Oliver Darcy here, back at work after my trip to the ER last week. Thank you for all the well wishes, as well as tips on how to address the back pain I am grappling with. The good news is that I am doing significantly better this week! Anyway, I digress. It's 10:52pm on Tuesday, July 19, and here is the latest on Steve Bannon's contempt trial, Elon Musk's legal battle with Twitter, Facebook's shift of resources from news, Bloomberg's global expansion, and more. But first.... Netflix avoids catastrophe |
It's the largest quarterly subscription loss in Netflix's 25-year history. And yet, it's also great news, all things considered, for the streamer. Netflix on Tuesday reported that in Q2 it had lost 970,000 subscribers. While the loss is of historic proportions, it is also a number much lower than the 2 million subscribers it had projected heading into the earnings report. As Frank Pallotta wrote for CNN, it effectively means that Netflix has "stopped the bleeding." "We're talking about losing 1 million instead of losing 2 million, so our excitement is tempered by the less-bad results," Netflix co-head Reed Hastings said as he discussed the results. He noted that "losing a million and calling it success" is not ideal, but that the company is "set up very well" for the future. That future shows a projection of growth for Q3. The streamer forecasted it will add another 1 million subscriptions in the three-month window. And, more importantly, it offered details on other long-term action that it is taking to give its subscription numbers a bigger boost in the future (more on that below). On the whole, Wall Street was thrilled. In after-hours trading, Netflix shares jumped nearly 8%, trading at about $217. Of course, that is still far below what the company was once trading at. In November, it hit its 52-week high of $700 a share. But Tuesday's news signaled that the company is back on the right track and working to climb out of the hole it has found itself in. Pallotta summed it up like this: "The streamer's results Tuesday still showed losses for a company that needs to grow. Yet, after the last hellish months for Netflix, the company and really all of streaming can breathe a sigh of relief. And the company got some breathing room to right the ship without the pressures of a plummeting stock or negative press." Long-term solutions, coming 2023 CNBC's Alex Sherman pointed out that Wall Street's positive sentiment toward Netflix is perhaps "being driven by the company's concrete plans to reinvigorate growth — most of which won't kick in until 2023." Indeed, in its quarterly shareholder letter, Netflix announced that the two big changes regarding password crackdowns and its ad-supported tier won't happen until 2023. Netflix said that it is "targeting" to launch its ad-supported offering "around the early part of 2023." The company said in its shareholder letter it will "likely start in a handful of markets where advertising spend is significant." From there, the product will evolve. "Like most of our new initiatives, our intention is to roll it out, listen and learn, and iterate quickly to improve the offering," Netflix said. "So, our advertising business in a few years will likely look quite different than what it looks like on day one. Over time, our hope is to create a better-than-linear-TV advertisement model that's more seamless and relevant for consumers, and more effective for our advertising partners." Netflix also continued to talk about cracking down on password sharing. In the shareholder letter, the company said it is in "the early stages of working to monetize the 100m+ households that are currently enjoying, but not directly paying for, Netflix." The company said it knows that clamping down on such accounts "will be a change" for members, and noted it has launched two tests in Latin America to determine the best path forward. "Our goal is to find an easy-to-use paid sharing offering that we believe works for our members and our business that we can roll out in 2023," the company said. Content is key Netflix may have been saved in Q2, in part, by the massive success of season four of "Stranger Things." The company said the season "generated 1.3 billion hours viewed, making it our biggest season of English [language] TV ever." And the streamer talked about its forthcoming action film "The Gray Man" set to launch on the service Friday. "The focus on quality has always been there and it has intensified as competition has intensified," Netflix co-chief Ted Sarandos said. But there are some questions about whether Netflix can stack up against its rivals. NPR's Eric Deggans noted the service has "a growing quality TV deficit." Deggans explained, "Even though shows like 'Stranger Things,' 'Squid Game' and 'Ozark' racked up the Emmy nominations this year, the service was outpaced by rival HBO and faces challenges from Hulu and Apple TV+. It isn't minting awards-level prestige shows like 'House of Cards,' 'Orange is the New Black' or 'The Queen's Gambit' like it once used to, and that will affect a certain segment of the subscriber base." Benchmark analyst Matthew Harrigan voiced similar concern. "To me, the big issues are the quality of the content," he told NYT's Nicole Sperling, noting that HBO will release the highly anticipated "House of Dragon" series and Amazon will release the "Lord of the Rings: The Rings of Power" in Q3. Meanwhile, "'The Crown' on Netflix is probably the highest-profile Q4 show they have," Harrigan said. Franchises are also expensive BY BRIAN LOWRY: One footnote to the Netflix subscriber numbers: Netflix got it right when it told Reuters Monday that it wants to cement its bond with subscribers with franchises like "Star Wars," citing "Stranger Things" as a home-grown example. Company officials also got it right by conceding that "those are not built overnight," which explains why legacy studios like Disney and Warner Bros. still have some strategic advantages in the intellectual-property dept. Because for every new series you launch that becomes another "Stranger Things," odds are you're going to have to risk having several misses, including a few expensive one-and-done flops like "Jupiter's Legacy..." |
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-- Richard Greenfield said the "MOST interesting line" in the Q2 shareholder letter was this one about free cash flow: "We expect annual positive FCF going forward (with substantial growth in FCF in 2023 vs. 2022)." Greenfield said it's the "first time" Netflix has used the word "substantial" in such context and that it is key "especially when its peers are 'losing' billions/year..." (Twitter)
-- Netflix on Tuesday also "disclosed that it took a $70 million charge for severance costs in the second quarter, as the company adjusts its operating model for slower top-line growth..." (Variety)
-- Regarding that ad-supported tier: The economics of it "will be more favorable than those of its primary ad-free one, one senior executive indicated..." (Deadline) -- Eric Deggans offered up several ideas he believes Netflix "should reconsider" to boost its numbers... (NPR) -- Reed Hastings is back to predicting the death of linear TV is on the horizon. He "kicked off the streaming service's pre-recorded Q2 earnings interview on Tuesday, declaring the death of cable and satellite TV within the next decade..." (IndieWire) -- "Hastings is financially incentivized to say this," Alex Cranz noted. "One of the biggest competitors for the largest streaming service on the planet is the set of totally free streaming channels that beam into any TV with an antenna, and their costlier friends on cable TV..." (The Verge) |
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White House comms overhaul? "The White House is considering a major overhaul of its press and communications shop in the coming weeks, a staff shakeup that's aimed at putting a new team in place to drive President Joe Biden's message into November's midterm elections and in the months after voters decide whether his party retains control of Congress," NBC's Mike Memoli and Carol Lee reported Tuesday afternoon. Per the duo, Anita Dunn has "begun interviewing candidates to be the next White House communications director, the first step in the overhaul." Candidates for that job reportedly include Liz Allen, Kate Berner, and Elizabeth Alexander. Here's their full story... |
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-- Driving the J6 story Tuesday: "Secret Service gives thousands of documents to January 6 committee, but hasn't yet recovered potentially missing texts..." (CNN) -- In other J6 news: Steve Bannon's contempt of Congress trial got underway. The right-wing media figure was "hostile as he spoke from the sidewalk outside the courthouse," CNN's Tierney Sneed and Katelyn Polantz reported... (CNN) -- And you probably won't see 1/6 Committee Chair Bennie Thompson at Thursday's prime time hearing. He announced Tuesday that he has Covid, but that he has also "instructed the Select Committee to proceed with Thursday evening's hearing..." (CNN) -- Meanwhile, Charles Homans has a deep-dive into the Stop the Steal movement in the next issue of NYT Magazine. One key line: "Providing the oxygen for these efforts, and often working to connect them," he notes, "are a cohort of national right-wing media figures and activists..." (NYT Mag) |
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The ESPYS air on ESPN, and the documentary "Dickie V.," a tribute to honoree and longtime analyst Dick Vitale, premieres on ESPN+... Comic-Con begins with a "preview night..." |
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A rebuttal to "Bad City" BY BRIAN STELTER In recent days we have been previewing "Bad City," Paul Pringle's book about alleged corruption at both USC and the LA Times. Pringle's charges of journalistic malfeasance have been challenged by some, most notably by Matthew Doig, one of the editors who worked with Pringle on the Times' USC investigation. On Tuesday, the book's release date, Doig published a detailed Medium post that calls Pringle "a fabulist who is grossly misrepresenting the facts to support his false narrative." Doig shows examples from his editing process with Pringle. More to come on this, for sure... |
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Record temps reignite climate conversation The record temperatures in the UK, and broader heat wave in Europe, are putting a renewed focus on climate change. In the UK, residents will wake up Wednesday to front page headlines such as the Metro's "BURNING HOT BRITAIN" and i's "Tinderbox UK ignites at record 40.3C." Notably, much of the coverage has drawn an explicit link to the extreme weather and climate change. Wednesday's i, for instance, notes prominently on the front page that scientists are waring the public "to expect frequent extreme weather because of climate change." And Sky News, in particular, has been commended — and criticized by right-wing voices — for emphasizing the link. Over at CNN, international climate editor Angela Dewan framed the extreme heat like this: "Heat waves across multiple continents have dashed records, threatened public health and buckled infrastructure, in what scientists say are signs of the climate crisis' impact on day-to-day weather..." |
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FOR THE RECORD, PART THREE |
-- "Extinction Rebellion protesters smashed windows at the London headquarters of Rupert Murdoch's media company, in protest at his outlets' coverage of the climate crisis," Jim Waterson reports... (Guardian) -- Garrett Graff's advice: "One note to media organizations covering the Europe heat wave: Don't chose fun pictures of people at the beach or hanging out outside to illustrate your stories — this is a deadly, serious story with historic global climate consequences. Don't make it seem like a fun day..." (Twitter) -- Heated newsletter author Emily Atkin's POV: "We've been pushing news outlets to mention climate in extreme weather coverage for years, but even that is not enough. Journalists must mention that climate change is caused primarily by fossil fuels..." (Twitter) |
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Musk v. Twitter trial set for October BY CLARE DUFFY: Book your hotels for Wilmington, Delaware, this fall. A judge ruled Tuesday that Twitter's lawsuit against Elon Musk, which seeks to compel him to complete his $44 billion deal to acquire the company, should go to trial in October. It was an early win for the company, which had asked the court to expedite the proceedings to stave off harm to the company caused by ongoing uncertainty about the deal. "The reality is that delay threatens irreparable harm [to Twitter] ... the longer the delay, the greater the risk," judge Kathaleen St. Jude McCormick, chancellor for the Delaware Chancery Court, said in announcing her decision. Here's my full story... A "committed enemy"? BY CLARE DUFFY: The hearing also marked the first opportunity for lawyers for the two parties to square off in court over the case, and it was fiery. Twitter's lawyer at one point called Musk a "committed enemy," and claimed he is trying to "sabotage" the company. Musk's lawyer pushed back on the allegation that Musk is attempting to harm Twitter: "No matter what happens with this case, [Musk] is the second largest shareholder with a far greater economic stake than any member of the board..." |
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"Facebook shifts resources from news"
That's one of the headlines in Wednesday's WSJ. Jessica Toonkel and Keach Hagey report that Facebook is "reallocating resources from its Facebook News tab and newsletter platform Bulletin, as the company focuses more on the creator economy, senior executive Campbell Brown told employees in a memo." Brown said in the memo that those products are going "on the backburner..." |
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House committee releases trove of docs linked to antitrust probe
BY BRIAN FUNG: Newly released internal documents from Amazon, Facebook and Google (you can see them here, here, and here) show how the companies sought to preserve their dominant positions at the expense of competition, according to the House panel that made the documents public on Tuesday. The trove of materials are linked to a 16-month congressional antitrust investigation of the largest players in Silicon Valley. That probe resulted in a massive, 450-page report published in the fall of 2020 and which the House Judiciary Committee formally published on Tuesday... >> The documents and the final publishing of the committee's report come as some lawmakers have pushed for the urgent passage of antitrust legislation. Chuck Schumer has indicated he could bring such a bill to the floor this summer, but with time running out before August recess and a spate of other priorities jockeying for floor time, the fate of the legislation is unclear... |
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Amazon sues Facebook group admins
BY BRIAN FUNG: Amazon said Tuesday it has sued the administrators of more than 11,000 Facebook groups allegedly responsible for facilitating the purchase and sale of fake reviews on Amazon's marketplace in seven countries. The group operators are accused of recruiting people to write fake or misleading product reviews in exchange for money or free items. Fake reviews have been a headache for Amazon for years and can lead to consumers buying sub-par or questionable products. But the issue grew much worse during the pandemic. Here's my full story... |
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FOR THE RECORD, PART FOUR |
-- The Atlantic on Tuesday named Alice McKown as publisher and EVP. The publication also announced it has hired Mary Liz McCurdy as SVP of strategic partnerships and business development... (The Atlantic) -- Dana Canedy has left Simon & Schuster as publisher of its flagship imprint after two years... (NYT) -- Bethany Allen-Ebrahimian has moved to Taiwan as Axios' first reporter based in Asia... (Axios) -- NYT has promoted Karron Skog to assistant managing editor of programming... (NYT) -- Max Bearak is joining NYT from WaPo to report on climate policy... (NYT) -- Penske Media and Getty Images have entered into a partnership... (Variety) |
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Bloomberg's global expansion "Bloomberg Media is planning a major expansion into localized coverage of different regions around the world," Axios' Sara Fischer reported Tuesday. "I believe we'll run out of runway on both engagement and audience size if we don't also go deep within the national and regional story," CEO Scott Havens explained to her. Fischer reported that the company" is beginning to assess markets with relatively high GDPs and areas where it has an existing footprint." More here... |
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| Rogan (again) faces backlash Joe Rogan is — once again — facing backlash for comments that he made on a recent episode of his podcast. The Spotify personality said in an offhand joke to comedian Tom Segura on his July 14 podcast that "maybe you should just go shoot the homeless people" in LA. Suffice to say, the comments have drawn significant scrutiny. Variety's William Earl added that "beyond the criticism that the comments were met with on social media, Variety shared the conversation with Los Angeles community leaders who work with unhoused populations. Representatives were shocked by the discussion." Spotify has not commented on the matter... |
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FOR THE RECORD, PART FIVE |
-- "A 31-year-old parking enforcement worker was shot to death on the Brooklyn set of 'Law and Order: Organized Crime' on Tuesday by a gunman who abruptly opened his car door and then opened fire..." (NBC New York) -- Broadway is staying mask optional — at least through August... (Playbill) -- The Country Music Awards is heading back to Amazon. The award show will livestream its 2023 presentation on May 11... (Deadline) -- The 2023 Critics Choice Awards are set to air on the CW January 15 from the Fairmont Century Plaza Hotel in Los Angeles... (Variety) |
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-- Sony has moved "Spider Man" spin-off "Madame Web" from a summer 2023 release to an October 2023 date... (THR) -- Eddie Murphy is set to appear in another film streaming on Amazon. The actor will star in the comedy "Candy Cane Lane..." (Deadline) -- Hugh Jackman will voice the animated "Koala Man" for Hulu... (The Wrap) -- FX has renewed "Breeders" for a fourth season... (Variety) -- "Lightyear" will hit Disney+ on August 3rd... (The Verge)
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Making a prequel? Better call "Saul" or "Obi-Wan" BY BRIAN LOWRY:
At first blush, "Better Call Saul" and "Obi-Wan Kenobi" sound like an unlikely pairing. But the more I thought about it, they have one thing in common: Both offer guides in the art of the prequel, and the particular challenge of threading the needle in terms of dovetailing with existing material – and the narrative curbs that erects – while still delivering for an audience. Here's my full analysis...
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FOR THE RECORD, PART SEVEN |
BY LISA RESPERS FRANCE: -- Here's what Alex Rodriguez said before Jennifer Lopez married Ben Affleck... -- Fred Durst's "personal health concerns" have postponed Limp Bizkit's tour... -- David Hasselhoff's 70th birthday turned into a "Baywatch" reunion...
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LAST BUT CERTAINLY NOT LEAST... Pets of the day! Reader Mike Gardner emails: "A border-collie mix, Darcy adopted us after a stay at a no-kill shelter in Joplin, MO. Sorry, Oliver, but Darcy's name came from our daughters' affection for Jane Austin's famous novel. Not the least aloof, Darcy often requests the old caretaker of the estate to throw frisbees far & high..." |
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Thank you for reading! Please do email us your feedback and any tips you might have. We will be back in your inbox tomorrow... |
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