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New Streaming Outlet that brings Golf Content to Overseas Markets

Discovery Inc. is looking to launch a new streaming outlet that brings golf content to overseas markets which will become a “Netflix for golf.”

Behind the impetus for some – not all – of the glitzy new service is a gloomy old problem: As media companies work to build new connections through broadband streaming, they continue to lose links to consumers via cable and satellite subscriptions.

According to data from Kagan, a market research firm that is part of S&P Global Market Intelligence, satellite broadcasters lost 726,000 subscribers, the industry’s worst quarter on record. Combined with cable and telecom distributors, the sector shed 1.2 million video subscribers in the three-year period ending September 30, 2018.

At Pivotal Research, analysts have predicted 2019 pay-TV losses will “continue at a similar pace to ’17 and ’18 as consumers continue to rebel against the rising price of PayTV amidst the continued emergence of budget entertainment alternatives.”

Hopes that new customers for broadband services such as Sling TV, DirecTV Now, Playstation Vue or live-TV options from Hulu or YouTube may have been tempered during the period: Those services have gained about 2.1 million new subscribers in the first nine months of the year, but traditional outlets lost 2.8 million, according to Kagan.

To make up for the subscriber shortages, the industry is working to create a swarm of new Netflixes – and fast.

“Consumers have much more flexibility to pick and choose the things they want to subscribe to, and I think that is going to be more attractive to a greater majority of people than a traditional pay TV company giving them a handful of restrictive bundles to choose from,” says Tim Hanlon, CEO of Vetere Group, who consults for media and marketing companies.

“Most programmers need to gently land their pay TV model while greatly ramping up their direct-to-consumer offerings. That is the concern that most television managers have over the next five-plus years – manage the decline of the bundle and shift to the expertise of being a direct-to-consumer proposition.”

To be certain, some of the declines have been driven by distributors themselves. AT&T and other video conduits have decided to get out of the business of hanging on to low-profit subscribers, the ones who sign up when it’s time for another season of “Game of Thrones” or another football cycle.

Even so, it’s clear the industry is trying to look past its traditional business. Walt Disney in 2018 launched ESPN +, a subscription-based broadband service for sports fans that gives them new programs and games coverage they won’t see on the flagship cable network.

In September, Disney said the service had notched more than 1 million paying subscribers in just five months (a portion of them came from ESPN Insider, a now-defunct ESPN subscription service).

In 2019, media companies will bet even more heavily on streaming. AT&T plans to unveil a subscription-based offering using its WarnerMedia content – with three different pricing tiers.

Disney has grand hopes for Disney +, a subscription service that will feature programming from its Disney, Pixar, Star Wars and Marvel lines. CBS is placing more emphasis on its “CBS All Access” streaming service. AMC Networks has backed Shudder, a streaming service devoted to horror.

One can easily imagine a new world in which TV fans decide to get their primetime entertainment from Disney, Amazon, Netflix, WarnerMedia or Hulu, rather than CBS, NBC, Fox and ABC. But that future is in no way guaranteed.

Can the average family – even without cable and satellite – afford to subscribe to so many different services, let alone other things like Apple Music or Sirius XM radio? “We simply don’t think it is plausible, in a world of rampant password sharing and of two home subscriptions collapsing to one, that we will continue to see anything like a sustained 1:1 conversion rate.

That’s obviously bad news for all cable networks,” said a recent report from media-analysis company MoffettNathanson. Meanwhile, the firm’s analysts suggest, linear TV networks will need to latch on to “the most passionate viewership, driven predominately by live news and sports.”

In that world, some traditional TV outlets may not survive. NBCUniversal has not been afraid to shut down several cable networks in recent years.

Source: Variety Media

Instagram Apologizes for Horizontal-Scrolling Test Glitch

Instagram has rolled out what it thought was a small-scale test of a new tap-to-advance feature that lets users scroll through posts horizontally.

But the new feature went to more users than it expected — with a high number of complaints from Instagram users, leading the social network to swiftly pull the plug on the test.

Adam Mosseri, whom Facebook recently installed as head of Instagram with the departure of the photo-and-video-sharing app’s founders, responded Thursday morning to users on Twitter, explaining that the horizontal-scrolling feature was “supposed to be a very small test that went broad by accident. Should be fixed now. If you’re still seeing it simply restart the app. Happy holidays!”

The test “went to a few orders of magnitude more people than intendedā€¦ sorry about that,” Mosseri posted on Twitter. He also tweeted, “Sorry for the confusion! Always trying new ideas, usually with a much smaller number of peopleā€¦”

An Instagram rep blamed a “bug” for the unwelcome appearance of the feature. “Due to a bug, some users saw a change to the way their feed appears today. We quickly fixed the issue and feed is back to normal,” the rep said.

Many users who received the Instagram app with the new scrolling feature immediately decried it as a step backward compared with the vertical-feed orientation — making it harder to see updates and slowing down the ability to navigate through posts.

Reactions to the test on social media were overwhelmingly negative.

Instagram — like other popular apps — has faced a backlash in making design changes. In 2016, Instagram switched users’ feeds from chronological to algorithmically sorted presentation; that led to a Change.org petition to keep Instagram chronological signed by 343,000 people (but Instagram did not revert to the previous design).

Mosseri is a 10-year Facebook veteran who most recently was head of Facebook’s News Feed. He took over the reins at Instagram this fall following the surprise announcement that co-founders CEO Kevin Systrom and CTO Mike Krieger were departing.

Instagram, which Facebook acquired for $1 billion, is a key asset for its parent company. Instagram would be worth more than $100 billion if it were a standalone company, according to an estimate by Bloomberg Intelligence. This summer, Instagram topped 1 billion monthly active users and says it has 25 million businesses that maintain accounts on the service.

Source: Variety Media

Facebook’s Ongoing Privacy Crises: What Happens Next After a Disastrous 2018?

Facebook investors, alarmed by latest privacy problems, pushed the stock down more than 7% in Dec — wiping out around $30 billion in market value.

At the start of the year, CEO Mark Zuckerberg wrote in a Jan. 4 post that his “personal challenge for 2018 is to focus on fixing” issues Facebook was wrestling with, including “defending against interference by nation states.” Instead, 2018 has delivered a steady drumbeat of public failings for Facebook, with Zuckerberg and his company under more scrutiny than ever.

Here’s a summary of the scope of the problems Facebook is dealing with and what’s likely to happen.

Facebook was sued after it was alleged that the company failed to protect the private data of millions of users that wound up in the hands of Cambridge Analytica, a political consulting firm that used the information to target voters during the 2016 presidential election. That came less than a day after a damaging report by the New York Times, which alleged Facebook has given large tech partners, including Microsoft and Amazon, data on hundreds of millions of users each month, including email addresses and phone numbers — which those partners were able to access without users’ knowledge or consent, according to the Times.

How big a deal are the revelations that Facebook gave big partners extensive access to user data, including the ability for some to write and delete private messages?

Facebook is downplaying them, but the new information has renewed calls for more comprehensive U.S. privacy legislation and could fuel the Federal Trade Commission’s probe into whether the company violated its consumer-privacy deal with the agency. Facebook says many of the data deals documented in most recent Times report have expired, while it is pledging to review “all our APIs and the partners who can access them,” Konstantinos Papamiltiadis, director of developer platforms and programs, wrote in a blog post. The company also claims that it never granted access to user data without the permission of its users.

On the issue of letting partners like Netflix and Spotify access Facebook users’ messages, Facebook essentially says that this has been overblown. By necessity, Facebook had to enable read/write/delete access for those partners to Messenger accounts of users who had opted-in to the features in order to make those integrations possible. “These experiences are common in our industry — think of being able to have Alexa read your email aloud or to read your email on Apple’s Mail app,” VP of product partnerships Ime Archibong wrote in a blog post response Wednesday. At the same time, Facebook noted, those messaging features have been discontinued.

How do the latest issues compound what came to light about Facebook earlier in 2018?

For context: Other internet players including YouTube and Twitter have been targets of controversy, including for failing to curb hate speech, misinformation and abuse, while Google’s CEO was called in front of Congress earlier this month to address topics including its data-collection practices, anticompetitive actions and alleged political bias. And data-privacy problems aren’t unique to Facebook (see: Marriott’s disclosure of a hack compromising info on 500 million Starwood guests).

But Facebook has spent more than its share of the time in the spotlight. A string of negative headlines and disclosures about the company’s business practices and security breaches have rattled Facebook. Those include:

The Cambridge Analytica scandal: After news reports in March that Facebook user data was improperly obtained by the U.K.-based political consulting firm, Facebook disclosed that info on up to 87 million users was actually in the possession of Cambridge Analytica, which subsequently shut down.

In May, Facebook suspended 200 apps that had access to large amounts of user data prior to 2014, as part of its efforts to clean up the mess from the Cambridge Analytica situation. In June, Facebook confirmed it had data-sharing agreements with Chinese manufacturers including Huawei Technologies and Lenovo, which granted the device makers special access to user data.

In response, Facebook noted that it was already winding down access to such partners. It also said the program was launched a decade ago when app developers (including Twitter and YouTube) “had to work directly with operating system and device manufacturers to get their products into people’s hands,” according to Facebook’s Archibong.

In August, Facebook said it identified and removed several hundred pages and accounts associated with Iranian state media. The company said it also removed content associated with Russian intelligence services and a group of accounts associated with Middle East media organizations that acted in concert while pretending to represent independent entities.

In September, Facebook announced the biggest hack in its history after it discovered a security hole had compromised up to 50 million user accounts. The company later said hackers had successfully accessed data from 29 million Facebook members.

In November, a New York Times investigative report detailed Facebook’s response to scandals over misuse of its platform and data-privacy gaffes, including that it withheld knowledge of Russia’s weaponizing the platform to spread propaganda.

It also revealed that Facebook hired a D.C.-area political consulting firm to push negative coverage of competitors and critics — including urging journalists to investigate ties between billionaire financier George Soros and anti-Facebook groups.

In early December, a U.K. parliamentary committee released a 250-page report, which included numerous internal company emails, detailing how Facebook granted favored partners including Netflix “whitelist” access to user info while it blocked rivals from accessing its data. (Facebook said the documents, obtained through an app developer’s 2015 lawsuit against the company, were “cherry-picked” and lacked context.)

Facebook (on Dec. 14) disclosed that it had discovered a bug in photo-sharing system that may have exposed the private photos of as many as 6.8 million users. (It said it fixed the bug and was notifying affected users.)

Is Facebook going to face other regulatory or legal repercussions?

Other government actions are growing more probable with every new revelation. The year of “bad publicity and significant issues” for Facebook makes it “more likely that the U.S. government will take action to penalize and/or regulate FB,” CFRA Research’s Scott Kessler wrote in a Dec. 19 research note. At the same time, the analyst reiterated a “buy” rating on the company because “we still see its fundamentals as healthy and valuation as attractive.”

On Capitol Hill, both Democrat and Republican lawmakers this week criticized Facebook, with some questioning whether Zuckerberg lied in his testimony during congressional hearings when he said Facebook users have “complete control” over their own data. Sen. Brian Schatz (D-Hawaii), who serves on U.S. Senate committees including Commerce, Science and Transportation, tweeted Tuesday, “It has never been more clear. We need a federal privacy law. [Facebook is] never going to volunteer to do the right thing. The FTC needs to be empowered to oversee big tech.” Analysts expect the U.S. to adopt legislation similar to Europe’s General Data Protection Regulation; Zuckerberg has said Facebook will apply GDPR-compliant controls worldwide.

Meanwhile, the FTC initiated its investigation into Facebook’s privacy practices this spring, which remains ongoing. The agency is expected to specifically examine whether Facebook violated the terms of its agreement with the FTC, approved in 2012, under which Facebook is required to give consumers “clear and prominent notice” and must obtain “their express consent before sharing their information beyond their privacy settings.” (Facebook insists that none of its data-sharing partnerships violated the FTC agreement.) The FTC has the authority to impose fines on Facebook, which Facebook would have the right to appeal. The agency also may seek additional restrictions on the company’s data-handling practices.

Are heads going to roll at Facebook because of these scandals?

It doesn’t seem like anything will change on the senior-management front right now. Despite calls from some investors for Zuckerberg to step aside, when asked in a CNN interview last month if he was going to resign as chairman, he said “That’s not the plan.” (Because he controls 60% of the voting shares in Facebook, only Zuckerberg can decide to exit.) COO Sheryl Sandberg — who acknowledged that she directed Facebook’s communications staff to look into Soros’ financial interests after Soros called internet companies like Facebook “a menace to society” — has the support of the board (which includes, of course, Zuckerberg as well as Sandberg).

Meanwhile, Elliot Schrage, Facebook’s longtime VP of communications and public policy who was already set to leave the company, in a memo just before Thanksgiving took the blame for hiring Definers, the political consulting firm that tried to push journalists to look into Soros’ backing of Facebook critics.

Is Facebook going to see a drop in users?

It’s unclear how big an impact the ongoing privacy problems are having on Facebook’s user growth. Immediately after the Cambridge Analytica erupted in public, Facebook actually boosted its daily active users in the U.S. and Canada. But in Q2 and Q3, daily active users have effectively been flat in the U.S. — and have dropped in Europe. Partly, the leveling-off of growth is because Facebook is already so massive it doesn’t have more runway to add more users. But privacy concerns clearly don’t help.

Is the privacy of Facebook users at risk?

Facebook says it’s doing everything it can to safeguard user data and remediate holes in its systems — but given its privacy track record, an increasing number of users are likely to either cancel their accounts, reduce their usage, or more tightly restrict their privacy settings. Facebook introduced new privacy tools this year, designed to consolidate controls that were previously in separate places. More information is on Facebook’s website at this link. The company also offers instructions on how to deactivate or permanently delete Facebook accounts at this link.

Source: Variety Media

Samsung to Add Google Assistant, Better Sound to 2019 TV Sets

Samsung is preparing to integrate third-party voice assistants into its 2019 line of TV sets. The company may announce a partnership with Google to integrate Google Assistant as early as next month, when it will unveil next year’s TVs at the Consumer Electronics Show (CES) in Las Vegas.

Samsung is likely also going to put a bigger emphasis on audio quality, and could include technology that mimics the way Apple’s HomePod tunes music to its environment into some of its high-end TV sets. A Samsung spokesperson declined to comment on those features, and instead pointed to the announcement of 2019 models of Samsung’s the Frame and Serif TV models.

Samsung’s embrace of third-party voice assistants comes just months after the company added its own voice assistant Bixby to its 2018 TVs. However, the current integration of Bixby on TVs is fairly limited. Consumers can use the voice assistant to control playback of videos, but Bixby can’t yet open and control third-party apps.

The company has also not opened up Bixby development to third-party TV app developers, but plans to do so next year. “We are at the very early stage of development for Bixby for TV,” admitted Samsung senior staff engineer James Jung during a session at the company’s recent developer conference in San Francisco.

By adding third-party assistants, Samsung can offer developers more flexibility, and take advantage of the growing number of smart speakers to bring far-field voice control to TVs without built-in microphones. Emarketer estimated this week that 74.2 million people will use a smart speakers in 2019. Samsung introduced its very first Bixby smart speaker in 2018, but has not made the device available for sale yet.

According to Emarketer, Amazon is expected to capture around 63% of the smart speaker market in 2019, with Google coming in second with 31%. An Adobe Analytics report revealed this week that 63% of smart speaker owners have such a device in their living room. In other words: People are already using third-party voice assistants in proximity to their TVs, so it only makes sense for Samsung to plug into those ecosystems.

Samsung’s integration of third-party voice assistants is expected to be similar to the way competitors like LG and TCL have integrated these assistants. On LG TVs, consumers can access local weather, their calendar, and more through the Google Assistant, and also use the assistant to control smart home devices. However, universal search is still being handled by LG’s own software. This helps TV makers to build commercial relationships with app developers and service providers, and keeps them in control of a key aspect of their smart TV systems.

Samsung is also expected to emphasize sound quality as a key area of improvements over previous TV generations. The company registered for a number of trademarks in late November that are related to TV audio, including one for “audio spatial intelligence,” one for “volume intelligence,” and one for “audio scenic intelligence.”

Audio spatial intelligence is being described as “software for televisions, namely, software for use in optimizing sound quality depending on the surrounding environment, such as space size and ambient noise,” whereas scenic intelligence improves TV sound quality based on the type of content users are watching.

Smart speakers like Apple’s HomePod and Google’s Home Max already automatically optimize sound based on their surroundings by monitoring music through built-in microphones. Sonos previously developed a technology to manually tune a speaker for the room it is placed in, which required consumers to wave their phone around while listening to test tones. It’s unclear whether Samsung will integrate microphones directly into its TV sets to optimize audio for consumers’ living rooms, or whether it will rely on a phone or remote control with integrated microphone to optimize these settings.

Samsung is also expected to further build out its TV Plus service, which presents over-the-top streaming channels in a linear-like environment. These types of offerings have seen significant growth in 2018, with Samsung content partner Jukin recently revealing that it was streaming more than 70 million minutes of linear OTT content to consumers per month.

TV Plus is important to Samsung because it allows the company to generate additional revenues after the sale of a TV set. Samsung has for some time tried to transform its smart TV system into a services business that would generate ancillary revenue streams, but the company has at times struggled to turn its TV software into more than just a way for consumers to launch Netflix and YouTube.

Case in point: Samsung acquired failed smart TV startup Boxee in 2013 to build an ambitious smart tvOS that would have replaced the traditional TV remote with a tablet for second-screen control — something that was internally known as “perfect experience.” However, the project was scrapped, and most of Boxee’s staff was laid off, before it ever shipped.

This year, the smart TV team saw another significant departure: content and services chief product officer Gilles BianRosa parted with the company over the summer, Variety has learned. BianRosa was hired in October 2016 from Tivo, and previously led the smart TV device startup Fan TV.

Source: Variety Media

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