THERE’S NOTHING MYSTERIOUS about Rael Merson’s upcoming departure from his post as president of Rogers Broadcasting.
It goes like this: He’s been at the company for over 20 years, recently turned 50 and wants to give something else a shot. “I felt like, we’re empty nesters and I turned 50, I’m here 20 years, I wanted to do something a little different,” he told Cartt.ca in a recent interview.
He’s not retiring, however. While he has a non-compete agreement in place that will keep him out of the industry for a little while, he does have something entrepreneurial in mind that will keep him busy. “I’m too young to retire,” he says, “I have something in mind… something in new media.”
[Ed note: While no replacement has been announced (“That’s in Tony Viner’s hands,” said Merson, who is staying on until year’s end), the hot circulating rumor right now that we’ve heard from 333 Bloor E and others is that Ted Rogers daughter Melinda – who is currently senior vice-president, strategy and development for parent company Rogers Communications – may move into Merson’s chair at Rogers Broadcasting.
“We don’t comment on rumours,” RCI’s vice-president of communications Jan Innes told Cartt.ca when asked.]
While Rogers’ Broadcasting unit is relatively small when compared to CTV and CanWest Global, it was positively puny when Merson came to the company in 1988. Total assets then? Two Toronto radio stations, CHFI and CFTR.
After numerous acquisitions and launches, the division which launched Ted Rogers’ career (CHFI was his first media asset, after all) is now about a billion-dollar enterprise. Radio stations now number 52 and the TV side includes two small TV networks in Citytv and growing multicultural broadcaster OMNI, popular regional sports channel Rogers Sportsnet, The Shopping Channel, Outdoor Life Network, Bio, G4TechTV, 50% of Dome Productions and some minority interests in other assets.
Of all the deals and launches Merson and his team worked through, the toughest, he said, was the first one, when it took part in the breakup of Selkirk Communications in 1989. Rogers added 11 radio stations then, he said.
“All of a sudden we went from being a couple of radio stations to being something that required a little bit of an infrastructure,” remembered Merson, who said they made their fair share of mistakes establishing themselves as a larger radio play.
Merson credits company founder Ted Rogers for his patience as he and his boss, Tony Viner, among many others, built Rogers Broadcasting. “The beauty of (Ted) Rogers is the fact that he has a long-term vision,” said Merson.
“We invested in The Home Shopping Network which I took on, which was a disaster for six years,” he added as an example. “I think we lost about $60 million at it in the first six years. And then we turned it around to the business it is today (about $280 million in revenue in fiscal 2007).
“One of the hallmarks of Rogers is giving us the space and the latitude to try things and make a few mistakes and figure them out as we go,” added Merson. “And you know we’ve got another major turnaround on our hands with Citytv.”
That most recent acquisition and in-progress turnaround – a small conventional TV broadcaster in the five-station Citytv – is coming at a time when it looks as though the traditional over-the-air broadcaster is losing its influence to all manner of other media outlets, from specialty service cousins to various web portals to 30-second videos viewers can consume on their iPods.
And even when people do watch television, the personal video recorder – which is growing rather slowly in Canada as compared to the U.S. – remains a future threat, thanks to its ease of use and how simple it is to skip commercials – which is still the conventional broadcasters’ only source of revenue.
Despite the fragmentation and the new avenues producers can take to get their content to a market, Merson believes Canadians will pay for quality video content and still want to watch it on TV.
“As an industry, we have to ensure that somehow we continue to take up that part of the value chain that brings (producers’) content to the audiences. And as the industry goes forth, we’re going to have to figure out how it is we continue to be really relevant to the producers of the content and the consumers of the content… to get it in their hands in a way that’s really efficient and a way that ensures that we are still a big part of the value chain,” said Merson.
But how can broadcasters ensure that? They’re going to have to take on much more risk, believes Merson, and invest directly in the content and get more creative with how its brought to the public.
“It’s going to be a question of how much risk we want to take. To me – and this is sort of the debate that we had at the fee for carriage (hearing) – the real risk to us is commercial skipping and the ability of the advertisers to pay for the content. And to the extent consumers skip commercials, we’re going to have a bit of a problem,” he explained.
“But the way around that is to ensure that we, first, broaden the way that we offer programming to consumers. So, currently we put Ugly Betty on the air on Thursday night at 8 p.m. and we hope they’re watching… In the future, I believe what we’re going to do is pre-release Ugly Betty in a pay-per-view environment, a week before it goes to free television.
“And then after free TV what we’re going to do is make it available on demand and charge people for watching it on demand. Hopefully, the charges will be small enough that people will be willing… but we’re going to have to broaden our windows as an industry on the distribution side.”
The second part of Merson’s vision is on the acquisition side. “It’s clear we’re going to have to take more risk,” he said.
“If one of the ways in which the studios monetize their product is to place advertising product within a show, in order to benefit from that, you’re going to have to be a partner in the production… not merely acquire the show.”
Those changes haven’t yet happened, however. “We are going to want to have our own original, domestic, interesting content. Over time I really believe the relationships will evolve to the point where there is a common interest between ourselves and the producers to make sure it happens in an efficient way.”
While Canadian broadcasters are forced by condition of license to spend a certain amount of money with independent producers, Merson envisions the model evolving over time so that content can be fully monetized for the producer and broadcaster, while giving consumers what they want when they want it.
“There has to be some element of ownership in order to be able to develop the product to some degree,” he added. “I think we’ve got to be more creative and more businesslike.”
As for radio, Merson is urging a re-think there, too. So much of radio’s content (all that music) isn’t unique to it, available now in so many other places, that the radio industry is “probably going to have to go back and recreate its production environment. We’ve spoken about everything internally (but), what we need to do in the world of the future is effectively create for the Internet, which is the richest medium,” said Merson.
“And then one of the outputs from that might well be your audio stream. So, before you go in and create a show, what you have to have in mind is that the show gets produced, an audio stream comes out of it and a video stream comes out of it that might get posted on, for example, YouTube or a blog.
“Web sites might have to have all the elements of social networks and community that’s around that. And sometimes you build something that’s a little larger than simply conventional radio… we do a lot of that already in our morning shows. Our morning show in Ottawa at CHEZ is a case in point.
“It’s a really good morning show (and) both our guys on the morning show do blogs. We video some of the stuff we do, post it on the CHEZ web site then post it on YouTube… and they have a little community that interacts from the web site about what’s going on, on the air,” Merson explained.
“It’s more than just a simple radio show. On the production side, things to really have to evolve.”
And why? Because audio is really easy to push and pull around the web. Your favourite morning show can literally be from anywhere. Some very good radio stations are Internet only, for example. And, added Merson, “I’ve got Internet radio at the house which works on my WiFi system and I click through stations around the world as if they were local.”
Which, of course, leads to a Commission argument that “somehow the regulatory environment is going to have to change to recognize the fact that radio has worldwide competition, unregulated worldwide competition coming at it,” he said.
So, are all these challenges and all this change causing an old media company president to run for the new media hills?
Despite the ongoing transformations in TV and radio, Merson added: “I’m enthusiastic about the business. I really am.”
