Axios Media Trends

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August 16, 2022

Today's Media Trends newsletter is 1,529 words, a 6-minute read. Tell your friends to follow along by signing up here.

🚨 Situational awareness: Amazon has inked a three-year deal to have Nielsen measure Amazon Prime Video's NFL Thursday Night Football telecasts.

1 big thing: Oracle auditing TikTok algorithms

Illustration of the eyes emoji with the Tik Tok logo as the pupils.

Illustration: Allie Carl/Axios

Oracle has begun vetting TikTok's algorithms and content moderation models to ensure they aren't manipulated by Chinese authorities, Axios has learned.

  • Why it matters: Chinese-owned TikTok is the first foreign-owned social media platform to win a mass audience in the U.S. and has spent years trying to show that it poses no danger to American interests.

Details: The new arrangement gives Oracle "regular vetting and validation" of TikTok's content recommendation and moderation models, a spokesperson confirmed to Axios.

  • The reviews, a source told Axios, began officially last week, now that all new U.S. user traffic is being routed to Oracle's cloud infrastructure. (It's still unclear when TikTok will be done migrating all of its previous U.S. user data over to Oracle's cloud, as is expected.)
  • Oracle will have visibility into how TikTok's algorithms surface content "to ensure that outcomes are in line with expectations and that the models have not been manipulated in any way," the spokesperson said.

Between the lines: Oracle will also conduct regular audits of TikTok's content moderation processes, including those involving automated systems and those employing people.

  • Giving Oracle access "will ensure that content continues to be flagged and actioned appropriately based on our Community Guidelines and no other factors," the spokesperson added.

🤠 The big picture: These moves are part of a broader TikTok effort called Project Texas, which is meant to give U.S. TikTok users and lawmakers assurance that U.S. user data is safe and content recommendations aren't being manipulated.

Go deeper.

2. Scoop: Condé Nast on pace to top 2021 revenues

Illustration of Condé Nast magazines with Ben Franklin on the cover

Illustration: Shoshana Gordon/Axios

Condé Nast is expecting this year to exceed the nearly $2 billion in total revenue it saw in 2021 thanks to continued growth in its advertising business, a source familiar with the figures told Axios.

Why it matters: Most digital publishers are forecasting advertising growth slowdowns in response to macroeconomic factors impacting the economy, like inflation and supply chain issues.

Details: For the first half of this year, Condé Nast — which is home to publications like Vanity Fair, Wired, Vogue and GQ — saw an 11% growth in advertising, a spokesperson confirmed to Axios.

  • That growth was fueled by a +13% growth in digital advertising year over year, as well as print advertising gains. A majority of the company's advertising revenue is now digital.
  • Last year, the company posted a profit for the first time in years, per the Wall Street Journal. It's unclear if the company will post a profit again this year, as it looks to invest in its digital expansion.

What to watch: As Condé Nast looks to fuel digital subscription growth, it's also begun to experiment with new types of consumer revenue models.

  • The company has quietly launched a new membership model for its flagship publication called Vogue Club.
  • Sources say the company is eyeing similar membership models for other publications, like GQ, in 2023.

Go deeper.

3. 📺 The TV bundle is back

Data: Axios research; Chart: Danielle Alberti/Axios; *Netflix plans to introduce an ad-supported tier in 2023

Facing saturation in the U.S., most major streamers are launching cheaper ad-supported streaming tiers, and they're beginning to bundle their offerings with other subscriptions to attract more users.

Why it matters: The streaming era was supposed to give consumers more choice, but streaming options increasingly resemble the bloated cable bundles they sought to replace.

Driving the news: Walmart on Monday signed a deal with Paramount to offer subscribers of Walmart+, its subscription membership program, access to the ad-supported tier of Paramount's subscription streaming service, Paramount+, for free.

Between the lines: The news comes days after the Wall Street Journal reported that YouTube is considering building its own channel store, which would allow customers to subscribe to various streaming services via their app, akin to programs currently available with Apple and Amazon.

  • Disney offers consumers a discount to purchase a bundle of all three of their streaming services, including Disney+, Hulu and ESPN+.
  • Paramount offers a bundled discount for Paramount+ and Showtime.

Flashback: Streamers have long relied on bundled relationships with telecom and hardware providers to increase their footprints.

  • Disney+ is available for six months to new Verizon mobile customers with unlimited data plans. So is discovery+. Netflix is available to T-Mobile customers.

Share this chart.

4. Exclusive: Morning Brew's creator program

Photo illustration of, from left, Sigin Ojulu, Emma Chieppor, Jack Appleby and Katie Gatti in a coffee mug.

From left: Sigin Ojulu, Emma Chieppor, Jack Appleby and Katie Gatti. Photo illustration: Brendan Lynch/Axios

Morning Brew has launched a creator program that allows independent personalities to work for the company full time while maintaining separate and distinct products and brands.

Why it matters: The program will help Morning Brew expand into niche areas, like personal finance, entrepreneurship and productivity, said Austin Rief, CEO of Morning Brew.

Details: The company currently works with seven creators, all of which are on Morning Brew's payroll full time.

  • Rief declined to provide details about how the creators are compensated differently from full-time reporters, but he alluded to the fact that they each have unique deals.
  • "We want to understand how we can ensure that creators are incentivized to stay for a long period of time," Rief said.

How it works: Some creators, including Katie Gatti — a 26-year-old podcaster and personal finance writer — have brought their existing brands to Morning Brew to grow them with the support of Morning Brew's infrastructure.

  • Others, like Sigin Ojulu, are launching personal brands on Morning Brew's social channels.
  • 📊 Gatti, as well as Emma Chieppor, the 25-year-old founder of Excel Dictionary, a franchise that focuses on optimizing workplace skills, have both launched merchandise lines with Morning Brew as part of the program.

Go deeper: Morning Brew's numbers

5. Activist investors target media

Illustration of a repeating megaphone pattern.

Illustration: Eniola Odetunde/Axios

Disney and the New York Times are under pressure from activist investors to focus their business efforts on consumer revenue, Axios Tim Baysinger and I write.

Driving the news: Hedge fund manager Dan Loeb on Monday revealed a new stake in Disney designed to put pressure on the entertainment giant to spin off ESPN, cut costs and take full control of Hulu sooner.

  • Loeb, who has pressured other media companies like Yahoo in the past, argued in a letter to Disney CEO Bob Chapek that Disney should hire new board members.

Between the lines: Disney has reportedly eyed an ESPN spinoff, but ultimately hedged against selling the asset, as it has proven critical not only to its cable revenues but its bundled streaming product.

  • Loeb, however, argues the company could reap much more value from the asset if it combined it with a sports betting company.
  • Some analysts disagree.

The big picture: The news comes several days after ValueAct, another activist investor, disclosed a nearly 7% stake in the New York Times, with which it plans to pressure management to more aggressively market its bundled subscription offering to consumers.

📧 Subscribe to Axios Pro Media Deals.

6. Nexstar buys 75% of The CW

Data: Yahoo! Finance; Chart: Axios Visuals
Data: Yahoo! Finance; Chart: Axios Visuals

Nexstar on Monday announced a deal to acquire a majority stake in the CW from Paramount Global and Warner Bros. Discovery, after months of anticipation following leaks about an arrangement.

Why it matters: The deal gives Nexstar, the largest local broadcast distributor in the U.S., an opportunity to invest more in content that it can sell national advertising against.

  • The company reported record second-quarter net revenue this year thanks to huge gains in political advertising at the local level.
  • National programming offers Nexstar more ad consistency, insulating it from the biennial highs of political ads at the local level.

Be smart: The deal also gives Paramount Global and Warner Bros. Discovery cash to invest in their own streaming services.

  • Both firms will retain a 12.5% ownership stake in the CW and will continue to produce original, scripted content for the network.

The big picture: Ratings for the CW have dwindled in recent years, and the linear network has been costly for both companies to operate.

7. 1 fun thing: Risky films blush at box office

Note: G rating data not available in 2022; Data: The Numbers; Chart: Axios Visuals

So far in 2022, the percentage of box office revenue that has gone toward R-rated films is the lowest it's been in over 25 years.

Why it matters: R-rated films across genres like drama and romance are increasingly being pushed to at-home streaming, while more family-friendly action and adventure franchises continue to dominate theaters.

The big picture: "If the greatest chance of box office success is having a PG-13 rating, or not having an R rating, then that's where the industry really had to go," said Comscore senior media analyst Paul Dergarabedian.

  • This year's box office, while up significantly from this point last year, is still down more than 30% compared to 2019.
  • The pandemic forced many indie films, which are more likely to be rated R, out of the theatrical business.

By the numbers: The vast majority of movies that hit theaters over the past two years were PG-13, according to data from The Numbers.

  • Every movie that grossed over $100 million in 2021 was rated PG-13.
  • So far this year, every movie that has grossed over $100 million has been PG-13 with the exception of two G-rated movies: "Minions: The Rise of Gru" and "Sonic the Hedgehog 2" and one R-rated film, "Nope."

Yes, but: Several notable R-rated $100 million+ domestic performers have historically come out in August, Dergarabedian said.

  • "I call it the punk rock month for movies," he said, referring to releases like "District 9," "Superbad" and "Inglourious Basterds."
  • "It seems to be the month where you get the edgier summer fare."

What's next: Sony’s "Bullet Train," which debuted earlier this month with an R rating, has grossed over $50 million domestically.

  • Idris Elba's survival thriller "Beast" debuts Friday with an R rating.