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Convergence is in the details: Asper
11/17/2003

TORONTO - Real convergence is not about stuffing together content and delivery platforms. It's all about content and the consumer, CanWest Global Communications CEO Leonard Asper told the Economic Club of Toronto last week.

Demand for media has not waned. People still watch a lot of TV. People devour much of what is on the Internet. People still read newspapers. Advertisers still want to reach all these people. Sure, the media markets is a fragmented place, "a supermarket with hundreds of shelves and dozens of aisles," said Asper in his speech, but ad revenues are still growing, and flowing, to CanWest.

"CanWest just posted a 5% increase over our TV revenues last year and an EBITDA improvement in television of 15% to $220 million," he said.

The fragmentation, coupled with Internet reach and digital technologies, just means there are more opportunities to better target consumers and take advantage of non-traditional revenue streams while still offering a mass market.

"The advertising market has become like any other competitive market where high volumes of inventory are available to buyers - most of the inventory is treated as a commodity with low value pricing. It is only the best product which attracts a premium value. The value of an 'eyeball' has increased, because it is harder to find them. The value of a mass audience has therefore increased," said Asper.

"This is good for newspapers because they are the last mass medium that exists, reaching over 40% of homes daily. In TV, to achieve the equivalent of one spot on Friends on Global, a media buyer must buy 51 spots on five cable channels. So they will pay a premium to achieve the mass audience. This is why conventional media continues to perform reasonably well."

So, with all these assets, among five media types (TV, print, on line, radio and outdoor), CanWest "will still sell mass audiences, but with better targeting," he explained. "By owning multiple media properties, media companies can provide customized marketing and advertising products to the advertising client. It can also mean that content creation costs are amortized over more properties."

But beyond just ad sales, CanWest is diving into transactional revenue and multi-faceted re-purposing if its own content. "We now need to build brands. Non-traditional and ancillary revenues become essential to maintain the profit margins of just a decade ago," he said.

That means shows such as Popstars must also become DVDs and soundtracks and concert tours and other merchandise sales. Newspapers must then be delivered in print and electronically and melded with the news operations of the company's TV stations.

"Newspaper columns and articles are re-purposed into books, pictures are resold as souvenirs� Classified ads are now ordered online, and in the digital newspaper, the classified ad for a car will have embedded in it a picture of the car, the sports highlights will be embedded in the sports summaries, all just a click away. Now maybe it becomes apparent why owning a television network is essential to operating a digital newspaper," outlined Asper.

"Why waste the talents of (Global TV personalities) Kevin Newman, Peter Kent, Deirdre McMurdy or (Financial Post columnist) Diane Francis on one 30 minute show per week or a few columns when they can do so much more. They themselves are brands. And a good marketing company knows how to extend brands and generate new profit streams from them."

As other examples, Asper cited Global's documentary Victory From Above, about the exploits of the First Canadian Parachute Battalion in World War II. The DVD and videocassettes were among the highest selling units in Wal-Mart stores across Canada earlier this year, he said.

Train 48 is now available on Rogers Cable's VOD platform and a soundtrack and DVD will soon be released.

"Our content and revenue strategy is to create and own content that has been pre-purposed or designed to enable exploitation across multi-platforms and the generation of multiple revenue streams from branded products, transaction fees, new customers and advertising categories," said Asper.

"Content at CanWest is never thrown out now because it can be re-purposed."

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