Most Important Story of the Week and Other Good Reads – 24 August 2018

Reflecting on the links I collected for “the most important story of the week”, what stuck out to me is that, well, it seems like political news can crowd out even entertainment stories. Digging a little deeper, I still think we found a pretty fun story.

The Most Important Story of the Week – AMC, A Small Theater and Paramount Consent Decrees

I first learned about the Paramount case in business school, and honestly I had summarized the lesson as, “movie studios can’t own theaters”. But I had never read the case law, so–as this excellent article by Eriq Gardner clarifies–that isn’t quite true. Instead, it’s an agreement that was agreed to in the 1940s and hasn’t really been challenged in court since.

Until now.

AMC is headed to trial over allegedly running a smaller Houston movie theater chain called Viva out of business by forcing studios to not to license other films to the smaller theater chain. If it does go to trial, it could be appealed and so on up the chain. Given today’s Supreme Court, if somehow this case got to that higheest level, I could see five justices saying, “What? Movie studios and theaters are just entering into contracts? In fact, why shouldn’t studios be able to own theaters? Go ahead, it’s all competition.” This is a summary of Gardner from the previous article that I love:

On the other hand, as times change, once-restricted practices that might have been perceived as an illegal restraint 
of trade in one era may be given a fresh look as pro-
competitive in a different era.

So I’m calling this important on the off-chance it goes all the way up to the Supreme Court and is struck down. Yeah, it was a slow news week.

Good Read of the Week – Kevin Spacey’s Box Office Bomb – A Deeper Look by Deadline

I’m always scouring for new stories that explain the context versus slam you with a buzzy headline. This article by  may be the ideal for what I want. When even my dad has sent me an article–and he sent me one on Spacey’s “box office flop”–you know something is a hot take.

This is the unpopular take: the film was only intended as a “straight to video” release, to use 1990s parlance. But this isn’t a world with video anymore. The straight to video for the 2010s is a release on Video-on-Demand, which encompasses platforms from iTunes to Amazon to cable MVPDs. They all love to bill, in particular that a movie is “in theaters now”. To get that, they need to release in some theaters, which they usually pay for by renting the screens.

So learn about how this works in depth a little more in this article. My other takeaways were that the film made iTunes top 20, which is surprisingly good, but also will likely lose a boatload of money, which makes sense for a film the exhibitor isn’t putting ad spending behind.

Other Contender for Most Important Story – Private Equity Firms Looking to Acquire TV Stations

On the one hand, man this is small potatoes. Who cares about TV stations in the digital age?

Well, “finance people” who I’ve now mentioned disparagingly in two weeks in a row. The larger point this smaller story makes–for me, the “business guy”–is to remember that you can still make a lot of money in a “dying” business. Do you make more than growing businesses? No. But you can still get cash. This lesson would apply to DVDs/cable channels going forward.

Mergers & Acquisitions on Media, Entertainment and Communications Updates!

A new feature to this weekly round-up! When I come across a notable acquisition, I’ll try to put it in here (and update my own table). A few weeks back, Viacom purchased AwesomenessTV, and they recently generated news stories from the announcement of layoffs for Awesomeness TV. The notable thing is the price which is between $25 and $100 million dollars, depending on who you read and whether debt is included in the valuation. Overall, though, the trend is clear that former MCNs–multi-channel networks–have been depreciated significantly in their value. AwesomenessTV at one point was valued at $650 million dollars.

Big Data of the Week – Three Stocks in the Micro-Bubble (Amazon, Netflix, and Spotify)?

Working on another article for my website, I stumbled upon this really interesting look at the stock market. As a strategy guy, I’m going to avoid commenting on how or why the stock market moves because frankly, I don’t know why it moves the way it does.

That said, in this case, my criticisms of some companies line up with their recommendations that these stocks are in bubbles. My philosophy on business is that making money tends to be correlated with success, and businesses that can’t make money will struggle to succeed. Some very buzzy tech companies involved with the entertainment business–Amazon, Netflix and Spotify–seem to buck my philosophy with their high valuations. Again, time will tell.

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