Axios Media Trends

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April 30, 2024

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🗞️ Situational awareness: Jeff Zucker's RedBird IMI is withdrawing its bid for the U.K.'s Telegraph and Spectator, Axios' Tim Baysinger reports.

  • The bid for the influential British publications has been circling the drain amid the country's push to change its laws regarding foreign state ownership of newspapers.

1 big thing: ⚡ Newspapers sue OpenAI/Microsoft

Illustration: Natalie Peeples/Axios

Eight prominent U.S. newspapers owned by investment giant Alden Global Capital are suing OpenAI and Microsoft for copyright infringement, in a complaint filed today in the Southern District of New York.

Why it matters: On top of a similar case filed by the New York Times against both companies, the new suits add heft to publishers' claims.

Between the lines: Until now, the Times was the only major news company to take legal action against AI firms for copyright infringement.

  • 💰 Many other news publishers, including the Financial Times, the Associated Press and Axel Springer, have instead opted to strike paid deals with AI companies for millions of dollars annually, undermining the Times' argument that it should be compensated billions of dollars in damages.
  • Microsoft declined a request for comment. Axios has also reached out to OpenAI for comment.

Zoom in: The lawsuit is being filed on behalf of some of the most prominent regional daily newspapers in the Alden portfolio: the New York Daily News, Chicago Tribune, Orlando Sentinel, South Florida Sun Sentinel, San Jose Mercury News, Denver Post, Orange County Register and St. Paul Pioneer Press.

  • ⚖️ The newspapers are being represented by Rothwell, Figg, Ernst & Manbeck, one of the two law firms supporting the New York Times in its complaint against OpenAI and Microsoft.
  • 🗽The lawsuit was filed in the same district as the Times' lawsuit. If the same judge is chosen to oversee both cases, they could choose to combine the two complaints.

Zoom in: A source familiar with the Alden subsidiaries that own the newspapers, MediaNews Group and Tribune Publishing, said that the papers opted to sue the two firms instead of attempting to negotiate a deal. (The Times tried to negotiate a deal with OpenAI and Microsoft for months leading up to its suit, which OpenAI said caught it by surprise.)

  • For now, the source said, Alden isn't ruling out having more of its more than 60 daily papers eventually join the lawsuit.

How it works: Similar to the Times' lawsuit, the heart of the new complaint centers on copyright infringement claims around the use of articles to train AI models.

The intrigue: The newspapers also accuse the two AI giants of reputational damage pertaining to generative AI's "hallucinations," or made-up answers to users' queries.

  • They cite an example where, in response to a specific query, ChatGPT fabricated that the Denver Post published research and medical observations that smoking can be a cure for asthma.

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2. Trouble in Paramount

Bob Bakish. Photo: Andreas Rentz/MTV/Getty Images for MTV

Bob Bakish's resistance to Paramount's pending deal with Skydance was a source of friction and lost trust with controlling shareholder Shari Redstone, sources told Axios, and his resignation as CEO Monday may allow those talks to escalate.

Where it stands: National Amusements, the Redstone family business that controls nearly 80% of Paramount's voting power, is in exclusive talks with Skydance about a complex deal that would see a merged company led by CEO David Ellison.

  • Skydance is funding the deal with help from Skydance investors, including RedBird Capital and KKR.
  • The original framework of the Skydance deal drew immediate pushback from Paramount Class B shareholders who said the offer would enrich Redstone and leave them holding the bag.
  • Skydance is now offering to buy some Paramount Class B shares at a premium. Redstone is moving toward letting non-voting shareholders "have a say on whether any transaction should be approved," Bloomberg reported Sunday.
  • Skydance made its best and final offer last week, a source confirmed to Axios. Its' exclusive window to negotiate with Paramount is set to expire Friday.

The big picture: Paramount has been on shaky financial ground under Bakish's leadership, which has complicated Redstone's efforts to stabilize the business.

  • 📉 Shares in the company, which includes its movie studio and library that includes "Titanic" and "The Godfather," have fallen nearly 70% since Viacom and CBS merged in late 2019.
  • 📺 Paramount's streaming efforts remain unprofitable and its linear channels are losing ad dollars and viewers. (The company shrunk its streaming losses last quarter, but it still doesn't expect Paramount+ to be profitable until 2025.)

What's next: Paramount has established an "Office of the CEO," consisting of three senior company executives:

  • George Cheeks, president and CEO of CBS.
  • Chris McCarthy, president and CEO of Showtime/MTV Entertainment Studios and Paramount Media Networks.
  • Brian Robbins, president and CEO of Paramount Pictures and Nickelodeon.

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3. Exclusive: 🎙️VP hopeful launches media blitz

Screenshot from Nicole Shanahan's new podcast, "Back to the People."

Nicole Shanahan, the vice presidential candidate running alongside Robert F. Kennedy Jr. on his independent presidential ticket, is launching a podcast and social media push as part of a broader media strategy to reach young voters ahead of the election.

Why it matters: The 38-year-old California attorney and former wife of Google co-founder Sergey Brin has little political experience nor national name recognition. Her media tour is a coming-out party for her as a politician.

  • "I have heard the comments that like I'm not getting out there fast enough, and I am moving as fast as I can. People will be seeing much, much more of me in the coming months," Shanahan told Axios.
  • Shanahan admitted that she "wasn't really on social media" until she joined the campaign.

Driving the news: Shanahan's new podcast, out Wednesday, will see the vice presidential hopeful interviewing innovators and economic policy experts about various issues impacting the American experience.

  • "I will give the occasional stump speech, but my primary focus over the next six months is to be with the people," Shanahan told Axios.

The weekly show, which is taped as a video podcast, will be available across all major platforms, including YouTube, TikTok, Instagram, X and likely Rumble, the YouTube alternative for conservative voices and free speech enthusiasts.

  • "X will be kind of my primary mode of direct communication," she told Axios.

Between the lines: Shanahan's media blitz will also serve as a critical opportunity for her to stress-test messages for RFK Jr. on the campaign trail. But it could also complicate his message.

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4. Strong Q1 ad recovery boosts Big Tech

U.S. internet advertising revenue concentration
Data: IAB; Chart: Thomas Oide/Axios

While legacy media companies are expected to report marginal improvements to their ad businesses during earnings this week, the vast majority of growth in the sector is increasingly being propelled by Big Tech.

  • Meta, Snap, Google, Spotify and Roku all beat investor expectations on top and bottom lines last quarter. (Shares in Meta and Roku fell after hours, mostly due to weak forecasts related to expenditures.)
  • Paramount yesterday reported significant year-over-year improvements to its ad business, largely thanks to streaming and the Super Bowl on CBS.
  • TelevisaUnivision's ad revenue remained flat in the U.S. but grew 7% year-over-year globally thanks to strong momentum in Mexico, where linear TV isn't declining as quickly.

Why it matters: Although Google's and Meta's ad dominance is shrinking relative to the rest of the sector, the rise of retail media players like Amazon, Walmart and Instacart is concentrating the ad market even more among the biggest companies.

  • According to new figures from the Interactive Advertising Bureau, the top 25 biggest ad publishers significantly increased their market share in the U.S. from 83.7% in 2019 to 87.6% in 2023.

🛒 What to watch: The marriage between retailers and media platforms will usher in more consolidation in the ad market among top firms, if regulators allow it.

  • Walmart/Vizio: Walmart agreed to acquire smart TV maker Vizio for $2.3 billion. Vizio said today that the Federal Trade Commission issued a second request from it and Walmart about their deal, a sign that the agency has some more questions about the antitrust impact.
  • Best Buy/CNET: Best Buy and CNET announced last week they're teaming up to create a new retail media network.

5. New focus on original content

Illustration: Aïda Amer/Axios

Tech companies focused on creators are cracking down on spammy aggregators in a bid to give those who create original content a better shot of breaking through.

  • Instagram is changing its content recommendation system to prioritize original content over spammy aggregators.
  • Google took similar steps last month to reduce "low-quality, unoriginal content" in search results by 45%. Google began prioritizing original news in search results over aggregators in 2019.
  • TikTok has started to prioritize longer-form content that's harder to repost or rip off with smaller clips.

Why it matters: YouTube, Meta, Snap and others have all moved away from producing original content and are instead relying on creators to create compelling posts and videos.

  • Quality control of that content is becoming a bigger priority.

6. ⏱️ 1 media thing: Speed matters

Jim VandeHei leading Axios' first company retreat in 2017. Photo: Sara Fischer/Axios

Axios CEO Jim VandeHei is out with his new book "Just the Good Stuff: No-BS Secrets to Success." (It's already the No. 1 new release in leadership reads on Amazon.)

  • The book lays out VandeHei's best tools and tips for effective leadership. But for media insiders, there's one clear takeaway: Don't wait.

Why it matters: The media industry is being upended so rapidly that time has become an executive's most precious resource. Often, leaders waste valuable time, energy and resources trying to validate things they know will work, or stress test problems that they already know how to fix.

  • "Think of all the time wasted avoiding tough conversations or difficult decisions or unpleasant moments. We dither, ignore, nibble around the edges. All this does is prolong misery for you — and everyone else involved," VandeHei writes.

The big picture: VandeHei understands the power of the first-mover advantage.

  • VandeHei, Axios' Mike Allen and Politico's John Harris saw an opportunity to create a digital-first politics website at a time when print outlets like the Washington Post and Time were slow to take risks.
  • In his book, VandeHei notes that his wife encouraged him to move fast and take the risk — giving up his $140,000 salary while raising two young kids to start Politico.
  • VandeHei and his colleagues saw an opportunity to launch Politico Pro quickly in 2010 while one of its main competitors — National Journal — took its time trying to over-survey the market to figure out what would work. And today, much of Politico's business is driven by premium subscriptions.
  • For Axios, VandeHei saw a critical opening in the market to deliver editorial insights to professionals around communications. Today, Axios Communicators is one of its fastest-growing and most successful products. (It's a close second to Axios Finish Line, a leadership column VandeHei co-authors that inspired his book.)

What to watch: Axios will be a first-mover in harnessing the power of AI to move its business forward. VandeHei has already detailed his plans publicly to shift company strategy.

The bottom line: Pounce.

  • "This is the magic," VandeHei writes. "You need to have the smarts and courage to take the breaks you make."

Go deeper: Listen to VandeHei on Jacob Donnelly's podcast