Spotify Settles $1.6 Billion Lawsuit From Wixen Publishing

Spotify and Wixen Music Publishing — which sued the streaming giant late last year for a headline-grabbing $1.6 billion — has announced that they have settled the lawsuit. According to the announcement, “The conclusion of that litigation is a part of a broader business partnership between the parties, which fairly and reasonably resolves the legal claims asserted by Wixen Music Publishing relating to past licensing of Wixen’s catalog and establishes a mutually-advantageous relationship for the future.”

While terms of the deal were not disclosed, a source close to the situation told Variety that, not surprisingly, the settlement amount was well short of $1.6 billion. If it were, as a public company Spotify would be obligated to disclose it per SEC rules, which suggests a 5% threshold (e.g. the impact of the event is 5% or more of revenue, earnings, etc) as a starting point.

In the lawsuit, Wixen, which handles titles by Tom Petty, Neil Young, Steely Dan’s Donald Fagen, Weezer’s Rivers Cuomo, Stevie Nicks, and others, alleged that Spotify was using thousands of songs without a proper license and sought damages worth at least $1.6 billion and injunctive relief.

“Prior to launching in the United States, Spotify attempted to license sound recordings by working with record labels but, in a race to be first to market, made insufficient efforts to collect the required musical composition information and, in turn, failed in many cases to license the compositions embodied within each recording or comply with the requirements of Section 115 of the Copyright Act.

Despite the size of the damages, Wixen signaled a willingness to settle in its first statement. “We’re just asking to be treated fairly,” president Randall Wixen said. “We are not looking for a ridiculous punitive payment. But we estimate that our clients account for somewhere between 1% and 5% of the music these services distribute. Spotify has more than $3 billion in annual revenue and pays outrageous annual salaries to its executives and millions per month for ultra-luxurious office space in various cities. All we’re asking for is for them to reasonably compensate our clients by sharing a miniscule amount of the revenue they take in with the creators of the product they sell.”

In Thursday’s announcement, Wixen said, “I want to thank [Spotify cofounder and CEO] Daniel Ek and [Spotify General Counsel and VP, Business & Legal Affairs] Horacio Gutierrez, and the whole Spotify team, for working with the Wixen team, our attorneys and our clients to understand our issues, and for collaborating with us on a win-win resolution. Spotify is a huge part of the future of music, and we look forward to bringing more great music from our clients to the public on terms that compensate songwriters and publishers as important partners. I am truly glad that we were able to come to a resolution without litigating the matter. Spotify listened to our concerns, collaborated with us to resolve them and demonstrated throughout that Spotify is a true partner to the songwriting community”

“We’d like to thank Randall Wixen and Wixen Music Publishing for their cooperation in helping us reach a solution,” said Gutierrez. “Wixen represents some of the world’s greatest talents and most treasured creators, and this settlement represents its commitment to providing first-rate service and support to songwriters while broadening its relationship with Spotify.”

Source: Variety Media

Hearst Television Renews Nielsen TV and Radio Ratings Contract

Hearst Television has set a multi-year renewal of its contract with Nielsen to provide ratings for its local TV and radio stations.

The deal calls for Hearst to use a range of new Nielsen software and data tools in its selling its wares to local advertisers. The pact covers Hearst’s 30 TV stations in 26 markets and two Baltimore radio stations.

The Hearst renewal is significant for Nielsen in the wake of CBS’ threat to drop the ratings provider as its year-end contract expiration approaches. The major networks have long been frustrated with Nielsen’s struggles to keep pace with measurement needs in the multiplatform universe. Nielsen ratings, while still the industry standard currency for advertising deals, are becoming less central to the ad sales business as data options proliferate in the digital age.

“Nielsen is an important partner in our television and radio station business,” said Eric Meyrowitz, senior VP of sales for Hearst Television. “We look forward to utilizing Nielsen’s audience measurement solutions and measurement enhancements to showcase the value of our audiences and deliver increased ROI to our advertisers.”

Nielsen said it was eager to work with Hearst to develop new measurement tools.

“Hearst Television is one of the most innovative broadcasters in the industry and is at the forefront of providing advertisers access to viewers across traditional and digital platforms,” said Jeff Wender, managing director of Nielsen Local Media. “We are thrilled to reach this agreement with Hearst Television and to collaborate on the best ways to monetize their audiences.”

Source: Variety Media

Warner Music Group 2018 Revenue Tops $4 Billion, Streaming Up 20%

Warner Music Group Corp. has announced that in 2018 its revenue exceeded $4 billion for the first time in company history during its call for fourth-quarter and full-year financial results for the period ended September 30, 2018. It also noted that streaming revenue is up 20.4% (18.5% in constant currency).

“We’ve had another terrific year and revenue exceeded $4 billion for the first time in our 15-year history as a standalone company,” said Steve Cooper, Warner Music Group’s CEO. “We continue to invest in our business for the benefit of our recording artists and songwriters and to fuel our long-term growth.”

“The fact that we ended the year with over $500 million in cash, despite significant spend on A&R, marketing, M&A and dividends, is evidence of the underlying strength of our business,” added Eric Levin, Warner Music Group’s Executive Vice President and CFO. “We’re on a great run and I’m looking forward to many more years of success.”

Answering a question about whether streaming revenue will begin to fall off in the coming months, Cooper said he expects it to “grow in a robust way,” noting that it will slow down over time in western countries as saturation begins. In emerging markets, he said, revenues and subscribers are “just now being tapped and I would expect to see growth,” noting that economics will probably be “reduced” by comparison, and “we can expect over a time a more modest trajectory.”

According to the report, for the fourth quarter, WMG revenue grew 13.3% (or 14.8% in constant currency). Growth in Recorded Music digital, licensing and artist services and expanded-rights revenue and growth in Music Publishing digital, performance, synchronization and mechanical revenue were partially offset by a decline in Recorded Music physical revenue. Revenue grew in all regions. Digital revenue grew 21.4% (or 23.1% in constant currency), and represented 57.4% of total revenue, compared to 53.5% in the prior-year quarter.

Operating income was $16 million compared to an operating loss of $1 million in the prior-year quarter. OIBDA was $72 million, up 20.0% from $60 million in the prior-year quarter and OIBDA margin increased 0.4 percentage points to 6.9% from 6.5% in the prior-year quarter. Net loss was $13 million compared to a net loss of $38 million in the prior-year quarter and adjusted net income was $10 million compared to an adjusted net loss of $39 million in the prior-year quarter. As of September 30, 2018, the Company reported a cash balance of $514 million, total debt of $2.819 billion and net debt (total long-term debt, net of deferred financing costs, minus cash) of $2.305 billion.

For the year, total revenue increased 12.0% (or 9.2% in constant currency). Domestic revenue rose 10.5% and international revenue rose 12.7% (or 7.8% in constant currency). Revenue grew in all regions. Digital revenue grew 20.4% (or 18.5% in constant currency), and represented 56.2% of total revenue, compared to 52.3% in the prior year.

Operating income was $217 million down from $222 million in the prior year and operating margin was 5.4% down from 6.2% in the prior year, driven by higher revenue which was more than offset by increased investment in A&R and marketing as well as higher SG&A expenses including for variable compensation, restructuring and facilities expenses related to the Los Angeles office consolidation.

Net income was $312 million compared to $149 million in the prior year. Adjusted net income was $388 million compared to $162 million in the prior year, reflecting higher other income related to the net gain on the Spotify share sale, a prior-year loss on revaluation of the company’s Euro-denominated debt due to changes in exchange rates, a prior-year non-cash loss on investments, lower interest expense in the fiscal year, higher income tax expense related to the impact of tax reform on deferred tax assets in the fiscal year, the prior-year benefit from the reversal of a U.S. deferred tax valuation allowance and the prior-year tax benefit of currency losses on inter-company loans. Net debt (total long-term debt, net of deferred financing costs, minus cash) at the end of the fiscal year was $2.305 billion versus $2.164 billion at the end of the prior year, mainly due to the difference in year-end cash balances.

Recorded Music revenue grew 12.5% (or 13.9% in constant currency). Digital growth reflects a continuing shift to streaming. Licensing revenue growth was due to increased synchronization activity, timing-related higher broadcast fee income and the impact of acquisitions.

During the call, Cooper cited the success of Atlantic’s Cardi B, Ed Sheeran, Bruno Mars and “The Greatest Showman” soundtrack; for Warner Bros. Records Dua Lipa, Bebe Rexha and Lil Pump; and for Nashville Dan and Shay. He also paid tribute to late Warner recording artists Aretha Franklin and Mac Miller.

Recorded Music operating income was $31 million, up 121.4% from $14 million in the prior-year quarter and operating margin was up 1.8 percentage points to 3.6% versus 1.8% in the prior-year quarter.

For the full year, recorded music revenue rose 11.3% (or 8.5% in constant currency). Recorded music digital revenue grew 19.3% (or 17.3% in constant currency) and represented 60.1% of total recorded music revenue versus 56.0% in the prior year. Domestic recorded music digital revenue was $1.037 billion, or 71.0% of total domestic Recorded Music revenue, versus 67.2% in the prior year.

Recorded music operating income was $307 million up from $283 million in the prior year due to revenue growth and operating margin was down 0.3 percentage points to 9.1% versus 9.4% in the prior year due to higher compensation and higher facilities expenses related to the Los Angeles office consolidation.

For Warner/Chappell publishing, in Q4 revenue rose 15.7% (or 18.0% in constant currency) with growth in all segments reflecting the ongoing shift to streaming in digital, timing of distributions in performance, higher licensing revenue in synchronization and the timing of mechanical distributions. Publishing operating income was $39 million compared with $36 million in the prior-year quarter driven by revenue growth.

For the full year, publishing revenue rose 14.2% (or 11.8% in constant currency) with growth in all segments. Music Publishing digital revenue rose 26.7% (or 25.4% in constant currency) reflecting the ongoing shift to streaming, and represented 36.3% of total Music Publishing revenue versus 32.7% in the prior year. Growth in performance revenue was due to higher distributions, synchronization revenue growth was driven by higher television and commercials income and mechanical revenue growth was timing-related.

Source: Variety Media

Bloomberg Is Expanding its Social News Network Beyond Twitter

Bloomberg Media thinks its one-year-old TicToc news brand has cracked the code on delivering bite-size chunks of news and analysis to a millennial-skewing mobile crowd on Twitter. Now it is taking TicToc to other platforms and screens — including plans to launch TicToc on dedicated apps and connected TVs.

There was no guarantee when TicToc by Bloomberg debuted in December 2017 that it would be able to get traction with the concept: a reimagining of the 24-hour news channel, with much of the dispatches delivered in 30- to 60-second video bursts.

But Bloomberg says TicToc has hit critical mass. Within the first 12 months, TicToc has topped 500,000 followers (currently, it has 516,000). Today it has around 2.2 million average daily views and 1.5 million average daily viewers on Twitter, according to Bloomberg.

“The aspiration is to be the news network for the next generation,” said TicToc general manager Jean Ellen Cowgill (pictured above). The service is capturing followers among “the new guard of business leaders around the world” in their 20s and 30s, she said: “Dominant news brands haven’t innovated their editorial model fully.”

Scott Havens, Bloomberg Media’s global head of digital, declined to discuss financial results for TicToc. But he said the company’s goal for the initiative was to achieve at least breakeven profitability and that TicToc has “largely hit that mark.”

“When we first launched this, we had aggressive goals – we really wanted it to pay for itself,” Havens said. “Many of the other social-video news guys out there have had trouble hitting scale.”

Next up: Bloomberg is prepping the launch of TicToc’s owned-and-operated digital video platform early in the first quarter of 2019. That will let viewers catch up on the news for longer periods of time on larger screens and include some longer-form programming, according to Cowgill. And there’s potential to build TicToc into an over-the-top streaming network that could be licensed to TV and OTT distributors, and even a direct-to-consumer subscription service in the future, Havens added: “The old cable model is coming undone.”

In addition, Bloomberg this week is launching TicToc on video screens at major airports, under a new partnership with Reach TV. Initially, TicToc news will play on over 500 screens in some 30 airports in the U.S. and Canada, with plans to expand to additional airports in early 2019 including parts of Europe.

TicToc also has launched a daily podcast and a newsletter, and recently began distributing news on Amazon Echo and screens on taxis and ferries in New York. “We want TicToc to be there in all the different moments in your day where screens could provide something of value,” Cowgill said. She joined Bloomberg Media as TicToc’s GM in June, after previously serving as president of Atlantic 57, the marketing consultancy and creative agency of The Atlantic.

The company is keeping TicToc on Twitter (at twitter.com/tictoc) under its multiyear deal with the social network, but also has ramped up its output to Facebook, Instagram, YouTube and other digital platforms. “We’re expanding our wings,” Havens said. “There are other platforms and distribution methods to get the content out there.”

Bloomberg Media has staffed up the TicToc team with 70 producers, editors and social-media specialists across three bureaus — New York, London and Hong Kong. The editorial team is headed by Mindy Massucci, TicToc’s head of global content. In the first year, TicToc posted over 100,000 tweets and 4,000 live-streaming video sessions.

Whereas Bloomberg TV is focused on financial news and markets, TicToc is positioned as a general news source, covering topics including global news, business, technology, sports, culture and entertainment. All of TicToc’s videos are designed to maximize the screen space through data, text, images and video, packing in “nutrient rich” information on the day’s top stories, according to Cowgill.

The service will produce new original short-form series that run longer than the minute-long video length targeted on Twitter and other social platforms. The shows will include news recaps and features that are more evergreen, Cowgill said. But it’s not looking to have anchors for TicToc. “The traditional talking-heads model doesn’t work as well on social and digital platforms,” she said.

For TicToc’s first year, Bloomberg signed seven advertisers to one-year deals: AT&T, CA Technologies, Goldman Sachs, Infiniti, SAS, TD Ameritrade, and CME Group. It has landed about a dozen additional sponsors and is in talks about renewing the pacts with the launch advertisers for 2019.

TicToc in some cases repackages stories and video clips from the other parts of Bloomberg, alongside its original content. Havens said TicToc is reaching a brand-new audience beyond its terminal clientele: “TicToc was based on our hypothesis that we could have broader appeal” than Bloomberg’s traditional media properties, he said.

Source: Variety Media

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