Axios Media Trends
May 05, 2020
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- Situational awareness: Pulitzer Prize administrator Dana Canedy noted during yesterday's awards that the first Pulitzers were awarded than a year before the outbreak of the Spanish Flu.
- 👀 Warren Buffett's first virtual-only investor meeting was the most-watched video on Yahoo Finance this year.
✏️ Today at 12:30, Join Axios' Kim Hart and I for a live, virtual event on COVID-19's impact on education, with Jeb Bush, AOL co-founder Steve Case and Teach for America CEO Elisa Villanueva Beard. Register.
1 big thing: America's new news boss
Cesar Conde will become the chairman of NBC News Group — including MSNBC, CNBC and NBC News — NBCUniversal announced Monday.
Why it matters: His promotion marks the first time that a Latino has become the head of news for NBC, and people who have worked closely with Conde say he's one of America's most underestimated media executives.
Details: Conde led Telemundo's historic turnaround over the past few years, and before that helped make Univision a global Spanish-language news powerhouse.
- "I think he's always been underestimated because he's young and brown and doesn't come across as a pushy person, but thats also how he got into the board of directors at Walmart and PepsiCo," says a high-level media executive who has worked closely with Conde.
- "He has a global perspective of how the world works that goes beyond that which many of us executives in the media have ever seen."
Conde, 46, has a father from Peru and a mother from Cuba. He grew up in Miami, and became a high school tennis champion before going to Harvard, and then eventually Wharton School of Business. Along the way, he served as a White House Fellow for Secretary of State Colin Powell from 2002–2003.
- People who have worked closely with Conde describe him as being a savvy and thoughtful businessperson. "He's very flexible and calm," says one source. "He thinks deeply on things and doesn't make rushed decisions."
At Univision, he led the network's primetime newscasts to be competitive with some of the major English-speaking networks in ratings.
At Telemundo, Conde is credited with having brought Telemundo from being the second-place network to Univision to a break-out network.
- One of his biggest accomplishments has been overseeing the network through its acquisition of World Cup rights from Univision from 2018-2026.
The big picture: Conde's appointment comes amid a broader executive shuffle at NBC. On Monday the company announced that longtime NBC News chairman Andy Lack is stepping down and will transition out of the company by the end of May.
- Under Lack, NBC News was accused of attempting to scuttle journalist Ronan Farrow's investigation into allegations of sexual assault against Harvey Weinstein. Farrow also accused Lack of downplaying an internal complaint about a rape allegation against then-host Matt Lauer.
- Sources describe Conde quite differently: "He's not a micro-manager," says a source that worked closely with Conde for several years. "He choses his team, helps them maneuver, makes bets and he pushes forward. He really doesn't drink or party, he's not into schmoozing. He's very focused on work and ethics."
Disclosure: NBC is an investor in Axios.
2. Western governments pressured to save local news
Governments in Western democracies are being pressured by the news industry to come up with relief plans to support local media companies that are being upended by the pandemic.
- Some have already begun implementing small aid programs.
Why it matters: Most experts agree these efforts are not sustainable in supporting the local media ecosystem long-term.
- In Canada, the federal government said it's planning a $30-million COVID-19 awareness advertising campaign, as well as possibly implementing tax credits for newspapers in light of the pandemic.
- In the U.K., the government has been directing more advertising dollars towards local publishers.
- In the U.S., there have been calls to do similar redirections of ad dollars by members of Congress, as well as calls to make it easier for news companies to apply for small business relief funds.
- In Australia, the government unveiled a plan to force Facebook and Google to pay for news. While the plan had been in the works for a while, unveiling it during the pandemic can be seen as an effort to address local news' woes during the crisis.
- In Ireland, news publishers are urging the government to take similar action by implement a 6% “windfall tax” on tech giants, with proceeds going to the news industry that's being impacted by the pandemic.
Be smart: While these measures could pose some risk to the editorial independence of local outlets, experts say local media is left with few options at this point to really consider denying the aid.
- "As long as there’s a culture where a local station takes the ad money but still investigates government actions, I think it’s ok," says University of New Haven professor Matthew J. Schmidt. "But it’s always a judgement call about where that line is."
The bottom line: "These types of policies make a lot of sense. Where there is market failure in a sector that has an important civic function, then it's always appropriate for the government to step in to help maintain those public services," says Rodney Benson, chair of NYU's Department of Media, Culture, and Communication.
3. Tech giants crush earnings, brace for ad slowdowns
The major ad-based internet companies reported mostly positive earnings during the first quarter impacted by the pandemic.
Driving the news: Facebook, Google, Snapchat, Twitter and Amazon all beat revenue expectations for the first quarter of 2020, despite the fact that most saw dramatic advertising growth slowdowns starting in late March, and some saw overall profits take a hit.
- Facebook and Google both said that some of the ad slowdown that it experienced in March began to stabilize in the beginning of April.
- Snapchat, as well as Facebook and Google, said it's seeing positive results from direct response advertisers, or advertisers that try to get people to take action or buy something immediately. This could be due to the fact that in a less competitive ad market, the price of those ads goes down.
- Amazon, which is heavily focused on direct response ads tied to e-commerce, saw healthy growth within its ads business, despite reporting less profit than expected due to coronavirus-related expenses.
- Twitter, like its rivals, saw record user engagement during the first quarter, but its ad business seemed to experience more tumult than some of its rivals, like Snapchat, compared to last year.
The media industry, which is also heavily reliant on digital advertising revenues, is experiencing major setbacks.
Yes, but: Most companies expect to face even bigger advertising headwinds over the next quarter, as the stay-at-home orders will have covered most of April, May and June in some states.
The bottom line: The pandemic has proven their resiliency of big tech companies, and will likely position them to come out stronger on the other end of the crisis.
4. Don't expect a cable refund any time soon
The absence of live sports is reigniting the years-long debate over the real value of live sports in a Pay-TV package.
Driving the news: New York State Attorney General Letitia James, a Democrat known for taking on big companies in favor of consumers, joined a growing group of critics last week that are calling on cable and satellite TV providers to rebate Pay-TV fees to consumers.
Why it matters: Her argument is that consumers shouldn't have to pay the same amount for cable and satellite packages, which include expensive sports networks, when those sports networks aren't carrying any live sports.
Yes, but: Contractually, it's unlikely cable and satellite providers will budge.
- In an interview with Axios' Jim VandeHei last week, Verizon CEO Hans Vestberg wouldn't say that he would provide any rebates to customers, and instead insisted that his company is committed to not charging late fees until June.
- As Sports Business Journal's John Ourand reports, "legally speaking, distributors can’t start seeking rebates (from TV networks) until September 2021 at the earliest," due to contractual obligations. The sports networks, at least ESPN, have at least 12 months to air a certain number of live events, per Ourand.
The big picture: Analysts and reports have begun to call out the tension between the networks and carriers ahead of earnings season.
- Last week, the New York Post reported that Dish, which is notoriously known for being a shrewd negotiator with networks over distribution fees, is looking to get out of the $80-$100 million distribution fee it owes ESPN for April broadcasting rights.
By the numbers: The average monthly cable or satellite package in the U.S. is roughly $100. Sports accounts for roughly 20% of that package fee.
- The top 10 most expensive cable affiliate fees in the U.S. are all sports channels — mostly regional sports networks — with ESPN being by far the most expensive at roughly $8 monthly.
5. Quibi has a new enemy
Feared activist investors Elliott Management are financing a patent lawsuit on behalf of a small interactive video company against the splashy new mobile streaming company Quibi, a person familiar with the lawsuit tells Axios' Dan Primack and me.
Why it matters: Elliott Management's involvement escalates the months-long battle over who owns the video technology that powers Quibi's entire business. Quibi just launched in April, and has struggled to stick to its ambitious growth plan amid the coronavirus pandemic.
Details: The lawsuit alleges that Quibi's flagship tech, which allows users to seamlessly switch mobile displays between horizontal and vertical, is stolen from video company Eko.
- Eko cites two primary pieces of evidence: (1) It held repeated talks with Snap, from which Quibi poached numerous employees. (2) Eko's CEO and Katzenberg discussed Eko's technology prior to Quibi's big unveil.
- Quibi unambiguously denies Eko's claims, and also has countersued Eko.
- The Wall Street Journal was the first to report on the lawsuit.
Terms of the arrangement are unknown, but a source says that Elliott will receive a "significant" equity stake in Eko.
- It's unclear what Elliott gets out of this if Eko doesn't win the lawsuit.
- According to a source familiar with the matter, the Eko team feels confident that its case will go to trial, and that Eko has enough evidence that Quibi executives were aware of Eko's ideas prior to launching their own product.
What's next: Eko has requested an immediate injunction against Quibi, with a ruling possible this week. But that's only on the trade-secret piece, not the patents, with a broader case management conference scheduled for July. Overall, the entire case could take upwards of three years.
- Our thought bubble: A loss may devastate Quibi, given that it's pitched the display tech to Hollywood content creators as an exciting new way to film. It's unclear if Eko would be willing to license out the tech to Quibi and, even if so, at what price.
6. Facebook, Poynter and ATTN: partner up
ATTN:, the progressive social media-based news outlet aimed at millennials, is launching a video series on Facebook and Instagram, in partnership with Poynter's groundbreaking digital literacy project "MediaWise."
How it works: Facebook came to ATTN: to produce the series because it's already proven that it knows how to capture millennials' attention with video, especially on Instagram.
- Facebook is paying for the video production on ATTN:'s end. It's already funding some of Poynter's efforts through a separate grant program.
- "Instagram is realizing that for first time ever this election season, young people are seeing more news items on the Instagram feed and they want young people who may not have same access news literacy to get it," says ATTN: CEO Matthew Segal.
What's next: The first video in the series premieres today, and is focused on helping young people distinguish fact vs. fiction on content specifically relating to the coronavirus.
7. Disney's day of reckoning
Wall Street is anxiously awaiting Disney earnings at market close today, after several analysts have already begun to downgrade the stock due to its unique exposure to the coronavirus epidemic.
Why it matters: Roughly half of Disney's revenue is directly tied to industries that have been shut down, like parks and resorts, advertising and film.
Disney's damage control so far:
- Furloughed 100,000 employees
- Freed up roughly $13 billion in credit
- Pushed blockbuster movies like Mulan off the release schedule while theaters are mostly closed and delayed production
Yes, but: The one bright spot for Disney throughout the pandemic has been Disney+, which Disney says has surpassed 50 million subscribers.
What to expect: Moody's SVP Neil Begley says that he expects Disney to take a hit in Q1, but that "the dramatic impact that's coming is really in Q2."
The bottom line: "We're anticipating that this will be a rough couple of quarters for the company."
8. 1 last thing: The most viral corona-conspiracy
Of all the conspiracy theories floating around the internet related to the coronavirus, disinfectant has by far gone the most viral.
Why it matters: Unlike some of the other conspiracy theories gaining traction on the internet, the disinfectant theory has gone viral online in large part because it's so obviously nonsensical that it quickly became an internet meme after President Trump suggested it could be used as a cure for coronavirus.
By the numbers: As of Monday, “Disinfectant Cure” retains the most widely-discussed conspiracy, despite discussion around the issue fading rapidly.
- “Bill Gates Created Virus" continues to generate between 40k and 80 pieces of content a day on a consistent basis, per Zignal Labs.
- “Hydroxychloroquine Questionable Claims” continues its boom/bust cycle of entering and fading from the news over the course of the month.