Thanks Department of Justice for dropping your Sprint/T-Mobile merger approval on a Friday, when I was already rushing to get a column out this week due to other commitments. (Which I didn’t do to family obligations in the form of children’s theater.) I don’t have time to tackle you in-depth this week, so read this quick thread for my thoughts. (Also, with state Attorneys General lawsuits looming, this isn’t settled yet.)
Meanwhile–even with multiple earnings reports and TCAs starting up–this week felt light on entertainment business news that mattered. Which means even a small announcement can get the top spot.
The Most Important Story of the Week – NBC-Universal Reveals A Pinch More
Here’s the news on the content side (NBC-Universal and Sky) from Comcast:
– NBC-Universal’s streaming platform will launch in April 2020, with The Office as a tentpole.
– NBC-Universal will use Sky’s streaming platform as a base.
– Sky will make more originals.
– NBC-Universal’s streaming platform will rely on licensed series too at launch.
That’s it?
As small as this news is, I haven’t written about NBC-Universal since January, so let’s do a quick check-in on how they’ve evolved since then.
Rereading my thoughts in January, I was surprised how positive I sounded, even a positivity with many caveats. I appreciated that NBC-Universal saw a way to offer customers something different than other streamers. Three cheers for creativity! And Comcast seems to be advertising that difference in their last earnings report, with Universal head Steve Burke saying the approach is “innovative”.
In a way, NBC-Universal could be launching the best FAST on the market…as long as you subscribe to one of their MVPDs. The FASTs are clearly growing, offering a new option for cord cutters. Couldn’t a conglomerate as big as NBCU make a “super-FAST” if they put their mind to it? If NBC-Universal leaned all-in on that, that could make a compelling offering.
Since then, though, well NBC-Universal and Comcast still don’t seem to have gotten it right. First, they’ll be the last out of the gate in the next wave of streamers to launch. That’s sub-optimal. Second, this isn’t really a FAST. It’s free if you pay for cable, otherwise you have to pay a monthly fee, and even then it isn’t clear if that product will have ads or not. I don’t think customers will want to pay for this.
Third, the content is a huge variable. NBCU plans to make The Office a tentpole of their new platform. Obviously, if The Office leaving Netflix hurt that platform, then the new service getting has to be a win, right? Well, not necessarily. The Office is leaving amongst a host of other content; the cumulative impact of those departures is what will hurt Netflix. (If subscriber growth stays stalled, so will their stock price.) But it’s not like The Office is the type of content that attracts new subscribers. It just keeps them using your platform. And besides The Office, all we know is that AP Bio will also be included.
Fourth, we still don’t have a name. Fifth, or know anything about the product itself.
To be slightly positive, Comcast is using Sky TV’s technology platform to launch their streaming service. One of my big questions was who would be creating their technology, since NBC-Universal had previously mostly outsourced their technology development. In a way, part of the Sky acquisition will benefit Comcast the way BAMTech benefitted Disney. Just at a much higher price for much less proven technology.
Other Contenders for Most Important Story – Cinemax Loses Subs; HBO Gets The Blame
This week, AT&T announced that they lost HBO subscribers. This sent everyone into a tizzy trying to ask the question, “How did you lose subscribers if Game of Freaking Thrones came out this quarter?!?!?” and then Casey Bloys calmly clarified that Comcast dropped Cinemax earlier in the year. Since Time-Warner and now AT&T have always released HBO and Cinemax subs together, it looked like HBO lost subscribers. Some quick thoughts:
– If you’re a devoted reader of my extensive musings on the business of Game of Thrones, you already knew that HBO & Cinemax subs get reported together. I’ve written on how that made my life more difficult when valuing Game of Thrones.
– I forgot to include the Cinemax carriage dispute in my list of carriage disputes in last week’s article. Just another data point that carriage wars are real.
– AT&T and Comcast seem set to do battle like this repeatedly going into the future. AT&T can retaliate with some of Comcast’s key cable networks and they’ll both have to agree on issues related to their new streaming platforms.
ICYMI – Athletic Director U – “Key Entertainment Developments & The Impact To College Athletics”
I published a new article at Athletic Director University, trying to summarize the last two months of entertainment news into one column. While geared towards college athletics, I enjoyed trying to summarize the biggest stories of the last two months. I also called out more good reads for the future. My favorite quote concerns why carriage wars are increasing:
Lots of News with No News
The criteria for this section, as a reminder, is stories that are newsworthy from a general interest standpoint, but that don’t move the needle for the “business” side of the house.
Amazon and Alphabet Tell Us Nothing about Prime, Twitch, Youtube or YoutubeTV
Unless I missed it, we got zero numbers about these huge parts of the entertainment landscape. For Youtube, it just seems like an SEC miss to not have this broken out by its own segment, given its size and importance to Google’s business. Under the SEC’s own guidance–if a business unit reports to the CEO quarterly, it belongs in the report–this seems like an actionable issue for the SEC. Indeed, it’s an issue the SEC has pushed Google/Alphabet on previously. If you study basic economics, information asymmetry is bad for investors and the market.
Also, bad for investors is blind faith. Honestly, at this point, that’s my question about Prime Video. I constantly see news articles that refer to how well the video portion of Amazon is doing. Where does the optimism come from, given that Amazon reports no numbers on success? Without numbers, it’s hard to know either way.
Benioff & Weiss Are Closer to an Overall Deal
Sorry Universal and Warner Bros, you’re out of the David Benioff & D.B. Weiss sweepstakes. Disney, Netflix and Amazon, you’re up. This would be more news if they actually signed; it would be even better if we knew even some portion of the terms. It remains to be seen how well they will transition from “showrunners” to “dev execs”, as that’s what will likely happen.
Comic-Con
The biggest news was Disney’s Phase 4 roll-out of the Marvel Cinematic Universe, followed by AMC’s plans for The Walking Dead. Though, without numbers to prove it, last weekend’s Comic-Con felt light on overall media interest. Not a ton of stories broke through the clutter. And even the Phase 4 news is only “so much” news, since we already knew Marvel planned to release the TV series and the films on the given dates.
Listen of the Week – KCRW’s Martini Shot on “The Price is Right”
Rob Long discusses how little experience Hollywood has with pricing. He’s totally right. Unlike consumer packaged goods, where product managers are constantly tweaking prices and business models, for years studios let everyone else do the selling and pricing. That’s a new set of skills they’ll need to learn, and some digital players have a big head start.
Twitter Thread of the Week – Noah Smith on Twitter about Rising Costs of Education and Healthcare
Bloomberg Columnist Noah Smith had a Twitter summary of one of his articles with lots of charts about the rising costs of education and health care. When we discuss economics–everything from antitrust to regulation to government spending–we often forget that different industries have different economics. This is a good reminder of that.
Long Read of the Week – Vivendi Universal Music Group Sales Analysis
Reuters confirmed that Vivendi is having some banks sell a portion of Universal Music Group. The hands-down best analysis I read on this was this take in Billboard by Ed Christman from a few months back. Take a read.
