vs. Netflix Market Value

Blockbuster vs. Netflix Market Value

Netflix $16 billion

7/13/2011

Blockbuster $0

5/1/2012

Netflix $4.5billion

Growth of Mobile TV Advertising

Multichannel 27.9%

Online 1.8%

Mobile 0.4%

Terrestrial 69.9%

2010 Multichannel

27.9%

Online 1.8%

Mobile 3.6%

Terrestrial 64.8%

2015

Source: Adapted from PricewaterhouseCoopers (2011); Global Entertainment and Media Outlook

• Tape recorder and transistor radio (1950s)

• 5-inch micro TV (1962)

• Trinitron Color TV (1965)

• U-matic video tape system (1969)

• Beta-Max (1975)

• Sony Walkman (1979)

• Compact discs and player (1982)

• Handycam 8mm video camera (1985) (Sony sales and profits triple during the 1980s)

• Sony Play Station (1994)

Akio Morita

Co-founder

S Source: “Historical Review of Sony's Innovations and Future Steps” (Masanori Hachiya/Sloan School of Management)

Sony: Five Decades of Innovation

Apple vs. Sony 1997 Market Value

Sony $34.3 billion

Apple $1.65 billion

21 Apple = 1 Sony

Sony $16 billion

34 Sony = 1 Apple

Date: 5/1/12

Apple $554 billion

Apple vs. Sony 2012 Market Value

“Innovation has nothing to do with how many R&D dollars you have. When Apple came up with the Mac, IBM was spending at least 100 times more on R&D. It's about the people you have [and] how you're led.”

-Steve Jobs

Primetime Viewing Shares Broadcast vs. Cable

80%

60%

40%

20%

87/88 89/90 91/92 93/94 95/96 97/98 99/00 01/02 03/04

National/Local Broadcast TV

Ad-Supported Cable

Source: NHI Quarterly NTAR/CAB Anaylsis of Nielson Galaxy

05/06 07/08 09/10

40.2%

58.1

Steve Ross