Who Really Knows?

As a small business owner who focuses on media – content creation, marketing and promotion, and new media – I am constantly looking for new ways of thinking of things or trying to see opportunities in perspective. About 10 years ago, I built a very healthy strategic thinking consulting business that reached globally, but has withered during this economic downturn, and I understand why. Companies and people are just trying to survive and have worthy credit. During this downturn, I took this time to build a new media business while others in the entertainment biz were/are trying to understand how technology and evolving demographic viewing habits are changing their business paradigm. I believe that many of the large media companies have fumbled by giving away their content for free. A friend of mine at a big media conglomerate recently told me – enthusiastically – that Hulu will be successful. “We are building viewing habits…and we will eventually be able to charge for our content.” I did not believe him then nor do I believe him now. The business model is cool, but unsustainable. There are not enough people willing to pay a price to view content that makes up for the previous sequential distribution content model that lasted in TV for over 25 years. Just because people at big media companies make statements does not mean that they are true. The media landscape is littered with false pronouncements. I know – I was in cable TV before it was a business model, and I helped define some of those models. You should read what leading broadcasters said about cable then. I think what I have learned over the years is that no one really knows anything…that the marketplace – consumer behavior and economics – ultimately decides…also…luck plays a pivotal role. No one ever thought NetFlicks was a business when they launched, but they are and have proved the critics wrong. Just like no one seemed to be able to predict our lousy economy, job losses, and home foreclosure rates, no one can predict how we will recover, but there was one economist – Arthur Cecil Pigou – who gave great thought in the late 1930s through the 1950s to these issues, but was overlooked by more renowned theorists like John Maynard Keynes and Milton Friedman. Pigou pioneered the study of market failure. While Pigou believed in capitalism, he also understood how it malfunctions, which is what we have been experiencing. I would argue that the state of media is malfunctioning today without anyone thinking through the consequences to rights holders and distributors. The good news is that it will eventually settle somewhere where we least expect it to and there will be new winners and losers. Broadcasting is not obsolete; the creative executives have just have not selected the shows people want to watch. While the current health pundits preach healthy living, they are not as relevant as “mel” or melslife to the generation of people who seek wellness solutions and alternatives.

Thin LIne of Success or Failure?

Many people contacted me regarding the thin line between success and failure after last week’s post. Some people cited famous coaches and their philosophies…like John Wooden…and others mentioned renowned businessman. What they seem to have in common is that one can never really fail by trying something new. I believe this too. I have learned from all of my failures – if you could call them failures. I don’t. I call them my entrepreneurial attempts because – by definition – success and failure encompass many things. I believe that there is a very thin line between success and failure. I have witnessed this in the entertainment business – many times — those producers who were able to sell a show – that many other producers had too at the same time – go on to have unbelievable financial success while the other producers — who could not sell their similar show — wither. It had nothing to do with smarts or financial acumen, but luck – preparedness and timing meeting opportunity. One of these producers has built an unbelievable $400 million plus business on his now long-running franchise, and he wants you to know how smart he is. Don’t get me wrong, the guy had to be smart to come up with his vision, but he really is no smarter than the other guys who had a similar idea but could not sell it. Often, it is not the producer who makes the sale, but an agent, attorney or group of people – who don’t get the credit. A friend of mine was looking to buy this producer’s $400 million company, which was the asking price. My financial friend asked me what I thought of this guy and his company…then confided in me that he had never met anyone so cocky. I laughed and told him that money and fame have intoxicating powers. When my investment-banking friend began pouring over this producer’s company, it became immediately clear that the company was worth far less than the guy was asking – probably under $25 million – because this guy did not control the format rights, but rather the original format holder from another country did. My friend did not buy this guy’s company…and as far as I know… the guy has not sold it to anyone yet he still believes it’s worth his asking price. What I find interesting in Hollywood is that everyone has advice or a story to tell; and no one truly knows what’s going on. Luck plays such a critical roll in everything. Years ago, Howard Stern used to have a chicken pick sports teams. The chicken sometimes beat famous odd-makers or sports “experts.” Whatever you do, do it well, and maybe someday you will get lucky too.

Success or Failure?

Last Friday I made a decision not to move forward on mel’s Circle of Wellness, the syndication of healthy living video vignettes from melslife. I had cleared 6-8 stations – which was my goal — in very good markets — that would have provided me with an excellent sampling of the concept. About a month ago, I began getting concerned about the barter market. As many syndicated shows changed their business model from cash plus barter to only barter, the barter advertising market became flooded with unsold inventory. I became concerned that I could not sell my barter time in this lousy economy. Last Thursday I was in Cincinnati at one of “our affiliates.” During a meeting with the station’s owner and CEO, his advertising executive told me that they were selling primetime spots for $20. I could not believe this figure. The local market had crashed – stations could not sell their inventory. If this station – in the nation’s 37th largest market — could only get $20 in prime, what could I get? I knew immediately that I could no longer proceed with Circle of Wellness. It did not matter that I thought Circle of Wellness was a good idea, worked hard creating and clearing it, or how it would improve melslife; it was just too risky of a business proposition to proceed further. I began to wonder if I had failed. Deals and business opportunities come and go – they are like buses or trains without a schedule. Sometimes the best deals are the ones you cannot put together. It took me a long time to learn this, but after several failed deals – many of them turned out to be good that they did not work out. Only the future knows for sure whether a deal becomes good or not. What I have learned over the last 6 months is invaluable – the vagaries of local television decision-making, syndication, barter advertising – and how wellness is perceived. When I got a good look at local television, I did not like what I saw. Another factor in my decision was computing the actual delivery and demos of local news compared to the opportunities I have my core TV business – producing general market television. The demos in TV news are significantly older than melslife, and my “affiliates” could not really guarantee audience delivery (since Circle of Wellness would be constantly moving throughout their telecast with no set time). So did I fail? I do not think so. In fact, I believe that I dodged a bullet. Many people look up to me to make the right decisions. I have a fiduciary responsibility to anyone who works for Richmel. We tried something and it did not work out. I could argue that I just saved the company thousands of dollars. Like many things in life, success or failure is what you make of it, it is now time to move on to the next endeavor.

Lucky Dog?

I am lucky. Everyday I field calls from people less fortunate than me. Some have lost their jobs, others have over-leveraged their finances, some live in fear, and then there are some who just have terrible personal lives – no family, multiple exes, angry kids – you name it. Sure the economy doomed some of these people, but for most of them, they made poor decisions and are now paying the consequences. Professionally I have been independent – owned my own company — for close to 25 years, and I have suffered through the ups and downs of life, which has made me stronger today. What I learned through the process is to be fiscally conservative and to be always looking for the right opportunities. Many people see me as a big risk-taker. I am not. Almost everything I do is methodically thought out. Sure I hope on planes and go around the world on a moment’s notice, but I have been doing that for years and it has allowed me to nurture some incredible relationships and contacts. My passion for good food as led me on many quests with my son Charlie searching for the best sticky buns, tacos, or lemon tarts, which have all led me to some interesting friendships in many cities. I enjoy what I do and I am not beholden to anyone. Sometimes I get surprised one a friend of mine ascends to a big job at a large media company and they are no longer who they were previously – power got to their head – and they proceed to destroy all of the personal and professional relationships around them. What these people forget is that it is not them that created their power, but rather their clients, company, or the chair they sit in. When these once powerful executives lose their job – and they always do – no one wants to be around them and they fail miserably. Just last week a former “acquaintance” who works at a very large ad agency and represents the barter time for two very large clients did not return my call after he rescheduled our calls at least 4-5 times. I have no doubt that when this guy loses his job, he will call me. Whatever you do in life, be authentic to yourself and the people around you. Guys like me can see right through you, and will happily call you out because we have nothing to lose. I treat every relationship with respect. It has taken me two years to understand new media and build melslife, but now – -like China, Hispanic media, television production, promotion and marketing – I have a terrific set of relationships to build a solid foundation for whatever my company does next. If you are one of the less fortunate people – and things are just not going your way – keep your focus, and things will eventually turn around. Dignity and pride are one thing, and survival is quite another.

Robert Wussler

Robert Wussler was one of my first bosses that helped define my thinking and bedside manner. Ted Turner, Brandon Tartikoff, Pierre Cossette, and Gerry Hogan did too. What I always admired about Bob was his world-view. He loved to travel and knew almost every U.S. city like the back of his hand. This was probably due to his being head of CBS Sports and the CBS network. Bob believed in socializing when doing business. When I was at Turner Broadcasting — and Bob was running the show — we would sit in some bar in a city and talk for hours about how to achieve a strategic initiative or program. I did not always agree with Bob’s style, but his depth of knowledge, relationships, and understanding of the entertainment business made it almost impossible not to respect him – I did. During the days that I was at Turner, it grew exponentially. It was not only Bob that counted, but the team Ted assembled – everyone was very smart and aggressive – which made Turner great place to work. Ted had vision. Gerry Hogan had a brilliant sales plan, Terry McGuirk had outstanding cable operator relationships, and Bob executed the programming. Bob also underscored Turner’s “network” creditability – someone who knew how the content game was played and promoted. Bob’s strategy and relationships helped TBS acquire many valuable sporting shows – like the NBA – which strengthened TBS and built its audience. At Turner, everyone challenged each other, and we all survived. What I owe to Bob Wussler today is my love of travel and the need to know every city in the world well. My strategic consulting business was definitely born at TBS – thanks to Bob and Gerry. I visited Bob recently in Connecticut, and he looked great. Sure we were both a bit older, but we are also wiser…and we had fun…fondly looking back on the “good ‘ol days of TBS.” Before I saw Bob, I ran into several people from disparate entertainment careers. The one thing they all had in common is that Robert Wussler had touched their lives. I must have told Bob that at least 5 people said “hello” and that they wanted him to know that he was a major part of their career. I do not know what Bob’s television legacy will be, but touching people’s lives will be one of them.

What is real?

Everyday I work at the cross section of new media and entertainment. I read countless “white papers” on just about every aspect of new media. I read several entertainment newsletters that frame winners, losers, and ratings for television shows and the key executives at the various networks that are behind these shows. Instead of feeling that I am in the know, I am constantly wondering what is real? Networks twist Nielsen data to the point of irrelevance. The only demo I look at now is the 18-49 demo because I know that is the demo advertisers are buying. I also look at the evergreen value of a show – does it have a chance to harvest additional revenue streams. New Media is probably one of the most over-hyped businesses that I have ever been in – no one seems to have the same analytics or successful results that are promoted. For companies like Google, Facebook, or Twitter, new media is a game changer. New Media also changes the paradigm for transactional companies selling products or services. New media can also be an amazing marketing tool. Statistically speaking though…there are only a few successful companies derived from the approximately 3 trillion available web pages. The problem seems to be that no one can find a workable business model in this economic environment. Executives I know – the ones who still have game – are telling me how well they are doing, but the public information I read about their companies or shows tell quite another story. With cable networks and online news sites searching for relevancy and trying to cut through the clutter, it’s hard to distinguish what is truthful. Just watch the same story on MSNBC, FOX News, or CNN and you will know what I mean by their spin. In economic circles the past several weeks, several prominent economists have weighed in on the U.S. and its weak dollar – many saying it’s good, and many saying it is the beginning of the end for U.S. currency domination. What’s real? From my college days studying economics, I became a proponent of a strong dollar for long-term growth and power. While a weak dollar provides some short-term benefits, the long-term effect can be devastating. Our government tells us that they are helping the American people out, but the only benefactors that I can see from our government’s help is Wall Street and its banks getting bailed out and securing our financial system. There has been little-to-none trickle-down affect because while Wall Street and the banks got money or credit without many restrictions, most Americans have to “qualify” to receive help, and those banks that received tax dollars are not loosening their credit to companies or individuals. Why doesn’t the government deal with this issue? Small businesses and individuals are still struggling to find credit to survive. The home foreclosure statistics are sobering. We now live in a world where we do not know what is real except maybe when it comes to our families and friends, and in the political, entertainment and new media worlds — no one can count on anything…therefore nothing is really real — except melslife.com

There is No Secret Sauce

I have now been in new media for about 2 years and I have come to a startling conclusion. New Media is really no different than Old Media except there are no barriers of entry in new media. It is all about Reach, Frequency, and Engagement – the same principals old media has been using for decades. Sorry folks, there is no secret sauce. Everyday I get bombarded with email campaigns that I do not care about, and I usually delete them. When I go to sites, I do not pay much attention to the ads unless they are executed creatively and do something to capture my attention. In New Media, it seems that relevancy is either defined by Search or promoted in old media. To be successful in any media, an advertiser needs reach, frequency, and engagement.

Defining Strategies in an Unforgiving Market

Do you have a strategy? I always do, but I am constantly redefining it. There are companies that spend months – sometimes years – defining a strategy, then the world changes and these companies do not adapt. In a world of unknowns and little credit available, it is probably a good idea not to have a long-term strategy, but a strategy for survival. I have always done pretty well in down times because many people and companies are not focused, but I sense that this time is different because few companies are investing or spending money, and if they are, they are improving their own infrastructure, and not hiring outside firms. I have had an on-going friendly debate with the head of marketing at one of the largest media conglomerates regarding outsourcing. I tell him that it is cheaper in the long run than building up overhead. He disagrees. At various times, we have probably been both right. My company is now outsourcing throughout the world and I find it more efficient. I do not have the financial overhead that I used to have and I doubt that I would ever go back. Outsourcing for me came out of discovering the possibilities of new media. I find that by reading at least 4 newspapers per day that I come up with new ideas that affect my thinking. Information is one of the most valuable commodities. For the past several days, I have been rethinking how we launch Circle of Wellness. Since I have been calling television stations, I have learned many new things that affect our roll out and success. Also figuring out who to partner with is critical. One indie station brought up the idea of us having our own local show – very interesting idea, but is it right? Ideas can be cheap; it’s the execution that matters. So I have many strategies…they just keep evolving daily. What are your strategies?

Natural Food Shows

As I write this blog, I am on an American Airlines flight from New York to Los Angeles after attending the Natural Products Food Show in Boston and visiting with my family in Connecticut. I am in seat 33C after standing by for an earlier flight – the ticket agent made sure that the seat next to me was empty, and now sitting on the tray table of the empty seat are two glasses of wine from first class and two small bottles of wine from coach. The flight attendant recognized that I traveled a lot – I have high status on American — and wanted me to have the comforts of first and business. I am happily surprised at my good fortune. Not only will I get home two hours earlier, I will have sampled all of the wine. This treatment got me thinking about my old life flying around the world and how much I enjoyed it. The last two and a half years have been an amazing experience building melslife, but now melslife is growing and seems to have a life of its own. As we work on Circle of Wellness, I have no doubt that we will leverage our brand and media strategy. I have been spending the last week rethinking our strategy, and I like where we are going. All “mel” and I need are patience and we will get there. I love going to the food shows and Penton Media and NASFT do a good job of organizing the best shows. I go to these shows to understand where the business is…and going, and how I can apply this information to melslife. I am concerned about the healthy living business. As more and more small entrepreneurs sell their profitable niche businesses filled with passion to large, strategic-driven companies, the identity and uniqueness of these products begin to dissipate. As a consumer walking the Natural Products show, I am dismayed by the arrogance of some of these large companies who no longer follow the mission statements defined by the original companies. They simply do not understand their consumer. My other concern is that when consumers realize the lack of standards in the supplement business, and that most of the raw ingredients are from China, the whole industry will be under attack. This past summer I visited a large supplement company – one of the companies that bombard consumers with phony testimonials about products. The COO – while giving me a tour – proudly told me that all of the products were sourced from American companies, who sourced the raw product in China. He thought he was being clever. My heart sank because I knew the ramifications of his statement. I wanted to tell the world, but that is not my place. melslife is for people who want or share a passion for healthy lifestyles. We are not investigative reporters. mel, I and our team have sampled enough products to know the quality of a product and what we like, but we do not endorse any companies. Let me give you an example of one of our dilemmas. I used to have a favorite chocolate that I found in the UK. Think organic chocolate backed by an incredible mission. This chocolate company was purchased by a large company, who dropped the original mission except for publicity purposes, and I now believe tinkered with the original chocolate formula – at least in the US. My sister and I tasted a sample of the chocolate that I got at the show and it was horrible. What would have happened if we had recommended this chocolate?

Doing Business in Pittsburgh

Everyone knows I love Pittsburgh, but over the last two years, I have had problems with two Pittsburgh-based companies. One of these companies is a national chain that melslife could really help, and the other is a new media company that facilitates outsourcing. Since taking two years off to learn new media, I have become an advocate for good management, and incompetent management leaves a bitter taste in my mouth. The last company that burned me did not take me seriously, but they should have. I tried to follow due process and reach out to their marketing department. They were always too busy to talk to me or see me when I went to visit Pittsburgh. I sent a letter to their CEO, who forwarded it on to his head of marketing. She called me and we had a nice conversation, but she passed me off to someone who never followed through. I finally realized that this company would be a cancer to what I wanted to do – they would sully my brand with their incompetence – so I decided to move on and work with people who wanted to make a difference rather than preserve their status quo. In Hollywood, we have an expression – “the fish smells from the head down.” The culture of this company is stagnant. It got me thinking – why I am disappointed working with Pittsburgh companies…then I read last Saturday’s Wall Street Journal and the answers were clearer. This article, written by a local Burgh, summed it up that most people in Pittsburgh have a “near-reverence” for their past – “we will never be as happy or as strong as we were then.” The whole tone of the article was about Pittsburgh insecurities and lack of trust with outsiders. In essence, they have a second-city mentality. Now every time that I have been to Pittsburgh, I have met wonderful people and experienced their culture. Many of them have built successful businesses and have wonderful lives. I have asked a few of these people why I was having trouble working with Pittsburgh-based companies, and they really did not have an answer except that they were all generous enough to offer to call both companies and tell them that “Rich is one of us.” I politely declined. After working with the communists in China and Russia, the Germans, French, Canadians, and Austrailians, one realizes that there is a common denominator. People have to want to work with each other, listen to their ideas, and want to make money or grow their company, not preserve their turf. Going back to the last company, I don’t think it’s really over yet. My experience tells me that I will get to know someone on their board or meet with a serious investor, who wants me to review the company. It’s happened to me too many times – someone wrongs me and I end up having to work with them or review their work, especially in marketing and media. I try not to hold grudges. I just ask very tough questions in front of the right people and let those people formulate their own opinions. If they can answer the questions effectively, good for them. I am on my way to Boston to attend the Natural Products Show East. I wonder if I will meet with the CEO of this Pittsburgh company there? My love for Pittsburgh has not diminished…it’s a city of good food