PARQOR is the handbook every media and technology executive needs to navigate the seismic shifts underway in the media business. Through in-depth analysis from a network of senior media and tech leaders, Andrew Rosen cuts through what's happening, highlights what it means and suggests where you should go next.
In Q4 2022, PARQOR will be focusing on four trends: this essay is on the theme, "Media companies have consumer credit cards on file. What happens next?”
I am now about halfway through “It's Not TV: The Spectacular Rise, Revolution, and Future of HBO” by Bloomberg reporter Felix Gillette and The New York Times reporter John Koblin.
I’ve just finished the section on the AOL-Time Warner merger and had one of those “Aha!” moments that may or may not have looked like the popular Leonardo DiCaprio meme from “Once Upon A Time in Hollywood”. The excerpt was a description of the AOL bosses visiting HBO for the first time:
Shelly Brindle, then a rising executive with HBO’s subscriber marketing group, remembers the first visit from her new AOL bosses. The executives, she says, arrived from Virginia on private jets, sat down at their first big meeting with her team, and asked the HBO staffers to turn over all the subscriber data. The intent, they explained, was to begin comarketing AOL services to existing and former HBO customers. There was an awkward pause. "We were like, um, what subscriber data?" Brindle says."This was after the deal was closed!"
It was left to the HBO staffers to explain that the network didn't deal directly with their customers and that it was the cable companies who collected, retained, and controlled all of the information on HBO subscribers.
The network itself had zilch. "There was nothing we could do to help them, Brindle says. "We didn't have access to the customers. Unfortunately, they didn't realize until after the acquisition that there was really no additive value for either side."
If the dynamics of the story seem familiar, it’s because they’re a fun-house mirror of one of the four trends I’ve been focusing on this quarter: “Media companies have consumer credit cards on file. What happens next?” HBO didn’t have subscriber data or credit cards on file, AOL assumed they did, and a key assumption of the merger – that HBO customers could be easily upsold AOL – was killed (one of many that led to the deal’s reputation as the worst transaction in history). But it’s also a story that left me scratching my head: how did AOL executives buy a cable company without understanding that distributors owned the consumer relationship in 2001?
Legacy media management understands DTC business models better than they did in 2001. But there is still both management and investor resistance to better monetizing consumers with credit cards on file.
Total words: 1,400
Total time reading: 6 minutes
I also have been wondering: the marketing and marginal revenue advantages of owning consumer credit card data were an obvious need in 2001… and yet it took legacy media two decades to solve for that need? And they’re still only charging those cards one time?
Many investors — and certainly ...