Saturday, November 28, 2009

A Tale of Three Newspapers: The LA Times, Wall Street Journal, and Financial Times

The recent, and sad news that LA Times trans-sexual sports reporter Mike Penner aka "Christine Daniels" was found dead at home at the age of 52 cements the transition of the LA Times from popular, metropolitan daily newspaper to a specialized, "Stuff White People Like" (ala the book and blog by Christian Lander) daily appealing to relatively few while having mainstream costs. What is likely to happen is that the LA Times model of high costs but "select" readership will fail, spectacularly, the transformation of the Wall Street Journal become Rupert Murdoch's costly mistake, and the Financial Times remain the model for daily newspapers: tightly focused on premium content subscribers will pay for (because they cannot get it anywhere else).

As a long-time LA Times reader, it was a difficult decision to cancel the subscription. But, the failure of the paper to deliver, well, news, made the decision easier. Gone were mainstream, middle class, middle of the road columnists such as Jim Murray, Jack Smith, and Scott Ostler, dead, retired, or moved on. Gone too was any desire to even approximate news reporting (instead of propaganda and news suppression), with story after story being broken by local bloggers such as Luke Ford (LA Mayor Tony Villaraigosa's affair with a Telemundo reporter covering him) or Mayor Sam's Sister City (the various goings on in LA council districts). But the deciding factor was the sports page.

Penner's story, and the paper's promotion of it, became a freak-show instead of a refuge from daily life. Sports are supposed to be about entertainment, rather than the Oprah-Jerry Springer circus that infest daytime TV talk shows. With the LA Times being unable to fathom the tradition, customs, and respect of the sports world, the transition was complete. Into a new, politically correct paper that won the approval of gay and women's groups, but left male sports readers cold. Sure Jim Murray could write about Howard Jones (the USC football coach not the 80's pop singer), or Ben Hogan, or Red Sanders, long-dead but not forgotten sportsmen who shaped the modern sports world (but were politically incorrect, being dead straight White males). Though long-dead, they formed the tradition of sports which being mostly a male section of the paper, was important. But the paper had other things on its mind, most principally being a politically correct, three ring circus (frankly, exploiting Penner/Daniels), guaranteed to win the plaudits of people who did not read the paper anyway, and alienate the White middle of the road, middle class that did.

The LAT is planning another 40 layoffs according to Deadline Hollywood Daily's Nikki Finke. The Washington Post will close it's LA bureau entirely by Dec. 31st. The problem is that there is not enough "Stuff White Like" to make a daily newspaper profitable. Particularly when the paper refuses to cover notable stories and retains a high cost structure. Daily Kos and the Huffington Post probably don't make money, but they probably don't lose much either and their backers make their political statements on the cheap. Much of their contributions come in for free, and their only real cost is likely server space and bandwidth charges at their hosting company.

The LA Times is sitting (according to Mayor Sam's Sister City) on the brewing scandal with Mark Ridley-Thomas, with ties to SEIU and perhaps, ACORN (if it is true he is being questioned by Federal Prosecutors). The LA Times has not covered the ACORN story, other than to take at face value the ridiculous claims (proved false by Breitbart's release of damning video) that the duo of James O'Keefe and Hannah Giles (posing as pimp and prostitute) were turned away from LA ACORN offices (they were not, with the spokeswoman herself offering to help with the importation of child prostitutes). The LA Times has still not released the tape of Barack Obama and Michelle Obama attending the Rashid Khalidi going-away banquet (their conduct must therefore be truly appalling). There has been little coverage of the dramatic fall in LA Port traffic, or the business flight from LA under Mayor Tony Villaraigosa's "progressive" agenda. It is no wonder then, that the paper is bankruptcy proceedings (and has consistently failed to make money for years, even before parent Tribune Company's highly leveraged purchase).

The lesson is simple. There just aren't enough SWPL in the LA Basin to make the LA Times profitable, and the reporters and editors are incapable of producing anything approaching a mainstream, middle class appealing newspaper.

The Wall Street Journal, purchased by Rupert Murdoch in 2007, is likely to also fail. For much the same reasons. Murdoch, has long been rumored to be a potential buyer for the New York Times though some predict he will instead buy the New York Daily News. The New York Times, as the "nation's newspaper" (the standard setter for all other newspapers even if the broad public does not read it outside New York), has served as a (failing) model for most other newspapers, and Murdoch seems intent on making the Wall Street Journal into a national competitor for the Times.

To the detriment, I might add, of the Wall Street Journal's reporting and coverage of events.

This move to compete with the New York Times in it's own SWPL image, is consistent with Murdoch's inevitably failed strategy to de-list itself from Google Search and ally itself with Microsoft. The Wall Street Journal, as part of that strategy, has tried to remake itself in the New York Times image. With many SWPL sections on fashion, "colorful" doings in Third World hell-holes, and movie and entertainment sections that crowd out serious business news. The "lifestyle" sections and other content are clearly aimed at the terminally politically correct crowd that reads the New York Times and is terrified of being caught out in an politically incorrect thought or word. The coverage of Barack Obama by reporters and editors is nearly indistinguishable from the worshipful, rainbows and unicorns from his ass, tone found in other newspapers. Mark Morford's column from the San Francisco Chronicle about Obama being a "lightworker" and "spiritually enlightened being" would not be out of place in many articles about Obama in the Wall Street Journal. To be fair, the editorial page is still mostly conservative (though appalling on immigration). But the daily tone and content of the Wall Street Journal's reporting crowds out the otherwise excellent business news for fluff and Politically Correct Dogma.

One of the worst offenders is Joe Morgenstern. A frequent movie commentator on NPR (which says something right there), Morgenstern is an admirer of Dogma 95 and has devoted both columns and NPR spots touting it. Basically, Dogma 95 (a set of rules drawn up by Lars Von Trier [Dogville, Breaking the Waves] and others) specifies a lot of joy-draining dictates: no artificial lighting, jump cuts, make up for actors, action, stunts, special effects, sound tracks, or anything else that makes films exciting and fun instead of a misery-inducing bore-fest. In other words, SWPL central, for a film devoid of enjoyment but filled with status (that you've seen it and endured it). SCTV famously parodied this sort of Bergman-esque idiocy in "Whispers of the Wolf":


Here is a sample of Morgenstern's latest reviews.

The problem with Murdoch's hope of creating a pay-wall for content (which the New York Times tried and found created a great loss in traffic) is that it is only successful for specialized content a few customers are willing to pay for. Business News, which used to make the Wall Street Journal's core content, is one such specialized content. The Wall Street Journal's daily circulation is now 2.1 million, only recently surpassing USA Today's circulation (the latter losing free copies in hotels and travel spots). This compares to the New York Times circulation of 928,ooo daily. However, the desire to create a mass market newspaper is doomed. Despite gains in circulation, the Wall Street Journal faces the same problem all newspapers face: the people who create it have a huge chasm in terms of attitudes and beliefs from the mass-market. The film "Up" had according to Box Office Mojo, a box office revenue of $293 million. The animated film "Monsters Vs. Aliens" had $198 million in revenue. Both are miles away from the bleak, unhappy "the Road" with it's SWPL status mongering misery. As commentator Bernard Goldberg noted, the media elite looks down up and hates, really, those people who eat at Red Lobster. But most of America, the potential customers for a mass-market, truly "national" newspaper, would think a meal at Red Lobster a fine affair. Rather than the elite's dream, of eating at Thomas Keller's "French Laundry" or Momufuku, which the Wall Street Journal celebrates, appeals only to the terminally status-mongering trendy.

Murdoch could scour the planet, and not find enough reporters and editors who have even a nodding acquaintance with tastes, morals, values, and desires of the average American. Hollywood also has this problem and outside Pixar and Dreamworks Animation, has not been able to consistently make films that people enjoy and pay money for. Murdoch aims to make money. So far, he's been successful with lots of leverage (debt) in risky ventures like the Fox Network, and Satellite TV, most aimed squarely at the middle class. Murdoch accurately senses the gap between the regional dailies, and the "national" newspapers the New York Times and Washington Post, and the desire for most people still to have a newspaper in the morning at breakfast. However, the Wall Street Journal at best can produce a paper with business news and lifestyle features aimed at the business class and those interested in business news (and willing to pay a premium for it). Unlike Fox Network in the mid 1980's, he faces little growth opportunities, because he has no one to execute a mass-market strategy. Worse, his likely successor as CEO, son Lachlan Murdoch, has no ability whatsoever to understand middle class life. While Murdoch was well-off, his upbringing in traditional Australia in the 1930's and 1940's giving him an entirely different perspective than his son raised from birth in celebrity and massive, modern wealth.

Which leads to the Financial Times. With a of only 432,000 internationally, the paper is much smaller in reach, compared to either the Journal or New York Times. However, it focuses mostly on financial news, and to a much greater extent than the Wall Street Journal, on international finance. While editorially the paper is appalling, signing on to every lunatic idea from global warming to the International Criminal Court, the news content is quite good, focused on business reporting. Unlike the Journal, the coverage of US economic policy has been quite critical, though again the editorial positions of the two respective papers are as reversed, mirror images of each other.

With the Financial Times available online as well as in various major US cities, it stands to pick up potential business customers wanting business news and not another copy of the New York Times SWPL manual. Coverage of the purchase by India's Central Bank of 200 tons of gold (equivalent to $6.7 billion), selling dollars to buy gold, has been excellent, as has the coverage of the US Mint's suspension of gold coin sales. Indeed the "gold section" at the Financial Times is better, more specialized coverage than what you will find in the Journal. The Financial Times has also covered the Dubai shock in more depth than the Wall Street Journal.

The FT will never become of course, a mass-market newspaper. But it is likely to sustain itself in moderate profitability in reporting business news. Because its relatively small global readership will still pay a premium for solid, business reporting and analysis.

The Journal is likely to prove an expensive, and given Murdoch's News Corp. deep pockets, slow-motion failure. In aping the failed New York Times, which has lost money consistently for a good many years, Murdoch can make the SWPL elite happy, but not investors. Because despite the media power and considerable wealth the SWPL crowd enjoy, their numbers are slim, and further thinned by the recession.

The LA Times is the most abject failure, and the easiest to see. Quite likely it will soon be an online only "publication" like the Seattle Post-Intelligencer. Competing for the same page views as Daily Kos and the Huffington Post, at much higher costs.

The new "morning newspaper" is sadly, going to be online only. A new venture by someone like Breitbart, or another entreprenuer, who understands middle class values and desires, and meets them with an informative, fun, and news-filled site. America will miss the feel and pleasure of a printed newspaper, but not the SWPL PC enforcers that turned the sad journey of one individual into a public spectacle, and cheapened the relief of the sports pages from the hectoring tone of the PC enforcers.
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Sunday, November 22, 2009

Twilight vs Call of Duty: The Hidden Story

The Twilight New Moon movie has posted $140.7 million for its opening weekend. The response, which was surprising, of tweens, teens, and their moms lining up, many a week in advance, for the movie, generated a lot of press coverage. Finally, the press and feminists celebrated, a movie that generated fangirl response on the lines of Star Wars and Star Trek enthusiasts. The hidden story, of course, is the phenomenal sales, unheralded, of the video game "Call of Duty: Modern Warfare 2." The game posted $310 million in sales its first day, and 4.7 million copies in its first 24 hours. Beating the "Grand Theft Auto IV" record of 3.6 million copies . The five day figures for "Call of Duty: Modern Warfare 2" were $550 million, again beating "Grand Theft Auto IV" which held the mark at $500 million.

The lesson is that while the attention may go to the fangirls, and the expensive legacy media of theatrical movies, the profits go to male-friendly videogames. Among the reasons: there isn't much competition. Moreover, it is likely movies and video-games will continue to diverge, one becoming a female-gay ghetto, and the other being "males only."

The first "Twilight" movie cost according to was $37 million. No current figures are available for the "New Moon" sequel, but the cost likely spiraled to around $60-75 million, given more effects, characters, rising salaries for actors, and so on. Marketing probably added another $30-40 million, making the film's total up-front cost of around $90 to $115 million or so. As Hollywood business writer and author of the "Big Picture," Edward Jay Epstein estimates, Studios net only about 18% or so of their revenues from theatrical / box office receipts. Fully 82% of revenue comes from Video on Demand, DVD, Pay-TV, and free TV rights (foreign and domestic). Further, studios only get 75% for the first weekend box office receipts, falling to about 50% thereafter. For foreign box office sales, percentages can drop even further while costs for dubbing, promotion/marketing, import fees, and so on can mount. It worth noting that piracy threatens both theatrical and DVD revenues. The LA Times notes that some studios have dropped profitable Korean and Spanish-language divisions, due to piracy. Eli Roth famously found that his loathsome "Hostel" movies were on sale on the street in Mexico City for the equivalent of twenty-five cents, American. Good quality pirated copies, too.

Of that $140.7 million that Twilight: New Moon pulled in, the studio will keep $105.5 million or so. That essentially covers its cost up-front and likely assures a tidy profit for the movie, assuming DVD sales track ticket sales and are not impacted by piracy.

Compared with the development costs, which were estimated to be $40-50 million and around $100 million total, the film "Twilight: New Moon" and the video game "Call of Duty: Modern Warfare 2" cost about the same.

But, the video game already pulled in about $310 million, or $210 million of net revenue, compared to a break-even figure for the film, through the first weekend (Fri-Sat-Sun) vs. the first two days (for the game). It is extremely unlikely that the five-day figure for the movie will match $550 million. Even more important, the game is more resistant to piracy than the movie. While pretty much any copy properly written to a DVD will play in most modern DVD players, making piracy technically easier for organized crime pirates, the same is not true for video games which generally have more robust copy protection. The games certainly can be pirated, but the expense generally prevents large-scale organized crime rings from participating, unlike movie DVD piracy. Moreover, online-game play is often a critical component, making purchasing of pirated discs a general non-starter, given that companies can and do require proof-of-purchase to participate in online play. These can be defeated, but again it is costly and most organized pirates do not bother.

Out of these trends several things are likely to emerge. First, that video games are ever-more bifurcated, either hit-driven like "Call of Duty" or cheap, and simple, like many of the IPhone games, which are troubled by piracy or in the case of Android low sales. Because of piracy and low-revenues for the Iphone style games, the barriers to entry into successful game development into "the next level" (profitability beyond a single developer) are likely to be high. Developers can still create simple games widely available (Apple's App Store tends to be better than Google's Android app store or Research in Motion/Blackberry's store) but widely pirated with low price points.

Hard to make enough money to move to the next level in that business. Increasingly, because of the high capital costs required to make a "hit" game, the video game business is resembling Hollywood of the 1920's through the 1940's, only with one big difference: unlike the studios the game companies have few female customers. But clearly, there is an order of magnitude or more, around two to five times as much money, hit film to hit game, available to video game makers. As game companies seek out (inevitably) cheaper labor, their costs will go down for everything but marketing, giving them a tremendous cost-advantage against Hollywood as well as making entertainment that men and boys desire.

Secondly, the success of Twilight and the sequel, are both good and bad for Hollywood. Good, in that they found a way to tap the fan-girl wallets of the folks below waiting in lines (some up to a week) for the premier [Click on images to enlarge]:

Looking at the pictures, a common thread appears for the fans of Twilight. They mostly do not find lots of male attention, let alone that of hunky, semi-gay, Alpha Male "sparkly vampires." They tend to be pre-pubescent, Moms, or overweight. Not all of course, but that accounts for most of them. Of course they want in fantasy what they don't get in real life. The comparison to the Star Wars geeks who lined up for that movie is of course, natural and apt.

For the purposes of fairness, the "Call of Duty: Modern Warfare 2" fans are shown below (fewer photos, because of less media interest).

Not much different, though a few are older. They seem to crave what they do not get in life, action/adventure (from the safe distance of the couch of course). Both the film and the game deliver to their respective audience.

But the danger for Hollywood is that the games can drive them out of business. Unlike the game companies, which can seek cheap programming labor in China or India, Hollywood is "stuck" using expensive actors, special effects, and location shots. The costs for the Call of Duty Franchise will only go down, over time, and sequels. While that of the Twilight series will only go up. Coupled with a tidal wave of predictable "sparkly vampire" bad-boy with superpowers fighting over teen girl projects, movies will become "gay" the way Broadway shows, reading/literature, and pop music (see Adam Lambert) have become. Many of Hollywood's key executives including Disney's Rich Ross are openly gay. While they have a keen eye for female-tween/teen appealing projects, they have failed and predictably will fail to generate much in the way of male-appealing projects. Movie after movie featuring a metrosexual vampire bad-boy that appeals to the fangirls is guaranteed to turn off guys from the theater. In favor of intermittent purchases of expensive video games. Call of Duty is listed at $60 at That works out to about 5 movies, per person, or nearly 3 paired tickets at full prices. Given the pressure the recession has on wallets, sales for video games means less money men have to spend on movies. This is particularly so as movies inevitably, like TV, become a female-gay ghetto.

Hollywood is intent on replaying Detroit's strategy: create a negative view towards your product by much of the potential customer base. Depend on a small portion of the potential customers, on only a few particular profitable models. Create a negative view of your key workers and executives nationwide, and create a high labor cost. Lack any imagination or quality that were hallmarks of your products in the past. Cede key customers to rivals with lower costs and perceived higher quality.

It is likely they will end up the same, bankrupt, bailed out, and still failures.
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Wednesday, November 11, 2009

Gossip Girl's Threesome A Dud and Dollhouse's Cancellation

Monday Night's "Threesome" episode of CW Network's "Gossip Girl" was a dud. Heavily hyped and promoted, the increased viewers only 20%, from 1.95 million viewers to 2.4 million viewers. By contrast, in the same week. NCIS did 20.9 million viewers. [A number of years ago CSI pulled in 22-23 million viewers.] Making NCIS the top-rated scripted show on Television. [American Idol can pull in 35 million viewers during peak showings.] In the same vein, Fox's Dollhouse (the Joss Whedon produced un-Sci-Fi show) has been canceled.

This shows once again, how Hollywood just does not get how quickly the culture has changed, likely permanently. Audiences are voting with remotes and wallets for whatever traditional, entertaining, and uplifting fare there is and ignoring the rest. While "Gossip Girl" did succeed in raising its profile and making a marginal improvement, nearly ten times as many viewers watch the number one scripted show. Moreover, the aging of America implies that there just are not enough potential (White female or male viewers) to make the sort of 1990's "hits" possible, and certainly not the ad revenue from the go-go 1990s (when the internet was still in its infancy).

The US Census Bureau has 2008 Survey Estimates for race/age breakdowns. As you can see from the graph below, there are not that many White tween and young female potential audience members. Gossip Girl gets about 10% of this audience. This is about the level of most network TV, getting between 10-12% of the potential audience (White plus Black viewers, Hispanic/Latino/Mexican viewers preferring Spanish-language TV).

The chart below shows the population estimates for White females ages 10-24 (the target audience for Gossip Girl).

Dollhouse did no better. The ratings for its last outing in October (Dollhouse was pulled for November sweeps) showed about 2.15 million viewers or so. Which given the 25.4 million White males between 15-29 (assuming Dollhouse skews a bit older in the male demo than female) equates to about 8.2% of the male population targeted by Dollhouse. Perhaps even less, if women/girls formed a significant portion of the audience (which is possible, but unlikely given the pseudo-sci-fi themes and lack of romance/relationships in the show, both unattractive to large female audiences). [The graph below, taken from the Census Bureau website 2008 Community Survey shows the make-up of White males ages 15-29]:

"Gossip Girl" of course acts as a loss-leader for CW Network, bringing in attention, hype, buzz, and so on. While not costing that much to make, the cast is of unknowns who don't require much money (tween girls know them, Joe Sixpack could not tell them apart). There are no elaborate sets, or expensive action and stunts. CW can afford "Gossip Girl" while Fox can obviously not afford "Dollhouse." Speculation was that Fox merely wanted to eke out a DVD release on the cheap. Certainly, "Dollhouse" with extensive stunts, some moderately priced actors, and larger expectations has not made the cut.

Moreover, for what it is, "Gossip Girl" is well suited to its audience. Tween and teen girls, plus an assortment of young women, dreaming of a life of riches and privilege and sex and romance in New York City, America's cultural and economic capital. It is "Dallas" without big 1980's hair for girls tired of Hannah Montana. Not to my taste, but well executed for a 15 year old girl dreaming of being a modern day princess.

Even so, the show is at best barely profitable would be my guess, and serves mostly as a way for CW to gain attention.

Dollhouse was not even good Science Fiction television. It posited no great social changes from technology, not the way Star Trek (the original) or Babylon 5 or even "Stargate" did (the series with Richard Dean Anderson). There was no male-oriented action and adventure, merely more "beautiful victims" with Eliza Dushku prancing around in skimpy clothing playing different characters as her character undergoes brainwashing-programming every week. Dushku herself was too weak to overcome the presence by warmth of performance and charisma, and was ill-served by scripts that did not have character consistency. NO positive male characters existed, and much like "Buffy the Vampire Slayer" the roles for men were: abusive victimizer "Alpha," or sort of gay gofer Omega male, or sexless "Beta" male playing a visibly secondary role as far as social status goes.

Fox bet that Joss Whedon plus Eliza Dushku equaled a substantial amount of young male viewers, and lost that bet. In fact, they got around the same amount of viewers "Gossip Girl" had with much higher costs all around. [Fox costs more to operate as a network than CW.] Even with budgets slashed and a clear mandate to grow viewers "or else" Dollhouse writers and producers could come up with nothing that appealed to younger men.

Joss Whedon had a minor (Buffy never had more than 5.4 million viewers) hit in the late 1990's. Mostly by playing the "doomed/forbidden love" angle with teen/tween girls and young women. At no time has he been able to attract a significant male audience, and his thematic repetition of waify, kick-ass women coupled with "asshole" Alpha males who lack any compelling male qualities (friendship, loyalty, leadership, honor, compassion) and embody women's ideas of masculine behavior (strength equals the ability to physically beat/kill others through pure physical superiority) have been proven losers with men: Firefly/Serenity (the series and movie), Dollhouse, and the web-stuff done during the writer's strike (Dr. Horrible starring Neil Patrick Harris, the openly gay star of "How I Met Your Mother.")

Fox's biggest problem has been the inability to draw in men, in any numbers, for any show not named "House" or not an animated comedy ("Family Guy" and "American Dad.") The rest of its lineup is a female-centric reality juggernaut ("American Idol") that few straight men will watch, and Baseball, Football, and also-rans. Fox as a practical matter cannot run "American Idol" over a full season. Its former signature show "24" has lost ratings luster amidst terminal PC and life overtaking it (weak-willed "Wayne Palmer" might as well have been called "Barack Hussein Obama") and tired pc-driven plots repellent to the White majority audience (it is always the White businessman who is the real villain).

That Fox could not see the obvious (Whedon was not the answer, and Dollhouse, where various women are "programmed" into being hookers or waify assassins was a ratings loser and repellent to both men and women) is troubling. It shows that even a fairly successful network has no idea how to reach men with entertainment. That it cannot sniff out disasters in the making when they are obvious, and cannot find producing talent. The team behind "Life," one the most compelling and male-oriented shows in recent history, Rand Ravich and Far Shariat, should be entertaining offers from Fox, CBS, ABC, and various cable networks. So too, "Burn Notice" writer-producer-creator Matt Nix.

While the cancellation of "Dollhouse" is a good thing, with no more tedious, tired, and cliched 1990's attitudes towards women (waify kick-ass "warriors") and men (hunky assholes who sadistically kill/maim and drive women wild with desire, or gay/beta gofers), what is troubling is how the show was green-lighted in the first place. Clearly Fox like the other networks has not left the 1990's yet, and the threat from USA-Network and ultimately, cheap content on the Web, has not sunk in yet. Fox has an enormous overhead to cover, how long a mega-reality hit like "American Idol" and "House" can continue to produce enough revenue in concert with the NFL and Baseball is an open question.

Certainly there are few signs that anyone in network TV is making an effort to draw in men. Which in the era of collapsed ad spending and a terrible economy, is a must for high-cost legacy broadcasters like Fox. Joss Whedon could afford to put Dougie Howser as the star of his "webcast" show because it was never intended to make money and cost almost nothing to create. Fox has found that model does not scale up to broadcasting.
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