Digital media exec-odus underway

Have Canadian broadcasters lost their enthusiasm for digital? Senior execs in charge of digital media at the major broadcasters are leaving faster than you can say 'convergence.'

CHUM’s VP of content business management Maria Hale? Out, now at Telus. CTV’s VP of digital media Kris Faibish? Gone. Arturo Duran, CanWest MediaWorks prez of digital innovation and ventures? Bye-Bye. Corus Entertainment’s VP and GM of interactive TV Lucie Lalumière? Sayonara. Alliance Atlantis SVP digital media Claude Galipeau? Ciao, baby. And this is all within the last couple of months.

So what’s going on here? If digital media departments are losing their heads, what does that say for the remainder of the departments, or the priorities at HQ? Have Canadian broadcasters lost their enthusiasm for digital?

The short answer is yes – but not really. A lot of it is about timing. What you’re seeing first up is the broadcasters robbing Peter to pay Paul. As we all know by now, CTV and Rogers Media recently took over different parts of CHUM for $1.7 billion. And the broadcast assets of Alliance Atlantis Communications, worth a cool $1.5 billion, are set to join the CanWest Global fold. AAC’s digital media division is already controlled by CanWest, while the licensed broadcasting assets remain in trust until the CRTC gives the deal the thumbs up or down, probably early next year.

However you number-crunch the broadcasters’ bottom-line contributions to these transactions, they’re pricey, and in the case of CanWest in particular, they add to an already strenuous debt burden. Acquirers are also finding themselves saddled with duplicate brain trusts, corporate cultures and MOs. Think of the collateral overhead. CHUM has 60 in its digital media department, while at CTV there are 80. Alliance Atlantis has close to 75, while CanWest has 222. Plus CanWest has that output deal with E! in the US that includes access to E!’s five-platform template (broadcast, online, mobile, VOD and satellite radio) and its 80-strong department of digital media experts.

If I were a drone in digital or interactive media at a broadcaster today, I would have my things in order, just in case. CanWest has already axed, AA’s flagship social networking website, and I expect there’s a whole lot more ‘restructuring’ on the way. This isn’t necessarily a bad thing. This, after all, is the original ‘change is good’ industry.

All of that M&A activity notwithstanding, digital media maven Raja Khanna opines that broadcasters aren’t forsaking digital media at all. He calls it ‘a sign of renewal.’ As cofounder of Toronto mobile video firm QuickPlay Media, Khanna counts these orgs as his clients, so you’d expect him to put a nice spin on things. But he points to a harder reality. The broadcasters can’t afford to pull back too much; there’s too much money at stake. TV broadcasting is a mature industry, while digital is exploding. According to the Interactive Advertising Bureau of Canada, online advertising last year grew a stunning 80%, from $562 million to $1.01 billion.

‘The way to drive traditional media is to keep digital at the centre of it,’ says IAB president Paula Gignac. ‘The challenge is: how do you change a model of profit that’s been in the industry for so long? In TV, you know how to work that model. In digital, you’ve got all these upfront expenses.’ Although the technology is now in place and the profit margins are higher for online than for television advertising, the proportion of ad dollars going online is still in the single digits, Gignac explains. ‘The spend in online is not efficient for TV companies. They’d need 20% to 30% to make it profitable now.’

Finding and licensing content remains prohibitively expensive, and there’s a talent crunch, with US and foreign companies pinching top execs such as former CHUM executive (and Raja Khanna sib) Roma Khanna (by NBC Universal International in the UK) and CanWest’s Duran (by ImpreMedia, a New York-based multiplatform Hispanic news and information company).

‘You have three things competing against each other,’ notes Raja Khanna. ‘There’s the turnover from mergers; retrenching money’s not there yet; and a realization that the people who run these business units have to be really well integrated into the company.’

So the money’s there, and the traffic is, well, around. But there remains a disconnect. Media companies, he says, haven’t given advertisers enough compelling products to advertise on, and some broadcasters (who shall remain nameless) continue to take something of a follow-the-leader approach. In other words, we’re living the adage Large = Unwieldy.

Revolution doesn’t come from within the status quo – rather, it shakes it up. ‘It’s going to be the small start-ups that are the wellspring of invention,’ says Khanna. And that’s where some of these people – like himself, as he steps back from QuickPlay to start a new venture – are going to go. So the fact that so much digital media talent is either already unplugged or about to be is part of a much-needed shake-up. Remember, change is good. Change is good…

From Playback Daily