A Topsy Turvy Year for Media Stocks

A year of consolidation and consternation for traditional media giants took a toll on showbiz stock prices during 2018.

Most major entertainment players saw share prices decline over the course of the year — from Jan. 2 through Dec. 28 — with the exception of Discovery and 21st Century Fox, the latter of which is about to be swallowed up by Disney.

Media companies were not immune to the unpredictable equities markets, particularly in the last few months with fears of an economic slowdown.

Lionsgate lost 52% during the year amid a perfect storm of box office disappointments and unrealized investor expectations that the smallest of Hollywood’s major studios would be an M&A target this year.

Disney and AMC Networks ended the year in territory. Fox was the beneficiary of a bidding war between Disney and Comcast, which also made for a choppy year in the share prices of Fox’s suitors. Discovery had a slow start to the year but the completion of its $14 billion acquisition of Scripps Networks Interactive boosted investor confidence. In fact, Discovery shares were up more than 40% this year until the broader market downturn took root in the fall.

The biggest cloud hanging over the media sector overall is the competitive threat posed by the digital disruptors that have become known as the FAANG companies: Facebook, Amazon, Apple, Netflix and Google. Amazon had such a strong year that it (briefly) busted through the $2,000 per share benchmark in August and again in September, before cooling off amid the overall market slump.

But it wasn’t all go-go-growth across the FAANG spectrum. Netflix and Amazon posted double-digit gains for the year. Apple ended the year down 8% while Google was off just 1%. Facebook shares plunged 25% as the social media behemoth found embroiled in growing concerns about consumer privacy protections.

The outrage over Facebook’s handling of user data could lead to tighter regulation of its operations in countries around the world. It has also fueled tougher investor scrutiny of how its management is handling both the PR crisis and the ability to leverage its enormous user base – 2.27 billion monthly active users as of September, per Facebook — to generate profits.

The emergence of global platforms like Facebook, Netflix and Amazon has shaken the traditional media business its core, driving AT&T’s acquisition of Time Warner, Disney’s deal for 21st Century Fox and Comcast’s $40 billion bet on Euro satcaster Sky. Content-rich companies have embraced the “direct to consumer” mantra of the moment, which is forcing companies to take a leap of faith and make big changes to decades-old business models.

“The speed of change has forced every executive to acknowledge that the future of media is uncertain, adding a high level of worry to many different parts of the ecosystem,” veteran media analyst Michael Nathanson wrote earlier this month. “Every incumbent studio and network is facing the new reality of a Direct-to-Consumer world and figuring out their place within it.”

The process of getting there won’t be easy or cheap. Disney and AT&T in particular are looking at investing big in the launch of subscription streaming platforms by the end of next year. The uncertainty about the path that both companies are pursuing in the direct to consumer arena has been a drag on share prices. AT&T has also been weighed down by investor concern about its ability to manage the $170 billion debt load it has amassed since acquiring DirecTV in 2015 and Time Warner in June after a hard-fought anti-trust battle with the Justice Department, which is now on appeal.

2018 was another rough year for the two halves of Sumner Redstone’s empire. CBS shares were battered by upheaval throughout the year, from the ouster of longtime CEO Leslie Moonves in September to the legal battle for control of the company that Moonves launched in May against controlling shareholder Shari Redstone. CBS posted a bigger drop for the year than Viacom, which began to show signs of a turnaround after four years of steady declines for the share price.

Lionsgate, meanwhile, is looking to rebound from a year to forget. The stock showed some uptick in the last weeks of the year despite the general volatility in the equities markets. Company chairman Mark Rachesky voted with his pocketbook as he went bargain shopping for nearly 800,000 shares this month according to Securities and Exchange Commission filings.

Here’s a rundown of how traditional media and FAANG companies fared on Wall Street in 2018.

TRADITIONAL MEDIA

21st CENTURY FOX Closing price Jan. 2: $35.36 Closing price Dec. 28: $47.62 % gain/loss: +40% 52-week range: $33.75-$49.65

DISCOVERY Closing price Jan. 2: $23.11 Closing price Dec. 28: $24.64 % gain/loss: +10% 52-week range: $20.60-$34.89

AMC NETWORKS Closing price Jan. 2: $54.13 Closing price Dec. 28: $54.72 % gain/loss: +1% 52-week range:$48.00-$69.02

DISNEY Closing price Jan. 2: $111.80 Closing price Dec. 28: $107.28 % gain/loss: flat 52-week range: $97.68-$120.20

COMCAST Closing price Jan. 2: $41.07 Closing price Dec. 28: $34.35 % gain/loss: -14% 52-week range: $30.44-$44.00

AT&T Closing price Jan. 2: $38.54 Closing price Dec. 28: $28.45 % gain/loss: -27% 52-week range: $26.80-$39.32

VIACOM Closing price Jan. 2: $31.19 Closing price Dec. 28: $25.89 % gain/loss: -16% 52-week range: $23.31-$35.55

CBS CORP. Closing price Jan. 2: $59.17 Closing price Dec. 28: $43.42 % gain/loss: -26% 52-week range: $41.38-$61.59

LIONSGATE Closing price Jan. 2: $33.01 Closing price Dec. 28: $16.16 % gain/loss: -52% 52-week range: $13.63-$36.48

FAANGs

NETFLIX Closing price Jan. 2: $201.07 Closing price Dec. 28: $256.08 % gain/loss: +33% 52-week range: $191.22-$423.21

AMAZON Closing price Jan. 2: $1189.01 Closing price Dec. 28: $1,478.02 % gain/loss: +26% 52-week range: $1,167.50-$2,050.50

GOOGLE Closing price Jan. 2: $1,065 Closing price Dec. 28: 1,037.08 % gain/loss: -1% 52-week range: $970.11-$1,273.89

APPLE Closing price Jan. 2: $172.26 Closing price Dec. 28: $156.23 % gain/loss: -8% 52-week range: $146.59-$233.47

FACEBOOK Closing price Jan. 2: $181.42 Closing price Dec. 28: $133.20 % gain/loss: -25% 52-week range: $123.02-$218.62

Source: Variety Media

Instagram Is Purging Fake Followers Obtained Through Third-Party Apps

Instagram launched a new crackdown on users who inflate their follower counts and engagement metrics using unauthorized third-party apps.

The photo- and video-sharing app said it will begin purging fake followers, as well as likes and comments, from user accounts that Instagram has found to have employed third-party apps that violate its policies.

“We will begin removing inauthentic likes, follows and comments from accounts that use third-party apps to boost their popularity,” Instagram said in a statement. “This type of behavior is bad for the community, and third-party apps that generate inauthentic likes, follows and comments violate our Community Guidelines and Terms of Use.”

Instagram didn’t identify third-party apps it’s targeting in the new crackdown. Dozens of companies openly advertise apps and services promising to let Instagram users quickly boost followers and likes, including Skweezer, Incentafan, Mr. Insta, Boostgram, and Turbo Like for Instagram.

Some users try to game Instagram’s algorithms with such tactics, in the hopes that it will result in their content being more widely viewed on the platform.

Instagram’s new crackdown is launching amid a crisis at parent company Facebook, which is fighting to restore its credibility after a New York Times report last week revealed Facebook’s surreptitious attacks on critics and alleged that senior execs ignored and failed to disclose evidence of misuse on its platform.

According to Instagram, the company has built machine-learning tools to help identify accounts that have generated bogus followers and activity. Accounts that Instagram has flagged as using these services will receive an in-app message alerting them that Instagram has removed fake likes, follows and comments. In addition, users will be asked to change their password.

Instagram shared an example of the message a user who has used third-party apps to boost their followings will receive:

Instagram added that “some people may have unknowingly shared their login credentials with a third-party app,” but warned that accounts that continue to use third-party apps to try to inflate their audiences “may see their Instagram experience impacted.”

Source: Variety Media

Nexstar Media Group Vaults Into TV’s Big League With Tribune Media Acquisition

Texas-based Nexstar Media Group is poised to become the nation’s largest owner of TV stations after setting a $4.1 billion deal to acquire Tribune Media, which will take the company into New York, Los Angeles, Chicago and other large markets for the first time.

The all-cash deal covers Tribune’s 42 stations — including WPIX-TV New York, KTLA-TV Los Angeles, WGN-TV Chicago — and the WGN America cabler. Nexstar, based in Irving, Texas, will become a broadcast colossus with more than 200 stations with the Tribune outlets included. Nexstar already owns 170 stations covering nearly 39% of U.S. TV households. Nexstar said the deal had a total transaction value of $6.4 billion including the assumption of Tribune’s debt.

Nexstar outbid private equity giant Apollo Global Management with an all-cash offer valuing Tribune at $46.50 per share. The sale comes about four months after Tribune’s previous acquisition pact with Sinclair Broadcast Group imploded amid regulatory hurdles and political controversy given Sinclair’s size and the notably partisan tilt to the company’s political opinion and commentary programming and the tenor of its newscasts.

Nexstar’s transaction will also face stiff regulatory scrutiny and require divestitures to comply with the FCC’s TV station ownership rules. The company, founded in 1996 by Perry Sook who remans president-CEO, has been one of the most acquisitive broadcast groups in recent years. Of the 118 markets served by the combined company, Nexstar identified 15 markets of significant overlap with Tribune holdings. The company said it would quickly present a plan to the FCC for divestitures in 13 of those overlap markets.

“Nexstar has long viewed the acquisition of Tribune Media as a strategically, financially and operationally compelling opportunity that brings immediate value to shareholders of both companies. We have thoughtfully structured the transaction in a manner that positions the combined entity to better compete in today’s rapidly transforming industry landscape and better serve the local communities, consumers and businesses where we operate,” Sook said in announcing the deal. “As with our past transactions, we have developed a comprehensive regulatory compliance plan and believe we have a clear path to closing. With committed financing and a plan for significant synergy realization that will result in only a minimal increase in Nexstar’s pro-forma leverage, the combined entity will be poised for growth, leverage reduction and increased capital returns for shareholders.”

Nexstar said the sale price marked a 15.5% premium to Tribune’s closing price on Nov. 30, and a 45% spike over Tribune’s closing price on July 16, the day the FCC made it clear that the Sinclair pact would not be completed without another long slog through a regulatory hearing.

The combined Nexstar and Tribune will have revenue of $4.6 billion and earnings of $1.7 billion, Nexstar said. The deal also encompasses Tribune’s 31% stake in cabler Food Network, now owned by Discovery.

Sook told investors he expects the transaction to close in the third quarter of 2019. Nexstar has targeted $160 million in synergy savings in the first year after the completion of the deal.

Tribune Media CEO Peter Kern emphasized that the Nexstar pact will provide Tribune’s shareholders “with substantial value and a well-defined path to closing. Together with Nexstar we can better compete by delivering a nationally integrated, comprehensive and competitive offering across all our markets,” he said. “We believe this combination will produce an even stronger broadcast and digital platform that builds on the accomplishments of both companies and benefits our viewers and advertisers.”

The deal comes with a safety net for Tribune in requiring the price tag to climb by 30 cents per share per month if the transaction is not closed by Aug. 31, 2019.

Fox is expected to pursue the purchase of at least seven Fox affiliates as part of Nexstar’s divestiture process. Fox had planned to buy Tribune-owned Fox affiliate stations in Seattle, Denver, Miami, Cleveland and other mid-sized markets for $910 million from Sinclair had that company closed its Tribune takeover.

Industry sources said Fox is expected to try to pick up number of other Nexstar-Tribune affiliates as the enlarged company will rival Sinclair as an owner of Fox affiliates, giving Nexstar significant sway over a good chunk of the broadcast distribution of Fox Broadcasting Co. With Fox poised to sell off its studio and entertainment cable channels to Disney, the new iteration of Rupert Murdoch’s empire will be largely focused on Fox Broadcasting, Fox News and Fox Sports.

In a memo to Tribune staffers, Kern acknowledged that the company has been on a bumpy ride since May 2017 when it first set its sale agreement with Sinclair.

Here is Kern’s full memo:

Early this morning, we announced that Tribune Media entered into a merger agreement with Nexstar Media Group under which Nexstar will acquire Tribune, paying $46.50 per share for a total transaction value of $6.4 billion. This combination will create the preeminent local broadcast company — one that will have greater scale and more resources to serve all the communities in which we operate. Together, we’ll have much more flexibility to navigate the huge changes taking place in media and continue the trajectory of growth that both companies have established.

I recognize that this is the second time around in quick succession for most of us. But thanks to your efforts, we are in a very strong position strategically and financially. Last time we were here, almost 19 months ago, I challenged you to ignore all the noise and deliver your best performances. You met this challenge and as a result, we overcame that failed attempt and performed incredibly well this past year – and that, I can tell you, is a rare thing. You helped make this transaction possible and you should be very proud of what you have accomplished. On behalf of our Board, thank you.

Nexstar has, in its own right, been a remarkable success story. Launched in 1996 with just one television station, WYOU in Scranton, PA, today it is one of the nation’s largest local TV operators. The company now runs 171 stations delivering high-quality news, sports and entertainment content to 100 markets across the country. For Tribune employees, the breadth of Nexstar’s operations offer a great opportunity for professional development and advancement.

Like Tribune, Nexstar recognizes the importance of being “local” as one of its core values and prioritizes the production of high-quality local news. Once joined together, the combined company will produce almost 300,000 hours of local news and content. That commitment to being local is also apparent in Nexstar’s “Founder’s Day of Caring,” when employees in all 100 of the company’s markets receive paid time off to volunteer in their community. A great program in which I know we will be enthusiastic participants.

We look forward to working with Nexstar to achieve regulatory approval as expeditiously as possible and rest assured we have a clear understanding on how to do just that. We hope to close this transaction by the third quarter of 2019. Until then, we remain an independent company with ambitious plans. I know I can count on you to deliver the same outstanding work you have this past year and advance our goals despite this pending transaction.

Source: Variety Media

New 4K Format, Growing Digital Libraries Invigorate Home Entertainment Market

In the kaleidoscope of business models and formats that make up the home entertainment business, there are some brighter lights.

To those not familiar with the home entertainment business, 4K UHD with HDR and EST may be alphabet soup, but they are the industry stars for those in the know.

EST, or electronic sell-through, is the industry term for digital purchases of content, and in 2018 consumers began to build their digital libraries with gusto, growing the market by double digits. The 4K Ultra High Definition format, with four times the pixel resolution of 1080p HD, and high dynamic range (HDR), featuring wider color gamut, brighter brights and darker darks, is also reinvigorating the market with explosive growth, especially on the physical disc side as consumers take advantage of the full experience only available on 4K UHD Blu-ray Disc.

At the 4K UHD Summit in Los Angeles, director Christopher Nolan noted 4K UHD with HDR is “a mouthful,” but it “really puts us in a position where we can get closer and closer to a theatrical print in the home.” He is a “big fan of the 4K disc because it removes the uncertainties of streaming.

“It’s fantastic for the filmmaker to have a physical media that eliminates the variabilities, the compression and so forth,” he said. “That’s the gold standard that streaming is going to have to reach.” “The 4K UHD format, across both hardware and software, is providing a meaningful boon to our business, creating retail opportunity as consumers look to invest in the most technologically advanced viewing experience in the home,” says Eddie Cunningham, president of Universal Pictures Home Entertainment. “4K UHD discs already account for almost one in 10 new release discs sold in the U.S.”

“4K UHD sales are increasing with each title that is released, and we expect that upward trend to continue into next year,” adds Mike Takac, Warner Bros. Home Entertainment exec VP and general sales manager. “And even with the proliferation and advancements in streaming services, physical discs still offer the best quality viewing experience for home consumers and also are the best value proposition.”

While overall disc sales remain challenged (down 11.5% in the third quarter), sales of 4K Ultra HD Blu-ray Discs, which often include a digital copy, soared 68% in the quarter from the same quarter last year, according to the latest numbers from DEG: The Digital Entertainment Group. At the end of the third quarter, there were 392 titles available on Ultra HD Blu-ray Disc (595 available digitally), according to the DEG. U.S. 4K UHD disc sales are projected to almost double this year to more than 11 million units, Cunningham notes.

David Kite, senior VP of product management and distribution strategy, Walt Disney Direct-to-Consumer & International, says his studio is “excited about growth prospects for 4K UHD on physical as it delivers such a rich visual experience that’s so well suited to movies like ‘Coco’ or ‘Black Panther.'”

“It’s fantastic for the filmmaker to have a physical media that eliminates the variabilities, the compression and so forth. That’s the gold standard that streaming is going to have to reach.” Christopher Nolan

“4K UHD has really transformed the home viewing experience and clearly consumers are getting it,” said Bob Buchi, president, worldwide, Paramount Home Media Distribution, at the Nov. 6 UHD event. “Product sales are up 87% in comparison to the first three quarters of last year.”

The DEG reported more than 4.2 million 4K Ultra HD TVs were sold in the first three quarters of 2018, bringing the total number of U.S. households to more than 42 million, an increase of 80% from the prior year period. Approximately 2.3 million Ultra HD Blu-ray playback devices (both dedicated players and video game consoles) were sold through to consumers in the first nine months of the year.

“Combined with technological advancements in film mastering and high dynamic range color, 4K is now the de-facto media format you didn’t know you couldn’t live without until you experience it fully,” says Miguel Casillas, senior veep of production, home entertainment and digital distribution, at Lionsgate.

The studios are feeding that market for the holiday season with releases such as Universal’s “The Big Lebowski” 20th anniversary 4K Blu-ray set, Warner’s “2001: A Space Odyssey,” and Sony’s “Philadelphia” 25th anniversary 4K Blu-ray, which is being released as part of a partnership with the (RED) Foundation and Coca-Cola to help fight HIV/AIDS.

Meanwhile, years of sowing the seeds of digital collection with an early release window before disc, special features and rights-locker services, including the year-old Movies Anywhere service and app, have finally begun to bear big fruit. Consumers are starting to buy titles digitally in greater numbers. Digital purchases of movies, TV shows and other filmed content rose 18% in the third quarter compared with the same quarter in the year prior, a significant uptick from the single-digit gains posted in prior years, according to DEG data. For the year through Sept. 30, EST spending totaled $1.8 billion, up more than 12% from the comparable period in 2017.

“EST continues to grow, with that consumer base gravitating because of the ease of use and flexibility of digital purchase,” says Jason Spivak, exec VP of worldwide digital distribution at Sony Pictures Home Entertainment. “This growth has also been driven by the continued addition of value to digital purchase, including expanded special feature offerings and interoperability across platforms via Movies Anywhere.” “We are experiencing double-digit growth in EST transactions this year and we expect to maintain that growth through 2019,” says Warner’s Takac. “Our involvement with Movies Anywhere is adding value to the EST consumer by making content easier to access and watch anywhere on a wide variety of devices. For supporting digital platforms, EST ownership includes all the special features available on physical product, making digital ownership an easy to use robust consumer offering.”

“We continue to focus our marketing efforts on educating consumers about the ease of utilizing digital, the advantages of the early window, and the convenience and flexibility of Movies Anywhere,” adds Chris Oldre, exec veep of pay TV, digital and international distribution, Walt Disney direct-to-consumer & international.

Movies Anywhere, the digital movie rights locker storage service and app backed by most of the major studios, is an outgrowth of Disney’s locker service. It celebrated its first birthday in October with 6 million registered users, 150 million movies collected and more than 1 billion minutes viewed. Launched in October 2017 with support from five of the six major studios (Disney, Fox, Warner, Universal and Sony), four of the biggest online retailers, and an opening library of more than 7,300 movies, the service now offers more than 7,500 movies and has added FandangoNow and Microsoft Movies & TV to its digital retailer lineup that included iTunes, Google Play, Walmart’s Vudu and Amazon Prime Video at launch. (Paramount Pictures and Lionsgate are not part of the service, which also does not yet feature TV programming.)

“FandangoNow’s EST business growth is even faster than our VOD growth, and that’s exciting,” says Cameron Douglas, VP of home entertainment for Fandango’s on-demand video streaming service FandangoNow, which joined Movies Anywhere in March.

“4K UHD has really transformed the home viewing experience and clearly consumers are getting it.” Bob Buchi

In addition to Movies Anywhere, interactive extras, premium formats such as 4K UHD with HDR and retailer offerings such as Vudu’s “Mix & Match” (offering multiple digital movie purchases for a lower price) are also boosting digital buying, adds Michael Bonner, EVP of digital distribution at Universal Pictures Home Entertainment.

For some time, the spotlight has been on the subscription streaming video-on-demand business (SVOD), with Goliaths Netflix, Amazon and Hulu dominating, and for good reason. Consumer spending on streaming subscriptions rose more than 30% in both the third quarter and the first nine months of this year, totaling an estimated $3.3 billion and $9.4 billion, respectively, according to IHS Market data cited by the DEG. And the market is about to get bigger. Both Disney and WarnerMedia (the new parent of Warner Bros., HBO and Turner following the AT&T merger) are readying streaming services for 2019.

Disney’s service, Disney+, has been the studio’s streaming focus since it in 2017 announced it would withdraw content from Netflix. Still, Walt Disney CEO Bob Iger in a Nov. 8 fiscal call indicated the studio would retain windows between its businesses.

“The home video window continues to be quite important to us,” said Iger. “You’ll likely see us protect that.”

Home entertainment executives say the different businesses can coexist.

“Our EST business continues to grow and benefit from the adoption of digital services, so we are well positioned across all platforms to serve the consumer anytime, anywhere,” Universal’s Bonner says. “It’s important to recognize the need for choice as consumers navigate the different options available in the home entertainment landscape,” Sony’s Spivak says. “Within that, physical media offers an expanded and optimized experience, as well as a way to build collections. That’s important to a significant portion of the consumer base, and we anticipate the coexistence alongside streaming to continue in a mutually beneficial fashion.”

Source: Variety Media

Jodie Foster to Launch Internet Class Teaching Filmmaking

Jodie Foster will lead her first-ever online course in filmmaking, through a partnership with internet startup MasterClass.

In the class, set to debut in early 2019, Foster will “share what she has learned from her five decades of experience on both sides of the camera,” MasterClass said in announcing the deal. “In her class, she will guide students through every step of the filmmaking process.”

Foster has appeared in more than 40 movies. She’s a two-time Oscar winner, having picked up best-actress trophies for “The Accused” and “The Silence of the Lambs.”

Foster made her film directorial debut in 1991 with “Little Man Tate,” in which she also starred, and has since gone on to direct “Home for the Holidays,” which she also produced; “The Beaver,” starring Mel Gibson; and “Money Monster,” starring George Clooney, Julia Roberts, and Jack O’Connell. Foster also has directed episodes of original Netflix series “Orange Is the New Black,” “House of Cards” and “Black Mirror.” Foster is repped by CAA.

MasterClass, which launched in 2015, focuses on developing and selling celebrity-led online classes. Other showbiz figures who have inked deals with the company include Martin Scorsese, Ron Howard, Spike Lee, Mira Nair, Ken Burns, Judd Apatow, Shonda Rhimes, Steve Martin and Aaron Sorkin.

MasterClass charges $90 for individual courses and offers a $180 annual plan, which provides unlimited access to all new and existing classes from its lineup of celebrity instructors. The San Francisco-based company currently offers more than 45 courses.

Source: Variety Media

Facebook Wielded Access to User Data as a Competitive Weapon, Documents Reveal

Facebook’s aggressive business practices are again in the spotlight, after a massive batch of documents released by a U.K. parliamentary committee showed how Facebook has used access to user data to reward friendly partners and punish rivals.

The 250-page report, which includes numerous internal company emails, detail how Facebook granted favored partners — including Netflix — “whitelist” access to user info, while it routinely blocked companies it viewed as competitors from accessing its data.

The documents also reveal that Facebook considered charging developers to access its platform, as well as restricting user-data access only to developers that bought a minimum amount of advertising. In addition, per the documents, one of Facebook’s developers admitted that its use of Android apps to collect users’ call and text histories was a “high-risk thing to do from a PR perspective” and that engineers discussed ways to use Android to automatically track user data without their explicit opt-in.

The release of the documents come after a series of damaging information about Facebook’s practices has streamed out over the course of 2018. Most recently, the New York Times last month published a report revealing how Facebook stalled in response to various scandals and lashed out against competitors and critics, an effort that included enlisting a consulting firm to push reporters to cover billionaire George Soros’ ties to an anti-Facebook group.

Facebook, in response to the release of the documents, said they were “cherry-picked” and lacked context. “The documents were selectively leaked to publish some, but not all, of the internal discussions at Facebook at the time of our platform changes. But the facts are clear: we’ve never sold people’s data,” the company said in a statement.

British lawmaker Damian Collins, chairman of the Digital, Culture, Media and Sport Committee, released the documents on Wednesday. Those came from a lawsuit that bikini-picture app developer Six4Three filed against Facebook in 2015, alleging Facebook’s move to block apps from accessing info on users’ friends represented fraud. Collins last month forced the founder of Six4Three to turn over the documents, which had been under seal.

“The idea of linking access to friends data to the financial value of the developers relationship with Facebook is a recurring feature of the documents,” Collins wrote in a summary.

Facebook said it stands by changes it made in 2014 and 2015 to block users from sharing their friends’ information with app developers. Those were changes it made after a vast trove of info was illicitly shared with political consulting firm Cambridge Analytica, which came to light earlier earlier this year and led to CEO Mark Zuckerberg being hauled before congressional hearings.

Zuckerberg, in a response he posted on Facebook after the documents were released, said the change to limit data access to third-party developers was to counter “shady apps that abused people’s data.” “This was an important change to protect our community, and it achieved its goal,” he wrote.

The document cache, which spans a time period of roughly 2012-15, revealed that Facebook execs — including Zuckerberg — had multiple discussions about potentially charging developers to use the platform. One company executive suggested the possibility of limiting access to user data only to companies that spent at least $250,000 in mobile ads annually.

In Zuckerberg’s response Wednesday, he said that after those discussions, “Ultimately, we decided on a model where we continued to provide the developer platform for free and developers could choose to buy ads if they wanted.” Other models Facebook considered adopting but decided against included charging developers for usage of the platform, “similar to how developers pay to use Amazon AWS or Google Cloud,” Zuckerberg wrote.

Meanwhile, Facebook also used access to data as a punitive measure, according to the documents. According to a 2013 email exchange, Zuckerberg personally approved the blocking of Twitter’s Vine video app from being able to find friends on Facebook using its ostensibly open API.

“Unless anyone raises objections, we will shut down [Vine’s] friends API access today,” Justin Osofsky, Facebook’s VP of global operations and media partnerships, wrote in a January 2013 email the day Vine launched. Zuckerberg replied, “Yup, go for it.”

Prior to the document release in the U.K., Facebook dropped its policy that restricted apps built on its platform that “replicated our core functionality.” While Facebook maintained that “these kind of restrictions are common across the tech industry,” citing YouTube, Twitter, Snap and Apple, it said it was eliminating the “out-of-date policy so that our platform remains as open as possible.”

Facebook critics alleged that its move to block rivals from the friends API represent violations of U.S. antitrust laws. “These internal Facebook documents are a smoking gun that executives — including Zuckerberg — engaged in illegal and anticompetitive actions to grow and protect Facebook’s monopoly power,” Sarah Miller, co-chair of the Freedom From Facebook coalition, said in a statement.

One of Freedom From Facebook’s founding organizations is George Soros’ Open Society Foundations. Facebook COO Sheryl Sandberg personally directed employees to look into Soros’ finances, as the Times first reported last week.

The Facebook board (which includes Sandberg and Zuckerberg) said in a letter to the head of Open Society that it was “entirely appropriate” for Sandberg to inquire about whether Soros had shorted Facebook’s stock after he had publicly called the company a “menace,” the Wall Street Journal reported. Sandberg has maintained she didn’t know Facebook had hired Definers, the firm that pushed the narrative about Soros’ ties to Freedom From Facebook; in a note to employees, the exec also said, “The idea that our work has been interpreted as anti-Semitic is abhorrent to me — and deeply personal.”

Regarding the use of “whitelists” to allow partners including Netflix, Airbnb and Lyft to access data on users’ friends lists, Facebook said, “In some situations, when necessary, we allowed developers to access a list of the users’ friends. This was not friends’ private information but a list of your friends (name and profile pic).” The company also said whitelists are “common practice when testing new features and functionality with a limited set of partners before rolling out the feature more broadly (aka beta testing).”

Facebook maintained that the call-and-text messaging tracking feature in Facebook Lite and Messenger on Android devices was deployed on an opt-in basis. “We use this information to do things like make better suggestions for people to call in Messenger and rank contact lists in Messenger and Facebook Lite,” the company said.

Source: Variety Media

Amazon’s Prime Video Channels Biz to Generate $1.7 Billion in 2018

Amazon doesn’t offer a “skinny bundle” of streaming TV channels — but its a la carte Prime Video Channels service is having a huge economic impact on the pay-TV business.

According to new estimates from BMO Capital Markets, Amazon’s Prime Video Channels will pull in $1.7 billion of revenue this year, more than double from last year’s $700 million. That’s poised to grow to $3.6 billion in 2020 worldwide.

Assuming the ecommerce giant shares on average 70% of the subscription fees, Amazon will pay out $1.2 billion in 2018 to Prime Video Channels partners — ballooning to $2.5 billion in 2020, the firm’s analyst predicted.

“We believe [Prime Video Channels] is a material driver of standalone [ subscribers for many entertainment companies,” representing anywhere from 25%-45% of total OTT users depending on the channel, BMO analysts Daniel Salmon and William Lowden wrote in the report.

In the U.S., Amazon’s Prime Video Channels currently provides a selection of 156 channels. Those include CBS All Access, WarnerMedia’s HBO, Cinemax, and Boomerang; Lionsgate’s Starz; PBS Kids and Masterpiece; Viacom’s Noggin and Comedy Central Now; Hallmark Movies Now; Lifetime Movie Club; Tribeca Shortlist; BBC/ITV’s Britbox; CuriosityStream; Cheddar; and AMC Networks’ Urban Movie Channel, Acorn TV, Sundance Now and Shudder. All movies and TV shows included with the subscriptions are available to watch on-demand, and many channels also provide live-streaming feeds.

A huge advantage Amazon offers partners is massive scale: It currently has about 75 million Prime Video worldwide (including about 40 million in the U.S.) and is on pace to top 100 million by 2020, BMO’s analysts estimated. Amazon earlier this year announced that it had surpassed 100 million Prime members globally but hasn’t broken out numbers beyond that.

In addition, Amazon removes friction from the OTT-subscription process, letting customers purchase access to a channel with a few clicks and by integrating the video services into a unified service available across several hundred devices.

But there’s a tradeoff: Amazon takes anywhere from 15%-50% of the channel subscription fees (estimated to be 30% on average), with bigger players like HBO and Showtime gaining more favorable splits. That’s compared with those media companies keeping 100% for subs through their own, direct-to-consumer services. Plus, Prime Video Channels removes media companies’ direct customer relationship (and limits the data they are able to collect), the BMO analysts pointed out.

Still, on a per-subscriber basis, media partners earn more from distributing their OTT services through Prime Video Channels than from deals in which their channels are bundled into traditional pay-TV or “virtual MVPD” internet services, like Sling TV, YouTube TV, DirecTV Now or Hulu With Live TV, according to BMO’s analysis.

Meanwhile, Amazon is continuing to expand access to Prime Video — including with Comcast, the U.S.’s biggest cable operator. This week, Comcast began rolling out Amazon Prime Video to Xfinity X1 subs, which includes access most of the channels they subscribe to through Prime Video Channels (with the exception of HBO/Cinemax and CBS All Access because of the programmers’ contractual restrictions in their deals with Amazon).

Amazon first launched the program in December 2015 as the “Streaming Partners Program” in the U.S. with about 20 partners, and has since expanded and rebranded the service as Prime Video Channels. The company has launched Prime Video Channels in the U.K., Germany, Austria and Japan. The BMO analysts identified France, Spain, Italy, Canada, and India as potential markets where Amazon could roll it out next.

Source: Variety Media

ABC Seeks $2 Million to $3 Million for Oscars Ads

Walt Disney’s ABC has sold more than three-quarters of its commercial inventory for its February 24 broadcast of the glitzy awards fest, according to Jerry Daniello, senior vice president, entertainment brand solutions, for Disney ad sales, pacing ahead of its progress at this time last year. He declined to comment on the price of a spot in the event, but two media buyers familiar with negotiations for advertising in the event say ABC is seeking between $2 million and $3 million for a 30-second ad.

“We are working lockstep with the Academy,” Daniello told Variety in an interview. No matter the host or the format, “it’s the biggest event we have on our network.” Commercials tied to the Oscars broadcast and ABC’s red-carpet coverage generated approximately $128 million for the network in 2017, according to Kantar, a tracker of ad spending – more ad revenue than it generates on any other day of the year.

Advertisers didn’t buy time in the Oscars with a specific host in mind, Daniello says. “Most of the interest we had to date was locked in”, he notes. ABC has seen interest in the broadcast, he adds, from automobile manufacturers, retailers, beverage marketers, and makers of consumer technology.

Madison Avenue’s attention to the event – even with a steep price – shows that movie buffs aren’t the only ones infatuated with extravaganzas like the Oscars, despite some of the fluctuations they have suffered in audience. Marketers are also paying top dollar for other events that typically bring in some of TV’s biggest crowds. CBS is seeking between $5.1 million and $5.3 million for a package of TV and digital advertising around its coming broadcast of Super Bowl LIII, according to three people with knowledge of negotiations, and, according to one of those people, around $1 million for a 30-second spot in the network’s February Grammys telecast.

ABC’s Oscars telecast has been beset in recent outings by low viewership. Ratings have more or less tumbled steadily since an Ellen DeGeneres-hosted telecast won 43.7 million viewers in 2014. This year’s broadcast captured just 26.5 million viewers, a 20% drop from the 2017 telecast. ABC in 2016 renewed a deal to broadcast the popular event through 2028.

Despite the audience drop, ad costs for the event continue to rise. ABC sought as much as $2.6 million for a 30-second Oscars spot in its 2018 broadcast. The price in recent years had typically hovered at between $1.8 million and $2.2 million.

Simply put, in an era when TV audiences have splintered around on-demand streaming video, big crowd-pleasers like the Oscars continue to have value – even if they attract fewer eyeballs than they did in the past.

ABC and the Academy have started working with sponsors in recent years to allow more commercials that play off elements of the awards proceedings. In 2018, for example, Walmart used its commercial time to run a series of short films crafted by female directors. The retailer is expected to return to the broadcast in 2019. “We are experimenting with ad formats,” says Daniello. “There is strong interest in developing specific creative elements that link to the content.”

Realizing advertisers are interested in the ability of TV content to drive consumers to seek out information via digital and social media, Disney approached potential Oscars sponsors with research it commissioned with Google examining just that. The study showed ads in live “tentpole” events broadcast on ABC or ESPN in the first quarter drove more than twice the search engagement compared to other broadcasters’ big first-quarter live broadcasts. According to the Google study, search engagement for both ads and content in the 2018 Academy Awards was nearly three times the average of that related to events such as the Super Bowl, the Golden Globes, the Grammys or the Winter Olympics.

Advertisers also know the Oscar playing field is a protected one. The Academy of Motion Pictures and Sciences limits the amount of advertising time allowed in the awards broadcast, meaning the commercials have a better chance of standing apart from the pack. Even so, the Academy has allowed more commercials – between 70 and 80 – in the broadcast in recent years, compared with about 60 between 2007 and 2011, according to Kantar.

The success of the Oscars broadcast is often at the mercy of the slate of films up for honors.. When the top movies nominated are arty films aimed at older audiences, viewership tends to slump. When the nominees for best films are blockbusters, the ratings increase.

In 1998, approximately 55 million viewers tuned in to see the crowd-pleasing “Titanic” win “Best Picture.” Oscar ratings hit a new low in 2008, however, when just 32 million tuned in to see “No Country For Old Men” win the big prize, down from about 38.9 million the year before. Top films in 2018 were not blockbusters, but rather well-received films like “The Shape of Water,” ‘The Post,” “Darkest Hour,” “Three Billboards Outside Ebbing, Missouri” and “The Phantom Thread.”

Source: Variety Media

How NPR Aims to Bring Transparency to Podcast Metrics

NPR has unveiled a new open source podcast measurement project that aims to bring more transparency and granularity to podcast metrics. The project, dubbed Remote Audio Data (RAD), has been developed in partnership with a number of podcast app developers, ad tech companies as well as tech and media heavyweights including ESPN, Google and iHeartMedia.

At its core, RAD allows podcast publishers to tag individual moments in their podcasts — think ad breaks, mentions of sponsors, individual segments and more. Podcast apps that support RAD will keep track of listeners reaching those moments, and send relevant data back to publishers.

RAD has already been implemented in NPR’s own NPR One Android app, and podcast analytics provider Podtrack is starting to offer support as part of a beta program. In addition, NPR has gotten commitments from Acast, AdsWizz, ART19, Awesound, Blubrry Podcasting, Panoply, Omny Studio, PRI/PRX, RadioPublic, Triton Digital, WideOrbit and Whooshkaa to implement support for RAD.

The development of the standard was supported by Cadence13, Edison Research, ESPN, Google, iHeartMedia, Libsyn, The New York Times, New York Public Radio, Voxnest and Wondery. Notably absent from the list is Apple, which has long been one of the biggest players in the podcasting space.

Source: Variety Media

YouTube Warns Creators They May See a Drop in Number of Subscribers

YouTube is enacting a broad purge of spam accounts over the next two days, and it’s warning creators they could see a big drop in subscribers as a result.

The Google-owned video service regularly works to verify the legitimacy of accounts, and its purge of spammy and bogus users has led to steep declines in sub counts in the past.

YouTube, as part of its quarterly report on enforcement of community standards that first launched earlier this year, said on Thursday it deleted 1.67 million channels during the third quarter of 2018, 80% of which were for spam violations. All told, those channels represented around 50 million videos (which were removed along with the channels).

In addition, in the third quarter YouTube said it deleted 7.85 million videos (81% of which were first detected by automated systems) for violations of its guidelines prohibiting spam and adult content as well as “low-volume areas” like violent extremism and child exploitation. YouTube also removed over 224 million comments for violating community guidelines, most of which were for spam.

To identify spam accounts, YouTube says it uses a mix of “industry-leading techniques and proprietary technology.” Spammer accounts tend to subscribe to a variety of channels, instead of just subscribing to channels that bought the spam.

YouTube requires channels to have a minimum of 1,000 subscribers to participate in the platform’s ad-revenue sharing program, called the YouTube Partner Program. If the spam-purge causes a channel to drop below the 1,000-subscriber threshhold, it will no longer be eligible for the rev-share program.

Source: Variety Media