Happy second half of 2016! Is it a holiday-getaway fever? A rush to have bragging rights at Herb Allen’s next Sun Valley MogulFest (trademark pending)? Whatever the cause, media/entertainment/digital media M&A deals and rumors of deals landed all over the place on Thursday.
I’m betting there’s more to come (perhaps some bargain hunting in an ailing post-Brexit English economy?) as another round of consolidation scoops up lesser players in the traditional space.
Whether that spills significantly into the digital and ad-tech spaces is another question. The Disney pickup of a stake in video-streaming powerhouse MLB Advanced Media has some significant implications in that sector. Will Disney pick up other tools and tech? Is John Malone’s latest shopping spree done? -DB
The agreement, unveiled Thursday morning, is the culmination of on-again/off-again talks between the companies in which cable pioneer John Malone owns stakes. Malone, who also owns a big stake in Discovery Communications and is chairman of Liberty Media and Liberty Global, has talked about the need to boost the scale of smaller content companies amid pay TV consolidation and globalization.
Wall Street observers have said a combined Lionsgate-Starz could over time acquire further content companies that aren’t entertainment conglomerates. Analysts have long seen Starz signaling a possible sale to a bigger company as a precursor to a hookup between the cable company and Lionsgate.
CBS and Viacom. Moonves the favorite to run a combined company, given Dauman’s feud with Redstones. A re-combined content powerhouse gets Viacom’s cable TV channels and Paramount, and becomes better able to compete with NBCUni, Fox and WB.
AMC. The owner of channels like AMC, SundanceTV, WE tv and IFC may well be among the next dominoes to fall for its top-quality content. With a market value of $4.1 billion, lots of buyers could find it relatively easy to swallow the pure-play content company famous for its cult dramas, including Breaking Bad and Better Call Saul.
Discovery. Could be a buyer or seller. Bernstein analyst Todd Juenger said Discovery, like most media companies, needs to reduce debt and expenses. Such savings could come easier as part of a larger entity.
M&A, Pay TV
M&A Activity Keep Entertainment Stocks Afloat at the Year’s Halfway Mark
More than half of the 50 stocks tracked by The Hollywood Reporter fell short of the S&P 500 in the year’s first half. That index managed a 2.7 percent gain, despite a wicked, short-lived downturn after the U.K. voted to ditch the European Union.
But what kept some big names alive was M&A talk -— and Thursday’s big Lionsgate/Starz deal is the perfect example. Leading the charge downward was Lionsgate, whose shares fell a whopping 38 percent since the start of the year. But, acquisition target Starz fell 11 percent, and that could have been much steeper given it gained 6 percent after the deal was announced.
M&A, Pay TV, Streaming Video, Traditional Media
Disney Said to Buy Stake in $3.5 Billion MLB Web Unit
Disney, the owner of ESPN and ABC, will also obtain a four-year option to buy an additional 33 percent stake in the digital arm of Major League Baseball. The deal underscores the importance of the video-streaming business to the future of ESPN, which has been losing viewers and advertising dollars to online media. ESPN has toyed with the idea of selling Web-only packages outside of the traditional cable-TV package, and Disney Chief Executive Officer Robert Iger is making deals to offer ESPN on Internet services such as Sling TV.
M&A, Tech, Music
Apple in Talks to Acquire Jay Z’s Tidal (Report)
By DAISUKE WAKABAYASHI, HANNAH KARP and PATIENCE HAGGIN
Apple is exploring the idea of bringing on Tidal to bolster its Apple Music service because of Tidal’s strong ties to popular artists such as Kanye West and Madonna.
The talks are ongoing and may not result in a deal, these people said. Terms of the potential deal aren’t known.
DB: As Apple showed with $3B Beats deal two years ago, which was driven in part by the desire to be in business with Dr. Dre and Jimmy Iovine, the company invests as much in talent as it does in any tech.
M&A, Traditional Media, Tech, MogulFest
Media Consolidation Could be on Menu as Moguls Descend on Sun Valley for Allen Conference
But the topic of media consolidation likely will be served up at nearly every meal, according to media analysts and dealmakers. It’s a perennial discussion among the moguls in attendance but has taken on more currency this year as the media landscape tilted with the merger of Charter Communications (CHTR) and Time Warner Cable, the nation’s third- and second-largest cable operators, respectively, and by the acquisition of Cablevision Systems and Suddenlink by France’s Altice to create the fourth-largest U.S. cable operator.
Content companies need to have broadcast networks, sports rights or HBO to command steep prices in negotiations with cable or satellite operators these days, Wible said. Without them, that’s likely to force smaller companies such as AMC Networks (AMCX) , owner of the AMC and BBC America channels, and Food Network owner Scripps Networks Interactive (SNI), to find larger parents.
MCNs, Investment, International
Kin Community Raises $13.5 Million In Fresh Funding, Eyeing Push Into Australia, The U.K.
Women’s multi-channel network Kin Community, which represents bold-faced YouTube stars like Rosanna Pansino and Hannah Hart, has reportedly raised $13.5 million in a series D funding round. This brings total cash raised by the five-year-old, Santa Monica, Calif.-based company to $40.5 million, according to The Wall Street Journal, which was first to report the funding round.
The round was led by Emil Capital Partners. And, as funds will be primarily allocated toward international expansion, several investors were from outside the U.S., including Germany’s Tengelmann Group, Canadian TV company Corus Entertainment, and Australian digital publisher Allure Media.
HTC Vive announces $10 billion VR Venture Capital Alliance
Today, at the GSMA Mobile World Congress in Shanghai, HTC Vive announced a $10 billion initiative to put the investment weight of much of the industry on the back of itself and its partners, which include a number of VR-centric VC houses, in addition to more staple firms like Sequoia Capital and Redpoint Ventures.
In all, there will be 27 firms joining HTC Vive in the VR Venture Capital Alliance(VRVCA). Alvin Wang Graylin, China Regional President of VR at HTC, will head up the “Alliance.”
Ad Blocking, Digital Media
Consumer control and “common sense” key to tackling mobile ad blocking: IAB UK study
The study, conducted by Differentology, used a mixture of online surveys, consumer diaries and in-depth interviews to understand what consumers really think about mobile ads, so marketers can produce better mobile campaigns and reduce ad blocking. It revealed 10% of people currently block mobile ads – millennials accounting for 63% of this group.
Do’s = Keep ads simple, fun, short. Less frequent. Be creative. Be relevant.
Don’ts = Hijack or take-over the user experience. Omit x/skip button. Go straight to app store/other sites. Overload by frequency. Overload amount of data/ad size.
In order to effectively evaluate programmatic video solutions and the relative value they provide, industry practitioners need to first decouple the targeting, forecasting, transaction, creative delivery, and reporting functions from the broader offering and evaluate them individually. Given that these platforms and technical infrastructures evolve rapidly with shifting media consumption patterns and ad technology solutions, the goal of this document is to provide buyers and sellers with a framework to help them evaluate these features and functionalities during partner evaluation.
Advertising, Live Streaming, Social Media
Facebook Live Commercial Breaks? Examining the Next Stage for Live-Streaming
Live is in the first stage of the cycle right now, Facebook’s working to build a product that people love – and that presents its own challenges in live content. One of the biggest obstacles faced by other live-streaming apps has been content quality – you go onto any live-streaming platform right now and a lot of the options you see will be random, niche, low-fi broadcasts that don’t have any significant audience appeal. That then drives people away – if there’s not enough relevant content to keep people coming back for more, they won’t, simple as that.
As you can see (and as discovered by Moshe Isaacian), there are already measures built into the back-end code of Live to include the ability to add in commercial breaks. And that’s particularly significant when you consider the possibility of Live as an option to traditional TV.
Social Media, Emotions, Thumbs Down
Facebook users are rebelling against clickbait with one of the only tools they have
That makes some amount of sense. But Mosseri continued: “Another pattern we see is that they’ll like a story, click on it, and come back immediately because they feel deceived and un-like it. We do see that reflected in behavior.”
Apps, Social Media, Mobile, Something Else Entirely
Ghost in the machine: Snapchat isn’t mobile-first — it’s something else entirely
Snapchat is a true creature of mobile, a living, breathing embodiment of everything that our camera-enabled, networked pocket computer can possibly offer. And in its cooption of smartphones into a true social operating system, we see the inklings of what is beyond mobile. When I open Snapchat up to the camera, I can’t shake the feeling that the ghost is banging on the glass, trying to break out into the world.
They coined the term “authentically mobile” to distinguish services that not only are tailored for the mobile world, but who so thoroughly leverage the unique capabilities of mobile devices that they could literally not exist without them. Where mobile-first companies take the new, portable form factor and riff on things that were more or less possible but limited in some way on the desktop, authentically mobile companies are truly creating experiences that would either be impossible or entirely meaningless without a networked supercomputer in our pockets. A classic example of authentically mobile would be Uber, which without a location-enabled computing device always on our person (on both sides of the 2-sided marketplace), would almost certainly not exist.
Digital Media, Streaming Video
Disney’s “LOL” App Brings Short-Form Video To Kids
Mobile-friendly, short-form video platforms like Snapchat and Instagram are the way of the future, and Disney is making sure it gets a piece of that pie. The Mouse House has launched Disney LOL, on which it will share a plethora of its kid-friendly videos.
The videos featured on Disney LOL come from the media giants owned and operated properties, including its TV channels, Pixar, Marvel, and Star Wars. The app will also share gifs and Vines with its young users.
Linear TV, OTT, Traditional Media Strategy
Moody’s: To Beat OTT, Nets Must Abandon Linear Model
But getting here won’t be easy. Moody’s says that shift will require that content providers unite to beat back the rivals they helped create by licensing their shows.
“The success of these OTTs has in large part been fueled by content licensed from the very industry heavyweights they are challenging,” said Moody’s senior vice president Neil Begley in a statement. “This is emboldening them to invest heavily in original, exclusive programming, and eventually bid more aggressively for streaming rights to major league sports.”
According to the report — Pay TV and Television Networks — US: OTT Invasion: Grand Bargain Required for Long-Term Sector and Credit Stability –to compete with OTT services and rapidly growing digital platforms for subscribers and advertising revenue, the networks must:
End their linear distribution model
Offer all programming on-demand with full stacking rights
Implement robust search and recommendation interfaces
Implement real-time targeted ad placement focused on the viewer instead of the program.
“Instead, based on the current trajectory, we believe that companies will go it alone, meaning change will be inconsistent, stability will erode as individual network churn rises, and operating performance will come under pressure for those that stumble,” Begley said in a statement. “This could result in potential for rating pressure for many notable industry players that cannot defend against the rising change.”
Traditional Media, Advertising, Upfronts
Yankee Doodle Dandy: Broadcast Upfront Could Close Before July 4
Fox and ABC have joined CBS and the CW in the “effectively done” category. As parity is the byword for this year’s bazaar, ABC’s results largely concur with the way things shook out for CBS, with CPMs (the cost of reaching 1,000 viewers) up as much as 10% and dollar volume up in the mid-single-digits versus 2015-16. Fox’s volume increase is expected to be more pronounced on a percentile basis, as it is building on a degraded base. (The broadcaster’s year-ago bookings were down 5%.) Meanwhile, it’s worth noting that every CPM hike for Fox cements its standing as the most expensive broadcast net on the dial, a function of its decade-plus run as the TV’s top source of viewers in the 18-to-49 demo. While the 2011-12 campaign marked the last time Fox won the annual ratings race, the gap between it and the top-rated network each year averages out to just four-tenths of a ratings point. Again: Parity is the byword.
ICYMI, Live Streaming, Advertising, Digital Media
Insights: Is Live Streaming Becoming A Real Business?
A spate of smaller companies – including YouNow, Upclose, Stre.am, Flurry, Live.ly, Live.me and Kanvas – are among those trying to create their own unique spin on a live experience, for creators and sometimes for enterprise-level customers. I can’t guess their prospects. Pioneering streaming app Meerkat already blanched at the competition and pivoted out of the sector.
Advertising will have to adapt as well, with more all-show sponsors, branded content, graphic overlays and – just as in radio and podcasting – live-reads of sponsor messages. Facebook recently enabled branded content, but opposes “interruptive” pre-roll advertising in its feeds (the graphic overlays should be a way around this). Live.ly, like Twitch, allows fans to “tip” a star with digital currency. It’s safe to say these business models will evolve quickly, and some sites and their ad-tech partners likely will find a foothold even in the face of Facebook’s vast scale and bank account.
Traditional Media, Social Media
RelishMix weekly assessment of social-media presence (Social Media Universe/SMU) for weekend’s wide-release movies:
TARZAN activity on social (daily views), especially on YT is noticeably stronger than THE PURGE (although a bigger SMU). BFG light.