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AAB Blog > January 2010

Last month the British Social Attitudes Survey was released prompting some interesting, seemingly contradictory headlines.   Society in the UK, once hugely hung up about sex, is becoming more liberal in its views about gay rights and co-habitation.  While traditional views about welfare claimants and the unemployed has stiffened as has the appetite for further investment in public services.   Thirteen years of New Labour appears to have left a legacy of a society more relaxed in social attitudes but with less sympathy for traditional left causes.  An interesting irony!
 

The survey’s findings are bound to shape the election manifestos of all parties as they position themselves around values of tolerance coupled with a strong sense of fairness.
 

But these insights into society today reveal one depressing fact – fewer people have a sense of duty to vote, just over 50% of the population indicating a widespread prevailing apathy.  And that number falls to just 40% with the under 35s.  Cause for concern?  I think so.
 

The expenses scandal confirmed to many long-held but often foundless views about politicians as large self-serving.  No doubt, the backdrop of that scandal has shaped the thinking of the respondents of this latest survey.   But this survey largely confirms what many of us know from experience; there are many people, often the young, who are completely disengaged politically.
 

And a General Election looms large in which politicians and their parties will slug it out to try and capture popular support.  Unlike many elections before, I sense a distinct lack of interest in this coming campaign.   There’s a general sense of tiredness in the current government and that change is ripe.  But there’s little evidence of a groundswell of support for an incoming Conservative administration, let alone LibDem.  This is all overlaid with a deep suspicion of politicians and a break-down of trust between the electorate and those who are elected.
 

I see the May General Election returning a political party to power but on a seriously reduced public vote and skewed by our first past the post system.  Consequently, the legitimacy of that government will be undermined from Day 1.    It will require a hell of a campaign to win back trust and instil a sense of faith and pride in our democratic institutions from that the very low base.  So I really do mean it when I say, whichever party is elected to office, I really do want to see them succeed.
 

Posted: 28/02/2010 13:28:08 by Global Administrator | with 82 comments


This week we will know whether the shareholders have accepted the offer by Kraft for Cadbury’s.  Rarely are passions raised to the extent we have seen in recent days by a corporate acquisition.   And it’s fair to say, Kraft has not got off to a good start.
 

Take the announcement; it leached out on the very day that the Business Secretary, the publicity-friendly Lord Mandelson, was appearing before a Commons’ select committee maximising both the political commentary and stoking a fervent public debate at the highest levels of government. 
 

Kraft has also appeared to have poorly paved the way for the announcement.  Its offer after grudging offer sent out completely the wrong signals of its regard for the revered Cadbury’s business and brand.   And if it did have an active stakeholder engagement programme accompanying its acquisition strategy, it doesn’t appear to have been very successful.   It just doesn’t look good when one of your biggest stakeholders – Warren Buffet no less – casts scorn over the deal.  
 

As a corporate it’s little understood; it is seen as a big American behemoth that has a track record of buying British confectioners and then closing its manufacturing bases.  It’s associated with being part of the Philip Morris tobacco empire until very recently.  How far away from the Cadbury’s ethos can you get?!
 

And that is at the crux of the public debate at the moment.  There’s a huge sense of affection and loyalty for the Cadbury’s brand and there is deep suspicion of Kraft.  This is an emotional debate which Kraft needs to win.  The commercial dimension of the deal is clearly agreed but for this acquisition to succeed, Kraft has to engage to win over hearts and minds.  How do they do that?
 

First, they need to embrace Cadbury’s brand and promote it.  The attributes of the Cadbury’s brand are powerful, borne out of its Quaker heritage, a legacy of strong societal contribution and positive sentiments attached to eating some great chocolate.  Kraft has a bad habit of buying British confectioners and diluting the brand – take Terry’s of York which subsequently became Terry’s and its UK production closed.  It would be madness if Kraft is as clumsy with the Cadbury’s brand.
 

Second, integrate the two cultures.  Cadbury’s has a very strong culture and it would be wise for Kraft to look carefully at how they can weave that culture in to strengthen the wider organisation.  Commercially, Kraft may be taking over Cadbury’s but it’d be smart if this effectively becomes the cultural takeover of Kraft by Cadbury’s.
 

Third, engage, engage, engage.  Kraft should tap into the highly sophisticated Cadbury’s stakeholder engagement team to get its messages about the acquisition heard.  That communication needs to be frequent, open and, above all, honest about its intention for the medium to long term.
 

It is with a sense of sadness that I watch Cadbury’s being taken over.  My hope is that Kraft is not as arrogant or clumsy with that most cherished brand as it has been with many other great names that it has acquired. But I tend to agree with Martin Wolf. the FT's eminent commentator; he thinks the takeover will be a flop with the only beneficiaries being the shareholders in the very short term. 
 

Posted: 01/02/2010 15:27:27 by Global Administrator | with 68 comments


The wait is over.  Like the plumes of white smoke over the Vatican to announce the arrival of the next pope, ITV has revealed this morning that it’s new CEO will be that broadcasting genius… err Adam Crozier?

Did we all hear correctly?  Adam Crozier risks becoming a CEO-jack of  all trades, and master of none.   Can someone who has held down the top jobs at the Football Association and the Royal Mail effortlessly move into broadcasting?   He’s certainly paving an intriguing career.

But as a candidate, he probably fits the bill well.  He no doubt has a pretty strong understanding of the media landscape having started his executive rise at Saatchis before dealing with the prickly issue of broadcasting rights at the FA.

What he brings to the table fresh from a tough seven years at Royal Mail is a demonstrable ability to take on impossible challenges and give it his best.   He took on the transformation of Royal Mail and has not shied away from tough decisions or at making enemies.  And what we’ve learnt about him is that he is a man who must love risk. 

So, he’s a fighter and he’s probably chomping at the bit to get his teeth in to poor old ITV.   As I’ve blogged before, it’s truly a great brand but ITV is facing the fight of its life and is in desperate need to reinvent itself in the digital media age.  I know the organisation somewhat as I toyed with the idea of taking up a senior management position at ITV four years ago or so.  As appealing as television was as a career move, the issues facing the broadcaster, not least their apparent failure to grasp the changing media landscape, were so daunting I decided to do other things.

And it’s going to take a huge amount of vision and a lot of pluck and courage to transform a much loved institution like ITV into a viable business.  The question is, does he have form at turning around businesses?  Royal Mail has been a mixed story to say the least.  As irony would have it, ITV’s Tonight programme, as recently as November, looked into Adam Crozier’s track record at Royal Mail.  Its main item was, of course, about pay; the show crowed at how Mr Crozier received £995,000 in pay and bonuses in the financial year 2008-2009. In other words a package five times higher than what Gordon Brown earned and puts him leagues above the heads of any other public sector body including Network Rail, the BBC and Olympic Games Organising Committee. 

I suspect it’s not the pay which has lured Mr Crozier to cash-strapped ITV, though.  It’s clearly the challenge.  But has he taken on Mission Impossible?
Posted: 28/01/2010 14:26:16 by Global Administrator | with 1 comments


A quick comment in response to the New York Times decision to switch its website and content over to an entirely pay-to-view basis next year; this is fast becoming my favourite topic.  The NYT announcement is a predictable move and I’ve no doubt that many other media businesses will follow the News International route.

I’ve blogged disproportionately about the changing media landscape and the implications for the media, particularly print, as it re-invents itself in a digital world.   So I am not going to offer any fresh insights that you haven’t already read on my blog. But I have to make one remark about the implications for the economics of media businesses.
 
Tim Luckhurst appeared on Radio 4’s Today this morning commenting on the NYT story. A respected journalist turned academic, Prof Luckhurst talks a lot of sense but I think he was a bit wayward this morning. His argument remains that people want good and precise media and they will pay for it and what’s happening now is a shift in consumer habits and people will adapt to paying on line. In other words, it’s nonsense to claim the demise of the media industry.  
 
The Prof is right that people’s habits will change and we’ll see more preparedness to pay for news content online. I’m sure he’s right on that.  And none of this augurs the end of journalism.
 
But I think he is underestimating considerably the implications for the industry and media economics. To suppose that traditional revenues will be replaced by online pay-to-view is unrealistic.  I think the consequence of the shift of publishing content online is a major shake-up in the media sector and significant consolidation.   Newspapers are going to have to learn to produce double the volume of copy with far fewer resources (ie journalists) because I simply don’t see that they’ll get the same level of revenues from ads nor pay-to-view subscriptions.  I don’t see how the economics are going to stack up especially when very good content will be online and free via (in the UK at least) BBC online.

It goes back to my view that the consumer is very fickle. They may want good journalism, but they’ll look around to see where they can find content free.  
 
Posted: 21/01/2010 12:14:33 by Global Administrator | with 0 comments


A new decade, another expansion of technology and further gloom for the traditional media industry.  2010 kicks off with a major announcement from Apple in the coming weeks when it launches it’s latest gizmo – the iSlate (name to be confirmed).   And from everything I understand about the functionality of Apple’s latest toy, this could well be a gamechanger for the media scene as we know it currently.

What the iSlate is expected to do is provide automatic media updates streamed to your screen.  Newspapers will automatically be downloaded in the morning your i-tablet and media updates continuously loaded.   The last decade provided the functionality to be accessible through manual updates; this decade heralds a significant departure with content streamed continuously to your iSlate.
 
And with that change in the way we access media, comes the biggest challenge for the traditional media sector.  The likes of the FT have been quick to cotton on to this and have already stated that it will no longer be producing hard copy by 2020 – everything will be online.   Other newspaper groups have been less responsive  as they try to work out a coping strategy.  That strategy has to rely on pay-to-view access but what the media indusry has learnt (depressingly) is that in an online environment customers are very fickle about how they chose to access information and news and who they turn to.   The conclusion is that customers will almost always look for free news updates and only prepared to pay when they want specialist information.  How, then, do the likes of the Daily Mail Group or Trinity Mirror respond to that?   News International has said it will be migrating most of its content to a pay-to-view basis but, as I’ve said before, I’m not entirely convinced their strategy is well thought through.
 

Arguably it could be that the iSlate accelerates that transition and drives the notion of pay-to-view. Some commentators are saying that consumers will have to re-learn the practice of paying for what they consume.  Consumers are already doing it for i-Phone applications so is pay-to-view coming of age?
 

Commentators and analysts are expecting the iSlate to be like a blown-up iPhone with a touchable screen, readable text and goshwow graphics capabilities. Coupled with an online digital storefront for magazines and newspapers, this could begin persuading readers to start paying for the privilege of reading news again.

But I’m not convinced.  We’ve seen so far that in a digital world consumers are fickle and are looking for information which is largely free with the exception of some very specialist content.  I don’t see that changing, particularly.  And I really struggle to see consumers choosing to view, say, the Daily Telegraph online for a story, when the same information will largely be easily available and free via BBC online or a variety of any other providers.  That’s the challenge for the media industry.
 

For what it’s worth I think there’s going to be massive consolidation in the media industry and that online there is going to be just a handful of players who will manage the transition well.  You can see those players lining up now – they are Reuters, Bloomberg, and, arguably, the FT i.e. outlets who provide very specialist information (which consumers pay for) and which effectively subsidises other general news gathering operations.

There’s always going to be an appetite for specific content – and may be the likes of The Sun can find a niche in providing sensational stories which folk will pay for.  But, I don’t think people are likely to pay (or if they do, it’ll generate very modest income) for general news.   The logical conclusion has to be that media outlets will slim down newsroom operations quite considerably.  And as for august weekly publications like The Economist, I struggle to see how that news model can operate in a 24 hour digital news cycle.
 

So the Apple iSlate won't be a savior for the media industry or pay-to-view online. It'll be just another device where we get free content and another headache for the print media. 
 

Posted: 16/01/2010 15:06:06 by Global Administrator | with 0 comments


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