InformationWeek

M E D I A
Managing Change
Savvy managers know technology is still the key to getting the word out

By Clinton Wilder
Issue date: Sept. 18,1995

s if the explosion of online information and digitized content during the past year wasn't enough to shake up the media business, this summer brought two of the most historic deals ever in the ind ustry. In acquisitions involving several of the biggest users of information technology among media companies, the Walt Disney Co. announced it would acquire Capital Cities/ABC Inc. for $19 billion--the largest media buyout ever and the second-largest in any industry--and CBS Inc. agreed to be acquired by Westinghouse Electric Corp. for $5.4 billion.

In a sense, Disney, Cap Cities, and CBS did on a grand scale what all publishing, broadcast, and entertainment chief information officers and business executives are being forced to do: develop bold strategies for a world where change borders on the revolutionary. But at the same time, they can't ignore their business of today, which in many cases still runs on antiquated, proprietary legacy systems desperately in need of an overhaul.

"While all these glamorous things are going on, we're making sure that the core applications continue to be improved," says Mark Morneau, VP of systems at Gannett Co. in Arlington, Va., the nation's largest newspaper chain. Whether the issue is converting content into electronic form or developing sales support applications, the key is flexibility--flexible thinking and flexible systems. Not so long ago, a movie was a movie. Now, as Disney has shown with huge hits such as The Lion King and Aladdin , a movie is also merchandise, toys, video games, and a home page on the Internet--in effect, branding the content.

Any company in the business of creating and delivering content must engage in similar "out-of-the-box" thinking. "Book publishers need to think of themselves as information providers," says Jordan Gold, publisher of online services at Macmillan Digital USA in Indianapolis, part of the Viacom International Inc. media empire. "If people want that information online or on CD-ROM instead of in a book, that's the way we need to give it to them."

But those kinds of transformations must take place without neglecting today's business--the "changing the tires while the car is moving" dilemma. "A lot of our cl ients are busy creating digital libraries, but the rest of their business processes go unattended," says Graham Brough, national director of Andersen Consulting's entertainment, media, and information services industry practice in New York.

Gannett isn't in that category. The company that pioneered satellite transmission of USA Today to its printing plants in the '80s is doing a major rewrite of its core business applications, using CASE (computer-aided software engineering) tools from Lansa USA Inc. in Lyndhurst, N.J. Gannett runs mainly on IBM AS/400s but is rewriting the applications to make them portable to Unix or other platforms.

Other key IT initiatives under way at Gannett are IBM DB2/400-based marketing databases that combine current subscriber information with regional demographic data to better identify potential news subscribers; laptop-based sales automation tools that integrate various data; and a digital archive of photos, graphics, and text running on an HP 9000.

Gannett ha s even entered the IT business itself. Its Gannett Media Technologies Inc. (GMTI) subsidiary in Cincinnati, formed in late 1994, sells media-industry IT tools that Gannett helped develop for its internal use, such as software that allows realtors to create their own classified ads.

Capitalizing On Content
Another media titan that isn't standing still is R.R. Donnelley & Sons Co. in Chicago, the $5 billion printing giant. Donnelley is in the midst of a massive migration of its mainframe and midrange core business applications to Sun, Hewlett-Packard, and IBM client-server platforms, including the Sun-based human resources applications suite from PeopleSoft.

Like Gannett, Donnelley has also formed a separate unit devoted to development and implementation of new media technologies. Donnelley's 150-employee digital division, based in Memphis, Tenn., is developing digital print-on-demand (POD) processes that will enable 24-hour turnaround on brochure or even book-printing jobs--immediately shipped back to the customer via Federal Express.

"To be competitive to the year 2000, we need to provide an automated approach to our product," says Al Guibord, Donnelley's VP of IT. "We need to better utilize our resources--to be able to distribute printing of a magazine, for example, among four facilities around the world instead of one." To that end, Donnelley is constructing a global wide area network, running Ethernet and TCP/IP on frame relay technology from Sprint, that will transmit some 50 terabytes of data annually by 1998.

In the past year, hundreds of newspapers and magazines have discovered that cyberspace is the perfect place to publish specialized content for special interests. But the opportunities of cyberspace pose a serious challenge--some would say threat--to CIOs schooled in the old ways of print publishing. "The biggest difficulty for companies is to create a business model to capitalize on their number one asset: content," says Dottie Butler, director of publishing industry co nsulting at EDS.

Among the InformationWeek 500 media companies, Time Warner's Pathfinder site on the World Wide Web is considered one of the best examples of a new business model. Pathfinder features online versions of Time Warner magazines such as Time, People, and Sports Illustrated, archives searching, and specialized content such as "O.J. Central." It also sells advertising and charges users for specialized services.

"The online media is beautifully tailored for special interests, but mass media traditionally has not been able to deal with the economics of those special interests," says Robin Johnson, senior VP of corporate development at Time Warner in New York. "Soon the whole world will realize that this Internet phenomenon isn't about computers. It's more about bringing together all the collectors of thimbles or breeders of Shetland sheep dogs," says Johnson. General interest sites will need to become specific.

At Time Warner, Johnson sees the emergence of a new breed of professional: an editorial/technology hybrid who understands editorial content and the news-gathering process as well as the company's technology infrastructure and online technologies such as Hypertext Markup Language (HTML). "When Microsoft, Oracle, or Sun calls on us, I try to redirect them from the IT people to the creative people actually doing the content work," he says.

Time Warner and its competitors in the cable industry face a dramatically shifting landscape. The much-hyped promises of interactive television have rung hollow, with market trials such as Time Warner's Full Service Network in Orlando, Fla., proving to be very slow and expensive, mainly because of unforeseen technology complexity. But the industry has no time to lose sleep over interactive TV, because deregulation has paved the way for cable companies to enter the telephone and data services industries, including offering Internet access.

But most cable companies, which until now have operated as regulated monopolies, have IT infrastructures woefully unprepared to support a fast-moving business. "No one is anywhere near where they need to be," says Paul Wedeking, a principal with EDS' entertainment and cable industry consulting practice in Los Angeles. "Telephony dial tone, Internet access, and long distance are all commodities, and you need to change pricing, packaging, and relationships to take advantage of a very volatile marketplace. The companies that win will have systems that are highly flexible." Those demands thrust the CIO to the fore in the cable industry, but spelled trouble for those who aren't progressive business thinkers. "Cable CIOs have been mainly a liaison between billing and operations--not a strong role," says Wedeking. "That must change dramatically. CIOs need to drive marketing, engineering, and business planning to make some final calls, so they can start on an appropriate system for the business they want to be in."

If content is indeed king in the online wor ld, media companies, as creators and deliverers of that content, should be poised for leadership and success. The competitive scramble is under way, and the media industry will probably look very different a year from now. Expect more merged giants like Disney/Capital Cities--and more companies swooping in on others' traditional turf.

(To view the Media chart in PDF format click here)

Comments on this story?

InformationWeek http://techweb.cmp.com/iwk