Media: Making money on wireless will take years

By Sinead Carew

NEW YORK (Reuters) - The wireless industry is pinning hopes for growth on video services, yet top media executives say they do not see cellphone projects reaping significant financial reward in the next several years.

Wireless operators now deliver everything to handsets, from Web surfing to gaming, and music to video. As the price of phone calls keeps falling, their aim is to boost revenue by convincing consumers to use phones for more than talking.

But even as carriers spend billions of dollars beefing up networks for these advanced services, executives at this week's Reuters Media Summit in New York were less enthusiastic about near term wireless prospects.

"At this point the revenues that are coming in to companies for programs like that ... they're small businesses for the most part," said Martha Stewart Living Omnimedia Inc. (MSO.N: Quote, Profile, Research, Stock Buzz) Chief Executive Susan Lyne.

"Maybe a decade from now it will be different," said Lyne, who has done some cell phone tests, but currently puts the lion's share of the company's new media resources into building its Internet business.

Merrill Lynch media analyst Jessica Reif Cohen said media and cable companies such as Time Warner Inc. (TWX.N: Quote, Profile, Research, Stock Buzz) and Comcast Corp. (CMCSA.O: Quote, Profile, Research, Stock Buzz) are preparing for the time when consumers want the programs they get at home on mobile phones. But she sees services like mobile video taking years to make a noticeable difference to media company's financials.

Wireless "doesn't even show up. It's such a little blip right now ... I think that story, from my perspective, will be more like five years down the road," said Cohen.

Time Warner's cable unit and Comcast are part of a wireless marketing joint venture with mobile operator Sprint Nextel Corp. (S.N: Quote, Profile, Research, Stock Buzz). Both were part of a cable consortium that recently spent $2.4 billion on the purchase of wireless airwaves in a government auction.

But Time Warner CEO Richard Parsons said the consortium is not in a big hurry to build a network using the airwaves.

Basketball, baseball and football executives are enthusiastic about prospects for sending everything from game scores to video highlights to phones, but they did not see mass audiences for watching full games on phones.

"It is a three-hour experience," said National Football League Commissioner Roger Goodell. "Frankly, it is counter to what we are seeing. People want to see it on the wide screen."

Barry Diller, CEO of Web conglomerate IAC/InterActiveCorp. (IACI.O: Quote, Profile, Research, Stock Buzz), said networks must improve before wireless becomes a key platform for media.

"The truth is that you still can't get, even in New York city, a decent cell connection and you can't get practically anything ... fast on a current wireless connection," said Diller.

But he was confident wireless will eventually be important for companies such as his.

"It cannot not be. There's no way around it," Diller said.

(For more coverage of the Reuters Media Summit, please see our MediaFile blog at blogs.reuters.com/mediafile)