Tuesday, October 25, 2022

Good evening from a stormy Manhattan. Scroll down below for news on NBCU buyouts, what Wendy Schmidt told me about the disinfo climate, a new sign the Elon Musk-Twitter deal will close soon, and WBD's big DC Studios announcement. But first, the A1.

THE A1

Google's 'bad omen'

CNN Photo Illustration/Christopher Occhicone/Bloomberg/Getty Images

Winter is here.

Google, the titan of the digital advertising industry, stumbled on Tuesday, reporting weaker-than-expected earnings for Q3 and signaling that even the most deep-rooted businesses in the sector are having trouble navigating the arduous terrain before them.

Facing stiff competition from TikTok and grappling with the cruel economic headwinds punishing the entire industry, YouTube even reported a drop in revenue, falling 2% versus analyst expectations of an increase of roughly 3%. It's the first time YouTube's ad revenues have shrunk since Google started reporting earnings for the video-sharing site separately.

"Times like this are clarifying," CEO Sundar Pichai said in a call with analysts.

Yes, they are.

The poor Q3 earnings provide even more evidence that the digital advertising industry is in peril, with companies cutting spending on online ads as they also try to grapple with the uncertainty looming large over the global economy. The earnings also point to the stunning dominance of TikTok, which has started to eat away at the profits enjoyed by Big Tech giants such as Google.

Those clear signals, which follow poor earnings from Snap last week, sent other giants in the tech sector into negative territory in after-hours trading. Meta, which reports earnings Wednesday, was down 4%. Snap was down 4%. And Pinterest was down 4%.

"When Google stumbles, it's a bad omen for digital advertising at large," Insider Intelligence's principal analyst Evelyn Mitchell said, adding, "This disappointing quarter for Google signifies hard times ahead if market conditions continue to deteriorate."

THE SIDEBAR

Spotify, which also reported earnings on Tuesday, saw its shares fall 7% in after-hours trading. (CNBC)
Microsoft shares were also down nearly 7%. The company posted a double-digit profit decline as it confronts a slowdown in the personal computing industry and broader downturn. (CNN)
Coming next: Meta reports earnings after the bell on Wednesday.

——— BELOW THE FOLD ———

CNN Photo Illustration/From Drudge Report

Ye's Billion-Dollar Fall : Can Kanye West call himself a billionaire anymore? Matt Drudge doesn't think so. And neither does Forbes, which declared that he is "no longer" in that class. That's because, on Tuesday, West saw one of his most lucrative deals collapse before his eyes. Adidas cut ties with West after weeks of sitting on its hands and watching the revolutionary music figure descend into antisemitic rants during interviews. The big question now is: Where — if anywhere — does West go from here?

THE BUSINESS

First in Reliable| NBCU Tightens the Belt: Hundreds of NBCU staffers received formal buyout offers this week, people familiar with the matter tell me. The offers are essentially voluntary early retirement, sent to staffers who are at least 57 years old and have worked at the company for at least a decade. One of the people I spoke to pegged the number of staffers eligible for the buyouts at less than 2,000 people.

🔎 Zooming in: The buyout offers come as media companies look to lean up with economic uncertainty lingering in the air. Axios' Sara Fischer on Tuesday examined how a "bad winter is coming for U.S. media companies."

Only in Reliable| Giving a Schmidt: After donating $600,000 in prize money, Wendy and Eric Schmidt are set to honor science journalists next month in Washington, DC, where they will host recipients of the Eric and Wendy Schmidt Awards. The awards, which are in partnership with the National Academies, "recognize science journalists and research scientists who have developed creative, original work that addresses issues and advances in science."

In an interview Tuesday, Schmidt told me that it is more important than ever to support journalism. "The misperceptions, misinformation, disinformation around us needs to be dispelled by good storytelling from people who are really on the front lines," Schmidt said, noting that reporters covering public health in recent years have faced attacks on their work. When I asked Schmidt about the role technology has played in promoting some of that bad information, she was candid: "I'm disappointed like everyone else," she answered. Schmidt said that she wishes "there were an easy answer," acknowledging the complexity of the issue and urged "greater transparency and accountability." Schmidt also noted that "there is a real transformation going on in the news world" and said that it was her belief that "the real solution is non-profit" orgs.

Locals Lose Major Ally: One of the fiercest advocates for local news in Washington, DC, is getting a new job, a move that might worry media outlets serving smaller communities across the country. David Chavern, who has served as CEO of the News Media Alliance, was announced on Tuesday as the next head of the Consumer Brands Association. He will start his new gig in January. Chavern has been a key figure lobbying for the press in DC. He was instrumental in ginning up bipartisan support for the Journalism Competition & Preservation act, which would allow local newsrooms to collectively negotiate with Big Tech for compensation for their content. A spokesperson for the News Media Alliance tells me a formal search to replace Chavern will get underway shortly.

IN THE INDUSTRY

Jimmy Lai, a pro-democracy publisher in Hong Kong behind the now-shuttered Apple Daily, was found guilty on Tuesday on two fraud charges. The Associated Press' Kanis Leung called it "the latest in a series of prosecutions apparently aimed at punishing him for his past activism." (AP)
YouTube sensation MrBeast is hoping to raise $150 million for a $1.5 billion valuation, Sara Fischer reports. (Axios)
The LAPD launched an investigation into the source of leaked audio that captured LA city leaders' racist remarks that resulted in resignations. (LAT)
The BBC is planning on cutting dozens of roles in Africa, Alexis Akwagyiram reports. (Semafor)
Craig L. LaMay argues that "media liberalization" could help Qatar with its image ahead of the World Cup. (Foreign Policy)
The Hill has launched a new program where you can "group text chat" its editor-in-chief, Bob Cusack. (The Hill)

MEDIA MOVES

WaPo has appointed Kathy Baird as its chief comms officers. (WaPo)
NYT has named Sam Felix its first-ever head of audience mission. (NYT)
It's official: Politico has announced that Jonathan Martin is joining, as we reported last night. He will be politics bureau chief. (Deadline)

THE INFO WARS

Against The Wahl: Right-wing smear artists Jacob Wohl and Jack Burkman each pleaded guilty in Ohio on Monday to telecommunications fraud. The duo have been accused by authorities of running a voter suppression campaign in 2020 through the use of illegal robocalls that targeted multiple states with election misinformation. CNN's Brian Fung has more.

IN THE BATTLEFIELD

Melanie Zanona reports on how the race for the GOP whip has turned nasty, thanks to Tucker Carlson. (CNN)
The NYT is facing criticism for saying in a headline that racism has become "a new battlefront." That headline has been updated. (Mediaite)
Ben Shapiro now says that he is not sure whether he would have been vaccinated for Covid: "I really don't know. I think maybe not." (MMFA)

THE VALLEY

CNN Photo Illustration/Carina Johansen/NTB/AFP/Getty Images

Closing The Deal?: "Elon Musk pledged Monday to close the acquisition of Twitter by Friday in a video conference call with bankers helping fund the deal," Bloomberg's Jeannine Amodeo, Gillian Tan, Paula Seligson, and Ed Hammond reported Tuesday, citing sources. "The banks, which are providing $13 billion of debt financing, have finished putting together the final credit agreement and are in the process of signing the documentation, one of the last steps before actually sending the cash to Musk." Twitter shares spiked when Bloomberg published the news. Read the full story here.

TOO MANY TABS

Apple quietly updated its App Store rules to require iOS developers use in-app purchases for social "boosts," undercutting Meta. (The Verge)
Meta, as a result, has slammed Apple. (Bloomberg)
Speaking of skirmishes involving Apple: Spotify is having a problem getting Apple to approve its audiobooks app. (NYT)
India's antitrust watchdog fined Google $113 million and ordered it to allow third-party payments for purchases. (TechCrunch)

CURTAIN CALL

CNN Photo Illustration/Warnermedia

DC's New Chiefs: Warner Bros. Discovery's search for someone who can fill a Kevin Feige-type role for the DC film universe has ended. CEO David Zaslav announced Tuesday that James Gunn and Peter Safran have been tapped as co-chairs and co-heads of DC Studios. "In their new roles, Gunn and Safran will spearhead the development and execution of a long-term plan for the many properties licensed from DC Comics," WBD said in a press release. The announcement comes at a pivotal time for DC, which recently saw the shelving of "Batgirl" and has, more broadly speaking, never been able to match the Marvel Cinematic Universe in popularity or critical reception. THR's Borys Kit and Aaron Couch have more.

OFF STAGE

James Cameron is hitting the press circuit ahead of the release of "Avatar: The Way of Water." He spoke with Kyle Buchanan about the film — and took some shots at Marvel and DC as well. (NYT)
Speaking of Marvel: The studio has released a trailer for "The Guardians of the Galaxy Holiday Special." (Deadline)
And "Black Adam" is also dominating the UK box office. (Variety)
Kendall Baker writes about how the "Manningcast" landed Barack Obama. (Axios)
Comedy Central is also looking at candidates outside the network to potentially succeed Trevor Noah on "The Daily Show." (Variety)
Rick Porter takes a look at how the new fall shows are doing from a ratings standpoint. (THR)