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BFD Expert Voices - Media Deals

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Hulu appears much more certain to end up in the hands of Disney sometime next year, Tim writes.

Why it matters: Whether or not to buy out Comcast's 33% stake in Hulu has been a $9 billion albatross hanging over Bob Iger's head in his second Disney stint — because of a deal he himself made during his first tenure.

The big picture: Disney buying out Comcast has long been the expected outcome, even if Iger tried to throw cold water on that earlier this year.

But last week during Disney's second-quarter earnings call, Iger said that they've had talks with Comcast regarding Hulu and seemed to change his stance on how Hulu would work within Disney.

"It's clear that a combination of the content that's on Disney+ with general entertainment is a very strong combination," he said. "How that ultimately unfolds is to some extent in the hands of Comcast and in the hands of a conversation and negotiation that we have with them."

Between the lines: Even if Iger did not want to buy out Comcast's stake — his endorsement of Hulu is still tepid at best — Comcast has the contractual right to force them to, as part of a 2019 put-call agreement.

"I think it's more likely than not … that we'll put, they'll call at the beginning of next year," Comcast CEO Brian Roberts said yesterday morning during a MoffettNathanson investor conference. "I think Disney recognizes, as anybody else would recognize, that Hulu is really valuable."

Unlike most other streaming services, Hulu doesn't own the content on its platform, which makes its real value hard to gauge in any prospective sale talks.

Roberts said as much himself: "The appraisal process imagined when we structured the relationship, you get all the content from Disney and Fox with it in theory forever. ... What's that worth to any buyer, including Disney, or including Comcast or including other tech companies or whomever if it was actually for sale?"

Per the 2019 deal, Hulu would be valued at a minimum of $27.5 billion. Disney and Comcast have since sparred over the service's true value.

The bottom line: Iger and Roberts, no strangers to negotiating against each other, are doing so this time through the press.

1 big thing: The happiest streaming service on Earth?

Illustration of two cartoon hands: one making a thumbs-up, the other making a thumbs-down.

Activist hedge fund Legion Partners is pushing Clear Channel Outdoor to explore a range of options, including the sale of the entire company. Good luck finding a buyer.

Why it's the BFD: Legion's efforts could put the company in play or at least add pressure to CCO's move to sell certain assets in the U.S., Latin America and Europe, Michael Flaherty writes.

Yes, but: The M&A market is in the doldrums, and finding a buyer for the whole business is going to be a challenge at a time when biz dev teams are waiting out the choppy waters.

Details: Legion, a midsize and veteran activist fund, has been a CCO investor since 2021 and has seen the company's stock trade at nearly $4 per share at its 52-week peak to around $1 per share, where it trades today.

Legion, which owns a 5.1% stake in the company, is demanding the company simplify its structure, as it paints CCO with a conglomerate brush that investors clearly don't like or understand.

In addition to pushing the company to accelerate and widen the sale of assets around the globe, it's also making the case that it should put up a "for sale" sign for the entire shop. Its market value is around $520 million.

The activist fund also points to CCO's heavy debt load, which currently sits at around $5 billion, and is encouraging management to pay that down ASAP.

Of note: CCO competitors include JCDecaux Group and Outfront Media.

What they're saying: "It appears very little has actually been done to meaningfully simplify the CCO business footprint and significantly reduce leverage, and we fear stockholders are losing confidence the Company can accomplish these goals in a timely manner," Legion's letter says, calling out the pace of the company's move to reduce debt and complexity as "glacial."

"The Clear Channel Board of Directors and management team always welcome constructive conversations with our shareholders, including Legion," the company said in a statement, referring to its effort to review strategic alternatives in Europe and other parts of the company.

"The management team and Board are confident in Clear Channel's strategic direction and will continue to act in the best interests of all shareholders to drive maximum value creation."

Activist pushes Clear Channel Outdoor review at a tough time to sell

2. The BFD: CCO's pressure to sell

TelevisaUnivision is pitching its audience as an "economic powerhouse" and major content developments — notably, the rights to the Spanish-language broadcast of Super Bowl LVIII — president of U.S. ad sales and marketing Donna Speciale tells Kerry.

Why it matters: The company's upfront presentation yesterday was only its second one as TelevisaUnivision, the result of the massive merger of two Spanish-language media companies last year.

Details: Throughout its hourlong presentation at Pier 36 on the Lower East Side of Manhattan that concluded with a performance by "Despacito" singer Luis Fonsi, TelevisaUnivision executives stressed the value of its audience and referred to them as Young América.

"Young América lives with us," Speciale tells Axios in an interview last week. "We are contributing almost 100% of the 18- to 34-year-old growth in this country, and will be over the next five years. That's the demo that clients are leaning into, where the growth potential is."

Speciale says the company has continued to address undercounting of its audience. It launched its own Hispanic household graph last year, which is now used by 150 clients. It also is promoting doing deals with Nielsen's Big Data Plus Panel solution.

"The disparity of the panel data versus now Nielsen's Big Data Plus Panel is astonishing. It's really embarrassing. .... It's over 26% differential between what the panel data is for the Hispanic market and us," Speciale says. "The disparity being so enormous is not appropriate anymore."

By the numbers: More than new 110 brands have started advertising with TelevisaUnivision since last year's upfront, Speciale says.

ViX, its Spanish-language streaming service that launched last year, now has more than 30 million monthly active users, and 63% of its users are incremental to linear, the company said.

Be smart: Speciale says the upfront is "very different" for TelevisaUnivision compared to other media companies because the people they are pitching to — predominantly non-Hispanic — are not its audience and that makes it "so important" to deliver the message.

"I have to immerse that audience into the culture, into our content, really feel the passion points and the insights that go into our audience," Speciale says.

Of note: TelevisaUnivision's upfront was immune from the writers' strike pickets, unlike the rest of the week's presentations, as it produces content in Mexico and elsewhere outside the U.S.

3. TelevisaUnivision touts "powerhouse" audience

Donna Speciale wearing an orange pantsuit and pink heels stands in front of a screen that says "TelevisaUnivision"

Donna Speciale, president of U.S. ad sales and marketing at TelevisaUnivision. Photo: Kerry Flynn/Axios

A group of media and investment veterans are launching a new podcast company called DWNLOAD Media that will invest in audio companies, Sara Fischer writes.

Why it matters: The launch puts a spotlight on the podcasting sector, an area that has seen large swings in valuation and investor interest, with the new firm making the case that despite the fluctuations, content remains king.

Details: DWNLOAD Media has raised a small seed round from Stockholm-based investment firm Co_Made, which invests in media and tech companies. Co-founder Chris Peterson says he's in early talks for a Series A.

How it works: The firm plans to invest in audio and podcast companies, primarily in the content space, in the U.S. and abroad.

The idea is to bring investment and growth opportunities to their portfolio companies to help them grow and eventually spread into other categories outside of audio, like merchandising and live events.

4. Media vets launch podcast investment firm

Illustration of a microphone on top of a stack of dollars.

• Kustomer, the CRM startup acquired by Meta last year for $1b, was spun out and raised $60m from previous backers Battery, Redpoint and boldstart at a $25om valuation, per TechCrunch. https://axios.link/455JLr0

• Peter Chernin's North Road Co. has invested around $10m into Peyton Manning's Omaha Productions, valuing the company at $400m, Bloomberg reports. https://axios.link/3pRBl6A

• Unitea, a Miami-based engage-to-earn music platform, raised a seed round of $7m. 1st Class Guernsey, Chaos Capital, TokenSociety and Fuel Venture Capital led. https://axios.link/3W9cnvq

• Audacy's stock was halted yesterday as the New York Stock Exchange initiates the delisting process, per Inside Radio. https://axios.link/3Mx2ogi

• A24 and German mini-major Leonine Studios set up a joint venture to release films in Germany and Austria. https://axios.link/3WdCC3Q

5. Deal flow

• ESPN signed a more than eight-figure deal with Pat McAfee, who will walk away from his four-year, $120m contract with FanDuel and take "The Pat McAfee Show" to the network. https://axios.link/41IB6Ie

• Pitch Black, the parent company of visual effects studios FuseFX, FOLKS, Rising Sun Pictures and El Ranchito, said it appointed Suzanne Bertrand as CFO. https://axios.link/3o3bV5p

• CNN selected Kaitlan Collins to host a new weeknight show at 9pm ET, Warner Bros. Discovery announced at its upfront today. https://axios.link/3MaYyb7

6. Movin' on up (or out)

💰 Kim Kardashian's $1 billion buyout pitch leans on her social media reach (Bloomberg)

"In a fundraising pitch seen by Bloomberg, SKKY flags Kardashian's social reach as one of the reasons it 'will win.' The 42-year-old reality TV star and entrepreneur has 432 million followers on Instagram, Twitter and TikTok as well as a 'demonstrated ability to identify and define culture,' the pitch says," Sonali Basak and Todd Gillespie report.

🎙️ "How do we get every second of your day?": The New York Times goes all in on a new podcast app (Vanity Fair)

"The only way to access the app is if you subscribe to the Times in some way (either for news or in a bundle with its other features). For now, the Times is not selling the New York Times Audio app as a standalone subscription, though it is sunsetting the Audm app and folding it into the new program," Charlotte Klein writes.

✊ CNET staff are unionizing, citing editorial independence and use of AI tools (The Verge)

"A major issue cited by the union is a lack of transparency around working conditions, including how performance evaluations are conducted and how the company plans to monetize content. In February, The Verge reported that, under Red Ventures ownership, CNET's editorial firewalls had repeatedly been breached, and writers were at times pressed to make their work more favorable to advertisers," Mia Sato writes.

7. Channel surfing

Illustration of a pair of sunglasses with lenses that look like tv screens.

😬 Situational awareness: "Vice's bankruptcy documents tell the story in painstaking detail of what happens when the easy-money era comes to an end," Kate Marino writes.

@tim_bays: "Air" on Prime Video. Excited to finally watch the sports movie about a shoe. 

@kerrymflynn: "The Sign in Sidney Brustein's Window" at James Earl Jones Theatre. Won rush tickets! Loved seeing Oscar Isaac and Rachel Brosnahan together and a surprise Rita Moreno.

✏️ Thanks to Michael Flaherty for editing and Katie Lewis for copy editing this newsletter.

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May 17, 2023

1 big thing: The happiest streaming service on Earth?