Can media companies thrive in a multi-platform world? Michael MacMillan thinks so

The co-founder of Alliance Atlantis has a solution—and it just might work

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Alliance Atlantis co-founder Michael MacMillan (Photo: Markian Lozowchuk)

Alliance Atlantis and Blue Ant co-founder Michael MacMillan (Photo: Markian Lozowchuk)

On the day in 2007 when Canwest and Goldman Sachs snapped up the specialty-channel conglomerate Alliance Atlantis for a whopping $2.3 billion, CEO Michael MacMillan headed to a divey sports bar in midtown Toronto to celebrate. Almost three decades after launching the company as an indie film production house with little more than $300 and a lot of youthful enthusiasm, he and co-founder Seaton McLean and a few other early shareholders had all become rich beyond imagining on the strength of a handful of lucrative properties, including HGTV, the Food Network and the spectacularly successful CSI franchise.

MacMillan had originally planned to grow the company, and spent years scouting for potential merger partners without any luck. By 2007, with valuations going through the roof and early signs of a financial crisis looming, he figured it was time to sell and exit outright. At the bar, McLean recalls, MacMillan said it felt like they’d just taken the last helicopter out of Saigon. Indeed, there wouldn’t be another big Canadian media deal for 2.5 years.

Freed from the executive suite, MacMillan started a charitable foundation, Samara, focusing on a personal interest: improving political participation in Canada. He worked on the Prince Edward County winery he co-owns with McLean and McLean’s wife, actress Sonja Smits, and listened to supplicants congratulate him on the timing of his corporate exit. He felt he’d moved on, although to what he wasn’t quite sure.

Eventually, as his friend and current investor Gary Slaight puts it, MacMillan realized that he was bored—missing the “cut and thrust of business.” Slaight told him cable giant Rogers had been sniffing around a six-year-old multi-platform media company called GlassBox TV, which was doing digital publishing, video-on-demand and specialty TV. He was intrigued.

And so, in early 2011, MacMillan decided to retire from his retirement. He dropped by McLean’s office and said it was time to get back in the game. The Rip Van Winkle of Canada’s media sector had woken up.

Blue Ant, the company MacMillan and McLean founded soon after that conversation, has plunged into a media environment that bears almost no resemblance to the industry he’d vacated four years earlier. Mobile devices, iPads and hi-def resolution have dramatically rewired the technology end of the game. Media properties like Buzzfeed and Vice are in spectacular ascendancy, YouTube and Netflix are radically redefining the way people consume video, and social networking has altered just about everything else.

The vertically integrated media/cable/telco giants are watching—with clenched corporate jaws—as previously bulletproof annuities, like landline and cable subscriptions, have begun to show signs of vulnerability. In the newspaper business, media giants are desperately trying to avoid an ad-revenue death spiral by pushing into video and live-streaming news formats. And if all that weren’t enough, the Canadian Radio-television and Telecommunications Commission decreed last fall that long-standing policies governing how cable companies bundle and sell channels will be replaced with more consumer-oriented “pick and play” rules.

Yet for MacMillan, a glass-half-full kind of guy, the current chaos is brimming with opportunity. People are consuming more text, video and music than ever, he says, suggesting that the pie is actually growing, due to the proliferation of new platforms. And the massive amount of consolidation that’s swept over the Canadian media sector in recent years—Bell, Rogers and Shaw have a lock on much of the market—has created openings for a nimble, smaller player that can fill niches in a TV universe overwhelmed by me-too reality shows.

MacMillan knew that his new venture couldn’t rely solely on TV screens for viewers, or on cable fees for revenues. So he set to work building an independent media company that he calls “technology-neutral.” The way you consume its content—via iPad, TV screen or Galaxy phone—doesn’t matter to MacMillan, who refers to himself as “platform-agnostic.” What does matter is that smart—and smartly targeted—content is available across all platforms to reflect today’s new fragmented media environment.

To that end, Blue Ant—named after a fictional marketing company in a William Gibson novel—is in the midst of a two-year buying spree that began with the acquisition of GlassBox TV, the venture-capital-backed firm that first caught MacMillan’s eye back in 2011. The company now owns 10 media brands, including the youth-oriented comedy channel Bite (GlassBox’s first-ever media property), Aux (its music-focused followup), Cottage Life and the Smithsonian Channel. It also plans to develop more new brands internally. (MacMillan has attracted some private and corporate backers with deep pockets, including Torstar, which has invested $22.5 million in Blue Ant.)

The grand plan is that the company will eventually have content available on the full range of media platforms anywhere in the world, from traditional print publications and cable channels to snappy websites with streaming video suitable for hand-held devices, as well as downloadable digital magazines. So, for example, Glass Box’s Travel+Escape and Aux channels both offer video content, but also digital magazines that can be loaded onto tablets. Cottage Life still publishes its traditional magazine, but also has a television show—as well as event-related revenue streams, such as its lucrative Cottage Life consumer show.

While every communications giant professes to be chasing this very goal, many established media organizations have had difficulty segueing into unfamiliar formats, notwithstanding the obligatory websites and Facebook pages. Specialty channels like Bravo and Discovery dutifully post past episodes and broadcast their schedules online, but there’s little content beyond video and desultory blogs. And most print-based properties still generate mostly text, despite efforts to move into video.

Selling media buyers, especially those focused on mass TV audiences, on the concept isn’t necessarily a slam dunk, either, because Blue Ant is trying to push out so many different content formats, which appeal to different demographics and different sorts of advertising strategies. “Blue Ant is ahead of its time,” observes digital media strategist Dan Hill, principal of Terraform Media Canada. “Where they specialize is really niche content. The industry struggles with how to bring that to life from a marketing perspective.”

MacMillan is not daunted, however. When he started building Blue Ant, he kept casting his mind back to the late 1990s, when every dog-and-pony show Alliance Atlantis did had to include a set piece about the “information superhighway.” In those days, convergence was the buzzword, but the media giants didn’t have much to pump through all those fibre optic networks.

The more research MacMillan did, the more he reckoned that things had come full circle and that there was money to be made in creating great content geared to crisply delineated audiences. The question is—despite MacMillan’s conversion on the road to the Internet—can his upstart firm genuinely move beyond the comfortable verities of the 1,000-channel broadcast industry and become a company that competes in the deep space of the online world? “It’s a confusing, nervous-making time,” he allows. “But we’re happy with all that.”

At 56, MacMillan is every inch the reluctantly aging baby boomer. He is short, lean and athletic, with a faintly pugilistic bearing that belies an otherwise cool and cerebral manner. He wears his wavy auburn hair long—the sale of Alliance Atlantis freed him of the need to maintain the well-coiffed looks that Bay Street demands of a chief executive, says McLean—and shleps around with a scuffed leather shoulder bag that looks like it’s been through the wars.

“He’s a lousy squash player, but he’s very, very competitive,” says Slaight, a scion of the Standard Broadcasting empire and one of the original investors in Blue Ant. “He’ll smash into walls to get the ball.”

Friends and colleagues in Toronto’s clubby media firmament describe him as both reserved and creative, an entrepreneur with a knack for hiring smart people. Heather Conway, who worked for Alliance and now heads English-language programming for the CBC, says MacMillan has a clinical, somewhat detached approach to business that enables him to understand its fundamental strategic drivers. “Michael can take it to a deeper level,” Conway says. “His favourite thing to do is to sit around and talk about what is the ‘real’ thing, the thing that really adds value. He also knows how to play the long game.”

Case in point: In 2000, Alliance Atlantis anted up $75 million for the right to co-produce a new crime series, CSI, with CBS. Within a few years, CSI had become the top-rated U.S. crime drama, and spawned two immensely popular spinoffs, as well as huge overseas distribution revenues (director Jerry Bruckheimer helped pitch the show to international buyers). MacMillan soon began to gut Alliance Atlantis’s production unit in 2003 to focus on the franchise, which became the company’s single-most-profitable venture by the time the company was sold.

That sale to Canwest made a lot of shareholders very happy, and so it’s not surprising that MacMillan has had little difficulty rounding up startup capital for his latest venture. McLean points out that it took Atlantis 15 years to raise its first $30 million, whereas Blue Ant zipped past the same milestone in only 14 months.

Most of those dollars came from a conspicuously old-media company: Torstar. The sprawling newspaper giant has always had commercial interests beyond journalism, including Harlequin Books. The company recently bought a stake in an e-commerce hub called Shop.ca, and owns a western Canadian newspaper chain. But it has been pushing hard to find new digital revenue sources, and the Torstar brain trust saw the Blue Ant stake as a way of nosing into adjacent content markets. MacMillan, moreover, had a long track record with all the major carriers, meaning he had access to audiences and subscriber revenues.

Yet Torstar, which is busy launching eBooks and adding video to its own news site, didn’t think of Blue Ant as merely a way to get a toehold in the television world. “When Michael came in and talked to me about what he wanted to accomplish with Blue Ant, he was approaching it differently than what you might have thought,” says Torstar CEO David Holland, who notes that the company was interested in Blue Ant’s content and its philosophy of delivering programming and information across the full range of media platforms and devices.

MacMillan has found much to admire in the new media environment. Take Vice, the outré pop-culture magazine that started modestly in Montreal and has become a global brand on the strength of outrageous video reportage, most of which lives on its YouTube channel (though it now has a series on HBO). It was the Vice crew that first took NBA star Dennis Rodman to North Korea.

“Brilliant,” MacMillan marvels. Vice’s success—major corporate advertisers and sponsors have beaten a path to their Brooklyn headquarters—reveals how its creators “maintained a precise idea of where they stand,” MacMillan adds. “How does anybody cut through the chatter? Every time the media has fragmented, it has become more and more important to have a clear marketing proposition.”

With Blue Ant, MacMillan appears to be tacking against the torrents of broadcast television dreck at the bottom of the dial by targeting two coveted demographics, the first of which is thinking, affluent baby boomers: its portfolio includes content about the cottage lifestyle, travel, and PBS-style documentary programming through the Canadian version of the Smithsonian Channel, as well as a nature channel called Oasis. Rounding out the offerings, Blue Ant also focuses on millennials with Aux and Bite, which originated with GlassBox. Both pump out content on cable and online, but their YouTube-subscriber and Facebook Like numbers are modest. Aux and Bite boast 96,000 and 40,000 Likes on Facebook, and 7,600 and 13,000 subscribers on YouTube, respectively. By contrast, Epic Rap Battles of History, a YouTube channel popular among teens, is running at over nine million subscribers.

Such box scores offer clues about how brands travel online. But MacMillan’s longer-term goal is to make sure that content flows across all the platforms. In some cases the video end begat the online presence. But in others, the expansion across platforms began somewhere else: the outdoorsy niche began with the purchase of Cottage Life magazine and two other smaller publications, which have been used to build a cable channel (how-to videos and sponsored content figure prominently). “The issue is the production and distribution of content, not who owns the screen,” says Conway. “Right from the get-go, he’s basically said, ‘I’m screen agnostic.’ That’s a really interesting insight. He’s smarter than the average bear.”

Or is he merely smarter than the average specialty TV executive? Red-hot media brands like Vice, Buzzfeed and College Humour have little connection to the old media environments from whence they sprang (magazines, newspapers, cable), and don’t much care about cable television as a distribution venue. And the success of Netflix has proven that viewers aren’t averse to paying for content, particularly for content with strong brand appeal. Alliance Atlantis was one of the first big specialty-channel aggregators to recognize the value of branding in the cable universe, acquiring rights to globally recognized properties like the BBC and National Geographic. MacMillan also understood the strategic importance of selling advertising across a portfolio of channels, as well as cross-promotion, as a way of maximizing returns. (Blue Ant’s sales teams have been pursuing this approach.)

MacMillan definitely understands what the iPad has wrought, and admits he spends more time with that particular screen than any other these days. He also suspects that the television industry is still in a state of denial about the fire burning in the basement. He says he recently attended one of the largest industry trade shows, Mipcom, and ended up talking to the same people he’d last encountered six years ago, most of whom were still thinking in terms of selling programs region by region to established channels as opposed to “worldwide deals for rights to be exploited via the Internet anywhere.” “I was surprised,” he says. “It was like the Internet was never invented.”

But the CRTC’s recent decision to press ahead with a so-called pick-and-pay approach to cable will force all the players in Canada’s $20-billion film and television industry to recognize that the mutually beneficial relationship between the broadcasters, specialty channels and the carriers may be coming to a close. For years, Canadian specialty channels depended on so-called mandatory carriage rules to get access to cable subscriber revenue and advertising revenue. MacMillan says that Blue Ant’s offerings won’t be exposed to the proposed changes, however. “Most of our channels are already delivered to niche audiences, and we expect greater pick-and-pay choices not to alter that much. Most of the subscribers who currently subscribe to our four ‘premium’ [advertising-free] channels, already chose them on an à la carte stand-alone offering.”

McLean allows that Blue Ant is likely heading in the direction of an initial public offering, although he doesn’t offer details. “It would be, I think, foolhardy to think that somewhere down the road that wouldn’t be a consideration.”

As for when, no one will speculate. For now, MacMillan seems to be enjoying his second lease on professional life: he may be pursuing a grand vision of the future of digital media, but he doesn’t act like a guy in a hurry.

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