Comcast this week said it was pleased with the progress being made by Canoe Ventures, assuring investors that the ongoing economic nightmare has not had a negative impact on the ad-targeting cooperative.
Speaking in a Q-and-A session at the tail end of the cable giant’s quarterly earnings call, COO Steve Burke said that the recession hasn’t put a damper on Comcast’s investment in Canoe, which officially launched in June 2008 after a protracted (and top-secret) incubation period. In fact, Burke said that the first Canoe product should be on the market before the end of the second quarter.
“Clearly there is a huge, huge business out there if you can marry TV spots to the interactivity that you get when you advertise on the Internet,” Burke said. “We’re bringing out our first product, Creative Versioning, this spring and we have two or three other things that are getting very close to being in the marketplace and launched.”
A joint effort forged by Comcast and five other leading cable operators––Time Warner Cable, Cablevision, Cox Communications, Charter and Bright House Networks––Canoe aims to bring the addressability and interactivity of the Web to advertisers who buy time on local and national cable.
If all goes according to plan, Canoe will allow advertisers to target neighborhoods or demographic zones by income and other census-level data, with the ultimate goal of targeting ads to individual households. In August, former Aegis Media chief David Verklin came aboard to lead the New York-based venture as CEO.
Although the local ad market is in dire straits––in the fourth quarter, Comcast’s local ad revenue fell 5 percent year-over-year; excluding political spend, core ad dollars dropped 20 percent––Burke said there’s no danger that Canoe will lose funding from its MSO partners. “This is going to become a very, very large needle-moving business for us, [although] that is not going to occur in 2009,” Burke said. “But we’re very pleased with the direction we’re heading and it’s the type of thing that has such a big reward that it really would not be affected by the economy or the current ad sales environment ... which as we mentioned is not good.”
Comcast chief financial officer Michael Angelakis said that local ad sales “will continue to be pressured” throughout the rest of the year, adding that Comcast does not anticipate a swift recovery. And while Comcast did not break out ad sales figures for its programming group, Angelakis noted that the national networks “experienced softness in advertising at the end of the fourth quarter.”
As has been the case across much of the media landscape, Comcast has had to cut jobs. The company laid off some 3,300 employees in the second half of 2008 in the course of a reorganization of its cable-TV operations, Angelakis said.
Other reductions have been made in the executive suite. In a form 8-K filing with the Securities and Exchange Commission, chairman and CEO Brian Roberts last week agreed that he would receive no increase to his base salary in 2009, a year after his father, Comcast founder Ralph Roberts, decided to carve his own annual compensation down to just $1 for the remainder of his tenure on the board of directors.
Last year Brian Roberts was paid a total sum of $20.8 million, including a $2.64 million base salary, plus bonuses and other stock-related compensation. Burke, Angelakis and executive vp David Cohen will also forego a base salary increase in 2009.
Comcast reported that its fourth-quarter net income fell 32 percent thanks to a stunted ad market, a beefed-up competitive environment and a write-down of $600 million. The company declined to offer guidance for the rest of the year, citing a lack of visibility. “There are a lot of problems in the economy which I don’t think I need to go in to,” Angelakis said. “In addition, we find the banking system and capital markets pretty unstable right now.”
For all that, Roberts was upbeat yesterday, saying that Comcast had anticipated the downturn in time to make the necessary adjustments. The Comcast chief was also buoyed by his company’s enviable multi-revenue stream.
“Many companies out there would like to have the kind of subscription nature and the diversified revenue streams that we today enjoy,” Roberts said. “It’s hard not to sit back at this moment in time and see uncertainty in the economy and nervousness with consumers... [but] I can’t think of a better place that I’d want to work from then where Comcast is right now.”