Research Shows Broadcast Networks Still Highly Desired by Consumers

Despite declines in viewing, broadcast networks top the list for most desired channel groups, according to research from The Diffusion Group.

Diffusion’s national study, Video Viewing Behavior in the Age of Quantum Video, examines preferred network groups by demographics and video behavior. The firm surveyed 2,030 connected consumers as to the five network families they’d prefer to have included in a five-group skinny TV plan. (Respondents were able to see which channels were included in each network group before selecting.) The big four broadcast network groups occupied four of the top five spots, led by NBC Universal (selected by 48%), followed by Fox (41%), Disney/ABC (41%) and CBS (38%).

“Live big-four broadcast viewing is diminishing, as with virtually every major network. This should not imply, however, that their death as brands or as major forces in consumer video is inevitable,” said Michael Greeson, Diffusion’s director of research, in a statement. “The value of their content is immense — top of mind for many viewers.”

The rankings offer important insight into the viability of direct-to-consumer services, according to Diffusion. For example, the fact that the ESPN family failed to rank in the top 10 suggests Disney’s decision to make ESPN Plus a premium add-on to its linear ESPN channel may have been a wise move, the research group noted.

“Many expected ESPN Plus to be the online equivalent of ESPN, but Disney decided that the risk of cannibalizing high-value linear pay-TV subscriptions would create substantial channel conflict and hasten the declines in pay-TV subscriptions,” Greeson stated. “This risk is inherent in the DTC model and must be addressed group by group, even channel by channel.”

For example, though ESPN Plus may be best positioned as a value-add to its live linear pay-TV service, Disney’s family-focused direct-to-consumer service appears destined to follow in the footsteps of CBS All Access – that is, serve as a full-on replacement to its linear channel, with a growing number of high-value titles reserved for the new service, according to Diffusion.

The standings also offer important insight into the viability of a new virtual MVPD entrant, Philo, which is populated by the channels A&E, AMC, Discovery and Viacom, the research firm noted.

“While this may at first glance seem too specialized to gain mass appeal separate from a broadcast bundle, the combination of networks may prove attractive,” according to a Diffusion release. “Keep in mind that A&E was selected as top-five by 37% of connected consumers, AMC by 28%, Viacom by 24% and Scripps by 21%.”

Comcast Rethinking OTT Opposition?

NEWS ANALYSIS – Comcast’s surprise $30.9 billion bid last month for British satellite TV operator Sky may be more than an effort to thwart Disney’s global ambitions. It could signal that the country’s largest cable operator is finally coming to terms with over-the-top video.

In December, Disney announced it would acquire select 21st Century Fox assets, including Sky, for more than $52 billion.

To be sure, Comcast CEO Brian Roberts said all the right things: Sky has “great people” and “capable management,” in addition to 23 million subscribers across the U.K., Italy and Germany. What he also admired is Sky’s technological innovation.

After Disney spent billions acquiring New York technology company BAMTech from MLB Advanced Media to further its branded OTT video platforms, Comcast had to reconsider its longstanding opposition to distribution channels other than linear television.

As Netflix revolutionized video distribution by creating the SVOD business model, Comcast responded with TV Everywhere, which attempted to give subscribers on-demand access to programing on digital devices. It then became the first pay-TV operator to offer transactional VOD and digital sell through of Hollywood movies.

While TV Everywhere has finally taken hold with consumers – after lengthy indifference – Netflix has more 117 million subscribers, including 53 million in the United States compared to Comcast’s 21.3 million.

At the same time, executives at Comcast Cable and NBC Universal continued to downplay OTT distribution. In a fiscal call last year, Steve Burke, CEO of NBC Universal, said that while the media company had deals with online TV services such as Sling TV, DirecTV Now, Hulu Live and YouTube TV, he doubted the platforms would make much of an impact.

“They’re off to a relatively slow start,” Burke said.

Indeed, NBC’s attempt at a standalone OTT comedy platform (SeeSo) shuttered after 18 months.

Neil Smit, former CEO of Comcast Cable, in 2016 infamously declared that he hadn’t seen an “OTT model that really hunts.” Less than a year later Smit stepped down as CEO, replaced by company veteran Dave Watson, whose stance on OTT is only slightly changed from his predecessor’s.

But opinions can change in the face of market reality.

NBC, working with Roku, announced the launch of a reality TV streaming service in the U.K. Dubbed, “hayu,” the service offers more than 5,000 episodes of U.S. and British reality TV shows, including “Keeping Up with the Kardashians,” and spin-off, “Life of Kylie,” in addition to “The Real Housewives” and “Million Dollar Listing” franchises.

“[Comcast’s purchase of] Sky brings with it a trove of exclusive content and rights that could be the basis of an OTT service with a genuine moat, capable of rivaling Netflix itself,” analyst Craig Moffett with MoffettNathanson Research wrote in a March 12 note.

Indeed, while Comcast CEO Roberts has embraced Netflix to the point of offering it seamlessly to cable subscribers, he understands well enough that the SVOD pioneer has morphed into much more than global distributor.

“One can assume that Comcast believes that the combination of Sky’s and NBC Universal’s proprietary content will be enough of a deterrent to ensure that the margins available to an OTT provider don’t simply get competed away,” Moffett wrote.

Atom Tickets Gets Additional $60M Funding

Theatrical moviegoers may be decreasing, but the battle to sell them tickets online is escalating.

Atom Tickets March 8 announced it secured more than $60 million in new capital from Fidelity Management & Research Co. – less than two years after raising $50 million in funding from Lionsgate, The Walt Disney Co. and Twentieth Century Fox Film, all of whom contributed to the new investment.

The funding comes as Atom competes with NBC Universal-owned Fandango and subscription ticket service, MoviePass, to establish market share as gatekeepers in the margin-challenged theatrical business.

Launched in 2016, the Atom Tickets app tripled its users and ticket sales in one year. The service features advance ticket purchasing, the ability to invite friends and sit together while paying separately and concessions ordering.

In the last year, Atom Tickets formed an advisory board with Steven Spielberg, J.J. Abrams, and Tyler Perry, among others. It teamed with T-Mobile and Chase Pay offering special ticketing offers, making purchasing tickets faster and more social.

Atom also partnered with studios to better connect them with moviegoers using proprietary data and targeting capabilities on Atom and across the web.

Exhibitor partners include AMC Theaters, Regal Cinemas, Southern Theatres, Showcase Cinemas, B&B Theatres and online movie database, IMDb.

“We’re pleased to participate in this latest round of financing for Atom Tickets, which has demonstrated enormous traction with exhibition partners, studios, and moviegoers during the past year,” Michael Burns, vice chairman at Lionsgate, said in a statement.

Netflix and Sky Ink European Pact

Everyone wants a piece of British satellite TV operator Sky, including Netflix.

Sky and Netflix March 1 unveiled an agreement to bundle the SVOD pioneer into an updated Sky TV subscription pack. This partnership – the first of its kind – will give Sky subs in the United Kingdom and Ireland later this year direct access to Netflix through its Sky Q platform.

Netflix will launch on Sky Q platforms in Germany, Austria and Italy thereafter. Sky provides sports programming, movies and broadband service to 23 million homes across Britain, Ireland, Germany, Italy and Austria.

Sky will make Netflix available to new and existing customers via a TV pack combining Sky and Netflix content side-by-side for the first time – including thousand hours of Ultra HD content, complementing Sky Q’s UHD programming.

“By placing Sky and Netflix content side-by-side, along with programs from HBO, Showtime, Fox and Disney, we are making the entertainment experience even easier and simpler for our customers,” Sky CEO Jeremy Darroch said in a statement.

Integration of the Netflix app essentially turns the SVOD behemoth into a pay-TV channel enabling Sky customers – via single monthly bill and user interface – to peruse myriad programs, including “Britannia,” “Billions” and “Big Little Lies” with “The Crown,” “Stranger Things” and “Black Mirror.”

Existing Netflix customers will be able to migrate their account to the new Sky TV bundle, or sign into the Netflix app using their existing account details.

In the UK and Ireland, Sky will launch Netflix as a standalone app on Now TV’s family of streaming devices (manufactured by Roku), including on the recently launched Now TV Smart Stick. Sky Ticket in Germany and Austria, and Now TV in Italy, will launch a standalone app on their devices.

“With this innovative new partnership … Sky’s customers will be able to seamlessly access all the best entertainment in one place,” said Netflix CEO Reed Hastings.

The deal comes after Comcast announced a $31 billion offer to acquire Sky – topping an existing bid by Rupert Murdoch’s 21st Century Fox to acquire the remaining 61% stake it doesn’t own. In addition, the Walt Disney Co. has a $52 billion offer to acquire select Fox assets, including Sky.

Hulu Posted $920 Million Equity Loss for Corporate Owners in 2017

Hulu, the No. 3 domestic subscription streaming video service with 17 million subscribers, generated $920 million in combined 2017 equity losses for corporate parents Walt Disney Co., Comcast, 21st Century Fox and Time Warner.

The SVOD service, which is 30% owned by Disney, Fox and Comcast, with Time Warner holding a 10% stake, generated equity losses of $531 million during the 2016 fiscal period.

Based on Comcast’s 10K regulatory filing, the media giant recorded an equity loss of $276 million in 2017, up 64.2 % from an equity loss of $168 million loss in 2016, and $106 million loss in 2015.

Comcast said the losses were driven by higher programming and marketing costs.

Indeed, Disney Feb. 6 revealed it expects more than $250 million in equity losses on Hulu in 2018. The revised projection is up from a previously anticipated loss of $100 million. Disney is on the hook for about $450 million in capital contributions to Hulu in 2018, according to a regulatory filing.

Disney, along with other Hulu corporate owners, expect to recoup the losses through content sales delivered by proprietary channels.

Regardless, BTIG Research analyst Rich Greenfield believes Hulu’s fiscal losses could reach $1.7 billion in 2018 – on top of an additional $1.5 billion in combined capital investment.

Greenfield says when Hulu’s relatively low loss to corporate owners was manageable, fiscal bean counters could spin the results. But as the losses deepen, Greenfield – in a blog note – wrote, “We have virtually no disclosure on the positive impact Hulu’s spending is having on its parent companies.”

 

 

 

Fox Bows Anniversary Editions of ‘Planet of the Apes’ and ‘Sandlot’

Twentieth Century Fox Home Entertainment is celebrating milestone anniversaries for 1968’s Planet of the Apes and 1993’s The Sandlot.

Feb. 6 saw the release of Planet of the Apes: 50th Anniversary Edition on Blu-ray, DVD and Digital HD, with special features including a behind the scenes documentary, “Beyond the Forbidden Zone” adventure game, original make-up tests, original on-site footage, and audio commentaries by key actors and cast. The digital versions, available through online retailers and Movies Anywhere, offer an exclusive new 50th anniversary bonus feature.

The Sandlot: 25th Anniversary Collector Edition arrives on Blu-ray March 27. Set in the early 1960s, the film follows a group of friends in a magical summer of baseball and other adventures. The gift set includes 10 custom Topps baseball cards — featuring Scotty Smalls, Benny “The Jet” and the rest of the ragtag roster — created exclusively for the release. It also includes an all-new booklet filled with behind-the-scenes photos from the film director’s personal archive, and an all-new, full-color poster. Extras include a featurette, theatrical trailer and TV spots.

Disney Ups Hulu 2018 Equity Loss to $250 Million

The Walt Disney Co. Feb. 6 revealed it expects more than $250 million in equity losses on Hulu in 2018. The revised projection is up from a previously disclosed loss of $100 million.

Disney co-owns (30%) Hulu, which has about 17 million subscribers, with 21st Century Fox (30%), Comcast (30%) and Time Warner (10%).

Disney would become majority owner of Hulu should its $52.4 billion acquisition of select Fox assets pass regulatory muster.

On the fiscal call, CFO Christine McCarthy said about a third of the loss ($82.5 million) would impact second quarter (ending March 31) financial results.

The executive said the increased losses are due to content licensing between Hulu’s equity owners. As a stake holder, Disney expects to recoup the loss through Disney-ABC Television Group content sales as well as various affiliate network revenue.

Disney is on the hook for about $450 million in capital contributions to Hulu in 2018, according to a regulatory filing.

On the fiscal call, Disney CEO Bob Iger said following the end of Netflix’s exclusive pay-TV distribution of its original Marvel, Pixar and Lucasfilm movies, all titles released in 2019 would be distributed through proprietary digital channels, including possibly Hulu.

“Hulu has an existing output deal with HBO that will last longer by a few years the deal we have with Netflix,” Iger said.

He said it remains Disney’s intention following closure of the Fox deal to grow the global direct-to-consumer business taking advantage of combined studios’ production output.

“We fully hope to expand our production of intellectual property under those [Fox, Disney] umbrellas — studio and television to feed multiple direct-to-consumer businesses that we own,” Iger said.

 

 

Oscar Frontrunner ‘Three Billboards’ Set for February Home Video Release

Acclaimed indie film Three Billboards Outside Ebbing, Missouri is slated to hit digital retail Feb. 13 and packaged media Feb. 27 from 2oth Century Fox Home Entertainment.

Nominated for seven Academy Awards, including Best Picture,  Billboards features Oscar winner Francis McDormand (Fargo) as the defiant mother of murdered girl who erects three local signs with a controversial message seeking justice.

The billboards and McDormand soon come into conflict with local cop (Sam Rockwell) and the chief of police (Woody Harrelson).

Written and directed by Martin McDonagh, Three Billboards won four Golden Globes Awards, including Best Picture, Best Actress (McDormand) and Best Supporting Actor (Rockwell).

In addition to being available on Digital HD through Movies Anywhere and other digital retailers, the movie will be available on Blu-ray, DVD and 4K Ultra HD Blu-ray.

Bonus material includes featurette “Crucify ‘Em: The Making of Three Billboards” and short film Six Shooter.

The disc release comes the week before the March 4 Oscars ceremony.

SVOD, Studios Ready Super Bowl LII Ads

Amazon Studios will showcase its first Super Bowl ad for a TV show or movie when it airs a trailer for episodic series, “Tom Clancy’s Jack Ryan,” starring John Krasinski (“The Office”) – the fifth actor to play the title character after Alec Baldwin in The Hunt for Red October in 1990.

Amazon will also run a humorous ad for voice-controlled Alexa losing her voice, with baffled CEO Jeff Bezos asking, “How is that even possible?”

“People are aware of Prime video, but they’re not always aware that they get this award-winning programming as part of the membership,” Mike Benson, head of marketing for Amazon Studios, told The Los Angeles Times.

The Big Game, which boasts a domestic TV audience of 100 million, again promises to be a showcase for Hollywood studios and subscription streaming video mainstays spending upwards millions per spot.

Few studio ads have been confirmed, but online speculation is rampant.

Paramount Pictures has myriad options, including spots for Krasinski’s horror thriller, A Quiet Place, in addition to Tom Cruise’s Mission: Impossible – Fallout, among others.  Universal Pictures has spots for Jurassic World: Fallen Kingdom, Dwayne Johnson’s Skyscraper and Fifty Shades Freed.

Walt Disney Studios could run ads for Black Panther and Avengers: Infinity Wars, among others. Warner Bros., Sony Pictures and 20th Century Fox reportedly are not airing ads.

Hulu, which aired a 2017 Super Bowl ad for original series, “The Handmaid’s Tale,” undoubtedly will run another spot considering corporate co-owner Comcast (NBC Sports) is broadcasting the game.

Netflix might air an ad for a Cloverfield sequel. The third installment in the franchise originally was set to be distributed by Paramount, until it wasn’t. Scuttlebutt at the Sundance Film Festival had Netflix acquiring global rights.

Vice Chairman: Lionsgate ‘Very Interested’ in Third-Party Merger

Lionsgate is shopping – itself.

With AT&T’s $85.4 billion acquisition of Time Warner in regulatory limbo, and Walt Disney’s $52.4 billion acquisition of select 21st Century Fox assets, including 20th Century Fox, pending, big media mergers are on the mind of Michael Burns, vice chairman of Lionsgate.

With a $7 billion market cap, Burns says Lionsgate is a “pint-sized bite” for potential suitors compared to “800-pound” gorillas like AT&T. Speaking on CNBC, Burns reiterated the usual “enhancing shareholder value” mantra driving publicly-traded companies like Lionsgate to acquire or be acquired.

Burns was quizzed about the likelihood of Lionsgate merging with Verizon, Comcast, Amazon or possible reunified Viacom/CBS.

He said merging with a telecom such as Verizon could be a big deal, provided the telecom decided what businesses it wants to be in. Burns was alluding to Verizon CEO Lowell McAdam, who, on the fiscal call, said the telecom wasn’t looking at any M&A activity in the short-term.

Burns said he is very interested in the outcome of the DOJ’s antitrust lawsuit against the AT&T/Time Warner merger. The executive called Comcast’s $30 billion acquisition of NBC Universal in 2011 the deal of the century.

“Again, you have to show organic growth or you have to make acquisitions, like us, which would be a bolt-on acquisition for [Comcast],” Burns said.

He said Lionsgate is talking to other media companies “all the time to see if a deal makes sense.”

Merging with Amazon would seem realistic given the ecommerce behemoth’s 70 million Prime members and ongoing content deals between the two companies, including movies The Big Sick and Oscar winner Manchester by the Sea.

“We’re a customer of Amazon and we are doing a lot of business with them,” Burns said. “We think there is more and more to do with them.”

He said media companies, particularly in the tech space, have to decide whether they want to “build it” or “buy it” when determining how far ahead the competition is in the streaming and subscription business.

“We’re very interested in the consolidation space,” Burns said. “Obviously that’s very important to us.”