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Fortune Brainstorm: Is Content Still King In Digital Age?

Tuesday, 22 Jul 2008 | 1:46 PM ET

This morning at the Fortune Brainstorm conference Viacom CEO Philippe Dauman and Verizon CEO Ivan Seidenberg took the stage to be interviewed by Fortune Magazine Managing Editor Andy Serwer.

Here we have content with an old media giant trying to compete in this digital age. And distribution; a telecom and wireless company that's reinventing itself as a multi-faceted distributor of content via mobile or its new fiber network.

As Time Warner spins off Time Warner Cable, Serwer pointed out that the trend of merging both content and distribution mechanism seems to be waning. But with pure-play content companies like Verizon underperforming the market, the pure content-creation route doesn't seem to be any more appealing to Wall Street.

So Dauman, Is technology commoditizing content? (Look at reality TV, which Viacom effectively created with "The Real World"). Dauman says no, rather that technology helps reinforce brands. He used another Viacom reality property "The Hills" as an example. "Hills" content is distributed not just to your TV, but via mobile and online; fans can join related social networks and virtual worlds. Dauman says the company's goal is to understand its targeted audiences to better create content for its platforms. And with more ways to distribute than ever, they're trying to create more and more original programming to distribute through their own 340 online sites, as well as the traditional cable networks..

What about VIA stock trading near an all-time low? Dauman says what CEOs always seem to say in those situations -- that they're building the company for the long-term. He touched on the fact that Viacom is pushing into a new business - casual gaming -- Dauman saying Viacom is the largest creator of casual games. (Casual games are those that pretty much anyone can play from their mobile phone or laptop-- not games like Doom which require significant investment of time). These games are one reason Dauman calls Nickelodeon "the ultimate multi-revenue brand we have." In addition to the content targeting youngsters, the company also has a virtual world, and games, and is now also hosting the first Nickelodeon cruise and selling hotel rooms. Bottom line, this content giant is moving to be less reliant on advertising to build other revenue streams, be they subscriptions for a virtual world, or from selling real and virtual goods on neopets.

Seidenberg was asked to justify Verizon's investment in its fiber distribution network, FIOS, which is about to take on Time Warner Cable as it launches in New York this summer. Seidenberg pointed out that while the company invests in its telco division, it's still less than half of its business. Joking that they're only looking to have 80 or 90 percent marketshare, he boasted that in the markets where Fios has been for a certain number of months, Fios has over 30 percent marketshare. Though it seem like it's hard to differentiate between what Time Warner Cable and Fios offer, Seidenberg says consumers see the value in 100 HD channels and all sorts of on-demand content, and they're voting with their dollars.

While the execs and magazine editors here chatter about the relationship between content creation and distribution Seidenberg dismissed the very construct. He says you don't have to have a connection between content and distribution to be successful, saying it makes more sense to have competition between content providers to create mobisodes or webisodes for various platforms, and competition among the distributors to get it out there in better, faster ways.

And any time you have the CEO of a wireless company open the floor to questions, you know he's going to get harassed about cell reception. Execs who travel often on business have a common complaint about the U.S. mobile system being incompatible-- and seemingly less efficient -- than the 3G system in Europe. Seidenberg said yes, the fact that we don't have interoperability is a reasonable complaint. But then he whipped out some statistics showing how much more time people in the U.S. spend talking on their mobile phones than those in Europe. (Though I wonder if people in Europe just text more.) And he reassured that as we move to 4G, the next generation of mobile infrastructure, we will have a common architecture for handsets and infrastructure.

I'll be watching to see how the FIOS launch goes in New York City--a key market to prove the viability of Viacom's investment.

(I find Verizon's service pretty good- I'm sending in these blogs via a Verizon wireless card that's working much faster than the WiFi service in the hotel).

Questions? Comments? MediaMoney@cnbc.com

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  • Working from Los Angeles, Boorstin is CNBC's media and entertainment reporter and editor of CNBC.com's Media Money section.