Jan 24,2001
Merrill, Bullish on Webcasting,
Sets Starring Role for AnalystsBy Peter Edmonston
WSJ.com It's show time at Merrill Lynch & Co. The nation's largest brokerage firm thinks that its more than 900 research analysts and economists have a big future in front of the camera. Last week, the company unveiled plans to feature their faces in daily audio and video clips streamed over the Internet, using a technology known as Webcasting. For Merrill's posse of financial analysts, the Webcast initiative means learning some new skills, such as how to apply pancake make-up and which shirt patterns look best on the screen. "You do get a flavor of what it's like to be a talk-show host or a newscaster," says Heather Murren, a Merrill Lynch analyst who recently interviewed Avon Products Inc. CEO Andrea Jung for a company Webcast. Merrill's objective is to distinguish its research amid the hailstorm of e-mails, faxes and phone calls that institutional investors receive each day. It's also a way for Merrill's year-old online brokerage, Merrill Lynch Direct, to compete with E*Trade Group Inc. and Ameritrade Holding Group Inc., which lack in-house research teams. Access to Merrill's Webcasts is free to institutional and full-service clients, as well as customers of Merrill Lynch Direct, which charges commissions of $29.95 and up per trade. "It's a content-driven business," says Andrew Melnick, director of Merrill's global research and economics group. "We've got the content, and we need to drive it," says Mr. Melnick, sounding more like a media mogul than a brokerage executive as he eagerly describes plans to create "digital newsrooms" world-wide. So far, Merrill is spinning out three to five Webcasts each day from its New York office, including analysts' stock recommendations, interviews with executives and analysis of business events. The company recently added morning briefings from London, Hong Kong and Tokyo, and content eventually is expected to include customizable online "channels." Of particular interest are highlights of Merrill's "morning call," a power meeting in which its analysts and economists offer daily insights to the company's institutional sales force. For years, this influential information was for internal use only. But through a partnership with streaming-media technology provider iBeam Broadcasting Corp., Merrill has been offering edited clips of the morning call between 8 and 9 a.m., before the market's opening bell. Financial terms of Merrill's partnership with iBeam weren't disclosed, but Nick Balletta, senior vice president of iBeam's enterprise group, calls the arrangement a "multiyear, multimillion dollar" deal. "Merrill is taking this extremely seriously," says Mr. Balletta. "This puts them way out in front of the competition." Merrill's Web-programming strategy has been building over the last year. In May 2000, the company began Webcasting a weekly program called "Tech Talk," hosted by Steven Milunovich, Merrill's global technology strategist. The segment featured frequent appearances by Henry Blodget, Merrill's well-known Internet guru. "This is exactly the sort of thing that Merrill should be doing," says Greg Smith, an online-brokerage analyst for J.P. Morgan H&Q in San Francisco. "The real competitive advantage that Merrill has is its proprietary content." Although E*Trade and Ameritrade provide third-party research to their customers, they would be hard-pressed to match Merrill's Webcasting offerings, adds Mr. Smith. Merrill isn't the only brokerage firm playing to the digital camera. Morgan Stanley Dean Witter & Co., Credit Suisse First Boston and Salomon Smith Barney, among others, have been using Webcasts to provide wider access to their conferences. A collection of streaming-media companies are supplying Webcasting services to the financial industry, including On24 Inc., Investor Broadcast Network and Yahoo Broadcast Services, a unit of Yahoo ! Inc. Merrill's digital-media mandate also underscores the increasingly hazy line between research analysts and media personalities -- a blurring process that has been driven in large part by the rising popularity of news television channels such as Bloomberg Television, CNNfn and CNBC. Dow Jones & Co., publisher of The Wall Street Journal and WSJ.com, is co-owner with General Electric Co. of the CNBC television operations in Asia and Europe; Dow Jones also provides news content to CNBC and U.S. radio stations. Mr. Melnick says Merrill isn't competing with these mass-media outlets, but he acknowledges that they have cast an aura of celebrity on Wall Street's number-crunchers. "They've made analysts into brand names," he says. Even so, not everyone in Merrill's research department is feeling like a superstar these days. Earlier this month, Merrill announced plans to eliminate up to 60 positions in the department, or about 4% of the research staff world-wide. A company spokeswoman said at the time that the cuts were necessary "to reduce the rate of growth of the research budget and still make new strategic investments." So why Merrill is investing in Webcasting technology even as it trims its payroll? Donald Ullmann, chief operating officer for global research and economics, says Merrill's research is only as good as its distribution channels. "If we don't develop ways to get our research out to our clients in all the ways they want it, we lose," Mr. Ullmann said. But Webcasting is no sure bet. The meager capacity of many Internet connections means that streaming video is often reduced to little more than jerky pictures in a tiny box. And even those whose computers have media-playing software are often not inclined to use it, according to a recent study by research firm Jupiter Media Metrix. "There is certainly a gap between a video experience on the Web and what you're used to seeing on TV," concedes iBeam's Mr. Balletta. "But we are seeing a convergence." Barry Marks, a 35-year-old engineer from Austin, Texas, last week used the Internet to listen to Merrill Lynch's morning call. "I can see the value in it," says Mr. Marks, who has accounts with E*Trade, Datek Online Brokerage and Merrill Lynch's Merrill Lynch Direct. "But I also tend to think that I could absorb the information faster by just reading it," Mr. Marks says. Digital broadcasts are gaining traction among European brokerages as well. A London-based company, closely held Raw Communications, already has deals to broadcast the morning
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