August 19, 2017

Collectors of Royalties for Music Publishers May See Better Results

The music industry is used to bad news. When the International Federation of the Phonographic Industry announced that record sales in 2012 had their first yearly uptick since 1999, for example, there was jubilation in the record business — even though the gain was only 0.3 percent.

One area that has been growing consistently, however, are the royalties from performing rights organizations like Broadcast Music Inc. and the American Society of Composers, Authors and Publishers, which pay songwriters and music publishers when their music is broadcast, performed live or streamed online.

BMI, as Broadcast Music is known, will announce on Monday that it had $944 million in revenue for the year that ended in June. That is 5 percent more than it collected the year before, and a new high for the organization, whose 600,000 members include stars like Taylor Swift, Pink and Adam Levine of the band Maroon 5. BMI paid $814 million in royalties, the first time its annual distributions have exceeded $800 million. Since 2003, BMI’s revenue has increased about 50 percent.

The performing rights societies are some of the industry’s oldest financial engines, and they are trying to adapt to a digitized business that has spread far beyond radio and broadcast television, their bread and butter for decades.

BMI, which was founded in 1939, collected $57 million in its most recent year from digital services, which include not only Pandora and Spotify but also Hulu, Netflix and other online outlets. As recently as 2009, such services represented just 2 percent of BMI’s domestic revenue, but in its latest fiscal year they were 9 percent.

BMI’s “general licensing” category, which includes live performances as well as the music played in restaurants and other businesses, brought in $116 million, and $297 million more came from international sources. Michael O’Neill, who took over as BMI’s chief executive this month, said the organization had become leaner through staff reductions and by building a more efficient digital infrastructure to track billions of performances of its songs.

Founded in 1914, the American Society of Composers, Authors and Publishers, or Ascap, reported in March that it had $942 million in revenue for 2012, down 4.2 percent. For the year that ended in June 2012, BMI’s revenue also fell by about 3.5 percent, to $899 million. In those periods, both organizations — which are nonprofits regulated by federal consent decrees — were hit by a royalty renegotiation with radio broadcasters.

Even as the performing rights organizations have tried to adapt and streamline their operations for the digital age, their future has been cast into doubt. In recent years, some of biggest publishers have withdrawn digital rights to their catalogs from the performing rights organizations, in an effort to control the royalty rates paid by online services like Pandora.

But last week, a federal judge in a case between Ascap and Pandora ruled that publishers could not keep some rights within Ascap but withhold others. That decision did not directly affect BMI. But it raised concerns that the societies — already threatened by the trend of rights withdrawal by publishers — could be in even greater danger if they are seen as standing in the way of publishers getting the highest rates they can.

“This was the year we were declared dead by some,” said Richard Conlon, a senior vice president at BMI, “and we just hit a 74-year high in revenue.”

Article source: http://www.nytimes.com/2013/09/23/business/media/collectors-of-royalties-for-music-publishers-may-see-better-results.html?partner=rss&emc=rss

Sony and Viacom Reach Tentative Deal to Stream Cable Channels

The agreement is believed to be the first of its kind between a major programmer and any of the technology giants that are trying to disrupt traditional modes of TV delivery. If other programmers follow suit, Sony’s as-yet-unnamed service would let paying subscribers receive live cable channels the same way they use on-demand libraries like Netflix or Hulu. Intel and Google are working on similar services, but try to make it more user-friendly, perhaps the way Netflix does with personalization features and a fancy interface.

Most households today have only a few choices for television service: whatever cable company serves their local area, be it Comcast, Time Warner Cable or others, and two satellite providers, DirecTV and Dish Network. In some parts of the country, television through Verizon or ATT is also available. Analysts say cable delivered through the Internet could give households many more choices — if the new services give customers more for their money and if cable incumbents don’t smother the services.

To even have a chance, companies like Sony and Intel need the permission of programmers, and that’s why the Viacom deal is considered a breakthrough. Although Viacom and Sony declined to comment on Thursday, a person directly involved in the negotiations confirmed a Wall Street Journal report about the agreement. The person insisted on anonymity because the companies were not prepared to comment on the record.

Having the news spread was advantageous for Sony, though, because having Viacom on board — even just on a preliminary basis — will most likely help the company complete other carriage deals. The company has also contacted other top programmers, like the Walt Disney Company and Time Warner.

That Viacom — which has more than 20 channels, including big ones like Comedy Central and small ones like Centric — was the first to agree to support Sony’s fledgling service is not necessarily surprising, since the company has a reputation for contentious relationships with cable and satellite companies. Last year, Viacom channels were blacked out in DirecTV households for nine days. Sumner Redstone controls both Viacom and the CBS Corporation, which is blacked out in three million Time Warner Cable households because of a contract dispute.

Time Warner Cable, and to a lesser extent other TV providers, has thrown up roadblocks for new entrants by inserting language into some carriage contracts that discourages programmers from selling its channels to Internet TV services. The existing providers say they just want to ensure that the upstarts don’t get better terms, like broader video-on-demand rights or cheaper rates for channels.

Most likely, Sony will pay higher rates — one of the downsides of being new and untested. Any deals between programmers and the Sonys of the world will keep the TV bundle intact, despite occasional public agitation for an “a la carte” option.

“I don’t think the classic pay TV subscription bundle model of television is going away anytime soon — it’s a pretty compelling and cost-efficient smorgasbord,” particularly for older Americans, said Tim Hanlon, a former media agency executive who now runs the Vertere Group. “But all bets are off with the under-40 set — the growing group of folks who just want their video content when and where they want it, preferably without the messy commitment part,” he added.

Sony is well-positioned to reach younger Americans because its PlayStation video game console is already hooked up to TV sets in tens of millions of homes. The company has said almost nothing about its intentions, but it has been interested in selling a bundle of channels at least since 2011. Its TV service could also be made available in the future via smartphones, tablet computers and other devices.

Sony hopes to start selling the service in the fourth quarter of 2013 or the first quarter of 2014, said a media company executive briefed on the plans for it.

If Sony’s service (or another one like it) gets off the ground, incumbents like Comcast, Time Warner Cable and Verizon are also likely to sell their own versions, furthering this new type of competition. What no one knows — but everyone in the industry wonders — is whether these Internet cable services will steal market share; entice people who do not currently pay for any channel bundle to sign up; or fail to sign up customers at all.

The overall number of American households paying for television has remained remarkably steady in recent years, though there are some slight signs of fraying around the edges. Mr. Hanlon said he sensed that as younger viewers were getting better at “cobbling together their own workarounds to all-or-nothing content packages,” the “smart programmers are starting to carefully position themselves to take advantage, just in case the classic carriage model starts to break.”

Of course, all of the alternatives being dreamed up in Silicon Valley and elsewhere are B.Y.O.B. — Bring Your Own Broadband. Video is data-intensive, and data caps or stiffer monthly charges for broadband imposed by companies like Comcast could inhibit the establishment of virtual cable services. In a recent interview, the departing Time Warner Cable chief Glenn Britt acknowledged as much when he was asked about Intel’s interest in TV.

“The reality is, if everybody watched TV over the Internet, and we were out of the TV business, then we would have to recover more money from the Internet service,” Mr. Britt said.

Article source: http://www.nytimes.com/2013/08/16/business/media/sony-and-viacom-reach-tentative-internet-tv-deal.html?partner=rss&emc=rss

Netflix Revenue Tops $1 Billion for the Quarter

The results were well within the company’s projections, but investors — who had made Netflix the best-performing stock in Standard Poor’s 500-stock index this year — were hoping for more, sending the stock down more than 7 percent in after-hours trading.

Looking ahead, Netflix projected that it would add another 1.1 million subscribers in the United States in the third quarter, continuing a growth trajectory that has made it one of the most closely tracked companies in the media and technology industries.

In the second quarter, the company’s revenue topped $1 billion for only the second time ever, totaling $1.07 billion, in line with analysts’ expectations. It reported earnings of 49 cents a share, beating the consensus expectations of 40 cents a share. It returned to positive cash flow for the first time in a year, because of a one-time decline in payments to content providers and overall profit growth.

Outside the United States, Netflix added 610,000 streaming subscribers in markets like Britain and Brazil. The international business continued to operate at a loss, but it was lower than expected in the quarter.

“We are thrilled to be pleasing more members than ever,” the Netflix chief executive, Reed Hastings, and its chief financial officer, David Wells, wrote in a quarterly letter to investors.

Mr. Hastings and Mr. Wells attributed some of the second-quarter subscriber gains in the United States to its late-May revival of “Arrested Development.” “This show already had a strong brand and fan base, generating a small but noticeable bump in membership when we released it,” they wrote.

But they cautioned investors not to expect a similar bump from other new shows, like “Orange Is the New Black,” which came onto the service earlier this month. “Other great shows don’t have that noticeable effect in their first season because they are less established,” they wrote.

Last week, Netflix gained widespread attention for its first-ever Primetime Emmy nominations, led by the Washington drama “House of Cards,” which is in the running for nine Emmys. Over all, however, original shows like “House of Cards” remain just a sliver of subscribers’ viewing; TV shows and films that have already had their premieres elsewhere “accounts for the bulk of viewing and leads to a lot of member enjoyment,” Mr. Hastings and Mr. Wells wrote. They cited a revealing statistic on Monday: three-fourths of the hours streamed on Netflix are spurred by the algorithms that recommend specific shows and movies based on the subscriber’s past viewing.

In a hint of the company’s plans for more original programming, Mr. Hastings and Mr. Wells said they would be expanding to “include broadly appealing feature documentaries and stand-up comedy specials.”

Before the earnings announcement, Netflix stock closed down $2.62 at $261.96. A year ago, it was hovering below $100.

“The stock’s meteoric rise to-date reflects management’s traction in repairing the brand, following the 2011 fiasco, but further momentum in the stock will have to be supported by better 2Q results and higher guidance,” Youssef Squali, an analyst for Cantor Fitzgerald, wrote in a note to investors before the earnings announcement.

Article source: http://www.nytimes.com/2013/07/23/business/media/netflix-revenue-tops-1-billion-for-the-quarter.html?partner=rss&emc=rss

No One’s Seen It, but Netflix Renews It

The company announced on Thursday that it had ordered a second season, two full weeks before subscribers get to see the first season. Such an early pickup is a rarity in television.

“It is unusual,” Cindy Holland, the company’s vice president for original content, acknowledged on Friday, but it was motivated by a practical matter: Netflix wanted to shorten the wait time between the first season and the second. In Season 2, she said, “our hope is that we can launch in late spring to early summer, rather than midsummer.”

The one-hour series, which comes online July 11, has both dramatic and comedic elements. It comes from Jenji Kohan, who created “Weeds” for Showtime, and stars Taylor Schilling as an unlikely new inmate at a women’s prison and Jason Biggs as the fiancé waiting for her release.

“Orange” has received raves from those who have seen the first episodes (The New Yorker television critic Emily Nussbaum called it a brilliant cross between “Oz” and “The L Word” on a podcast last week) but it doesn’t have the same name recognition as other original Netflix offerings, like “House of Cards,” the political thriller that came online in February, or “Arrested Development,” the revival of the Fox comedy that came online one month ago. Renewing the show so early may boost interest in the first season’s worth of episodes.

“To the industry, an early renewal is a vote of confidence in the show’s creators,” said Diane Gordon, the television editor for Studio System News, an industry Web site. “To fans, it encourages them to watch a show because they know it won’t disappear after two or three episodes, as often happens on broadcast networks. ”

Earning the loyalty of fans is critical for a service like Netflix, which depends on monthly subscriber fees. “Orange” continues the company’s push to compete with traditional sources of entertainment and, along the way, alter the definition of television.

Television executives could recall only a few other occasions when additional episodes were ordered ahead of a premiere — some prophetic and others, well, not. The premium-cable channel Starz did so with “Boss,” a drama led by Kelsey Grammer, only to have that series wind down after two seasons. More successfully, Starz renewed “Spartacus” a full month before viewers saw the first episode in 2010.

“Even the best of shows take more than one season to fully develop,” Chris Albrecht, the chief executive of Starz, said in an e-mail. “While we are always mindful of the audience, we are not slaves to ratings, which offers the creative teams we have confidence in the luxury of time to develop the stories and characters.”

HBO, the category leader, has a tendency to renew shows within weeks, and sometimes within days, of their start dates. In these cases, the network executives have already seen many of the coming episodes, so they have a good sense of what to expect.

Because Netflix releases all the episodes of a season at the same time, the executives there have already seen all 13 episodes of “Orange Is the New Black.” “We don’t have the benefit of having viewing information from our subscribers yet, but we do know creatively everything about the season,” Ms. Holland said.

Ms. Kohan alluded to that when she spoke at the New York premiere of the series at the New York Botanical Garden in the Bronx. “I feel like I’m at the end of a pregnancy and I just want it out,” she said.

The announcement means that Netflix has renewed all of its original series to date, with one exception, “Arrested Development.” (While the company would like more episodes, it has warned that reassembling the cast would be very difficult.) It committed to two seasons of “House of Cards” from the get-go (the second is in production now); it long ago ordered more episodes of “Lilyhammer; and this month it renewed the horror series “Hemlock Grove.”

Article source: http://www.nytimes.com/2013/06/29/business/media/no-ones-seen-it-but-netflix-renews-it.html?partner=rss&emc=rss

DreamWorks and Netflix in Deal for New TV Shows

In a multiyear deal announced early Monday, DreamWorks Animation will supply a flood of new episodic TV programs to the Internet streaming service. The partnership calls for 300 hours of original programming, perhaps the biggest commitment yet to bring Hollywood-caliber content to the Web first.

The new programs will be “inspired” by characters from past DreamWorks Animation franchises, which include “Shrek” and “The Croods,” and its coming feature films. Series will also come from Classic Media, which the studio bought last year. Classic Media’s holdings include characters like Casper the Friendly Ghost, Lassie, She-Ra and Mr. Magoo.

The agreement is the latest in the hotly competitive market for streaming content, with major services like Netflix, Hulu and Amazon vying to capture viewers who are gravitating to the Web, especially younger ones.

Until now, DreamWorks Animation’s primary focus has been the release of about two costly movies a year. Its success record is strong, but one miss can send its stock price plummeting, as was the case late last year, when “Rise of the Guardians” severely underperformed expectations; the company eventually took an $87 million write-down tied to the film.

Investors on Monday responded favorably to the announcement, driving Netflix shares up more than 7 percent, to $229.23, and DreamWorks Animation shares up about 4 percent, to $23.74.

The studio’s characters currently appear on four TV shows. Three are made by Nickelodeon under a licensing agreement, while DreamWorks Animation supplies a fourth, based on “How to Train Your Dragon,” to Time Warner’s Cartoon Network.

The first of the new DreamWorks Animation programs will appear on Netflix sometime next year. Netflix has exclusive rights to the series in all of the countries in which it operates; it has about 27 million streaming subscribers in the United States.

A DreamWorks Animation spokeswoman declined to provide more details, including financial terms. Jeffrey Katzenberg, the studio’s chief executive, plans to outline his TV strategy in a conference call on Tuesday with analysts and reporters.

DreamWorks Animation had three primary TV options: starting a cable channel of its own, perhaps in partnership with 21st Century Fox, which distributes its movies; teaming with an upstart children’s network like the Hub (or taking it over); or bypassing cable completely and going with Netflix.

Mr. Katzenberg and his company parted ways with HBO in 2011, opting instead to distribute their films and television specials through Netflix. Mr. Katzenberg and Netflix announced this year that a new episodic series called “Turbo: F.A.S.T.” would come to the streaming service in December. (It is based on “Turbo,” a film that arrives in theaters on July 17 and features a speedy snail.)

For Netflix, the DreamWorks Animation programming will help fill a hole left by Nickelodeon. Because of a dispute over terms, Netflix declined this year to renew its contract with Viacom, Nickelodeon’s corporate parent. (Viacom in turn made a deal with Amazon this month for Nickelodeon shows like “Dora the Explorer.”) New films from Disney and Pixar will move to Netflix from Starz in late 2016.

Children are avid streaming consumers, particularly overseas, and cartoons allow the company to pitch itself to parents as a commercial-free alternative to television. Animated shows for younger viewers are also less likely to appear on the pirated-content sites that compete with Netflix for viewers.

Article source: http://www.nytimes.com/2013/06/18/business/media/dreamworks-and-netflix-in-deal-for-new-tv-programs.html?partner=rss&emc=rss

DreamWorks and Netflix in Deal for New TV Programs

In a multiyear deal announced early on Monday, DreamWorks Animation will supply a torrent of new episodic TV programs to the Internet streaming service. The partnership calls for 300 hours of original programming, perhaps the biggest commitment yet to bring Hollywood-caliber content to the Web first.

The new programs will be “inspired” by characters from past DreamWorks Animation franchises, which include “Shrek” and “The Croods,” and its upcoming feature films. Series will also come from Classic Media, which the studio bought last year. Classic Media’s holdings include characters like Casper the Friendly Ghost, Lassie, She-Ra and Mr. Magoo.

The agreement is the latest in the hotly competitive market for streaming content, with major services like Netflix, Hulu and Amazon vying to capture viewers who are gravitating to the Web, especially younger ones.

The first of the new DreamWorks Animation programs will appear on Netflix sometime next year. Netflix has exclusive rights to the series in all of the countries in which it operates; it has about 27 million streaming subscribers in the United States.

A DreamWorks Animation spokeswoman declined to provide more details, including financial terms. Jeffrey Katzenberg, the studio’s chief executive, plans to outline his TV strategy in a conference call on Tuesday with analysts and reporters.

DreamWorks Animation had three primary TV options: starting a cable channel of its own, perhaps in partnership with 21st Century Fox, which distributes its movies; teaming with an upstart children’s network like the Hub (or taking it over); or bypassing cable completely and going with Netflix.

Mr. Katzenberg parted ways with HBO in 2011, opting instead to distribute his films and television specials through Netflix. Mr. Katzenberg and Netflix announced this year that a new episodic series called “Turbo: F.A.S.T.” would come to the streaming service in December. (It is based on “Turbo,” a film that arrives in theaters on July 17 and features a speedy snail.)

For Netflix, the DreamWorks Animation programming will help fill a hole left by Nickelodeon. Amid a dispute over terms, Netflix declined earlier this year to renew its contract with Viacom, Nickelodeon’s corporate parent. (Viacom in turn made a deal with Amazon this month for Nickelodeon shows like “Dora the Explorer.”) New films from Disney and Pixar will move to Netflix from Starz in late 2016.

Children are avid streaming consumers, particularly overseas, and cartoons allow the company to pitch itself to parents as a commercial-free alternative to television. Animated shows are also less likely to appear on the pirated-content sites that compete with Netflix for viewers.

Article source: http://www.nytimes.com/2013/06/18/business/media/dreamworks-and-netflix-in-deal-for-new-tv-programs.html?partner=rss&emc=rss

Barnes & Noble to Add Google Apps to Nook

Barnes Noble, in an effort to strengthen the digital offerings of its Nook devices, will outfit its color tablets with Google Play, the one-stop shop for Google’s applications and software services, the bookseller said on Thursday.

The move is intended to give Barnes Noble, the nation’s largest bookstore chain, a boost in the highly competitive tablet market after a disappointing holiday season for the Nook.

“It opens up a whole world of content and really gives HD and HD Plus a unique position,” William Lynch, the chief executive of Barnes Noble, said in an interview, referring to the company’s two color tablets. “There’s no question this is going to accelerate sales.”

Barnes Noble executives said Nook owners can choose from 700,000 apps, including Facebook, Twitter and Netflix – even Amazon’s Kindle app.

The announcement follows Barnes Noble’s recent vow to focus more on digital content, including books, movies and popular apps, while beginning to moderate its investment in its digital hardware division.

In the quarter that ended Jan. 26, Nook revenue declined to $316 million, from $426 million over the same period the year ago.

“Of all the things that Barnes Noble could do to expand its potential audience, running the features of Android that consumers like is a great step,” said Sarah Rotman Epps, a senior analyst with Forrester Research. “You can’t change the fundamentals of Barnes Noble’s brand and their customer footprint and the economics of their business, but adding more Android features makes this product more appealing to more customers.”

After the recent holiday season, Mr. Lynch said on Thursday, Barnes Noble learned that “the No.1 reason for nonbuyers in the tablet market, as it related to Nook, was the lack of breadth and apps.” That was, he said, “the one area where we were deficient.”

Michael Norris, senior analyst for Simba Information, said the deal with Google will help Barnes Noble do what Amazon has done well: create a comprehensive online shopping center of nonbook media.

“I think Barnes Noble is learning a few lessons from Amazon,” Mr. Norris said. “And that has to do with sweetening the deal and adding value for the consumer. Amazon has always had a greater variety of movie and video content, and I think Barnes Noble is hoping to erase part of their entertainment deficit.”

Barnes Noble’sseven-inch Nook HD sells for $199, and the nine-inch Nook HD Plus for $269.

Mr. Lynch said that Barnes Noble executives had been talking about the possibility of a deal with Google for two years, but stepped up those discussions in the last four months.

To date, Barnes Noble has sold more than 10 million Nooks in the United States; it introduced the product in 2009 as e-book sales took off.

Article source: http://www.nytimes.com/2013/05/04/business/media/barnes-noble-to-add-google-apps-to-nook.html?partner=rss&emc=rss

Common Sense: Netflix Chief Looks Back on Its Near-Death Spiral

It was the thousands of e-mails that poured in from angry and disappointed customers.

“I realized, if our business is about making people happy, which it is, then I had made a mistake,” Mr. Hastings told me this week, in a rare public comment on an episode that could have destroyed the company. “The hardest part was my own sense of guilt. I love the company. I worked really hard to make it successful, and I screwed up. The public shame didn’t bother me. It was the private shame of having made a big mistake and hurt people’s real love for Netflix that felt awful.”

This week, Netflix announced that it gained three million subscribers globally in the first quarter and that revenue for the quarter exceeded $1 billion, a record for the company. On Tuesday, the stock jumped 22 percent, the first time it has traded over $200 since the Qwikster episode, and it is up 135 percent so far this year, making Netflix the best-performing company in the Standard Poor’s 500-stock index. The company is basking in the critical glow of its original series, “House of Cards,” and this month narrowly surpassed HBO in total subscribers.

In the annals of corporate missteps, there are few parallels to such a rebound from what once looked like a death spiral, especially in the momentum-driven world of technology. Zynga, the online game maker, and Groupon, the Internet coupon company, are struggling with brutal competition. In an old-economy industry like retail, J. C. Penney was in the midst of a similarly bold attempt to reposition the company when it fired its chief executive, and is now fighting to survive.

How did Netflix simultaneously manage both a fundamental transformation of the company and a public relations disaster?

Mr. Hastings said he realized that the company’s attempt to both raise prices and separate into two companies, one the legacy DVD-by-mail business and the other the up-and-coming broadband streaming business, was trying to do too much too fast. Angry subscribers abandoned the company in droves (800,000 in the fourth quarter of 2011 alone), revenue missed estimates and the stock plunged.

“I messed up,” Mr. Hastings wrote in an unusually forthright September 2011 blog post. Citing the precedents of AOL and Borders Books, which struggled or failed to make the digital transition, “my greatest fear at Netflix has been that we wouldn’t make the leap from success in DVDs to success in streaming.” But in the rush to accelerate the transition, he wrote, “In hindsight, I slid into arrogance based upon past success.” He also made a video apology.

Mr. Hastings said he didn’t expect the apology alone to “turn it around,” adding, “I wasn’t naïve enough to think most customers care if the C.E.O. apologizes, but I thought it was honest and appropriate.”

The mea culpa resonated, though, with some important constituencies, including some Wall Street analysts, who were punishing the company’s stock. Richard Greenfield, an influential media analyst at BTIG, said that he was impressed that Mr. Hastings “realized his mistakes and openly admitted them.”

“He dusted himself off, stood back up and started running,” Mr. Greenfield said. “Very few people can do that.”

Still, Mr. Hastings said, “The situation made me nervous and very focused.

“I couldn’t say with confidence that we’d recover. We were in a place that was quite risky. We didn’t have the reserves to make a second stumble.”

On the other hand, he didn’t panic, and he didn’t lose confidence. Although he made some big changes, like scrapping Qwikster, he never questioned his original vision for the company, which he helped found in 1997. Nor did he lunge at supposedly transformative opportunities that were pressed upon him — a lesson he learned from a four-year war with Blockbuster that began in 2004, when Blockbuster, then the dominant and much larger DVD distributor, tried and failed to crush its upstart competitor.

“There were elements of panic in my reaction back then,” Mr. Hastings said. “We got desperate and we did some dumb things.” (He cited online advertising on the Web site; starting Red Envelope, an independent film producer and distributor, since shut down; and buying DVDs out of the Sundance Film Festival.) “After we eventually won the Blockbuster battle, I looked back and realized all those things distracted us. They didn’t help, and they marginally hurt. The reason we won is because we improved our everyday service of shipping and delivering. That experience grounded us. Executing better on the core mission is the way to win.”

Article source: http://www.nytimes.com/2013/04/27/business/netflix-looks-back-on-its-near-death-spiral.html?partner=rss&emc=rss

DealBook: Businesses Take a Cautious Approach to Disclosures Using Social Media

Reed Hastings, chief of Netflix, used Facebook to brag about his company.Richard Brian/ReutersReed Hastings, chief of Netflix, used Facebook to brag about his company.

Zynga’s latest quarterly earnings report, released on Wednesday, came in the typical format and was accompanied with the usual financial tables investors expect.

But the social gaming company that counts FarmVille among its games included a new addition: a 204-word paragraph encouraging investors to check its corporate blog and Facebook and Twitter pages for regular news updates.

It was just one of dozens of companies taking advantage of newly clarified rules from the Securities and Exchange Commission that have now blessed the use of social media sites to disclose financial information.

Although social networks have proliferated for years and the public more readily turns to Twitter than the S.E.C.’s Edgar Web portal for updates, the agency just a few months ago was still evaluating whether using newer outlets would violate its rules.

Even with the updated guidelines, uncertainty over what exactly the commission will allow has meant that many companies, and their legal teams, are playing it safe this earnings season.

“Right now it’s like the Wild West,” said Broc Romanek, editor of TheCorporateCounsel.net, a Web site that focuses on S.E.C. rules and regulations. “The S.E.C.’s guidance is definitely going to need to be further refined.”

For instance, when General Electric released its earnings last Friday, the company mentioned its Twitter and Facebook accounts for the first time, noting that they “contain a significant amount of information about G.E., including financial and other information for investors.” A quick check showed that G.E. has at least 10 different Facebook pages and 10 different Twitter feeds. A company spokesman, Seth Martin, however, said the conglomerate would continue to rely on news releases to communicate material information.

“While we currently have no plans to disseminate material information using social media, we will comply with S.E.C. guidance as it evolves,” Mr. Martin said.
Others may simply be hesitant to leap into the world of 140-character messages out of fear of security. Earlier this week, the Dow Jones industrial average briefly plunged 150 points after hackers gained control of The Associated Press’s Twitter feed and falsely reported explosions at the White House. A similar fake report on a company stock could easily cost investors billions in a matter of seconds.

Not long ago, regulators regarded social media sites with skepticism.

Until now, information that has the potential to affect a company’s stock price had for the most part been relegated to the bureaucratic sounding form 8-K, the S.E.C.’s document of choice.

Last year, the S.E.C. warned Netflix that it might file civil claims after its chief executive, Reed Hastings, bragged about subscriber numbers on his Facebook page. But after the ensuing reaction against the agency’s view, the S.E.C. gave in a little, saying this month that social networks were acceptable news outlets — as long as shareholders knew which to check. The new rules update the S.E.C.’s Regulation Fair Disclosure, which requires companies to publish material information to all investors at the same time.

A spokesman for the agency, John Nester, argued that the new guidance on social media should not be too confusing, given how quickly companies adopted a 2008 rule that allowed the use of corporate Web sites in addition to S.E.C. filings.

“Companies were able to figure out how to use our guidance to disclose information on their Web sites, so there’s no reason they shouldn’t be able to do the same with social media,” he said in a statement.

In practice, corporations are experimenting with a wide variety of policies. In its earnings release last week, AutoNation listed five different places where investors could find information about the company, including the Facebook and Twitter feeds of its chief executive, Mike Jackson.

Netflix itself listed in a securities filing five different places where investors should check regularly for more information. Among them: its corporate blog and Twitter feed, as well as the chief executive’s personal Facebook page.

Glen Ponczak, a vice president for investor relations at the manufacturer Johnson Controls, said that the company had started posting information on Twitter several weeks before the S.E.C. outlined its new policy on social media, but that it was very much in experimental mode. On Twitter, the company posted a link to its earnings call, but did not post any updates from the earnings call.

“We’re starting off slow and learning what we need to do,” Mr. Ponczak said. At least for now, he added, “it will not be our primary disclosure point.”

Lawyers who focus on disclosure issues expect a bit of experimentation, and heavier use by technology companies whose business models are already heavily dependent on social media.

“The S.E.C. is not going to let companies be sloppy,” Thomas A. Sporkin, a former S.E.C. enforcement official and now a partner at Buckley Sandler, said. “The investing public needs to know where to go for disclosures, and the division of enforcement is going to be vigilant on this.”

And for some legal teams, the old formats of S.E.C. filings will still likely be the preferred method of disseminating financial news.

“Most companies are going to use social media as a supplement,” said Amy Goodman, a partner and co-chairwoman of the securities regulation and corporate practice group at the law firm Gibson Dunn Crutcher.

“You can’t go wrong if you file an 8-K. That’s your insurance policy.”

Michelle Leder is the editor of footnoted.com, a Web site that takes a closer look at companies’ Securities and Exchange Commission filings.

Earnings Reports and Social Media

[View the story “Earnings Reports and Social Media” on Storify]

A version of this article appeared in print on 04/26/2013, on page B1 of the NewYork edition with the headline: Businesses Take a Wary Approach To Disclosures Using Social Media.

Article source: http://dealbook.nytimes.com/2013/04/25/businesses-take-a-wary-approach-to-disclosures-using-social-media/?partner=rss&emc=rss

Amazon Plans an Internet Video Device

The company is developing a television set-top box and has begun discussions with outside providers of content to distribute their video services to the device, according to three people briefed on the plan, who spoke on condition of anonymity because the Amazon product had not yet been announced and remained confidential.

Amazon is planning to introduce the set-top box in the fall, one of these people said.

Bloomberg Businessweek first reported news of Amazon plans on Wednesday.

Kinley Pearsall, an Amazon spokeswoman, declined to comment.

It was not immediately clear why Amazon would bother designing its own set-top box. The device will most likely showcase Amazon’s own online video offerings, which include Prime Instant Video, a Netflix-like subscription video service with more than 40,000 movies and television episodes that is included as part of Amazon’s broader Prime membership.

Among other benefits, Prime members, who pay $79 a year, get free two-day shipping on orders bought through Amazon’s site.

Amazon also offers a much broader library of video content, totaling 150,000 titles, that anyone, including people who aren’t Prime members, can buy and rent.

But Amazon’s video services are already available on hundreds of devices, many of which connect to television sets, like game consoles, digital video recorders and Blu-ray players. An app for using Amazon’s video service is even embedded in some television sets, including models from Sony, Panasonic and Samsung.

Although Amazon was an early entrant in the e-reader market with the Kindle, the company is late to the market for set-top boxes, where the incumbents include Apple’s Apple TV device and a family of products from Roku.

Amazon, though, has considerable strengths and has shown an aptitude for reinventing itself in new categories, like cloud computing and tablet computers. One media executive who has participated in discussions with Amazon about its set-top box said he thought the company’s standing as a top shopping destination would allow it to promote its new device and give it a strong chance of attracting an audience.

The company could use other creative techniques for getting its set-top box into more living rooms.

Michael Pachter, an analyst at Wedbush Securities, said one approach that could make sense was for Amazon to sell the device for $100 or less, about what Internet set-top boxes cost today, and to include a free year of its subscription video service.

At the end of the term, customers would have an incentive to sign up for Amazon Prime to continue receiving all of its membership benefits, including the video service. “I think this is a Trojan horse to get people to join Prime,” Mr. Pachter said.

Amy Chozick contributed reporting from New York.

Article source: http://www.nytimes.com/2013/04/25/technology/amazon-plans-an-internet-video-device.html?partner=rss&emc=rss