There used to be a time when everyone knew the name of each member of the Beatles. You could randomly poll anyone on the street concerning this subject, and the answer would come back immediately -- Paul McCartney, John Lennon, George Harrison, and Ringo Starr. Try that experiment on a young person today, say someone in high school, and you'll find that there's no guarantee the names of the Fab Four will be recited -- heck, the kid might not even know the first names.
That's been my experience, at least, and that's what went through my mind as when I read an article by the Associated Press concerning the use of News Corp.'s (NYSE:NWS) MySpace to bolster the brand equity of the King of Rock 'n' Roll, Elvis Aaron Presley, who would have turned 72 today were he still with us. Elvis may be the King to some, but let's face it -- a lot of young people would tell you that the only king from Memphis is a guy named Jerry Lawler, the cocky color commentator for World Wrestling Entertainment programming.
CKX (NASDAQ:CKXE) is the company which owns an 85% stake in Elvis Presley Enterprises, Inc., giving it control over the licensing opportunities for the legendary singer; it also operates the Graceland estate. CKX believes that it can enhance value for its shareholders by acquiring the rights to entertainment content. Besides Elvis, the company also owns the rights to the American Idol brand -- via the acquisition of 19 Entertainment -- and has a controlling stake in the licensing business for Muhammad Ali. Once it acquires new content, CKX must then exploit it for all it's worth to generate revenues and profits.
Enter MySpace. CKX is utilizing an account dedicated to Presley for purposes of increasing equity with his name, likeness, and product catalog. Presley was a teen idol of his era, and while the quality of his music has withstood the test of time, his cool factor has not. That's why the brand needs an injection of marketing prowess to increase its net worth. A MySpace page can certainly help, along with Google's (NASDAQ:GOOG) YouTube platform, which the company also uses to help spread the Elvis word.
Social networking is an economical solution that CKX can use to get Presley's name out in front of those who were not even born yet when the King died; maintaining a MySpace account and uploading videos won't break the bank. But with millions of pages and videos in existence, it's a pretty competitive arena to be in. Nevertheless, social networking is something that all media companies are forced to engage; conglomerates like Disney (NYSE:DIS), Viacom (NYSE:VIA), and Time Warner (NYSE:TWX) are always evaluating the merit of leveraging this online trend to market their content.
2007 marks the 30th anniversary of Presley's death. CKX will be pulling out all the stops to ensure that young people are aware of the milestone -- as well as what Presley's catalog has to offer. The company operates an interesting business model based on content-rights acquisition, and if you believe that content is king, then Elvis certainly is a king of content. CKX's latest quarterly financial statements show that it is doing well in terms of operational cash flow -- the company booked $46.1 million of net cash from operations for the nine-month period, versus $25 million in the comparable time frame -- but its acquisition activity and capital expenditures didn't leave any true free cash behind. Over time, that could change, as the company's intellectual-property portfolio is monetized. To ensure that the Elvis brand stays alive, social networking may be a vital strategy on the part of CKX.
More on the king of social networking:
- Is MySpace's 15 Minutes Over?
- MySpace's Next Frontier: Video
- MySpace in China?
- If Stocks Had MySpace Pages
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Fool contributor Steven Mallas owns shares of Disney. He not only knows the names of all the Beatles, but he also knows the names of everyone in the Monkees, Cheap Trick, and Devo. As of this writing, he was ranked 4,135 out of 19,322 investors in the Motley Fool CAPS system. Don't know what CAPS is? Check it out. The Fool has a disclosure policy.
