Archives for July 2017

Mr. Zaslav outlined how Discovery has the chance to expand Scripps’s content to more than 220 countries and territories and to create new services for mobile and streaming. In addition, the union is expected to provide $350 million in cost savings.

The announcement came amid sweeping consolidation in the telecommunications and media industries. Over the past several years, cable and broadband providers including Comcast, Charter, Verizon and ATT have steadily increased their market presence. By acquiring Scripps, Discovery will gain added scale that will give it more leverage during negotiations with advertisers and cable and satellite distributors. Discovery is backed by the telecom billionaire John C. Malone, who has advocated industry consolidation.

Still, news of the transaction was met with skepticism on Wall Street, with Discovery’s stock price plunging about 8 percent on Monday. Both companies released second-quarter earnings on Monday that, according to some analysts, revealed how the companies were merging from a position of weakness rather than strength. Discovery missed expectations for revenue growth, while Scripps reported weak advertising results and lowered its full-year revenue guidance.

Michael Nathanson, an analyst with MoffettNathanson Research, said he did not believe that the deal would change the long-term prospects of the companies.

“This shotgun marriage is a clear sign that the cable network industry has seen the future, and that future requires deep cost cutting and increased scale to mitigate both the current headwinds and the inevitable painful changes that lie ahead,” Mr. Nathanson wrote in a research note.

“Without any material improvement to current ratings and subscriber trends, the timing and cost for Discovery to double down in the U.S. will likely look foolish in hindsight.”

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The Discovery-Scripps deal has been in the works for a long time. About nine years ago, Discovery approached Scripps about a potential deal, Mr. Zaslav said. But the Scripps family’s shareholders, who control roughly 92 percent of the broadcaster’s voting stock — and who vote as a group — were not yet ready to sell.

In 2014, the companies started talking again, but those discussions fell apart over a range of issues, including price. Discovery shifted gears and focused on expanding its international footprint, making deals to buy Eurosport, SBS Nordic and other programming rights.

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All the while, Mr. Zaslav stayed close with Kenneth W. Lowe, the chief executive of Scripps Networks Interactive. The two men have been friends for nearly 30 years, sneaking away from industry conferences for steak dinners, and they have gone on vacations with their wives together, including a trip to Rome a few months ago. Both men were inducted into the Cable Hall of Fame in April.

It was about six weeks ago that Mr. Zaslav decided that Discovery should take another look at Scripps after a meeting with his head of content for Latin America. The executive asked Mr. Zaslav if he knew Mr. Lowe, explaining how a deal to distribute Scripps programming across Discovery’s Home Health network in that region was providing a significant boost and that they could use more.

The next morning, Scripps came up again during a discussion Mr. Zaslav was having with Group Nine, the digital media company in which Discovery invested $100 million. Mr. Zaslav asked about the Tastemade video network, which led to a discussion about Scripps’s significant presence in the food category on emerging services like Snapchat’s Discover.

“We took another look at those assets and put it through our filter: Do they help us in the U.S., do they help us internationally, and do they help us in the new world?” Mr. Zaslav said.

The answer was yes. So in July, at the Allen Company media and technology conference in Sun Valley, Idaho, Mr. Zaslav approached Mr. Lowe, once again, about a deal.

In pursuing Scripps, Discovery also faced competition from its rival Viacom. But Discovery was able to convince the Scripps family to agree to a deal valued at about $90 a share, or roughly 34 percent more than the price of Scripps’s stock before reports emerged about a potential sale. The transaction — made up of $63 a share in cash and $27 a share in Discovery common stock — includes the assumption of $2.7 billion of Scripps’s net debt. The companies say they expect the transaction to close early next year, subject to shareholder and regulator approval, and Mr. Lowe is expected to join Discovery’s board.

“Ken and I have been joking for the last month that maybe the third time will be the charm,” Mr. Zaslav said.

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Article source: https://www.nytimes.com/2017/07/31/business/dealbook/discovery-scripps-acquire-viacom.html?partner=rss&emc=rss

The financial story of “Logan Lucky,” which arrives in theaters on Aug. 18, starts in the fall of 2014. According to Mr. Soderbergh, a “friend” asked him to read the script, about a ragtag group that robs a Nascar track, and suggest a director. Mr. Soderbergh said he loved the idea (Ocean’s 7-Eleven, if you will) and wanted to direct the film himself.

But first he needed a plan that satisfied his creative and economic demands. It was relatively easy to raise the $29 million or so needed to make “Logan Lucky,” which stars Channing Tatum, Daniel Craig and Riley Keough. Once his cast was in place — all agreeing to work for scale, with profit participation if the film succeeds — Mr. Soderbergh sold off overseas distribution rights, a standard practice in the independent film business. Voilà: creative control over the actual film.

But distribution would not be so easy.

The standard option for a wide release, meaning at least 2,500 locations in North America on opening weekend, involves renting a major studio’s machinery. A studio like Warner Bros. foots the marketing bill (about $40 million is standard for a production like “Logan Lucky”) and handles all aspects of the release. For its services, the studio collects a fee (roughly 15 percent of total ticket sales) and deducts its expenses. Any remaining profit goes to the owners of the film.

For Mr. Soderbergh, that route was a nonstarter. “You’re way too far away from your money,” he said.

Mr. Soderbergh also wanted to spend much less on marketing. It would stand to reason that a studio would, too. But it is actually in a studio’s interest to spend more — that way the box office total is usually bigger, which in turn means a bigger fee. It is also extremely hard to get studios to rewrite their marketing playbooks. With dozens of movies on the assembly line, overwhelmed studio executives tend to go with what has worked in the past.

“I understand why they resist new ideas,” Mr. Soderbergh said. “With so much money at stake, it’s hard to sit in that room and say, sure, let’s jump off a cliff and try a whole new approach.”

In addition, Mr. Soderbergh, who won an Academy Award in 2000 for directing “Traffic,” wanted full creative control over “Logan Lucky” advertising. He said studios had never given him absolute say over a campaign. Trailers, for instance, are tested with focus groups before they are released and often tweaked based on the responses. “It’s very difficult once you get into studio testing to push back,” Mr. Soderbergh said.

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As he explored options, Mr. Soderbergh first considered forming an alliance with the National Association of Theater Owners, a trade organization. Why not cut out distributors completely by going straight to multiplex operators? Mr. Soderbergh soon realized that was not an ideal solution, in part because the Justice Department keeps close tabs on the adherence of theater chains to federal antitrust laws.

Mr. Soderbergh ultimately connected with Hollywood’s leading authority on distribution: Dan Fellman, a former Warner Bros. executive who now runs a consulting business. Mr. Fellman, who became an executive producer on “Logan Lucky,” devised a plan that Mr. Soderbergh liked.

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They would raise about $20 million in marketing money by selling off a portion of the film’s nontheatrical rights. Amazon, for instance, bought streaming rights.

Then they would make an atypical distribution deal with Bleecker Street Media, an upstart with a total staff of about 20. Bleecker Street would execute the marketing campaign — with Mr. Soderbergh approving everything — and receive a token fee of less than $1 million. If the film hit certain box office thresholds, Bleecker Street would receive a slice of ticket sales. Bleecker Street would also participate in other revenue streams, including DVD sales.

Mr. Soderbergh noted that the box office bar for success is lower under this setup. With nearly everything prepaid, and no hefty distributor fees coming off the top, even a modest $15 million opening would be a win.

“All of our financial interests are aligned,” said Andrew Karpen, Bleecker Street’s chief executive. “Logan Lucky” will easily become Mr. Karpen’s biggest release to date, surpassing the thriller “Eye in the Sky,” which collected about $18.7 million last year on about 1,000 screens. Bleecker Street also has dibs on a “Logan Lucky” sequel.

“We know that a lot of big-time filmmakers are watching this,” Mr. Fellman said. “We want this to be the beginning of a bunch of movies.”

So far, Mr. Soderbergh has spent only about 15 percent of his “Logan Lucky” advertising budget. With only three weeks until release, studios would have typically spent 40 percent. But Mr. Soderbergh believes that the vast majority of marketing should come immediately before a film’s release.

“I was also very adamant about the trailer,” Mr. Soderbergh said. “I wanted it to feel like a throwback and not seem like it gave away all the jokes.” He said the trailer was not tested with a focus group.

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Outdoor “Logan Lucky” ads are concentrated in the Midwest and South. Bucking studio tradition, billboards are scarce to nonexistent in cities like Los Angeles and New York.

“Logan Lucky,” which has received very strong early reviews, has also generated headlines over its script. The screenplay is credited to Rebecca Blunt, who does not seem to exist. Who wrote it?

That mystery may be part of the marketing plan.

In response to questions about the screenplay’s author, Mr. Soderbergh said in an email, “Clarify? Me? Why would I do that? I can tell you that Rebecca Blunt is enjoying all this immensely.”

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Article source: https://www.nytimes.com/2017/07/31/business/media/with-logan-lucky-soderbergh-hopes-to-change-films-business-model.html?partner=rss&emc=rss

Dooley Tombras, the firm’s executive vice president, said it sent products to influential Amazon reviewers in hopes of soliciting positive feedback and conducted “guerrilla sampling,” like holding events “where we’re handing out a product and we’ve got teams there with iPads and we’re encouraging people to write reviews of a product on the spot.”

There are more than 14,000 reviews of the powder. The page also has more than a dozen images of the powder taken from “multiple angles” against a light background to look clean and professional, Mr. Tombras said, along with short videos extolling the powder.

Brands can pay Amazon to customize the middle of pages with large advertorial images and information — which in the protein powder’s case included photos of men working out; a recipe for “birthday cake pancakes” made with the chocolate-flavored whey; and a chart featuring six of its other products, like Micronized Creatine Powder, explaining when and how they should be consumed.

Mr. Tombras’s firm is even working on a feature for Echo devices that will provide recipes from Optimum Nutrition. “If you find a recipe you like and happen to not have that flavor or item, you can go ahead and make that purchase,” he said, “which is pretty cool.”

Amazon has long been an online shopping behemoth, but marketers now know it is playing an increasingly important role in how people discover and learn about their goods.

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“E-commerce is nothing new, it’s been going on for decades, and Amazon is nothing new, it’s been successful for decades — but now they are becoming much more of a dominant force in brand discovery,” said Sarah Hofstetter, the chief executive of the digital agency 360i.

Its quick success in categories like apparel and the popularity of voice search emphasized that, Ms. Hofstetter said. “Amazon is the new shelf space,” she added, “and if you’re not on it, you may be rendered invisible.”

Mindshare and Possible, two agencies under the ad giant WPP, recently announced a service to help companies spend their advertising dollars across “the Amazon ecosystem.” (Possible caught the industry’s attention this year when it acquired Marketplace Ignition, an Amazon-focused consulting firm.)

The agencies said in the release that more than half of United States consumers now started online product searches on Amazon, compared with 28 percent on search engines and 16 percent on retailer websites.

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Martin Sorrell, WPP’s chief executive, said on an earnings call this year that “Amazon’s penetration in most areas is frightening to some.” He added that the company was his response when people asked him, “What worries you when you get up at night and when you wake up in the morning?”

In an interview in Cannes, France, last month, Mr. Sorrell said his firm wanted to do more with clients and Amazon, but noted there were major questions around how brands might gain access its customer data and compete on voice search.

“What happens if I say to Alexa, ‘I like Cheerios,’ and Alexa says, ‘I’ve got Kellogg’s Corn Flakes, which are 10 percent off’?” he said.

Amazon Media Group, the company’s growing advertising division, has been looking to assuage such concerns while touting new ways marketers can reach people on Amazon. Seth Dallaire, its head of global ad sales and marketing, has been urging agencies to view product pages and images as “brand marketing vehicles,” noting that if they are not well maintained it could undermine all the work companies did to get people there in the first place.

“We can see the entire customer-decision journey, and that’s what’s unique,” Mr. Dallaire said. “We can help a brand if they’re selling their products on Amazon understand when a customer is exposed to an ad and, when they clicked on an ad, if they bought something, and then we can help them tailor their marketing messages and their creative to each different step.”

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That’s no small pitch given the guesswork that goes into advertising. Amazon has long sold lucrative sponsored product listings and other ads tied to search terms on its site, like Google. It also offers automatically placed ads on external sites using its own technology and data, and marketing on Amazon packages and devices like Kindles.

It can harness its users, too — while Amazon does not sell cars, it worked with Hyundai last year to offer test drives to Prime Now customers in California.

Amazon does not disclose the size of its ad business, though estimates show it is well below Google and Facebook, which each bring in more than $25 billion from ads annually. While eMarketer estimated that Amazon will attract more than $1 billion in ad revenue this year, BMO Capital Markets forecasts $3.5 billion for 2017 and $5.7 billion next year.

“In the grand scheme of things, the advertising revenue they’re generating is small compared to Google — you can barely compare them,” said Norm Johnston, global chief strategy and digital officer for Mindshare. “But for Amazon, it’s not the advertising revenue in itself. They know if brands invest in the platform, the more sales they’re going to generate, and a lot of those sales lead to subscription models.”

In the past, many brands handled their Amazon business through store sales teams that determined shelf positioning and end-of-aisle displays at brick-and-mortar chains. That is no longer workable as Amazon extends its ad network, offering branding opportunities through its Prime program and streaming N.F.L. games.

“In the old world, you’d run magazines, TV spots and outdoor ads, then you’d go into the shop, and they’d control what happened in the shop,” Mr. Johnston said. “You can’t distinguish like that anymore.”

To that end, marketers are also learning to pay new attention to issues like how much of an item is in stock before promoting it, or risk being penalized by Amazon’s algorithms if they aren’t able to handle demand, Mr. Denny of Bai said.

Mr. Dallaire said Amazon planned to keep investing in its ad sales and agency development teams.

Ultimately, he said, the interest is generated by behavioral shifts.

“It could be people shopping on their phones, the expectation you or I might have of getting immediate customer-review information and pricing information within seconds of pulling a device out of our pockets, it could be the expectation of hearing a song you ask Alexa to play,” he said. “Advertisers want to make sure they are not missing out on these customer trends.”

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Article source: https://www.nytimes.com/2017/07/31/business/media/amazon-advertising.html?partner=rss&emc=rss

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HBO confirmed on Monday that the network had been the target of a cyberattack, as an anonymous hacker boasted about leaking full episodes of upcoming shows along with written material from next week’s episode of “Game of Thrones.”

In an email to journalists, the hacker or hackers claimed to have obtained 1.5 terabytes of data from HBO, according to Entertainment Weekly, which broke the news. Unaired episodes of “Ballers” and “Room 104” may have been published online, and the hacker vowed more would be “coming soon,” the magazine reported.

HBO did not reveal what data had been stolen or posted online, and there was no immediate indication of whether the breach included customer data or personal information about employees.

In a statement, the network said: “HBO recently experienced a cyber incident, which resulted in the compromise of proprietary information. We immediately began investigating the incident and are working with law enforcement and outside cybersecurity firms.”

In an email to employees, Richard Plepler, HBO’s chief executive, said the stolen information included “some of our programming.”

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Article source: https://www.nytimes.com/2017/07/31/business/media/hbo-hack-game-of-thrones.html?partner=rss&emc=rss

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The “Game of Thrones” creators’ concept for a new drama — set in an alternate reality where slavery is still legal — inspired a social media campaign that was a trending topic on Twitter on Sunday night: #NoConfederate.

“Confederate,” was announced less than two weeks ago by HBO and the “Game of Thrones” creators David Benioff and D.B. Weiss. It will be set in a world in which the South successfully seceded during the Civil War. In this world, slavery will still be legal, and the show “will chronicle events leading to the Third American Civil War,” HBO said in a statement.

Despite Mr. Benioff and Mr. Weiss’s record-smashing success with “Game of Thrones,” their new concept has been under attack on social media for its potential insensitivity to race, and tangled questions of history and politics.

Now, many are calling on HBO to abandon the project. Last night’s #NoConfederate campaign was spearheaded by April Reign, a media activist with nearly 100,000 Twitter followers. She also created the viral #OscarsSoWhite, that has spurred conversation about racial representation in the Academy Awards.

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On Friday, she tweeted:

Others responded and retweeted.

So far, HBO has stood by the show in the face of the internet outcry. Last night was no exception. In response to #NoConfederate, the network released a statement on Sunday.

“We have great respect for the dialogue and concern being expressed around ‘Confederate,’” HBO said.

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Article source: https://www.nytimes.com/2017/07/31/arts/television/confederate-hbo-inspires-noconfederate-hashtag-campaign-twitter.html?partner=rss&emc=rss