Read My Latest at TVRev! Four Lessons from MoviePass

I’ve been a little light in non-Weekly Update articles this month because I’ve been writing some new pieces for other entertainment outlets. My first has gone up at TV-Rev so check it out and share. It’s on MoviePass, who I’ve been writing/thinking about for a while. As a company, MoviePass’s rise and fall offer us a lot of good lessons on the challenges of digital disruption and growth. Again check it out.

(Thank you to Alan Wolk and team for giving me the opportunity to publish on their site. They publish really good deep dives, like their most recent on how OTT is changing ad delivery.)

Most Important Story of the Week and Other Good Reads – 15 March 2019: Is Spotify the People’s Champion?

This week felt slow , but I’ll say this: March will end with at least one big story. Or two. Or three. So stay tuned for that. Meanwhile…

Most Important Story of the Week – Spotify and Apple Battle Over Fees

Technology duels sure are fun, aren’t they? On Wednesday, via press release, Spotify founder Daniel Ek went after Apple in the EU antitrust arena for being a monopoly. (And tattled on them to the EU regulators.) Apple responded back, also via press release, “Hey you’re the bad player you don’t pay artists.” Which is true: earlier in the week, Spotify was back in court to appeal a ruling that increased payments to songwriters.

More than anything, this story portends the forces that are looming future battles in the entertainment, communications, technology and media industries. Some of these skirmishes will undoubtedly benefit customers, but often, the consumers are just the pawns.

Force 1: Appeals to consumers

Customers aren’t going to decide if Apple Music can exist on Apple’s platform. But both Tim Apple Cook and Daniel Spotify Ek took their cases to the consumers with blog posts, that they knew would get picked up by every media outlet out there. And so they were.

It seems relevant that the companies at least feel the need to go to customers with their pitches. (Hey, Apple is raising prices!; Hey, Spotify is screwing artists!) When Standard Oil was marauding through the land, they just paid to bury negative stories. The techlash is real, and the companies who need to watch out are…

Force 2: Tech giants and aspiring tech giants

Monopolies make for strange bedfellows, and the smaller guys want to get in that bed. In this case, Apple sat out the lawsuit against artists, but in fairness to Spotify, they were joined by Google, Amazon and Sirius XM/Pandora in opposing paying songwriters more. I saw another article this week about Apple vs Facebook, previously Apple had gone to war against Amazon, and Google and Amazon fight regular battles too.

It really does feel like Pacific Rim, where giant jaegers fight giant kaiju, and the customers are just watching. A few massive companies wage battles over each other’s monopolies (or “industries” if you’re being generous). Meanwhile, a company like Spotify is too small to truly battle, but wants to be a fellow tech giant, but just isn’t big enough. So it turns to…

Force 3: Antitrust

Appeals to antitrust regulators is probably the new normal. The EU already has a very aggressive regulatory regime, and I don’t see it slowing down anytime soon. If a Democrat wins, especially certain Democrats, you could expect the same on this side of the Atlantic. Sure, Spotify is only doing this out of self-interest, but it could help the market and us as customers. (I haven’t written about the Elizabeth Warren tech breakup proposal yet, but I will, in an entertainment context.) Of course, Spotify doesn’t really care about antitrust behavior, it cares about…

Force 4: Fees

At the end of the day, Spotify just doesn’t want to pay 30% cut of subscriptions to Apple. Neither did Netflix, and they thought they were big enough so they dropped payments from the App Store. Clearly, Spotify felt the same way, but unlike Netflix they’ve felt the crunch on premium subscribers more. Which isn’t to say Spotify’s complaints aren’t legitimate–they are and echo Microsoft in the 1990s more than a little bit–but it doesn’t make Spotify the people’s champion. And these splits on fees are the new battleground for streaming music, film and entertainment in the next decade.

So that’s it: Spotify wants to keep prices low. Which is good for consumers, but their biggest cost is still…

Force 5: Costs for content

Which is why Spotify went to court to keep royalty payments low. This is the story to monitor: Spotify’s costs rise as its usage does. Spotify is doing whatever it can to get to profitability and positive cash flow. Whether that means fighting artists or fighting Apple, that’s what it’s doing. Hardly the people’s champion.

Other Candidates for Most Important Story of the Week

Meanwhile, everyone else was repositioning their troops in the #StreamingWars2019.

Disney is Ending the Vault

If I have a big unquantified rule, it’s this: content is king. Distribution is not. Unless you have a monopoly. That helps.

But otherwise, content is king. Netflix knows this, which is why they are spending a fortune to build stuff they alone will own. Meanwhile, of all the studios, Disney has the best film content. (TV we could debate.) And before streaming times, this content was so valuable they could hold it back from customers to inflate the value even further. They called this putting films back in “the vault”.

This is why I pitched that Disney should have called their streaming service “The Vault”. I mean, it’s like you get access to the thing that was secret for all those years. That’s a great deal, in my opinion. “Disney’s Vault”. It’s better than “plus”. 

Either way, we’re going to get those movies. Bob Iger announced that all of Disney’s animated films will be available for streaming when Disney +/Plus launches. On the one hand, that’s a ton of great content immediately. On the other, rotating content in and out is a way to keep people subscribed, which would have been my tentative recommendation. Of course, anyone can second guess anyone else’s strategy. And you never know when the vault could return.

Apple Prepares to Launch (or Announce a Launch)

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Most Important Story of the Week and Other Good Reads – 8 March 2019: Youtube (And all Social Platforms) Deal with Child Predators

I wouldn’t call this a “what a week in entertainment!” media week, but at least one outlet ran an “special emergency” newsletter, so clearly we had news. Instead of that big story–or the continued musical chairs at Warner Media–I’ve had my eye on a few stories that add up to a bigger one.

Most Important Story of the Week – Youtube Battles Child Pornography/Predators

This was a contender for the most important story last week, but got bumped since it isn’t really a “one-time’ story. It’s slightly evergreen. Since we invented video on the internet, we’ve had these problems. Slate had an article on Periscope and child predators back in 2017. So I’m not just picking on Youtube even though I put them in the headline; any social media platform (with video/images) eventually has to deal with predators targeting teenagers and children.

Let’s stick on that for one quick moment.




I just paused to think, “Is that too strong?” It really isn’t. It just describes what is happening. If you doubt this, read the excellent article that set off the furor on Wired. Clearly, this is a problem. (Again, pair it with the Slate article above and doubtless this problem happens on multiple social platforms.)

The best defense of Youtube (and others) has been something along the lines of, “Well, you know they do have to handle billions of videos and trillions of interactions. This is fair, yet I feel like I need a Matt Levine-esque analogy to explain why this isn’t really a defense.

Let’s say you owned a park. For some reason, you were able to monetize parks and turn the parks into private places. And since this is the tech age, say I turned one park into 10,000 parks. All sorts of kids started playing there, mostly with their parents, but sometimes you convinced parents the kids were safe in the parks without them. Then all of a sudden a bunch of creepy dudes in the forties started hanging out at the park without kids. And then they talked to the kids and eventually asked the young girls to expose themselves. If I was making money off that enterprise, is saying, “Well, I own 10,000 parks, I can’t keep child predators out of all of them!” The answer would be, “Well you better damn well try.”

See running safe parks is part of the requirement to run parks. And with video, running a service where people can’t target children should be part of the requirement.

The problem with Youtube, Periscope and others (who likely have the same problems) is that my 10,000 parks doesn’t even capture the scale. I’d need 1,000,000,000 parks! This is the challenge of social video, in that content is no longer curated by executives in Hollywood offices working by the dozens, but by engineers optimizing equations on computers anywhere around the globe.

Like I said above, what makes it work is also what creates this shady underbellies, as Slate called them. This is where I concede the very eloquent defense of the tech companies. Tyler Cowen (who I saw linked to by Kevin Drum) makes the case that when it comes to social media, we have a trade-off of three forces: the scale we want to achieve, the costs to review all the content, and the consistency to treat only get rid of bad content. Cowen and Drum argue you can only have two of the three. That’s hard to disagree with.

This view was echoed recently in Dylan Byer’s newsletter too, who linked to Wired writer, Antonia Garcia Martinez. To summarize the challenge facing Youtube and others, “All detractors have to do is point to one bad piece of content, whereas Youtube is hosting billions of videos.” That’s a hard point to disagree with. If you want Youtube to exist–meaning you think it is valuable–you have to accept it is huge, so hard to police perfectly. Further, it isn’t like Youtube is doing nothing to combat these issues.

Ultimately, while I understand the scale of the problem, I don’t think those defenses get it quite right. And I have a few counters for today. Basically, regulators should demand Youtube (and other social platforms with video or images) do better when it comes to children, and not just reactively to bad press:

First, this isn’t about all content, but clearly illegal/evil content.

The counter is summarized in this Chris Mim’s tweet, which doesn’t mention the child pornography issue, but is in the same family.

My “synthesis” is that we can’t control all content, but can try to control content that is clearly evil, for lack of a better word. Promoting genocide? Yep. Interfering with democracy? Yep. And content that hurts children. (Vaccines are a tougher call, but given that kids can die when they contract illnesses, it merits solutions too.) The fact is, as compelling as the “This isn’t a huge problem” argument is, if a social platform helped cause a genocide or creepy young men flock to teen videos, that’s a problem. And illegal. Even more so if you’re monetizing that interaction. One of the costs of running a video platform is finding this content and banning it.

Second, these companies are WILDLY profitable.

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Most Important Story of the Week and Other Good Reads – 1 March 19: The Bones Arbitration

Early last week, I had an easy leading candidate for the “Most Important Story of the Week”. Then, on Thursday. AT&T had their “I am Spartacus” moment. Should I change just because that story took over Twitter and would get me more traffic? Nope, but it’ll be a contender.

Most Important Story of the Week – Fox loses $179 Million Bones Arbitration

My goal each week is to to pull out the story that will likely have the biggest impact on the future of the entertainment business, even if it wasn’t the biggest story of the week. Especially if it wasn’t the biggest story of the week. That feels like “The Bones Arbitration“–an unwritten Robert Ludlum novel?–to me.

What surprised me: This isn’t about content libraries.

When I read the headline, I guessed that a lot of this was about valuing libraries and shenanigans therein. Valuing libraries is hard. In my opinion, that’s where most “Hollywood Accounting” comes from. It is onerous to negotiate distribution deals for every single TV series and movie. As a result, many studios just negotiate an “overall” deal for future series and sell all their content to a streamer or channel, with maybe some carve outs.

Usually, that buyer has their own vision of what every piece in the overall deal is or will be worth. The seller probably has a similar view, but legally they try to pretend everything is valued equally. They want to pretend that less valuable (and usually less profitable films) are more valuable. This keeps profit from going to already profitable films or series, so the studio gets to keep more. This is “Hollywood Accounting” in a nutshell.

(Bonus: My article on film financing shows a quick example of this. Also, the economic distribution of hit TV shows is, you guessed it, logarithmic. So winners really should take home most of the revenue, which is why “Hollywood Accounting” is so flawed.)

What this is about: Double dealing between business units.

In the Bones case, though, the double dealing wasn’t tied to distribution deals. The negotiations with Fox broadcasting were done on a one-off basis (as most current series are with their distributors). Same with the negotiations with Hulu. And likely the international buyers. Since the conglomerate 21st Century Fox owns all those pieces, from the studio making the show to the distributors, they just sold the shows to themselves.

The temptation to resist double-dealing was too great. When the network threatened to cancel if fees went up, it isn’t surprising the studio caved. It is hard to go to war with a fellow business unit (one you may end up running!). Since studios will own even more of the value chain in the future–in AT&T and Comcast’s cases this includes the pipes streaming the content; in Apple, Amazon and Google’s case this includes the devices playing the apps–double-dealing will be even more of a risk. Seeing it so blatantly in this arbitration should worry talent.

Legal context: Arbitration is secret.

That’s obvious. But it has ramifications for a decision like this. Legal decisions decided in a courtroom, create precedent that applies to future decisions and contracts. That doesn’t happen in arbitration (or settlements with non-disclosure clauses). Because mandatory arbitration tends to favor the powerful, which is obviously the studios, this hurts talent. Just because Fox lost this one–and The Hollywood Reporter got a hold of it–doesn’t mean that it is as big a victory for talent and profit participants as if it were in open court. There is a reason this was “secret” until Eriq Gardner broke the story.

(So yes, mandatory arbitration is usually bad, in my Constitutionally-derived political position.)

The economic context: Will the huge punitive damages will discourage bad behavior?

Maybe. The Friday edition of The Business podcast noted that every agent or manager will now double-check the profit participation numbers from Hulu. That is true, and for future deals, lawyers will need even better language to deter double dealing. But honestly, would this huge award stop studios from trying to hide profit?

Probably not. Consider the total award is $180 million. Let’s say Fox tried to take $50 million or so from their ten biggest shows. (Fictional numbers to illustrate a point.) That’s $500 million, and they only got caught once. That means they’re still taking home $320 million. (Assuming no other talent payouts.) In other words, this is why every decade has a huge talent participation lawsuit: it just makes sense for the studios to keep trying it.

The future: This benefits Netflix?

Maybe. The argument here is that Hulu will have to pay well above market rates (or at least at Netflix’s deficit financed rates) in the future. Or when AT&T, Comcast, and Disney launch their platforms they’ll have to pay higher rates to keep talent from complaining about double-dealing. This would be to the dominant market player’s advantage (Netflix), since they can leverage international subscribers to outbid the others.

On the other hand, Netflix is winning the “profit participation” battle by just not waging it. If you don’t sell a show overseas, you can’t screw talent by selling it below rates. If you don’t sell merchandise, you can’t bury those costs in line items. If you don’t do electronic sell through, second windows, international or home entertainment, you don’t have to pay anything out. The windfall that would previously come to wildly successful TV shows–Simpsons, Friends, Seinfeld, etc making billions–will never come to any top Netflix talent.

(The way traditional studios could fight Netflix at their own game is to publicly bid on the rights to Stranger Things for say Syfy. Let those creators know the cash Netflix is not giving them in profit participation.)

Of course, the streaming landscape is always evolving and streaming giants are thinking about other ways to reward hit TV shows. They have their own versions of profit participations. Renewals will always feature renegotiations. That said, Netflix’s current plans are to just pay everyone ahead of time, which front loads all the risk. Of course, paying everyone like they are a huge hit has financial risks if most of those shows end up becoming duds, as usually happens with all TV shows. (And Netflix has a very ordinary track record here.) So we’ll see.

Is any studio better than any other?

If you just use the history, I mean not really. But yeah, let’s make a spreadsheet on this for future articles!

One solution: More distributors and competitors.

My pro-competition, anti-big business solution is simple: Bring back the value chain!

What I mean by that is each layer of the value chain–content creators, distributors, distributors of distributors, and the people who own the pipes–should go back to being not vertically integrated. (And not horizontally either.) The best way to eliminate double dealing is to not have business units in the same firm depressing prices artificially. If distributors like Netflix or ABC or NBC-Universal or Amazon didn’t own their own content, we’d likely have a many more independent production companies, which would improve overall quality of content.

More markets is the solution here. (Which feels like it should be the traditionally “conservative” solution, but is somehow the liberal/progressive position.)

Other Contenders for Most Important Story – AT&T Replaces Two Executives

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Do Popular Oscar Films Make for Larger Oscar Telecast Ratings? Maybe.

Often in my weekly column (the “most important story of the week”, click here!), I’ve called out the narratives behind one-off events. Take the Super Bowl. Were ratings down because we’re sick of the Patriots? The death of broadcast? Or because football isn’t popular anymore? 

Last year, a lot of people asked, “Why did Solo fail?” and identified four or five totally plausible reasons that all could have mattered or couldn’t have mattered at all. We just don’t know! (I also called out the Lego Movie Part II narrative too.)

If you take nothing else from my website, understand that we need to do better than narratives when it comes to the business of entertainment. (With the implications that execs/companies that rely on data instead of narratives will outperform the others.) One time ratings or box office weekends are noise that we try to force into signal narratives. (Yes, I’m a big Nate Silver fan.)

That said, as fan of film, the Oscars hold a special place for me. I still remember the first film I rooted for at the Oscars and felt devastated that it didn’t win. (Crouching Tiger, Hidden Dragon if you’re curious.) And I’ve seen most Oscar films each year until I had my first child, even if the films I love the most (big, popular and genre) don’t tend to get nominated.

“Popularity” was the meta-narrative of the Oscar’s in 2019, after the Academy announced their intention to start a popular film category. (Well, and diversity.) I first looked at this last August, but now we have the ratings for the telecast on Sunday. Since this year saw a big jump up in box office, without the new category, we can answer the question:

“With a generally more popular set of films, did that boost Oscar telecast ratings?”

The quick answer is that ratings are up (roughly) 12% over last year’s telecast. But what does that mean? Can this one new data point impart the lesson to the Academy that more popular films lead to higher ratings? Not by itself. We need to analyze the larger trends.

Today, my goal is to answer that question, but I’ll be honest, I can’t. The sample size is too small to draw clear conclusions. Instead, my goal today is just to lay out what data we do have and the limits of that that data can explain.

Oh, and to correct the record. I screwed up in August with some data analysis, so I plan to correct the record and explain what went wrong. (With a really fun learning point.)

How to Craft Narratives

First, let me show how easy it is to craft a narrative. Consider these two narratives:

Narrative 1: Popular films boost Oscars. 

Obviously, the more popular films that get nominated, the higher the ratings. Is it really any surprise that the highest ratings of the last 10 years came in 2010 (for the 2009 films) when, uh, Avatar and Toy Story 3 were nominated? Meanwhile, the last two years had mostly sub-$50 million films, so ratings sank to their lowest since 2007’s films, which were so unpopular the Academy changed the rules entirely. With the highest box office total since 2010, it’s not a surprise ratings went up 12% this year. Not to mention, Titanic had the highest ratings of all time!

Popular films don’t really impact Oscar ratings.

Actually, it really doesn’t matter. The 2011 ratings were tremendous (10 million more viewers than this year) and the most popular film was The Help at $169 million. Or 2005. The biggest nominee that year was Brokeback Mountain (that’s a fun trivia question to stump your friends) with $83 million. And 38 million people tuned in. Sure popular films may matter, but even a juggernaut like American Sniper didn’t help boost the ratings, as they declined from the year prior. (It did way more box office than Bohemian Rhapsody or A Star is Born.) So yeah, if you care so much about Titanic and Avatar, maybe you just need an awards show devoted to James Cameron movies, and leave this awards show alone.

Why is it so easy to craft narratives? A small data set

Narratives don’t help. Instead, we need data. But data alone can’t solve our problems, and I’ll explain why. 

The Explanation 1 – Small Sample Sizes

In the realm of small sample size, everything can be true. Simultaneously. 

I weaved those paragraphs above by looking at my Oscar film table and picking high and low years, while cherrypicking the data. With annual data sets, you only get one piece of data each year, the Oscar’s telecast. 

Further, this data set is limited by history. I can’t justify including years before 1998, since that was a time period when broadcast shows like Seinfeld got ratings in the 20s. Since then—and even before—cable has been taking viewers. (Hot take: the biggest driver in the decline in broadcast ratings over the last 25 years has been cable television, not streaming.) 

Then in the middle of that data set, the Oscars expanded from 5 films to 10, then somewhere between 8 and 10 since. That means even my 20ish sample size is arguably only 10. And yeah, cord cutting started in the middle of that latter ten years. So a five year sample set? That’s small. 

The Explanation 2 – What are we measuring for?

This seems easy—popularity!—but is deceptive. Do you take viewers in millions—which is growing?—or ratings—which is declining? Or growth per year? Or rolling averages? 

Or take the biggest “input” being popularity. Obviously, box office is the best measure for popularity, because paying to see something is the truest expression of intent. But how do we measure those 5 to 10 films? 

This year, a lot of people just added up al the box office numbers to get the total box office. But clearly years with 10 films have an advantage over years that only have 8 (or 7 if one was on a streaming platform). So you could use the average to account for that, but then again one huge outlier (Avatar in 2009 or Black Panther in 2018) would throw that off. Or maybe not, since I’ve always said this is an industry dominated by logarithmic returns and the outlier could draw in more viewers.

Still, if you did want to account for the number of films appealing to the most people, you could factor in box office ranks or median box office or the number of popular or blockbuster films. All of which I did in this table (which has been updated to the last weekend of box office):

Screen Shot 2019-02-28 at 3.33.49 PM

The point is, I came up with 16 different ways to even ask, “is this set of films popular?” That’s partly why conflicting narratives can arise.

The Explanation 3 – So many variables

Finally, the last difficulty is that beyond popularity, quite a few variables can and do impact the ultimate TV ratings for the Oscar telecast. Off the top of my head:

– Presence of big stars in feature films

– Decline of broadcast TV ratings, in general

– Decline of broadcast TV ratings, because of cord cutting specifically

– Popularity of the host

– Quality of broadcast the previous year

– Politicization of the Oscars (cuts both ways)

– Popular films actually “contending” for Best Picture, not just nominated

And likely more. So a small sample set, with many ways to measure our variables, and a lot of potential explanations, of which most we can’t test. 

Trying to Answer the Question 

C’mon Entertainment Strategy Guy. Do or do not, there is no try. So here’s my try. 

Step 1: What is the null hypothesis? What is our hypothesis?

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Some More Entertainment and Media M&A Thoughts I’ve Been Meaning to Publish

If other writers are like me, when you write a lot on something, well a lot of great little tidbits and nuggets just don’t fit in. The thoughts are interesting, but will ultimately disrupt the flow of the article or series of articles. The joy of having my own site is I don’t have to junk those ideas like a Universal exec junking another monsters franchise.

For instance, last July I dug pretty deep into the M&A (mergers & acquisitions) landscape as it relates to media, entertainment and all communications (that’s my term for the pipes, both real, spectral and bundled) that deliver it. I’ve long been fascinated by M&A, doing some in my career, but this gave me the chance to study the trends at a higher level. So I devoted most of July to this topic. 

But a lot of thoughts didn’t fit into my initial piece. Consider this the DVD commentary/directors edition of that post along with a slight update into M&A in entertainment, media and communications since the huge surge of 2018. Did the pace continue? Has the consolidation worked? And how has the media covered it?

Data Thought: M&A Is a Messy Data Set

What does this mean? It means that with fuzzy definitions, small sample size and exponential effects, you can make M&A data do lots of things.

Let’s pause on that last sentence. Another way to say that is my least favorite quote of all time, “There are three types of lies: lies, damned lies, and statistics.” This implies all of statistics is a lie. And what I’m about to show is how you go about doing that: taking small sample size, selective dating and fuzzy definitions to weave a narrative. 

But the word “narrative” is the key to that last sentence. The quote should be “lies, damned lies and narratives”. Narratives are created by weaving together anecdotes and reasoning from first principles, sometimes using statistics as your anecdotes. Good data analysis is the antidote to bad narratives. The problem is that data analysis is hard to do and takes lots of time.

But maybe if I show you how messy this data set is, the next time The Hollywood Reporter or The New York Times does an M&A article, you can see how they may be selectively pulling data to sell a narrative.

In fact, let’s use the New York Times and Bloomberg to show this. A lot of the inspiration for this series came from the Times June 2018 article showing how huge M&A was in 2018 through the first six months, and expectations it would continue at that frantic pace. Here is they key image from The New York Times:

NY Times M&A by year

Yikes. So M&A in the first half of 2018 was five times the amount of all of 2017. That’s a 5X jump. A jump that big is clearly the signal through the noise in this small sample size data set. So presumably, if Bloomberg wrote a similar article on media & entertainment M&A, we’d see similar results. And here we have that:

Bloomberg M&A ChartFrankly, it is hard to reconcile these numbers. The New York Times divides up telecommunications and media & entertainment, while Bloomberg combines them. But it doesn’t matter because the numbers are way off either way. How could Thomson Reuters data be off from Bloomberg’s data by three times in 2017?

I could make this story even crazier. Here’s an article from Variety from October of 2018, and it uses Thomson Reuter’s information, and it doesn’t even match the New York Times numbers. Then they give PwC’s numbers, which don’t match either set:

Thomson Reuters reported $145.7 billion worth of media and entertainment deals across the Americas in the first six months of 2018 — up from $141.7 billion for all of 2017. PwC, looking through a different lens, found $82.4 billion worth of U.S. media and telecom deals in the first half of the year, up 197% from last year.

Sometimes M&A doesn’t even match at the same paper. Take the Hollywood Reporter. Doing research for my series in July, I found two different charts from articles less than a year apart, one from March 2016 and one from January 2017. Even they don’t match.

H Reporter 2016 early for SITE

H Reporter 2016 M&A

The point is M&A data is messy, as I wrote way back in July.  By choosing either when a deal closed or was announced or what counts as “entertainment” you can draw very different conclusions. It’s confusing enough that I want to do a quick explainer on it.

A Quick Primer on M&A Data Variables

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Most Important Story of the Week and Other Good Reads – 22 February 2019: The Most Diverse Oscars Yet?

If I have one goal with this website, it’s to combat bad narratives about the entertainment business. And the best way to do that is with data. You’ve heard me mention this before, “Strategy is Numbers”. Data is the first step to quashing anecdotes and narratives.

Today I’m going to lightly touch on one of the most important issues in Hollywood: diversity and representation. Frankly, Hollywood does a bad job discussing the issue mainly because it doesn’t use data. Without data, we can’t make good decisions to solve the problems. Instead, we rely on narratives built on anecdotes. (Though some places like USC’s Annenberg School do study the issue and try to bring data to the fight.)

Since all eyes are turned towards the Oscars, let’s ask some questions about representation.

Most Important Story of the Week – The Oscars: The Most Diverse Year Yet?

I took a stab at answering this last August, so now it’s time to update that article with the 2018 data. I’m going to look at three types of representation in the Oscar films: African-American, global and Latinx-American. (LGBTQ has been covered by other publications.) My sample size today is just the Best Picture category, since I haven’t collected the data for actors, writing and so on, and this is a quick update, not a full-blown research project.

First, African-American representation. For all these categories, I count films that have either an actor, director or themes that represent African-Americans. One table notably sums up how well the Oscars have been doing:

Table 1 - AA Representation

The key takeaway–which I really want to emphasize–is that expanding the field to 10 films has been great for featuring more diverse voices. (Along with other changes too.) In 2018, this clearly went even bigger with three films featuring African-American themes and one of them was about superheroes, a genre never represented in best picture before. So chalk up one victory point for expanding the number of films in the Best Picture category.

However, the expansion of the categories hasn’t been great for what I call “global diversity”. In other words, foreign language films. Movies made outside of America. 2018 is the first year to feature a non-English language nominated film since Amour in 2012. Here’s a table showing that breakdown:

Table 2 Foreign Language Films

This is a small sample size issue, though. Between 1998-2006, four foreign language films were nominated for Best Picture. Since the expansion, only two have been nominated. So the number of films nominated went down, even as the total films almost doubled. (5 films per year to 8 to 10 per year.) So clearly just expanding the number of nominated films doesn’t make the Best Picture category better for global films.

Moreover, this year’s Roma nomination brings up another tricky issue: Latinx representation. If you consider all Spanish language speaking people, well, the Oscars have been on a run. The 2010s have been dominated by Mexican directors–Alfonso Cuaron, Alejandro González Iñárritu and Guillermo del Toro–who have had multiple films nominated for Best Picture.

The problem is if you clarify “Latinx-American”. Those three directors above were all born in Mexico. As far as I can tell–mainly using this Wikipedia article–the only Latinx-American to receive a Best Actor nomination this century is Demián Bichir, and his film wasn’t nominated for Best Picture. Benicio del Toro was nominated for Best Supporting Actor twice in 2000 and 2003, but hasn’t been nominated since.

So using the same definition as African-American films above, I don’t think a single Latinx-American film has been nominated for Best Picture this century. So that’s another strike against diversity in Best Picture films.

As mentioned above, too, Asian-Americans have had a similar lack of representation. (And this year had a very easy, good opportunity to do right with Crazy Rich Asians.)

So we need more solutions to fix the diversity issues still involved with the Best Picture category. Honestly, I’m a bit terrified diving into this territory today. If you write something wrong on race, it can backfire and go viral in terrible ways.

But we need better representation in our films, so I went ahead. Most of the articles I read only use anecdotes to cover the issue. Even the more rigorous data-based approaches usually have clear methodological biases. (Though I avoid pointing these out lest I give ammunition to people who are racist, alt-right trolls.) Moreover, the primary solution for Hollywood–diversity initiatives and diversity showcases–don’t work. So consider today my start at looking for data-driven solutions to help executives and Hollywood as a whole make better decision, especially to be more diverse.

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So Many Skinny Bundles

Charter is creating a “Spectrum TV” bundle for internet only customers. Viacom signed a deal to get their channels on PlutoTV, together. Throw in Alan Wolk in last week’s TV Rev update about how the growth in the vMVPD space and the conclusion is, “So many skinny bundles!”

The “vMVPD” angle of the streaming wars is an interesting front. Call this the “vMVPD air war” to the “content ground wars” and “naval streaming wars”. Yes, I’m taking the “#StreamingWars2019” moniker to its logical conclusion. Sure, it’s fun to read about who can have a more compelling streaming service between Disney and Netflix, but people still need local news and live sports. And cheap, free content to kick back and just watch. So OTT fills multiple needs.

But how many can the market support? Well, probably not this many. Definitely not this many. The cable component is really the intriguing part here. Owning the device is a clear competitive advantage in owning an OTT. Roku has a lot of devices; same with the AAAs (Amazon, Apple and Alphabet/Google). But cable boxes own even more homes. And some of the companies are innovative (Cox and Comcast) while others are terrible (despite their OTT, Spectrum). So can they take their ability to bundle internet (happening anyways) and move into the OTT space? It remains to be seen.

The Biggest Movie in China: The Wandering Earth 

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