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Panel: Content will drive digital future

Data providers, not gatekeepers, will reign, analysts say

NEW YORK — As the expanding supply of bandwidth turns data access into more of a commodity business, content will once again reign supreme — and soon.

That was the consensus of a panel of veteran media analysts convened to discuss the future of the media business at the PricewaterhouseCoopers Entertainment, Media & Communications Summit, which kicked off in Gotham Tuesday.

Members of the panel observed that distributors of data, including cable systems operators, telecommunications carriers and satellite companies, will relinquish their role as information gatekeepers as their services become harder to distinguish from one another.

By contrast, companies that establish strong identities by producing branded content will generate more demand and more profits, said PaineWebber analyst Christopher Dixon. “You don’t need to control distribution; you only need to have access to it,” he said.

Dixon cited the success of companies such as Viacom and Yahoo, which aggregate content and own famous brands but don’t own major distribution assets, as evidence of that strategy’s efficacy.

But Thomas Wolzien, media analyst at Sanford C. Bernstein & Co., said there are opportunities for distribution companies to capitalize on ownership of both content and the pipes through which it flows.

He cited the example of Philadelphia-based cabler Comcast, which uses its ownership of gamecasts from the Flyers and the 76ers to add value to its cable infrastructure. “By owning content, they are able to slow down the commoditization process,” he said.

That was also one of the main arguments made in favor of the merger between America Online and Time Warner, which owns substantial cable infrastructure, the panel noted.

But PaineWebber’s Dixon said a significant benefit of the pending merger that’s often overlooked is the opportunity for AOL to sign up new subscribers at low cost, thanks to the built-in audience for TW content.

In the wireless communications market, however, the value of content may have been a little overblown, at least for now, the panel agreed.

The idea of transmitting all kinds of data, including video, over the airwaves to a mobile phone or a handheld device is a little too ambitious, noted Donaldson, Lufkin & Jenrette telecom analyst Richard Klugman. At least in the near term, it’s more likely that listening to music via wireless devices will catch on, since it doesn’t require the bandwidth or screen size of video, he said.

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