NHL Expansion To Seattle Looks Inevitable

The recent news that the Seattle ownership group has filed an application with the NHL for an official expansion bid and included a $10 million deposit has been at the top of the news surrounding hockey in the past week.

The group can now begin a season ticket sales drive (begins March 1st) in a similar process to how the NHL proceeded with the Las Vegas expansion bid a couple of years ago. The ticket sales results will then be submitted to the league office so they can more adequately gauge the level of interest in the sport in the Seattle market.

The major sports media outlets as well as the local Seattle media are all essentially positioning the Seattle NHL expansion bid as a “done deal”. In my research I found one article that acknowledges that the process has some hurdles that should potentially temper the expectations for a future hockey team in Seattle.

Conversely, the fact that the NHL has coveted the Seattle market is among the worst kept secrets in the sports business news for a couple of years now. The league would benefit greatly from the geographic location, TV market/media market size, the natural regional rivalry with the Vancouver Canucks, and the noted passion of the fans of that city for their sports teams.

In fact, there are some within the sports media and sports business experts that maintain that Seattle would have been awarded an expansion franchise with Las Vegas in that last expansion cycle. Seattle did not submit a bid because they did not have an agreement on an adequate arena that was up to NHL standards.

The lack of a modern sports arena has derailed the progress of Seattle gaining an NHL or NBA franchise to replace the departed and beloved Supersonics for several years. The arena issue was the reason why the NBA bolted the city about ten years ago and it has taken all of that time to get a comprehensive plan put into action.

My earlier piece on the Seattle arena renovation of the Key Arena at Seattle Center provides the context of the details of the deal that will provide the city with a state of the art arena by 2020 or 2021. That is the earliest we can expect a hockey team to start playing in the Emerald City.

The potential approval of Seattle’s bid fixes the West-East conference imbalance the NHL has been dealing with for several years. The league would have sixteen teams in each conference, and the scheduling would be much smoother, and travel would be improved for the players as well.

The successful bid for Seattle does present some questions regarding the other cities that have been in the mix for an expansion team such as Portland, Houston, and Quebec City. Those cities are now potentially on the outside looking in, with regard to an expansion team because it is unlikely that the league will expand again beyond the 32 member franchises it will have given Seattle is successful with their bid.

The most likely logistical solution for at least two of those three cities would be to gain a team via relocation. The current situations for two or three current NHL franchises are tenuous at best at this point and that could provide the ability for one or more of those hopeful cities to gain “a seat at the table”.

The Calgary Flames, the Arizona Coyotes, and some feel the Florida Panthers all have some instability in their current markets. The relocation of an NHL team is certainly a long shot because the league prefers to keep teams in their markets unless a move is absolutely the last resort left to pursue. In fact, there are some within the hockey media that maintain that having Houston and Quebec City out there as possible alternative markets is exactly what the league office wants because it provides them leverage with the current markets in getting a favorable deal.

The league could “strong arm” a city like Calgary or Phoenix into a real estate deal with a publicly subsidy for a new hockey arena in terms that blatantly benefit the NHL because they can threaten the relocation of the team to Houston or Quebec. Those two markets, Calgary and Arizona, have been a total debacle for a while. It is becoming a major problem for the league that those cities are in limbo, and the exertion of pressure with regard to relocation is one of the few cards that the respective ownership groups of the Flames and Coyotes have left to play.

In the end, it looks like Seattle will be the next city to be awarded expansion into the NHL, and if it is anything close to the success that hockey has seen already in Las Vegas it is going to further continue the emergence of the league in new markets in the years ahead.

CBS & Viacom Explore Merger Again

The news on Wednesday that CBS and Viacom were once again exploring a merger opportunity should come as no surprise given that the same person, Shari Redstone, is “running the show” at both corporations because her father, who is the chairman of CBS is very ill.

The potential merger is being driven by a strategy to get ahead of the likely merger of AT&T and Time Warner which would create an enormous media conglomerate. The recent merger that is likely to meet full approval between Disney and FOX is another reason for CBS and Viacom to view each other as a potential “port in the storm” scenario.

The combination of the two entities would combine television/media content creation and broadcasting with the expertise Viacom has in distribution of that content. The ability to have expertise in both areas is becoming a necessity in the mainstream media in order to be able to negotiate profitable distribution agreements.

Furthermore, the synergy of content creation/broadcasting and distribution is becoming crucial for the smaller players in the industry to be able to stay relevant with the competition from Disney/FOX and AT&T – Time Warner (AT&T also owns DirecTV).

This is especially relevant when you consider that AT&T has a market cap of over $200 billion and CBS has a market cap of $23 billion. In the event that AT&T merges with Time Warner that number could be close to $300 billion. The Disney and FOX deal will put that combined corporation at around $250 billion in market cap.
The CBS – Viacom deal might become a necessary move to ensure their own survival in the changing media landscape. The distribution of content is critical, and control of content is also an integral part of the connection between content and profitability. The two companies have several areas of cross-compatibility which is suitable for a merger opportunity.

The merger, if approved, would potentially bring together a more robust stable of networks that are widely available on basic cable packages that would provide leverage for CBS & Viacom when negotiating the carriage fee agreements.

This same principle would apply outside of the U.S. domestic market where a combined entity would be a serious player in the international media / television broadcasting space. My own depth of knowledge is not in the international market but plenty of coverage is out there on that area of this potential deal.

The streaming service that CBS operates called CBS All Access would gain a significant increase in content by merging with Viacom. CBS would also obtain the control of the Viacom owned Paramount movie studio, which should be noted is struggling at this point.

Wall Street is not keen on this deal, according to Forbes they do not see the synergies or the market caps of the combined entity being significant enough to make a difference in the media industry at this point. It also notes, as other major financial news outlets have noted, that CBS is a ripe target for being obtained themselves by Verizon.

The Verizon-CBS rumor has been long running now and it remains to be seen if Verizon wants to take that strategic dive into the network television arm of the industry. The resources of Verizon would be a significant deal within the media industry that would create some serious ripple effect.
However, for now, at least for the next few weeks the focus will remain on CBS and Viacom and if they can determine the parameters of a deal. The combination will not reshape their industry segment but it will have an impact on the way content is controlled and distributed. In that sense, this deal is significant because with the meteoric rise in streaming television programs, content rights are king. CBS would hold the keys to some important properties. Stay tuned.

(some background provided by CNBC, Recode, Forbes, CNN Money.com)

“Parkland” – A Poem by Frank J. Maduri

Here is my poem on the tragic events today in a Florida High School

“Parkland”

Alerts on my phone, alerts on my computer screen;
Reveal an unfortunately familiar type of scene.
A school with kids fleeing, hands raised high;
Under a clear, innocent looking sky
High school kids – their lives a clean page
Some lives lost, others altered, in an act of rage.
The news broadcast talked about the reaction –
Of the students being so collected, calm
To the horrible situation they were in
Because they have drills for shooters or a bomb –
In schools like this one outside of Miami
A usually very safe place called Parkland
A place where you would want to raise a family
A place now failing to grip or to understand;
How this could have happened, how a student
Could open fire on other kids this afternoon
How others feel that gun control isn’t prudent
Except when you’re the parent of a child taken too soon
Then that perspective changes, it alters
As our society, our government routinely falters
Parkland, it sounds so idyllic, yet it joins a list;
A list of American places where kids have died:
Columbine, Paducah, Newtown, Virginia Tech, Roseburg
A list nobody wants their town to be mentioned
Our country’s values have to be questioned
How can this behavior persist without consequences?
How have we all collectively lost all of our senses?
The events today should not be tolerated
A school is a safe haven not to be desecrated –
By violence, hatred, or anything destructive
It should foster thoughts that are positive, constructive
The terrible images today in Parkland
Are among the tragedies I will never understand
I will take time tonight to solemnly pray
For those families effected by a shooting on Ash Wednesday
To ask God above to help us all to find –
Our way back to a place where we are humble and kind
To a place where we can all live in peace
Where violence and hatred all will cease
Where hope and freedom will last, will glisten
I pray that God above will listen

(c) 2018 Frank J. Maduri – All rights reserved

Hain Looking To Sell Protein Business Unit

In a report by CNBC regarding potential mergers, Hain Celestial is looking to sell their protein business unit. This decision is widely regarded as a precursor to the company looking to merge the rest of their business with another entity.

My experience in the food industry is what drew me to this headline coupled with my experience in writing about mergers and acquisitions over the past few years. The consolidation of Hain Foods and Celestial Seasonings (yes the “tea people”) back in the early 2000s was never a very good fit.

The business strategy, or some may argue the lack thereof, by Hain in gobbling up smaller regional organic food product labels only exacerbated the issues stemming from the Celestial merger. The company is now a hodge podge of different brands that all do not co-exist in any sort of cohesive manner.

The sale of the protein business component of the Hain Celestial portfolio will certainly aid the eventual consolidation of the company with a “bigger fish” in the consumer-packaged goods area of the food industry.

The unit for sale is the organic poultry division of the company, which according to statements in the release from the company this area is not congruent with their future strategy. The company was ahead of the trends for organic foods at one point, and after missing the earnings per share estimates set by Wall Street, they are looking to refocus their strategic objectives.

The issue, from my perspective, that Hain is running up against is the demand for pesticide free, GMO free, locally grown/sourced food products. The offerings from Hain are not locally grown, for the most part, and are not fresh either they are generally frozen or shelf stable packaged. It is a more mass produced organic offering and they have to recalibrate their business model to meet shifting consumer demand.

The two big names associated with a potential merger of Hain Celestial are Nestle and Unilever. The implications on the food industry in either case is a scenario of the “big getting bigger” and that might alter the corporate culture at Hain Celestial and prove to have a negative overall effect on their objectives. It would make sense for either of the “big fish” linked to them to consolidate Hain Celestial because it would expand the reach of either Nestle or Unilever further into the organic foods area.

The deal would also provide the larger entity with the access to technologies that Hain Celestial uses to develop future product lines within their respective core business areas. This could provide a potential competitive advantage to a company such as Nestle in their scramble for increased market share in a variety of segments within the consumer-packaged food industry.

The suitors for Hain for their poultry division could be potentially Tyson Foods who could leverage the purchase of the protein division of Hain to bolster their presence in the organic poultry area.

The other part of this situation is that Hain could be in a position where they have to sell off other divisions of the company to be folded into a suitor like Nestle or Unilever in a more seamless manner. The sale of Hain will certainly shift the landscape in the organic food segment of the industry.

Amazon Targeting Expansion Into Healthcare

Amazon announced a partnership with Berkshire Hathaway and JP Morgan to provide better healthcare for the employees of the three respective American corporate giants. The details of the exact parameters of the newly formed joint venture are unclear. It appears that the partnership will not be to form a healthcare company to compete with major health insurers.

However, the announcement certainly shook up the industry: from Wall Street to Main Street, everyone was talking about this news on Tuesday. The prospect of these three companies getting involved in the evaluation of costs is a daunting set of circumstances for the healthcare industry.

In addition, Amazon is rumored to be targeting expansion into the pharmaceutical area. The online retail giant filed for pharmaceutical licenses in a handful of states back before the holidays, but it is unclear whether they were related to the medical devices which they already sell on their site.

The strategy and route for Amazon into this space is through this partnership with Berkshire Hathaway and JP Morgan. The stakes for certain retailers or interested parties in the pharmaceutical industry could be very significant. The other side of the situation is the protection of patient records should Amazon start peddling prescription drug delivery services.

The potential for misdirected prescription abuse is also at stake here should Amazon enter the prescription drug space. This is all transpiring amid the backdrop of a prescription painkiller abuse epidemic in America.

Those are just some of the ethical issues presented in this situation. The business implications are also significant with the “Big Pharma” companies falling somewhere in between the distributors and the retail drug chains. The sentiment within the pharmaceutical manufacturers is that the potential entry of Amazon into the industry would be a welcome turn of events because it would provide greater competition.

The translation there is that the pharma companies have been at odds with the PBMs (Pharmacy Benefit Managers) for years. The PBMs handle mail order prescriptions and they negotiate prices for the large insurance companies and for large corporations that have a bigger “say” in the benefits for their employees.

The insertion of Amazon into the equation is problematic for the PBMs such as Express Scripts, CVS Caremark, and United Health/Optum. They will have diminished leverage in negotiating pricing and other terms with the pharmaceutical companies because Amazon will essentially disrupt the way that game has been played. This is why the pharmaceutical companies have no problem with Amazon entering the space, the online retail behemoth is going to look to undercut the other players in the mix.

The potential entry of Amazon into prescription drugs will also hinder the prescription drug distributors, particularly the top three: McKesson, Amerisource Bergen, and Cardinal Health. Amazon is going to push back on them on price and that is going to squeeze their margins. The massive consumer base that Amazon will bring to the table and could command with greater potential for consumers to join Amazon Prime membership just for the prescription drug services will put these distributors in a tough position.

The entry of Amazon would shift the distribution paradigm as well. Their presence would shape the cost structures for that component of the industry. The benefits would definitely be reaped by the consumer because it will have a domino effect on the prescription drug pricing across the board.

The final area is the retail prescription drug channel, which if Amazon does indeed enter this part of the industry it could have a profound impact on the entire industry. The biggest players that would be at risk in that scenario are: CVS, Walgreens, and Rite Aid.

Those three companies have existed for decades by servicing customers through predominately brick and mortar operations where the customer or patient will pick up their prescription products. These companies have delivery services available in some markets as well.

However, Amazon would turn that part of the industry on its head, so to speak, and reinvent the way that patients would get their prescriptions. The concept of ordering a prescription online, or through a voice- controlled device such as the Amazon Echo, one would think would be a compelling option for consumers.

There is a definite argument for the convenience that Amazon would provide to someone who was feeling too ill to drive to the pharmacy to get a prescription. It is appealing to people with busy lives as well, who need maintenance meds for a given medical condition to eliminate having to run over to the pharmacy from their routine thereby saving that time.

The retail pharmacy chains mentioned earlier would certainly have to adapt in the advent of Amazon potentially entering that sector. The strategy to combat Amazon would be two-pronged, in my opinion, in order to create resistance to Amazon grabbing too much market share.

First, the retail pharmacy chains can tout that they can fill prescriptions in one hour or less. The order of a prescription through Amazon will take more time to fill, so if you are sick (and the fact remains that being sick is when most people see a doctor and need prescriptions filled) the traditional retail route is still the most effective method.

Next, is an adaptation of the retail pharmacy operation into a true omnichannel approach. This approach is key to the survival of essentially every traditional retailer with a brick and mortar presence moving forward. The CVS, Walgreens, and Rite Aid chains and others in a regional presence have to consider developing delivery in most every market they serve. They also have to develop some type of website portal that can handle prescription orders for delivery to the consumer. This would allow for a truly omnichannel approach.

The patient prescription history and personal data are already in their database so these chains can tout the security and trust they have established with the patient over a period of time. This could become their pathway to remaining relevant with Amazon actively competing in the channel.

The patient confidentiality issues which were raised earlier in this piece still have significance as Amazon weighs whether to enter the pharmaceutical space or not. The potential for prescriptions to fall into the wrong hands is an aspect of this situation that should be careful considered by the government with respect to Amazon.

Conversely, that argument can be made for the major retailers and PBMs that are currently active in the retail pharmacy channel currently. The way the systems function today certainly provides some openings for the potential for prescription drugs to be misused or used by someone other than the patient it was intended to help. The mail order supply could easily get into the possession of someone who has the propensity to abuse prescription pain medications, anti-depressants, or some other type of pharmaceutical product.

The “Big Pharma” companies seem at this point, from their public statements, to be largely unconcerned with Amazon entering the market. I can understand how some people might be confused by this position. However, when you consider how the industry functions, and through my professional experience in different roles within the pharmaceutical industry, I can attest that the “Big Pharma” guys only care about making money. Amazon will allow them to do that especially with the PBMs.

The PBMs must be concerned about retaining profitability should Amazon enter that area of the industry. The joint venture announced on Tuesday with Amazon, Berkshire Hathaway, and JP Morgan has the healthcare industry shaken up already.

In full disclosure, some reports have also speculated whether Amazon is announcing this partnership to “save face” because of reports that they make their employees who work there for a certain length of time and then leave the company pay back the amount that Amazon paid for the healthcare coverage for that particular employee.

This new partnership could integrate new technology into the sector with rumors that the three companies in the venture will have an employee web portal that will provide healthcare planning information to help reduce the cost of tests and other services for those on their payrolls. The other rumor is that they are going to launch a smartphone app that streamlines healthcare choices and explains the protocols for different procedures very simply.

It is clear though that Amazon wants to get into the healthcare and potentially the pharmaceutical space and that has put everyone from the major health insurers, to PBMs, to those involved in the pharmaceutical retail drugstore segments on notice that changes are coming whether they are ready for them or not.

Follow Up: Toys R Us to Close 180 Stores

In a follow -up to a prior article on Toys R Us entering Chapter 11 bankruptcy protection back in the Fall of 2017, the company announced on Wednesday that they will be closing 180 stores by April.

The beleaguered toy retailer has been consistently losing market share and foot traffic due to stiff competition from Amazon, Wal-Mart, and Target. The Chapter 11 filing was due to a heavy debt load of $5 billion and the need to reorganize the company to emerge a more streamlined organization.

However, while most experts and industry analysts understood the Chapter 11 filing, and my prior article covered the necessity of the timing of the decision, consumer perception was that the chain was “going under”.

The chain had to file when they did for bankruptcy protection because they had to be able to pay the suppliers to get the shelves stocked for the Christmas and holiday season (where the chain makes 90% of their annual sales).

The plan backfired because they failed to market the promotional items properly during the holiday season, and the toy seller neglected to properly provide a concise and simple explanation of the Chapter 11 decision.

Therefore, in survey results from customers the top reason why the company struggled at the holidays was because the public perception was that the chain was going to close their doors, so any gifts for the holidays were perceived to be not returnable merchandise. This perception caused shoppers to avoid the purchase decision at Toys R Us and to purchase those gifts elsewhere.
The company made a statement Wednesday regarding the store closures and cited “operational missteps” during the holiday season as the reason behind the closings. The company now has to move fast to salvage the future of the entire chain.

The competition from Target, who has placed many of their store locations near current Toys R Us locations as well as expanded their toy product offerings, has definitely cut into the revenue capture for Toys R Us. This competition is heightened by aggressive marketing campaigns from Amazon and Wal-Mart that are convenient places for customers to get a wider range of products as well.

The main issue with Toys R Us, in the survey results from consumers, is that they are not easy to shop either in-store or on-line. The company has recognized that both of these areas are a major source of the downward spiral they find themselves within at this point.

The ability to succeed in retail today in an increasingly competitive marketplace is to be an easy place for the consumer to make a purchase. The products must be easy to find and priced to move, and the omnichannel approach: in-store, over the phone, store pickup for large items, and a robust on-line presence are all essential to survival.

Toys R Us is apparently struggling in all of these areas, and they have to hope that this decision today will be approved by the bankruptcy court. They have to hope that they can restore confidence in both the toy suppliers and the consumers. The company has to improve operationally and become aggressive in promoting in-store and on-line product offerings which create a sense of urgency for the customer.

The unfortunate reality of the announcement today is that most likely the chain will announce more store closings in the future. The strategy is to focus on their best performing stores or their best potential locations, which is the path that other retailers have taken at this point in their life cycle.

A personal note, here amidst all of this is my own memories of going to Toys R Us as a child, and getting so excited about a new toy or game that just was released. It was a place you could go and be happy because they sold toys and that nostalgia for a different time makes this article really bittersweet.

The resources I consulted mentioned a rift between the company and toy suppliers because Toys R Us was still giving out executive bonuses before they paid the suppliers, and they were behind on payments. The argument can be made for both sides of that situation: the company does not want to lose quality executives to competitors over a compensation gap, but you also have to pay your bills.

The consolidation of stores, especially the elimination of underperforming stores, is a logical first step. The unfortunate consequence is the lost jobs involved, which in their statement the company did not address the actual number of eliminated jobs. The company needs capital to run a more streamlined operation, so executive bonus pay probably should be suspended until they emerge from Chapter 11 protection.

In the end, as one who has covered the retail space and bankrupt companies in the past, this is a familiar pattern which usually results in the end of the chain in question. The biggest issue here with the potential demise of Toys R Us is that some industry experts maintain that the toy business cannot survive without the presence of Toys R Us. The validity of that analysis may be tested in the near future.

Unsubsidized: The Uncertain Future of Monmouth Park

My memories of growing up and living on the New Jersey coast have always included summer days at Monmouth Park watching thoroughbred horse racing. The race track has been a gathering place for families and groups of friends to get together for a day outside in the sunny, seemingly endless weekends.

The news from this past week regarding the new Oceanport town council and their concern for the future of Monmouth Park is very troubling to long time Shore area residents like myself. New Jersey has no subsidy from the state for horse racing, and rising operational costs are a looming threat to the future of world class thoroughbred racing in the Garden State.

Monmouth Park opened almost 150 years ago and is an iconic place to visit and spend a day at the races. The park entered an agreement with Resorts Casino at one point to attempt to merge the operation of the track with on-site casino game gambling. This measure has been blocked and has faced a number of hurdles in New Jersey.

The local news reports that without a subsidy of some type either from gambling revenues from introduction of slot machines and games at the track or from sports betting, the prognosis is not good for the future of Monmouth Park.

The sports betting has been argued all the way up to the Supreme Court and is awaiting a final verdict. A decision by the court in the affirmative would permit gambling on all sporting events from all the major professional sports and major college sports games to be legal in New Jersey. This would benefit a facility such as Monmouth Park in a substantial manner.

In one estimate, if sports betting was legalized, it estimated Monmouth Park to have a total gambling revenue per season of $50 million, of which the facility would get a 50% share because they would have to split the betting revenues with another party, should the measure be approved.

That cut of revenue at $25 million would be a very beneficial subsidy to the operational costs of running the facility. The town of Oceanport has a great deal at stake because Monmouth Park accounts for 20% of their municipal tax base. In the event that the state does not provide a subsidy and the race track fails, that is a huge tax revenue shortfall.

It should be noted that the surrounding states in the region: Pennsylvania, New York, Delaware, and Maryland all have a subsidy from their respective state to help with the operation of horse racing.

The horse racing industry has changed, I remember back in my younger days, Monmouth Park had a horse racing card every day during the summer through Labor Day weekend. The “meet” schedule for the year then changed to three to four days a week as the approach shifted to having fewer racing cards but with bigger purses, or better- quality races.

Then, the industry shifted again, and over the past few years, the racing “meet” schedule for the season has racing cards two days a week from the opening weekend in May through July 4th weekend before it goes to three days of racing per week. Then, it adds Thursdays in August to the meet schedule.

The reduction in the number of days of operation for full racing cards was needed throughout the horse racing industry, but is an absolute necessity in New Jersey without a state provided subsidy.

New Jersey is home to a numerous horse farms and equestrian training centers, yet it could be without a horse racing operation. That would translate to lost jobs, lost revenue, and the end of many different traditions for families who spend time at the track together.

I find it all very sad on a personal level, Monmouth Park, as I mentioned earlier in this piece, is a place where I spent time with my family and with family members who visited in the summer from outside the area. It was where I spent time with my friends on a day off from a summer job in my high school and college years. It was where I went on a sunny Sunday when my wife and I were dating, to spend a day outside doing something fun.

It is sad to think that Monmouth Park may not be there for future generations, the future is uncertain, and the path forward is unclear. The new racing schedule was released recently with the 50th edition of the famed Haskell Invitational race which is broadcast nationally on NBC coming our way on July 30th this year.

It is my sincere hope that the state officials, the Supreme Court, and local officials can all work together with the partners involved to find a long term solution to Monmouth Park to keep the doors open for years to come.

How Cable and Satellite TV Providers Stay Relevant

I am contemplating switching cable TV providers, and I was thinking about how most of the people I know still have basic cable type packages; while others have done what is called “cord cutting” by eliminating cable.

Those people who cancelled their cable subscriptions stream content over the internet through one of the ever-growing number of streaming device options or Smart TV platforms. They utilize amplified antennas to get broadcast channels locally to supplement their program options.

I was at the gym running on the elliptical machine last week when a commercial came on while I had ESPN on during my workout. It was for the NHL Center Ice package which provides access to over 40 out of market games per week and works out to about $150 paid out over four installments for the season.

The advertisement put an emphasis on the ability to stream games from tablets or other devices as well, since that has become a critical value add for certain consumer demographics when it comes to media products such as this NHL package.

However, the flip side of that situation popped an idea into my head: who has time to watch 40 out of market hockey games a week? I would venture to guess that not too many people could do so, while affording the cost of the package and working. This is where cable remains relevant, and in the paragraphs to follow I will qualify that statement.

The NHL Center Ice or Game Center app does not allow full access to game highlights or condensed game packages without a subscription to the package or without a link to your cable subscription. Those who do not want to pay for the package or have cut their cable service completely lose out on hockey coverage or access to hockey content. This same example can be used for other programming or content available through cable and protected by those cable or satellite providers from those who have decided to “cord cut”.

The NHL Network channel is available only through cable or with a subscription purchased and offers the best alternative for those with a busy lifestyle because you can get all the highlights just by flipping to that channel on your cable box. It provides the ability for more casual viewing of the games as well.

The cable companies also stay relevant because having a cable subscription active allows for the best access to content from live programming that would air on a delay on a streaming device or app, to the ability to “live stream” certain content.

The implications of the Disney – Fox mega media merger as well as the proposed merger of AT&T with Time Warner can and will have an impact on the access to content of all types. The access to content and “protection” and restriction to content is going to shape the media in the next 5 years.
The handwriting is already on the wall, so to speak, with Disney spending truckloads of money to design their own streaming app that they will charge a monthly membership fee to allow access to their content. The recent proposed merger with Fox will expand the amount of content that they can potentially add to this application and restrict from distribution to other outlets.

The individual Time Warner group channels such as CNN, TBS, and TNT have all developed their own streaming content apps to appeal to a wider audience of those who have cut the cord.

The membership payment type apps for streaming are expanding as well with HBO, Showtime, CBS All Access, and the Hallmark Channel app called Hallmark Now ; these apps are all charging fees for access to their exclusive content.

The future of streaming television is going to consist of paying for the content from a multitude of different subscription based app content providers. The cable subscription will offer a potential “value add” because it will allow for access to the streaming content while potentially circumventing some of those subscription fees.

The future of cable and satellite television is unclear at this point as well. The “al a carte” approach that has been a concept that has been enticing to certain viewers is gaining a resurgence. This concept, where each individual household would pay only for the channels they would watch consistently, is largely cost prohibitive within the current cable/satellite TV business model.

The carriage fees (which is the amount the networks charge the cable companies to carry the channel) on some of these channels are a major barrier to this proposed solution. A good example is if your family would watch CNN, ESPN, and Disney channel to provide a mix of news, sports, and family programs. In the current model, the carriage fee is divided among all the subscribers for a respective cable provider whether it is Comcast or Verizon Fios.

The “al a carte” model would create a formula with a lot less subscribers so the fees would go up and your cable bill will follow suit. I have seen sample models where the earlier example provided would break down like this: CNN would cost $35 per month, ESPN would cost between $60 and $65 per month, and Disney would cost between $25 to $35 per month. That means for three channels plus your free network channels, your cable bill would be upwards of $125 to $130.

The carriage fees would have to change or the providers would have to offer more packages to bundle down costs.

In the end, as we approach the New Year, the way we watch TV will continue to evolve. The growing consensus from the consumer perspective is to cut the cord with cable. However, the cable companies and the media companies are largely becoming the same entities with all of the mergers happening in the media landscape.

This translates into a combination of a cable subscription (at least one cable box in your home) and streaming devices or Smart TVs that can stream content. This combination will provide access to the most wide- ranging amount of programming and provide a good value to the consumer.

Follow Up: Seattle Arena Renovations Approved

The news that the Seattle City Council voted by a 7-1 count in favor of close to $600 million in funding for the renovation of Key Arena, ends a saga that spanned several years revolving around both politics and sports.

That saga involved a few very different proposals, and two big spending groups of business leaders: one led by Chris Hansen, and the other the Oak View Group which boasts Jerry Bruckheimer, among others. The lack of a suitable arena is what drove the Supersonics basketball team to move out of the city in 2008, and it also cost the city a potential slot in the NHL expansion process a couple of years ago.

The vote to approve these renovations to Key Arena casts a great deal of clarity on a situation that was once very fluid in Seattle. The vote comes one day after the MOU between the city and Hansen expired, effectively ending that bid from ever moving forward. The vote also means that the NHL may have an expansion announcement regarding Seattle shortly.

Hansen, as it was noted in my earlier coverage of this topic, spent millions of his own money to obtain land over a period of several years in an attempt to build an arena in the “stadium district” in the southern part of downtown Seattle. That plan also required the land around a roadway to be sold and the road grid to be changed to be able to have adequate space for the arena concept in the proposal.

The Hansen proposal was not popular among several constituency groups and political groups in Seattle. It was opposed by the Port of Seattle because of the proximity to the port and the impact that game/event traffic could have on trucks and port operations. The city politicians also had no intention of selling him the land on Occidental, which became known as the “road abatement” clause in the proposal, which was an unpopular concept from the start. Hansen had a dream to bring the Supersonics back to Seattle, and it is hard not to feel badly for him that his proposal is dead, and the NBA could still be another 4 to 5 years away from coming back to Seattle.

It appears that with the Key Arena renovations, which is at Seattle Center up by the Space Needle, the city officials are banking on the central location as well as public transportation improvements to guide the way to a world class arena in their city. The renovations could be completed by October 2020, and appears that the NHL would be the anchor tenant initially for the newly renovated facility.

The NHL expanding to Seattle makes a great deal of sense because the city fills a void for the league in a region (Pacific Northwest) that is largely untapped for hockey. The team would have a natural rivalry with the Vancouver Canucks, which the league likes the ability to play up regional rivalry type games. Seattle also has a strong potential ownership group, great potential for corporate sponsorship, and is known for having loyal fans for their other professional teams.

Seattle would represent a large media and TV market for the NHL to tap into heading into their next media rights contract which would improve the value of that deal. It also would balance the NHL which currently has 31 teams: 16 in the East and 15 in the West, the addition of Seattle would even the conferences from an alignment standpoint.

The NHL could also relocate a team from another market to Seattle, as I have covered in the past, with the Arizona Coyotes and Calgary Flames both potentially looking to leave their current market over disputes involving their current respective arena leases.

The NBA, according to reports from NBC among others, is not actively entering into an expansion process. The current CBA agreement between the players union and the league ownership has a clause for potential expansion in 2022. That is where certain people within the Oak View Group involved in the Seattle arena renovations have indicated that the Sonics could return to the NBA.

The process to this point has been a long road, Seattle is one of the few major American cities to not have an updated or newly constructed arena for entertainment and sports. The vote today will provide major enhancements to a nostalgic building in the heart of the downtown area of the city.

The sports fans there could be welcoming NHL hockey to their city and that would become a destination for many hockey fans from outside the region as well. The return of the Sonics may not be far behind. In the end, the Oak View Group was better connected than the Hansen group, it had a proposal that utilized an existing arena rather than constructing something totally new, and the Key Arena proposal kept the historic roof as well as other elements intact which was very smart.

The arena will be renovated and will be incredible when it is completed if it is anywhere near the renderings I saw earlier today. The city will now wait and see if their investment will yield them the sports teams they desire. The addition of one team generates a greatly enhanced amount of revenue for the city and Oak View Group than just having concerts and shows at the venue. The addition of two teams would be a revenue machine and would make for happy residents as well.

Seattle just put the money on the table to become a premiere sports city, a move they were reluctant to make in the past, now it will be interesting to see how the NHL and NBA respond in the months ahead.

Organic Fertilizer Development Gains Steam

Several companies are either developing, or partnering with other groups to develop, an organic fertilizer that can handle a larger quantity of crop yields. This is in response to the anti-GMO, anti-genetic engineering sentiment that has been rapidly growing within the consumers in both America and Europe in recent years.

The push to develop an organic fertilizer that is capable of this production yield stems from other scientific studies of soil. Those studies demonstrated that farmland treated with organic materials for fertilization was in more favorable growing conditions (soil microbial abundance is the official metric) than the farmland treated with nitrogen based fertilizer products.

In a report from CNBC one such company, Abundant Farms, recently hired a new director of technology who has a background in developing prototypes of organic fertilizers. The plan is for the company to test some of these products in a “scaled up” prototype scenario in test market farms in designated areas in the United States as well as in Romania in Eastern Europe.

Romania is one of the top producers of corn and some other crops in the world and will provide an excellent test market for this new organic product for crop treatment. The country distributes their crop production throughout the European Union and the world.

Abundant Farms partners with governments and farmers to provide solutions that are environmentally friendly. This is a time period of increased consumer scrutiny of food ingredients and where as well as how food is sourced and produced; the timing of these developments in organic farming is highly relevant.

Melior Resources, a company with an international presence just announced a strategic partnership with an Australian based organic products company, SOFT. The terms of the agreement essentially translate to Melior buying and distributing organic fertilizer products which SOFT will create and scale up.

The first organic fertilizer product in the pipeline for this new strategic arrangement is derived from a substance called apatite, which is a mineral sourced in Australia, among other places. The apatite from a specific mine in Australia has different properties that are not found in other versions of the mineral from other parts of the world.

The apatite that Melior/SOFT will be utilizing has no cadmium and no lead which lends itself well for use in fertilizer. SOFT has a unique technology to refine raw apatite into organic fertilizer.

In addition, according to the joint press release, this particular apatite from the Goondicum mine in Australia has a slow release phosphate effect. This slow release characteristic makes it ideal for organic fertilizer because it is not harmful to waterways or areas surrounding where it would be utilized.

The joint venture between the two companies is for ten years and the results of the combined strengths of the two partners should yield beneficial products for the consumer relative to the pushback being given to GMO containing and genetically engineered products.

The subsequent increase in organic farming necessitates the demand for more options with organic fertilizers, especially products which can handle higher yields. The expansion in supply of organic corn, soybean, and sugar beet are critical to the future of organic farming.

The LA Times produced an insightful report on the future of organic farming by taking a different perspective. The report states that the world could grow and sustain more widespread organic crop yields if our global society embraced two very important concepts: reduce food waste, and consume less meat.

This is due to the amount of land and resources required to maintain livestock for the consumption of meat. The rise in organic farming would have an environmental safety benefit because of the reduction in the use of chemical fertilizers, but organic farming is plagued by the “yield gap”.

The “yield gap” is the amount of land required to farm within organic standards. The practice of organic farming need more land because the yield level on an organic crop is smaller than a standard crop which uses nitrogen based fertilizer products. The rise in organic farming could have a potentially negative side effect when you consider the impact of deforestation to narrow the “yield gap”.

The concept of food waste is a “first world problem” but it is a significant contributor to the current food supply situation as well as a challenge to the future growth of organic crop production. The reduction in food waste can be achieved through greater awareness, through adjustments in food consumption, through more conscious food purchasing decisions, and by consistently checking your refrigerator by rotating food by expiration dates.

The ability to slash food waste is a grass roots approach, it is done at the family level which will extend to whole communities. The scientists in the LA Times feature are conducting multiple studies which examine the amount of crops and acreage are used for growing feed stock, compared to land used for growing food for human consumption. The analysis is then done to determine the conditions needed for organic farming yield targets to be attained considering demographic factors such as population growth.

One study concluded that the food waste globally would need to be cut in half from current levels, and that all the land used for feed stock would be needed for organic farming. The reduction of meat consumption to zero is an unrealistic outcome, so there are other studies targeting a 50% reduction in meat consumption by 2050.

Those are macro level changes over the long term, the micro level changes occur through more locally grown produce. The community farmers market approach is another viable method of expanding the organic foods approach.

Finally, the growth of organic fertilizers, and the commitment from the agriculture products industry to the development and scaled up production of high yield options for farmers will be a key in the movement toward more organic food in our global supply chain.