Managing Media Companies

The authors of this book have made an in depth study of the strategies and management practices of leading media companies and have identified the core competences media companies need to have to win in the new world. The book is strongly focused on applicability and combines long standing best practice principles with innovative approaches for staying ahead. It systematically discusses competences needed in each of the key functional areas in the media companies drawing on examples from all main media sectors.

Advisory Board xi

About The Authors xii

Preface xiii

Acknowledgements xv

Chapter 1 Introduction 1

Media: One or Many Industries? 1

Current State of the Industry 5

Focus and Scope of the Book 11

Chapter 2 Rebalancing the Media Value Chain 13

Current Practices Mostly Historically Grown 13

Fundamental Changes Still Ahead 20

Consequences for the Management of Media Companies 29

Is a Fundamental Rethink of Future Business Models Needed? 34

Key Takeaways 36

Case Study: The Welt Group: Creating New Business Models For News Provision 38

Case Study: Hubert Burda Media: In Search of New Digital Business Models 57

Case Study: Mediaset: From Focused Broadcaster to Value Chain Operator 69

Chapter 3 Creating and Leveraging Innovative Content 83

Future Role of (Blockbuster) Content 83

Should Content be Redefined? 89

Management of the Content Generation Process 92

Peer Production, User-generated Content and Co-creation 101

Key Takeaways 102

Case Study: Endemol: Diversifying the Content Portfolio 104

Case Study: OhmyNews: Creating a Sustainable Model for Content Co-creation 112

Chapter 4 The Fight for Customer Attention: Intelligent Mass Marketing and Cautious Niche Strategy 121

The Increasing Need to Understand Customers 121

Strategic Brand Management 128

Fine-Tune the Marketing Strategy to Revenue Model 133

Marketing Strategies for Subscription-based Players 136

Marketing Strategy for Niche and Thematic Offerings 141

Key Takeaways 143

Case Study: Canal+: Keeping Consumer Loyality in the Face of Platform Competition 144

Case Study: EMI: Developing New Marketing Models for the Digital Age 156

Case Study: Telenet: Leveraging Digital Segmentation 167

Chapter 5 End-to-end Supply Chain Management 179

Achieving Operational Excellence in Supply Chain Management 179

Enhancing the Effectiveness of Standardized Media Supply Chain Processes 181

Improvement Levers for Non-standardized Processes in the Media Industry 189

Managing the Transition to Digital Platforms 192

Key Takeaways 197

Case Study: RTL Group: Creating a Digital Value Chain 198

Chapter 6 Ways Out of the Advertising Commodity Trap 211

Traditional Advertising Under Increasing Pressure 211

The First Wave of Advertising Spending Shift: Direct Marketing and Below the Line 213

Digital Technology at the Core of the Second Wave 214

Reaching New Capabilities in Advertising 226

Key Takeaways 247

Case Study: Schibsted: Diversifying the Advertising Source 248

Chapter 7 Corporate Strategy in Media 259

Current Media Landscape 259

Future Portfolio Logic 266

Key Takeaways 276

Case Study: Liberty Global: Multichannel Portfolio Play 277

Case Study: Lagardere Active: Restoring Growth Through Operations 284

Case Study: Sanoma Group: Restructuring the Portfolio for Growth 293

Chapter 8 The Future Role of Online Media 303

Online Start 1995--2001: ‘Overestimate in the Short Term’ 303

Period of Consolidation 2002 to 2008: Building the Digital Platform 306

Online Media Business Models 312

Key Takeaways 321

Case Study: Second Life: Peer Production Through Co-creation 322

Case Study: YouTube: Building Social Media 330

Chapter 9 People Management in Media Companies: Creative Managers or Managed Creativity? 339

Current People Management Practices in the Media Industry 339

Current Challenge: Embrace ‘Creators’ Yet Do Not Understate ‘Transformers’ 341

Common Principles of People Management Processes for ‘Creators’ and ‘Transformers’ 342

Management of ‘Transformers’ 345

Management of ‘Creatives’ 346

People Management in the Digital Media Era 356

Outlook and Open Questions 364

Key Takeaways 364

Case Study: BBC: Adapting the Organization to the Digital World 366

Index 375

Annet Aris, Adjunct Professor of Strategy at INSEAD, Fontainebleau, and former partner at McKinsey & Company. Dr Jacques Bughin is a director at McKinsey & Company, and academic Fellow at ECORE as well as at the Katholieke Universiteit Leuven (KUL). Both draw on a long and broad experience of working in, and teaching on, the media industry. Media is an exciting and innovative industry. In its effort to combine business and creativity, the industry has traditionally been faced with unique opportunities, and also challenges, increased by the short-lived nature of its products and services. The media industry is currently being reshaped by the sudden rise of digital technologies and web applications. As such, this second edition of Managing Media Companies has been completely revised with brand new content to reflect those latest developments with clear emphasis on digital transformation.

The authors have made an in depth study of the strategies and management practices of leading media companies and have identified the core competences these companies need to have to win in the new world. This book is strongly focused on applicability and combines long standing best practice principles with innovative approaches for staying ahead. It systematically discusses competences needed in each of the key functional areas in media companies drawing on examples from all main media sectors.

An essential text for students of media management and professionals in the field, this book includes the following key features:

• A discussion of the key challenges faced by media executives taking daily managerial and strategic decisions in an industry undergoing enormous change.
• In-depth discussions of the current and new skills media companies will need.
• Insights into best practices from traditional and new media companies as well as from pioneers of media and telecommunications convergence.
• Brand new and fully updated case studies from a wide range of global media companies, which include Axel Springer, Hubert Burda Media, Gruppo Mediaset, Endemol, OhmyNews, Canal+, Telenet, EMI, The RTL Group, Schibsted, Lagardère, LGI’s Chellomedia, Sanoma, Second Life, Google’s YouTube and the BBC.