Flashback to the start of the 2007-2008 TV season

When I wrote a recent post about the collapse in ratings for television soap operas this year — pointing out that this collapse comes despite the fact that soap operas continue to air new episodes through the writers’ strike, albeit episodes apparently written by scabs — I received feedback to the effect of, “well, of course ratings collapsed, the writing got a lot worse.”

So that compels me to go back to the very start of the prime time season in September-October 2007, when the TV networks put their very best feet forward…

Pulling from a piece of research from Lehman Brothers (not accessible online):

According to the initially reported Live Ratings provided by Nielsen Media Research, audience levels for the first week of the new season are on average roughly 10% lower Y/Y across all demographics.

In the most advertiser-coveted demographic [of] 18-49, the networks seeing the most significant declines are CBS and ABC each at -15% Y/Y, followed closely by FOX at -14% Y/Y, and NBC at -8% Y/Y. [Bear in mind that NBC was already in the basement, ratings-wise.]

CBS and ABC had the most difficult premiere week of any of the networks, as many of their franchise shows (including “CSI: Miami” on CBS and “Grey’s Anatomy” on ABC) experienced >20% slides.

So, not to repeat myself, but: TV ratings collapsed year over year; it wasn’t the fault of the strike (which of course then caused additional viewers to flee); 2008 TV ad revenues will prove to be propped up by the election and the Olympics (as is usual for such years); and 2009 is going to be a deeply, deeply interesting year for the TV industry — which this blog will follow most closely when it happens!

Astonishing Societe Generale transcripts emerge…

As uncovered by Financial Crookery:

Saturday morning. A particularly nice apartment in an upmarket residential district of Paris. Monsieur Bouton is shaving in front of the mirror. A lady lounges on the plush bed. The telephone rings.

Bouton: “‘allo?”

Voice: “Bonjour, Danny, eet iz Christophe ‘eere.”

Bouton: “Christophe?”

Voice: “Yes, Christophe Mianne….your ‘ed of capital markets and derivatives…ze one who got you Equity Derivatives ‘Ouse of ze Year.”

Bouton: “Yes, what do you want. I am busy eere. And call me sir.” (he winks at the lady)

Mianne: “‘ow you like ze markets at the moment sir? Ze equities I mean?”

Bouton: “Zat is your job to tell me. I pay you 5 million euros last year for zis game. I don’t like your question.”

Mianne: “OK OK OK. I sink we ‘av accident. I ‘av unexpected exposure.”

Bouton: “How unexpected?”

Mianne: “About 70 billion euros unexpected. All long.”

Bouton: “70 million? And you are bothering me about zis on le weekend?”

Mianne: “Sir, you mis’eard me. I said billion. Seventy sousand million euros of long exposure.”

Bouton: “Is zis bad?”

Mianne: “Une catastrophe, sir. I sink you ‘av to come into ze office today.”

Monsieur Bouton ends the telephone call. He apologises to the lady, dresses and summons his chauffeur from his slumber in a not so nice apartment in a not so nice residential district of Paris. We move to Saturday lunchtime. An equally plush boardroom in la Defence, Paris. Many, many assorted senior faces present.

Bouton: “What is ‘appening?”

Head of Risk: “Sir, we ‘av discovered some unausorised positions in ze equity derivatives delta one desk. Because of zis we have beaucoup de long exposure. We ‘av lost about 1 billion Euros so far. I recommed zat we quickly close zis position and….”

Bouton: “…who ze fuck are you?”

Head of Risk: “I am ze ‘ed of risk sir. We ‘ave a junior guy who ‘id some trades. It eez a large position which we found by accident. It eez not my fault.”

Bouton: “Shut up. I am announcing our results in 4 days and I do not want zis position.”

Head of Risk: “Me too. I think zat we….”

Bouton: “Shut up…..merde…..Mianne, ‘ow we get rid of zis position and ‘ow much we lose?”

Mianne: “Sir, ze US she is closed Monday. Lazy Americaine. If we unload on Monday ze impact will be huge.”

Bouton: “‘ow bout we call some banks and ‘edge funds and place it?”

Mianne (with panic in the voice): “SIR, it is seventy billion euros! Zis is like a quarter of ze whole belgian market. Eef I even mention zis figure on a telefone ze other party will ‘ang up and start shorting. We will be killed! We can tell no one, sir, no-one! We ‘af to be fast.”

Bouton: “‘ow much we lose if we sell?”

Mianne: “Eet doesn’t matter. If people find out before we are finished eet’s a bigger number.”

Bouton: “I don’t understand.”

Mianne (patiently): “Sir, zis figure is so impossibly ‘uge zat we are dead if anyone know it.”

Bouton: “Merde. OK sell. Zen we talk again OK.”

Wednesday evening, Paris.

Mianne: “We ‘ad some ‘elp from ze Fed. Zey so dumb zey thought it was a recession. We only lost 4.9 billion euros. Zis is good, no?”

Bouton: “Who was zis guy, ze tradeur who did zis?”

Mianne: “We lost him, sir. ‘E ‘as vanished.”

Bouton: “Tomorrow ‘e is famous. Zey will find ‘im, ze press. I am ‘appier being me zan zis tradeur.”

[* with apologies to the cast, crew and writers of ‘Allo ‘Allo]

Great moments in journalism, Risk Magazine edition

Risk Magazine — the finance industry magazine focused on risk management — presented, this very month, its Equity Derivatives House of the Year award for 2008 to… ta daa… Societe Generale.

(The Societe Generale rogue trader did his $73 billion of dirty deeds with — you guessed it — equity derivatives.)

This is by far the best corporate award since Fortune Magazine gave Enron its Most Innovative Company in America award in February 2001 for the sixth consecutive year, right before Enron blew up and went bankrupt.

Update on Societe Generale rogue trader Jerome Kerviel

From The Daily Mash via Megan McArdle:

Friends of rogue trader Jerome Kerviel last night blamed his $7 billion losses on unbearable levels of stress brought on by a punishing 30 hour week.

Kerviel was known to start work as early as nine in the morning and still be at his desk at five or even five-thirty, often with just an hour and a half for lunch.

One colleague said: “He was, how you say, une workaholique. I have a family and a mistress so I would leave the office at around 2pm at the latest, if I wasn’t on strike.

“But Jerome was tied to that desk. One day I came back to the office at 3pm because I had forgotten my stupid little hat, and there he was, fast asleep on the photocopier.

“At first I assumed he had been having sex with it, but then I remembered he’d been working for almost six hours.”

As the losses mounted, Kerviel tried to conceal his bad trades by covering them with an intense red wine sauce, later switching to delicate pastry horns.

At one point he managed to dispose of dozens of transactions by hiding them inside vol-au-vent cases and staging a fake reception…

My jaw just hit the floor

You already know that the rogue trader at Societe Generale, the second largest bank in France, cost the bank $7.2 billion in losses.

What the Wall Street Journal just reported:

The combined trading positions [the rogue trader] built up over recent months, say people close to the situation, totaled some €50 billion, or $73 billion.

By “people close to the situation”, they mean “bankers and lawyers currently wandering disheveled and shirtless down the Fifth Arrondissement, rendered mute by systemic emotional shock”.

The fun continues:

In addition to the billions, Société Générale appeared for a time to have lost Mr. Kerviel as well. Executives at the bank, still stunned at the magnitude of the scandal, told reporters yesterday they hadn’t kept track of his whereabouts since questioning him on Saturday.

Sacre bleu!

“He was mentally weak,” said the bank’s co-chief executive, Philippe Citerne.

Um.

Toward the end of 2007, Mr. Citerne said, Mr. Kerviel’s trades were winning.

OK. So, how exactly much was he in the money “toward the end of 2007” with his$73 billion of combined trading positions, do you think?

Continued:

Société Générale Chairman Daniel Bouton declined to provide details about the positions the trader built up over the past months. But he warned: “Had we not acted swiftly, the loss could have been 10 times worse.”

Color me reassured.

And, to close, here’s your big chance:

[T]he [bank’s new funding] plan is to raise €5.5 billion in a rights issue, an arrangement in which new shares are sold, typically at a discount… J.P. Morgan and Morgan Stanley are underwriting it… The capital raising is expected to kick off after Société Générale reports its 2007 results on Feb. 21.

The line forms to the right!

The best way yet to measure the implosion of the TV and radio industries!

Really, this is kind of genius…

WPP Group PLC [one of the really big advertising agencies] invested in a Silicon Valley start-up that arms consumers with cellphones that measure which television and radio ads they see and hear…

Integrated Media Measurement Inc. outfits survey participants with a device inside their cellphones. As long as the cellphones are on, any ads the people hear are recorded.

Getting accurate information about how many people are exposed to their ads is a top priority for marketers.

However, it is not yet clear how many of the following additional factors the new whizzy cellphone measurement devices will be able to track:

  • Number of visits to the bathroom during commercial breaks while your cellphone is left on the living room couch — pay-per-flush?
  • Same for visits to the fridge — pay-per-pie!
  • Number of very very subtle and quiet clicks of your channel changer remote control
  • Awakeness/alertness level of the viewer at any given time — you guessed it, pay-per-snore
  • Percentage of putative TV/radio viewing/listening attention instead actually focused on reading Digg on your laptop
  • The frequency with which you can actually remember the brand of car or toothpaste or breakfast cereal being marketed by yet another bland, undifferentiated, generic TV or radio commercial — pay-per-retain-anything-at-all
  • The pounds-per-square-inch of pressure being exerted by your posterior when you’re accidentally sitting on your cellphone while you watch TV
  • Number of thousands of times you prop your cellphone up in front of your computer speakers and play the “Head-On! Apply directly to the forehead!” TV commercial on Youtube on an infinite repeating loop just to f— with The Man, while you go out for a pizza
  • Confusion level of your teenage son or daughter when confronted with the idea that you’re supposed to listen to music interrupted by commercials — or video interrupted by commercials, for that matter

Good luck measuring that ol’ inherently unmeasurable media, dudes!

Oh boy! The FT liveblogs the Societe Generale conference call

I love the Internet…

The Financial Times liveblogs the Societe Generale conference call; everything translated from French:

10.01 – “we’re all waiting,” explains one journo to two new arrivals to the conference call. No sign of any official/SocGen action just yet. Just half Europe’s financial media.

10.03 – very loud banging in the background. Someone makes a gag about a guillotine in action…

10.12 – the chaos continues. They’re looking for our correspondent apparently. Starting to see how this bank managed to let a plain vanilla futures trader build up sufficiently vast positions to lose €5bn. They don’t seem to have mastered the basics of telecommunications…

10.19 – the conference seems to be going on: “dealing with an extraordinarily exception….specific case”…

10.21 – there’s a forceful type online complaining that the bank must restart the conference call. In the background: “we are probably…nothing to do with the core activities….derivative product.” Hope you’re finding this as insightful as we are…

10.23 – We’re in!!!!!!

10.24 – It’s muffled. Someone called Frederic (?) is talking….about the writedowns related to subprime. Which wasn’t what we wanted at all…

10.33 – “We have just given you bad news. We have just shown you simultaneous that…the whole [company] was making quite good results… The strength of our business …and the skills of people working in the [company] is wonderful.”

10.36 – to conclude – “All my apologies for those awful events we uncovered last weekend.” Onto questions…

10.45 – motivations of fraudster are “totally irrational.” He didn’t directly benefit. Further investigations will be carried out to see if he indirectly benefited…

10.48 – bank had a “duty to cut off positions before disclosing the information.” “With the chance of good fortune, it was possible to liquidate these positions over three days which was quite exceptional…We discovered this at the same time as the market plummeting….we really had to settle those positions as fast as we could and we did so during the three day crisis which you all witnessed.” [Aha! Thus the massive worldwide equity market crash on Monday!]

“They could have turned into gains if the market had gone up.” [If I had wings, I could fly!]

10.55 – “the risk and control system is not faulty.” [Yes, clearly not.]

11.14 – the man was let go with his passport, it seems. “perhaps we made a mistake.”…