Media executives, under siege from Web-based distribution that promises television shows, news and movies for little to nothing, are striving to protect lucrative business models while avoiding the bleak fate of the music and newspaper industries.Panic has yet to set in, as reflected by this year's 17% rise in shares of media companies -- which has outpaced the 7.5% growth of the broad-based S&P 500 Index.But each day brings new warning signs.The latest is the creeping worry that the most lucrative corner of media -- the pay-TV business -- faces a fresh assault by the same competitive forces of Web distribution and multiplying customer choices that have eroded the profits of other platforms over the past decade."If you can find somebody that comes along with a new platform ... where you don't cannibalise your existing business and you can make it accretive, then that's a good thing," said Turner Broadcasting System vice-chairman Andy Heller.At stake is $658 billion in 2010 global spending on TV, newspaper, and magazine advertising and fees, according to PricewaterhouseCoopers.How executives will tackle the world of limitless choice and contracting wallets for video and news will underpin discussions with top executives at next week''s Reuters Global Media Summit in New York, London, Paris, Taipei and Mumbai.Attendees include media chiefs Chase Carey of News Corp, Time Warner Inc's Jeff Bewkes, WPP's Martin Sorrell, Publicis' Maurice Levy, Next Media's Jimmy Lai and Viacom's Philippe Dauman.Disruptive forces that have upended the once-thriving global $60.4 billion interactive entertainment industry will also be hotly debated by the chief executives of Electronic Arts, Activision Blizzard Inc and Take-Two Interactive Software Inc.Nowhere are these challenges more acute than at News Corp, where top executives have taken to discussing its newspaper business in terms familiar to the pay TV industry.In the new model for news, the race for free online news consumers, who stick around for split seconds and generate little income, has given way to pursuing fewer customers who will be willing to pay for access to the Times of London and The Sun websites.That tactic has worked well in the pay-TV world for DirecTV, which News Corp once controlled, and at BSkyB in which the company is trying to take full ownership.News Corp, which has taken the pay model further with the imminent launch of a subscription newspaper designed solely for digital tablets like Apple's iPad, will be joined by The New York Times Co, which by early next year will begin charging some visitors to its popular website.In the video world, the experimentation of the past few years has helped create a powerful new player, Netflix Inc, whose future hinges on customers paying just a fraction of typical pay-TV bills.Even with the robust growth in profits at cable networks and pay-TV operators, industry chatter about "cord-cutting" -- or consumers ditching pricey TV subscriptions for cheaper or free online fare -- is unnerving. So are two straight quarters of customer losses for the first time ever at cable and satellite companies in the United States, analysts said.The question investors ask is the extent to which media companies need to exit the experimental stages of the past few years to forge new business models that could jeopardise existing cash flow businesses but pave a path to long-term growth.There is no reason they cannot do both, said Jeffrey Stevenson, managing partner at Veronis Suhler Stevenson, a media investment firm."The challenge financially is that the inflection point is still far out to the future, whereas the growth associated with the newer channels exceeds the decline in the old ones," Stevenson said. "We're in no-man's-land right now."Doing nothing is not an option either. Having first watched the music business and then newspapers bleed billions of dollars as consumers devoured their products for free, media companies are extremely cautious to avoid letting this happen to the video business.Analysts at Credit Suisse describe the scenario for the pay-TV business executives as facing an "Innovator's Dilemma."Do they risk losing their big leads to nimbler operators like Netflix, which is now the third-largest video distributor in the United States with more than 16 million subscribers to date. It is just behind Comcast Corp and DirecTV Group with 23 million and 18 million, respectively.But whereas Comcast and DirecTV have average revenue per video customer of between $70 and $88, Netflix's ARPU comes in at around $12 -- an attractive prospect for some users in a tough economy.To Credit Suisse analyst Spencer Wang, Netflix is not necessarily accretive and could just be "good enough" to entice paying subscribers away from cable and satellite services.

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