Conglom gets in sync with catalog
NEW YORK — Partners Universal Music and Bertelsmann’s BMG Entertainment, along with AT&T and Matsushita, will roll out a full-blown version of a new venture for digitally downloading music from the Internet by next summer, Seagram CEO Edgar Bronfman Jr. said Monday.
Testing on Project Nigel, which focuses on large-scale, secure music and media distribution online, will start this month.
Bronfman unveiled the initiative before investors Monday at the annual PaineWebber media conference.
He also discussed a new unit, Universal Music Ventures, with sole responsibility for mining and developing Universal’s giant music catalog — the biggest in the world since it merged with Polygram about a year ago — and anticipated about $75 million in music-related technology spending during Seagram’s current fiscal year.
Meanwhile, USA Networks topper Barry Diller said he will announce a cable deal plus a separate broadcast partnership in 60-90 days as USA prepares to launch stations in New York, Los Angeles and Boston next year. They currently air USA’s Home Shopping Network.
Viacom chairman-CEO Sumner Redstone called the hypothetical purchase of station group Chris-Craft one of the best uses of capital for a combined Viacom/CBS aside from a multimillion-dollar stock buyback. He and Bronfman talked of Internet spinoffs in the not-too-distant future.
Rumors circulated Monday that Viacom’s MTV Networks is the front-runner to acquire Spin/Vibe Ventures, a publishing and media group that fits perfectly with the MTV-VH1 demos.
The moguls and other CEOs are spreading their stories to hundreds of Wall Streeters at the weeklong conference. Many of the same faces appeared at a dueling conference only blocks away hosted by Donaldson Lufkin & Jenrette. The DLJ powwow, which featured CBS CEO Mel Karmazin, was closed to press.
Redstone sees the Viacom/CBS merger closing in February or March at the earliest. The combined company will be cash-rich with little debt, but he doesn’t see many transactions on the horizon — save a potential deal with station group Chris-Craft that would create duopolies in several markets. He never mentioned Chris-Craft by name, referring only to articles in the press that the two are talking.
“It sounds like they’re dancing,” one fund manager said.
Redstone aims high
Redstone’s optimistic about Viacom/CBS retaining UPN despite restrictions on owning more than one TV network. “I really don’t see a single public-policy reason why we should not keep UPN,” Redstone told reporters.
The exec said he’s still planning to sell off the rest of Blockbuster, but only if the stock rises into the $20s. It’s stuck at $15, where it’s traded since it went public last summer.
At USA, Diller has all but given up on finding an affordable cable network and spoke mainly of building up one or more channels in partnerships with cable companies. He and chief operating officer Barry Baker said they’re also in talks with a number of possible joint-venture partners for USA’s 16-station broadcasting business, which it has no plans to exit.
Robert Coen, senior VP, director of forecasting at McCann-Erikson, predicted a rosy future for media companies over the next several years.
He anticipated total media spending — local and national — in the U.S. will rise 6.8% this year to $215.2 billion, beating his earlier estimates. He predicts another 8.3% jump in 2000 to $233 billion.
Coen and Zenith Media Worldwide chairman-CEO John Perriss see the Internet capturing close to $2 billion of that media spending in 1999, jumping to $3 billion next year.