Axios Media Trends
May 10, 2022
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Situational awareness: The 2022 Pulitzer Prize winners were announced Monday, with several awards going to journalists that covered inequities around voting and policing. Two prizes were awarded to journalists covering Jan. 6.
1 big thing: Seuss scoop
Dr. Seuss Enterprises, the private company that manages the work of the late Theodor Seuss Geisel, has been in talks with bankers to conduct valuation exercises following recent sales of other children's content companies, according to two sources familiar with its efforts.
Why it matters: Dr. Seuss Enterprises is one of the most prized collections of intellectual property in the world, and nearly every major Hollywood heavyweight is likely to show interest.
- Dr. Seuss is the No. 1 literary license in the U.S. by print sales, according to data from NPD BookScan. It sells more copies than any other IP-based book, including for both children and adults, as Axios has reported.
Details: Dr. Seuss Enterprises is a notoriously private group that's long held out on sales talks. But as other major kids-focused production and intellectual property companies begin to sell, it's looking to understand its options and market value.
- Sources say a sale is not imminent, but that the sale of Roald Dahl Story Company to Netflix in September prompted Dr. Seuss Enterprises to begin exploring possibilities.
- Dr. Seuss Enterprises did not comment.
Some of the obvious bidders for Dr. Seuss Enterprises include Comcast and Warner Bros. Discovery.
- Comcast is home to NBCUniversal's theme parks and resorts. Universal's Islands of Adventure theme park in Florida includes an exhibition called Seuss Landing, which features dozens of Seuss-themed rides and attractions.
- Warner Animation Group has a partnership with Dr. Seuss Enterprises to produce feature films based on Seuss characters and stories.
Other major streamers are also likely to look into the asset. Netflix announced five new animated series and specials based on Dr. Seuss books in March. Amazon is reportedly developing a baking competition series inspired by Dr. Seuss books.
The big picture: Companies that sit on valuable troves of kids entertainment are starting to cash in as the demand for original streaming content, especially for kids, skyrockets.
- Moonbug Entertainment, the U.K.-based digital content company that's home to the YouTube streaming hit "CoComelon," sold for roughly $3 billion last year.
- Roald Dahl Story Company was acquired by Netflix in September for a reported price of over $600 million.
- Alvin and the Chipmunks owner Bagdasarian Productions has engaged in sale talks, per CNBC, including with big streamers like ViacomCBS.
Disclosure note: Comcast is an investor in Axios.
2. Crisis in Mexico
Two journalists were shot to death in Mexico this week, bringing the total number of journalists killed in Mexico to 11 this year.
Why it matters: Even in Mexico, which is considered one of the most dangerous countries in the world for journalists, the number of journalists killed in such a short period of time is unprecedented.
- For example, last year was previously considered Mexico's most deadly year for journalists, after nine journalists were killed.
Details: The latest victims, Yessenia Mollinedo Falconi and Sheila Johana García Olivera of the online news site El Veraz in Cosoleacaque, were shot to death in the Gulf coast state of Veracruz, per AP.
- The Veracruz State Attorney General's Office tweeted that it's opened an investigation into the killings.
The big picture: Mexico has long been one of the most dangerous places for journalists globally, but victims rarely see justice.
- In the past 30 years, only three journalists’ murders in Mexico have resulted in convictions, according to the Committee to Protect Journalists. It notes that since the late 1990s, "153 journalists have been murdered and another 29 'disappeared.'"
3. Sports networks squeezed by rising costs, fewer subscribers
A new report suggests sports networks should expect continued profit margin declines as the economic outlook for traditional TV worsens in the next few years.
Why it matters: Live sports have been the bedrock of cable subscriptions for decades. But the rising costs of sports rights can't be subsidized by cable subscribers forever.
Details: Data from Kagan, the media research group within S&P Global, finds that sports rights fees have risen faster than inflation over the past few years, which has begun to cut into the profits of major sports networks.
- Analysts estimate that ESPN's cash flow margin peaked in 2011 at 41.5% and declined to roughly 25.1% in 2021.
- The network, the report notes, "is projected to see margins dip into the single digits as soon as 2023."
By the numbers: Networks spend around $15.5 billion each year for rights across major American sports leagues, according to the study.
- While networks were able to make up for some of the pandemic-driven cable subscriber losses with advertising revenue, that revenue hasn't necessarily increased enough to also offset rising programming costs.
⚡️ Breaking: On an earnings call Tuesday morning, Fox Corp. CEO Lachlan Murdoch said Tom Brady will join Fox Sports as lead NFL analyst when he retires.
4. Tech's biggest losers
Amid a brutal market sell-off, tech companies that focus on streaming, e-commerce and social media are facing especially steep declines.
Why it matters: Internet firms that benefited from pandemic habit changes are now being forced to trim their outlooks and spending as the market leaves behind a frothy era of soaring investments and zero interest rates.
Tech firms have started to announce layoffs, hiring freezes and spending cuts.
- Cameo, the hit app that connects celebrities to fans virtually, laid off 87 people Wednesday — about 25% of its workforce.
- Meta, parent to Facebook, is implementing a broad hiring freeze, per Insider.
Between the lines: Long-established tech companies in sectors like IT, hardware and chips have had the market's latest volatility built into their stock expectations for some time.
- For those companies — including Microsoft, IBM and Apple — this market downturn so far looks more like cyclical retrenching than an existential crisis.
👀 Speaking of Meta: The company is considering cutting back on news partnerships after its three-year contracts with publishers for the Facebook News Tab expire this year, The Information reports.
5. Crypto craze continues
Two years after the blockchain journalism startup Civil shut down, a new crop of digital websites is trying to forge a path for journalism in the web3 era.
Driving the news: Dirt, the entertainment and culture newsletter that became the first one to fund itself solely using only NFTs, has raised a $1.2 million seed round, its publisher Kyle Chayka and editor-in-chief Daisy Alioto tell Axios.
- "It's a pathway to having a media brand that operates more off of the streetwear fashion playbook," Alioto said.
The big picture: Most media companies that rely on web3 tech operationally also cover web3. But more companies, like Dirt and Time Inc., are taking a different approach.
- Time has sold more than 20,000 individual NFTs for more than $10 million in profit, Digiday reports.
6. Disrupters, disrupted
Splashy direct-to-consumer brands like Peloton and Blue Apron are losing their edge as established companies double down on digital products and services, Axios' Hope King and I write.
Driving the news: New data from Insider Intelligence shows that direct-to-consumer e-commerce sales from established brands will be three times larger than those of digitally native brands.
- The upstarts' marketing playbook "has mostly run out of juice," wrote Andrew Lipsman, principal analyst for retail and e-commerce.
- "We believe that there is a paradigm shift going on," Accenture CEO Julie Sweet said last month at Axios' "What's Next" Summit.
Traditional companies across industries are finally beginning to claw back at their upstart rivals.
- Upstarts are finding it more difficult to do business online as advertising becomes more expensive and privacy changes have limited their ability to track their customers.
The bottom line: "Digital ad costs are rising, the early arbitrage opportunity has eroded, and brands can't growth-hack their way to scale," Lipsman wrote.
7. 1 🍿 thing: The summer blockbuster is back
Marvel's "Doctor Strange in the Multiverse of Madness" brought in a whopping $185 million at the domestic box office this weekend, making it the second-biggest domestic theater opener in the pandemic era.
Why it matters: "It's clearly a very important next step in getting the summer movie season back," said Comscore senior media analyst Paul Dergarabedian.
Details: The mega-hit opened at No. 1 in all key markets and brought in roughly $450 million globally in its debut weekend, per Comscore.
- It soared past Warner Bros.' massive opener for "The Batman" earlier this year.
Worth noting: The film did not debut in a few key markets, like Russia, Ukraine and China. It's unclear if China will give the film a release date, but given the country's recent history in blocking Marvel films, it seems unlikely.
What's next: The summer movie season took a big hit during the pandemic, but analysts predict a significant comeback this year, thanks to a jam-packed summer movie slate.
- "Anything over $3 billion is a total win" this summer, Dergarabedian said. Pent-up demand could manifest in longer playability for movies or bigger grosses for movies that open this summer, he predicted.