Two of the nation's media giants have made the news this week, in moves that suggest the market might be moving with the times.
Virgin Media, which boats a customer base of 3.7 million users in the UK, released a second quarter results statement, in which it spoke of seeking a secondary listing on the London Stock Exchange.
Virgin is currently only listed on New York's Nasdaq, the US technology-led index, which at first seems rather strange for a company operating entirely in the UK. But that's a legacy of the old days of NTL, which listed in the US ahead of expanding into the UK TV market.
Easy shareholder access
With all of its customers here in the UK, and Virgin being amongst the largest UK telephony and TV suppliers (in addition to the figures above, Virgin serves approx 4.5m mobile users, of which around 784,000 are contracted subscribers), the move does seem overdue. If a company's stock market listing is not easily accessible, it won't get the following of "loyal customer" investors that it might otherwise deserve -- it is fairly easy for British investors to buy US-listed shares, but it's more hassle and relatively few people do it.
With results looking good, now might turn out to be a very good time for Virgin to list in the UK, as telecoms and TV companies are likely to come out of the recession quite strongly. We should probably expect more news when the full annual report is available.
No free news
The other interesting media news of the week comes from the owner of one of Virgin's arch-competitors, Rupert Murdoch's News Corporation, which owns a chunk of our very own British Sky Broadcasting (LSE: BSY). BSkyB is way ahead of Virgin in the customer stakes, reporting 9.4 million subscribers at its year-end in June this year, and is well on its way to its target of 10 million subscribers by 2010.
Responding to News Corporation's net loss of £2bn for the year ending June 2009, Murdoch has announced that the days of free online news, from his sources at least, are numbered. Charges for all of the group's news websites, including the Times, the Sun and News of the World, will apparently be in place by next summer. The Financial Times already charges a subscription -- though a small number of articles can be read for free each day.
Quality isn't cheap
This does seem like a bold move, and it may well be that we're getting close to the end of free news content on the internet. As Murdoch correctly points out, producing quality journalism isn't cheap, and relying solely on advertising revenue to pay for it means there is no direct link between customers and revenues -- income is dependant more on the economic health of the advertising industry than on the consumption and satisfaction of direct customers.
But on the other hand, free internet content is pretty much taken for granted these days, and it will take some doing to get the idea out of the modern psyche. The first to break ranks and impose charges is likely to witness a mass desertion, which will in turn lead to still lower advertising revenues. And, though a subscription model for content from the Times might work, I suspect a lower proportion of existing users would pay to read the Sun and News of the World online.
The death of free content?
It's true that the advertising-revenue business model is a risky one, because advertising spend is discretionary and volatile. Firms will advertise to their target markets far more vigorously when there is spare cash to be extracted from people, but in recessionary times when belts are being tightened, advertising will be scaled down as it becomes less effective.
So when advertising revenues are being hit hard as a result of reduced discretionary spending, companies based on the advertising-revenue model may be hit disproportionately harder than others, and it might well make good long-term sense to try to move towards more of a mixed-revenue model. But I think rumours of the death of free internet content are a little premature.
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