All Access

Media Deals

Media Deals Alerts

Alert

Standard

Media Deals Thought Bubble

Thought Bubble

mustard

BFD Expert Voices - Media Deals

BFD Expert Voices

After a rocky week for streaming, with terrible earnings for Netflix and a dramatic end to CNN+, David Zaslav pitched WBD's strength in the company's first-quarter earnings report, Kerry writes.  

Why it matters: Because this is the company's last earnings report without WarnerMedia, the guidance is more important than the results.

What they're saying: "We are not trying to win the direct-to-consumer spending war. To begin with, we firmly believe that two content companies coming together have unique advantages, including the largest film and television library from Warner, the largest domestic and international lifestyle library from Discovery and significant global live sports and news," said Zaslav, WBD's CEO and president. 

Zaslav's opening remarks seemed to throw shade at both Netflix and CNN+ with critiques on spending. He shared a four-part "recipe for long-term success": 

"World-class IP content that is loved all over the globe"

"Distribution of that content on every platform and device where consumers want to engage, whether it's theatrical or linear or streaming"

"Balanced monetization model that optimizes the value of what we create and drives diversified revenue streams"

"Durable and sustainable free cash flow generation"

By the numbers: WBD CFO Gunnar Wiedenfels' opening remarks focused on cost synergies, sharing the "good news" and the "bad news" for reaching the $3 billion target. 

WarnerMedia's operating profit and cash flow were below his expectations. Wiedenfels estimated WBD's profit baseline will be $500 million lower than what he anticipated. 

But Wiedenfels said there are cost-cutting opportunities. "I feel very confident in our ability to rectify some of the drivers behind the business case deviations, and some very quickly, with the CNN+ decision last week being Exhibit A," he said. 

Wiedenfels noted potential cutting on the $5 billion marketing spend. "We intend to drive for the highest level of financial discipline here to make sure that every dollar spent is purposeful and measured," he said. 

Discovery reported 24 million streaming subscribers, up from 22 million last quarter. (WarnerMedia's HBO and HBO Max ended the quarter with 76.8 million subscribers, up from 73.8 million subscribers last quarter, as AT&T reported last week.)

What's next: WBD's Upfront is May 18, when the company will share "the full suite of our combined network portfolio," Zaslav said. 

The bottom line: "Warner Bros Discovery is playing to win," LightShed Partners analyst Rich Greenfield tweeted. 

1 big thing: WBD's first earnings

Illustration of the HBO Max and Discovery+ logos merged with a play icon in the middle.

Roku has closed a multiyear theatrical output deal with Lionsgate for upcoming films, beginning with the studio's 2022 releases, Tim writes.

Why it matters: This is Roku's first theatrical output deal and comes as the streaming device maker is pushing more into being a content player. 

For Lionsgate, the deal earns back some of the licensing fees the studio gave up when it moved its content from Hulu and HBO to Starz, which it owns.

At the same time, Lionsgate is looking to either sell or spin off Starz. 

Details: The films will be available on Roku's free, ad-supported streaming channel, The Roku Channel.

The deal includes "Are You There God? It's Me, Margaret," "John Wick: Chapter Four," "Expendables 4," "Borderlands" and "The Unbearable Weight of Massive Talent."

It will still be a while before they land on Roku. Starz will get access to each for about 18 months after their theatrical run before they land on Roku for a shorter exclusive run.

The big picture: Roku has been ramping up its original content business as it seeks to transform into a full-fledged media company from a streaming device maker.

What's next: Roku reports its first-quarter earnings on Thursday. 

2. The BFD: "John Wick" heads to Roku

Illustration of a film strip with one hundred dollar bills in each frame

Data: Yahoo Finance; Chart: Baidi Wang/Axios

Monday was a good day for Elon Musk, but not for former President Donald Trump. Shares of Digital World Acquisition Corp. — the SPAC trying to take Trump's fledgling media venture public — fell 13% to $35.71, Tim writes.

Why it matters: Digital World Acquisition Corp.'s stock price has been cut in half over the past month. It was trading at around $72 per share on March 24.

The stock price is down 30% since the start of 2022.

The big picture: Truth Social, Trump Media & Technology Group's flagship social media network, has gotten off to a rocky start amid tech snafus, long wait times to sign up and a lack of use by Trump himself.

But Trump sort of gave Truth Social a vote of confidence: Despite Twitter's agreement to sell to Musk and let him take the company private, Trump said he won't return to Twitter even if he's reinstated. 

"I am not going on Twitter. I am going to stay on Truth," Trump told Fox News. "I hope Elon buys Twitter because he'll make improvements to it and he is a good man, but I am going to be staying on Truth."

3. Charted: Truth hurts 

Left Lane Capital, a New York-based VC firm, raised $1.4b for its second fund to invest in consumer tech. http://axios.link/Ac1k

Coral Tree Partners, an LA-based growth equity firm focused on the media and entertainment sectors, raised $470m for its debut fund. http://axios.link/M64n

HartBeat, Kevin Hart's media company, raised $100m from Abry Partners, which bought a 15% stake, valuing the company at more than $650m. http://axios.link/JVvk

BandLab, a Singapore-based social music platform, increased its recent Series B funding round to $65m at a $315m valuation. Prosus Ventures joined as an investor. Vulcan Capital led, with participation from Caldecott Music Group and K3 Ventures. http://axios.link/1rVm

Riverside, a podcast recording platform, raised $35m in Series B funding. Oren Zeev led, and was joined by Lachy Groom and Alexis Ohanian's Seven Seven Six. http://axios.link/DKqd

Hour One, an Israeli developer of "virtual twin" tech, raised $20m in Series A funding. Insight Partners led, and was joined by Galaxy Interactive, Remagine Ventures, Kindred Ventures, Semble Ventures, Cerca Partners and Digital-Horizon. http://axios.link/jHil

OpenSea, the NFT marketplace recently valued by VCs at $13.3b (and which had some social channels hacked yesterday), acquired Gem, an NFT aggregator whose backers include Dragonfly Capital Partners, Sfermion and Tioga Capital Partners. http://axios.link/pYgD 

4. Deal flow

NBCUniversal Television and Streaming promoted Orit Blankrot to SVP of entertainment business and legal affairs. http://axios.link/3n2x

Reese Witherspoon, investor Jim Toth and Tennessee Titans' running back Derrick Henry have become minority owners in Nashville Soccer Club. http://axios.link/amjE

WPP appointed Kyoko Matsushita as CEO in Japan. She was serving as CEO of WPP's Essence Global. http://axios.link/lP3z

Indiegogo named Becky Center as CEO. She previously worked at HealthJoy and Groupon. http://axios.link/Z2jE

5. Movin' on up (or out)

"Twitter's board had a choice: Continue to fight Elon Musk or take the path of least resistance. It picked the latter, declaring victory and going home," Dan Primack writes. 

Here's what Elon Musk is getting for $44 billion (Axios)

"Twitter's most precious asset isn't its technology, its business, its data, or its employees. What makes Twitter unique is the attention it has won from the media profession," Scott Rosenberg writes.

Everything Elon Musk wants to change about Twitter (Axios)

"Before he announced he had made an offer for Twitter, Musk had talked about the things he would want to change about the social media platform, from adding an edit button to limiting content moderation," Julia Shapero writes.

Climate scientists and activists nervously eye Musk (Axios)

"Musk's views on free speech, and to a lesser extent climate science and solutions, may help determine if climate researchers and activists disband the communities they put so much time and effort into creating," Andrew Freedman writes.

Who is cheering, jeering Musk's Twitter deal (Axios)

"Right-wing politicians were among those most excited by Elon Musk's purchase of Twitter, while those expressing the most worry were groups representing women, people of color and the LGBTQ+ community," Ina Fried writes. 

Jack Dorsey on Musk Twitter deal: "Elon is the singular solution I trust" (Axios) 

"Twitter as a company has always been my sole issue and my biggest regret. It has been owned by Wall Street and the ad model. Taking it back from Wall Street is the correct first step," Dorsey tweeted. 

Twitter execs could see massive paydays if Elon Musk takeover closes (THR)

Dorsey would "receive a $978 million cash payout should the deal be completed. ... If Musk terminated their employment, [CEO Parag] Agrawal would be in line for a $38.7 million pay package, with [CFO Ned] Segal receiving a $25.5 million package," Alex Weprin writes. 

Twitter employees search for answers as Musk takeover becomes reality (NYT)

"Employees said they worried that Mr. Musk would undo the years of work they had put into cleaning up the toxic corners of the platform, upend their stock compensation in the process of taking the company private and disrupt Twitter's culture with his unpredictable management style and abrupt proclamations," Kate Conger reports. 

Elon Musk's backing means Twitter needs ads to stay aloft (WSJ)

"Musk will need to preserve Twitter's cash flow — and ideally grow it — to service the debt. ... Doing that without advertising would be difficult. Ads account for nearly 90% of Twitter’s revenue now, while data licensing provides most of the rest," Dan Gallagher writes. 

"Twitter had already been hearing from shareholders concerned that Mr. Musk's offer might be the best it could do, and the existence of financing ramped up pressure on directors to take it seriously," Cara Lombardo and Liz Hoffman report. 

6. Channel surfing (Twitter edition) 

Illustration of a surfer with a television in the place of his head.

Good morning, Media Deals readers! Channel Surfing is all Twitter-takes today, so catch the wave!

Situational awareness: CNN+ executives projected that within the next decade the streaming service would be more profitable than the company's cable arm is today, Axios' Sara Fischer scoops.

@tim_bays: "We Own This City" on HBO. A David Simon-written show about corruption in Baltimore? I feel like I've seen this before. 

@kerrymflynn: "The Northman" at AMC Theatres. Excited to see Nicole Kidman on the big screen in something other than the AMC commercial. But TBD if I throw up from the graphic violence. 

Thank you for reading Axios Pro Media Deals! Please ask your friends, colleagues and Truth Social users to sign up.

April 26, 2022

1 big thing: WBD's first earnings