Axios Media Trends
April 13, 2021
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Situational awareness: Reuters News named Alessandra Galloni its next editor-in-chief Monday, the first woman to lead the 170-year-old organization.
1 big thing: DraftKings readies major media push
DraftKings is in the final stages of hiring a chief media officer who will manage a team responsible for evaluating potential media acquisitions and content efforts, sources tell Axios.
Details: The team will help vet future deals and content partnerships that the company will use to help drive customer referrals to its sportsbook.
- DraftKings has talked about a potential deal with Action Network, the digital sports betting publisher, two sources familiar with the conversations tell Axios.
- Action Network, which sources say is profitable, has been approached by several sportsbooks about a deal. One source says that the sale process for the venture-backed company has accelerated in recent weeks, given the momentum around the betting market.
Driving the news: DraftKings two weeks ago announced the acquisition of VSiN (Vegas Stats & Information Network), a sports betting television and streaming channel. VSiN, sources say, is the catalyst for more deals to come.
- A source familiar with the transaction says the deal was valued around $100 million, mostly in stock.
How it works: For sportsbook operators like DraftKings, as well as rival FanDuel and casinos like MGM, Caesars and Wynn, owning content could be a cheaper long-term vehicle than paid marketing for accruing customers.
- DraftKings spent $475 million on sales and marketing last year. The company has reported 1.5 million monthly unique paying customers.
Between the lines: Most sportsbooks have already begun striking partnerships with media companies, but the deal frenzy is just getting started.
- DraftKings inked several high-profile deals with sports publishers over the past few years to test the waters around content before starting to build its own operation. The most notable partnership has been with Bleacher Report, long been rumored as a potential acquisition target for the company.
- Sources say Bleacher Report parent Turner Sports has no plans to sell Bleacher Report at this moment.
The big picture: Sports betting has helped to boost dozens of small sports media upstarts that are ripe for future acquisitions.
- Companies often noted as potential acquisition targets include Blue Wire Podcasts, Front Office Sports, Wave.TV, Overtime, OutKick Media and SportsGrid.
"Leading operators, in addition to DraftKings, such as FanDuel, BetMGM, Caesars, WynnBet, PointsBet and more…they're all looking at (media) assets," says David VanEgmond, Founder & CEO Bettor Capital, an investment fund.
- "There are a lot of emerging digital media assets, in the $50-250+ million equity range, that are likely acquisition targets of the operators to own more media content and subsequently lower their cost of customer acquisition as opposed to buying advertising," VanEgmond adds.
2. Air Mail's growth plans
Graydon Carter's new media venture, Air Mail, expects to employ 40 people by year's end, up from 30 today and 10 at launch in 2019, Axios has learned. It currently has over 75 editorial contributors.
Why it matters: While some have criticized the outlet as a nostalgic attempt to recreate print online, its strategy has helped the company seamlessly transition into new revenue streams like e-commerce, where brand authority is important.
- Air Supply, the company's new e-commerce shop, is billed as a "Highly Selective Storefront," selling a high-end list of curated goods from $595 Lanvin sneakers to $18 retro cycling hats.
- Every week, a new editorial trend inspires a curation at the top of the feed with new inventory available for purchase, a spokesperson tells Axios.
- "Our readers are global in their outlook," Carter tells Axios. "Because the staff is made up of Spy and Vanity Fair vets plus a great mix of smart young tyros, Air Mail is, we believe, the most sophisticated combination of old school rigor and new school smarts out there."
Between the lines: Air Mail launched as a weekly subscription newsletter for highbrow individuals. Its content is accompanied by glossy, print-like magazine ads from premier brands, a reflection of Carter's days at Vanity Fair.
- A subscription to Air Mail costs about $80 per year, up from $50 a few months ago. The company does not disclose subscription numbers, but says its subscriber count grew 147% from 2019 to 2020.
- Air Mail allows just one premier advertiser to run against its content in each newsletter each week. It's worked with 53 unique advertisers, mostly from high-end brands like Hermes, Gucci, Celine, Tiffany & Co, HBO, Apple TV+ and Ralph Lauren.
Details: The company has several newsletters in addition to its premier Saturday email, including a Wednesday Week in Culture Newsletter, a Thursday Book Report Newsletter, and a Friday Pilot Newsletter for kids, AirMail JR.
- The company has recently started to expand out from its digital roots, launching podcasts and expanding into brick and mortars.
- In September 2020, Air Mail launched its first podcast called "Morning Meeting" (M.M.).
What's next: This fall, a spokesperson says Air Mail will be branded on newsstands in Milan, in addition to London.
3. Microsoft looks to leapfrog competitors
Microsoft announced Monday it would buy Nuance Communications, a software company that focuses on speech recognition through artificial intelligence, in an all-cash transaction valued at $19.7 billion (including debt assumption).
Why it matters: This is Microsoft's second-largest acquisition, behind the $26.2 billion deal for LinkedIn in 2016.
Be smart: Microsoft is trying to leapfrog competitors like Google and Amazon as they face record antitrust scrutiny.
The big picture: The deals Microsoft has been eyeing are larger than its usual targets and bigger than those of its competitors.
- Microsoft tried to buy TikTok's U.S. operations last year in a deal reportedly valued between $10 billion to $30 billion. Reports suggest it's in advanced talks with gaming chat app Discord for a deal worth more than $10 billion.
- A report in February suggested Microsoft was eyeing a takeover of Pinterest, worth $51 billion on the public market. Last September, it bought gaming giant ZeniMax Media for $7.5 billion.
4. Ad industry makes a comeback
The advertising industry, plagued last year by pandemic-driven budget cuts, is poised to return stronger than ever in 2021 and beyond, according to several new forecasts.
Be smart: The quick turnaround means that the ad market is recovering faster than it did following the 2008 recession.
- "In 2021, the American advertising industry is poised to regain all that it lost in 2020 and more," wrote GroupM's Brian Wieser in an analyst note last week.
Between the lines: Beyond the general economic recovery, analysts are also optimistic that in-person activities, like sporting events, live entertainment and travel, will return faster-than-expected, driving marketing opportunities.
- The summer Olympics is expected to drive $800m of incremental revenue this year, per Magna.
- Magna expects that the strongest ad spend growth rates will come from the travel, automotive, beverages, and movies categories.
The big picture: The pandemic has expedited the migration from analog media to digital, and the same effect can be seen in the advertising market.
- Digital advertising was resilient during the pandemic, thanks in large part to small businesses leaning into e-commerce, and favoring the likes of tech giants like Google, Amazon and Facebook.
- Traditional publishers on the other hand, "barely stabilized digital ad sales," per Magna.
5. Live events industry sits in limbo
The "live economy" — broadway shows, concerts, music festivals and more — is in pandemic purgatory, Axios' Courtenay Brown writes.
What's going on: Operators in states with audience caps are holding back from reopening as they contemplate whether it makes financial sense for the show to go on.
- Concert promotion company LiveNation — one proxy for the health of the "live industry" — lost $1.6 billion last year. (It was profitable the prior year, making $324 million.)
What's next: Data from Vivid Seats provided to Axios shows that remote concerts gained steam in 2020, in some cases drawing massive audiences.
- The data shows that some virtual events, in particular, BTS's online concert last October with roughly 1 million viewers.
- The data shows that virtual concerts spiked at the beginning of the pandemic, but started waning in popularity starting in July, as drive-in concerts began becoming more popular. They spiked again around BTS's massive virtual show.
The bottom line: The intimate nature of such events, and the ability to put them on in short-notice, may give remote events some staying power.
6. Historic theaters shut down
"Pacific Theaters, which operates some 300 screens in California, including the beloved ArcLight theaters and the historic Cinerama Dome in Hollywood, said Monday that it will not be reopening," the AP reports.
- The big picture: "This is a deep wound to Hollywood's psyche," tweeted N.Y. Times Hollywood reporter Brooks Barnes.