What’s In A Network Name? Linear TV Brands Still Looking for Traction Online

HBO added 2.7 million subscribers during the fourth quarter according to Time Warner Inc.’s latest earnings report, “about 800,000” of which, or just under one-third, came from HBO Now, it’s standalone over-the-top offering. That suggests that, barely eight months in, HBO Now has emerged as an important contributor to HBO’s overall subscriber growth.

Since HBO Now is sold direct-to-consumer at $15 a month, moreover, those subscribers are likely worth more to HBO on a revenue basis than pay-TV subscribers, for which revenue is shared with operators.

Time Warner officials pronounced themselves pleased with the results so far.

sports_centerWall Street, however, had a different view. Analysts were expecting as many as 1.4 million OTT subs by now and investors responded by sending shares of Time Warner down by nearly 5 percent.

To be fair, Warner announced its results on a day when media shares got slaughtered across the board and Time Warner’s losses were in line with other media victims. On the other hand, Time Warner’s results, along with Disney’s the day before, were major triggers for the sell-off, as investors continue to fret about subscriber losses among among cable networks as consumers cut the cord or shift to cheaper, skinnier bundles.

Disney got dinged for subscriber losses at ESPN, despite posting a record-breaking quarter on the strength of “Star Wars: Force Awakens.” Read More »

Retransmission Discontent

Last week’s meltdown among media company stocks seems to have subsided for now, but not before wiping out $60 billion in market value. Shares of Viacom fell 17 percent between August 4 and August 11; Discovery Communications and 21st Century Fox each fell 13 percent; Disney shares dropped by 11 percent; Time Warner by nine and Comcast (NBCUniversal), CBS and Starz all fell by mid-single digits.

Media CEOs complained, and many analysts concurred, that the sell-off was overdone, and that neither the actual earnings news that triggered it nor the underlying fundamentals of the business justified such a drastic repricing. It certainly wouldn’t be the first time that the market overreacted to events in the short term.

FCC_buildingIn fact, the stampede out of pay-TV stocks last week felt more like the release of pent-up anxiety among investors than a reaction to any particular bit of news. It began when Disney issued a small downward revision to its earnings forecast for its ESPN unit, which it blamed on “modest subscriber losses” from cord-cutting. The adjustment was a small one, but Disney chief Bob Iger has been among the most outspoken media CEOs in arguing that cord-cutting is a limited and manageable phenomenon, and that ESPN is well-positioned to profit from changes in the pay-TV business. If even Disney couldn’t paper over the impact of cord-cutting on ESPN, investors seemed to conclude, then maybe the problem really is as bad as we feared.

Similarly, ratings woes on linear TV channels are not new. But when Viacom reported a 9 percent drop in ad revenue from its cable networks investors seemed to take it as confirmation that even well-established media brands are losing pricing power in the advertising market. Read More »

Miscalculating movie release windows

Speaking of windows, Disney has touched off quite the firestorm in Europe over its plan to release “Alice in Wonderland” on Blu-ray and DVD just 12 weeks after its March 5 worldwide theatrical debut instead of the usual 16 to17 weeks. Holland’s National Board of Cinema Owners is up in arms, and has organized a boycott among that country’s four largest theater chains, representing some 80-85% of screens. Three top chains in the U.K. are threatening to follow suit, vowing to keep Tim Burton’s 3D extravaganza off 95% of the 3D screens in the realm unless Disney backs down.

Good luck with that. I don’t see Disney backing down on this one. It obviously picked this fight with theater owners now because it knows it has the leverage to win. “Alice in Wonderland” will be one of the biggest-grossing theatrical releases of the year, with or without wide distribution in The Netherlands, and it has “Toy Story 3” in the wings, which will be even bigger. In crude terms, the theaters currently threatening boycotts need Disney’s movies more than Disney needs their screens, and both sides know it (U.S. theater operators have more leverage, of course, which is why Disney apparently has cut some sort of deal with NATO that would let it “experiment” with windows on one or two movies a year so long as it doesn’t make a habit of it).

The real question is: why is Disney so intent on getting “Alice in Wonderland” out on DVD and Blu-ray so soon.

In an interview with CNBC last week, Disney CEO Bob Iger said the early “Alice” release would allow the studio to “put the video out before the doldrums of the summer and to put it out when the movie is very fresh in consumers’ minds.” Read More »

Is DECE about to get Lala'd? (Updated)

Updated to fix the bad link: MP3tunes CEO (and former MP3.com CEO) Michael Robertson has an interesting guest post on TechCrunch today about Apple’s emerging cloud strategy and the possible role in that strategy for Lala, the subscription music service it recently acquired. According to Robertson, the Lala acquisition does not presage the launch of a subscription iTunes service, as many have speculated. Instead, the real value of Lala to Apple is its cloud-based personal music storage service and the software for managing it:

As Apple did with the original iPods, Lala realized that any music solution must include music already possessed by the user. The Lala setup process provides software to store a personal music library online and then play it from any web browser alongside web songs they vend. This technology plus the engineering and management team is the true value of Lala to Apple.

An upcoming major revision of iTunes will copy each user’s catalog to the net making it available from any browser or net connected ipod/touch/tablet…After installation iTunes will push in the background their entire media library to their personal mobile iTunes area. Once loaded, users will be able to navigate and play their music, videos and playlists from their personal URL using a browser based iTunes experience. Read More »

Getting nowhere on TV Everywhere

The Media Wonk is en route to Las Vegas for the Consumer Electronics Show as this is being written, where I expect to be inundated with all things 3D. Between taking off from Washington, DC and a stopover in Minneapolis, however (there’s a reason Delta Airlines went bankrupt awhile back, by the way), my BlackBerry was bombarded with “urgent” communiqués from all sides of what looks to be shaping up as a nasty policy fight over TV Everywhere.

The hoo-hah appears to have started with an item in the Washington Post Monday about calls on federal antitrust regulators by various public interest groups spearheaded by Free Press to begin immediately to investigate TV Everywhere. The calls were ostensibly prompted by a “study” paid for by Free Press, which purportedly discovered that TV Everywhere is actually a plot by “giant cable, satellite and phone companies,” along with Time Warner, to “eliminate the threat of online competition,” so they can continue to gouge consumers.

“This is a textbook antitrust violation,” thundered University of Nebraska law professor Marvin Ammori, the study’s author. “The old media giants are working together to kill off innovative online competitors and carve up the market for themselves…The antitrust authorities should not stand by and let the cable cartel crush Internet TV before it gets off the ground.” Read More »