Tuesday, October 18, 2022

Scroll down for a scoop on The Recount, how Ben Smith thinks Semafor's launch day went, the latest on Kanye West and Parler, why Elon Musk's takeover of Twitter could finally be coming to a close, what Comedy Central might do when Trevor Noah signs off "The Daily Show," and so much more. But first, the A1.

THE A1

Netflix's Narrative Shift

CNN Photo Illustration/Patrick T. Fallon/AFP/Getty Images

After the bell Tuesday, Netflix announced its Q3 earnings, beating expectations and adding 2.4 million subscribers, driven largely by growth in Asia. The news marked a reversal from the previous two quarters where Netflix saw stunning declines in subscriber growth. Wall Street reacted approvingly, with the company's stock price spiking more than 14% in after-hours trading.

But, while Netflix started adding subscriptions again, the company's message to investors strikingly suggested that they pay less attention to those very numbers. The streamer announced it will stop providing guidance for its membership, stating that the company is "increasingly focused on revenue as our primary top line metric."

"Our competitors are investing heavily to drive subscribers and engagement, but building a large, successful streaming business is hard - we estimate they are all losing money, with combined 2022 operating losses well over $10 billion, vs. Netflix's $5 to $6 billion annual operating profit," Netflix boasted.

As an executive at a rival streaming company told me Tuesday, the shift in narrative is "a complete 180" for Netflix, which for years has intensely focused on subscriber growth. So what changed? Mostly, Wall Street's view on the streaming business, which has soured considerably.

The era in which streamers are rewarded for chasing subscriptions at any cost is decidedly over, especially after Netflix's tremendous stumble earlier this year. Now Wall Street is far more interested in hearing about revenue growth and seeing a strong business model.

So Netflix is aiming to shift its narrative, choosing to stress now that it has the strongest business model among the streamers. In doing so, the company took an overt shot at its competitors. "While it's early days, we're starting to see this increased profit focus," it said in its shareholder letter, "with some raising prices for their streaming services, some reigning in content spending, and some retrenching around traditional operating models which may dilute their direct-to-consumer offering." (I should note here that CNN's parent is Warner Bros. Discovery, one of the competitors Netflix is clearly jabbing.)

"In other words," CNBC's Alex Sherman translated in his story, "Netflix is saying it has built a great streaming business, while Disney, Warner Bros. Discovery, Comcast's NBCUniversal, Paramount Global, and others want to build a great streaming business."

THE SIDEBAR

Will Netflix's narrative shift work? Most news reports were still focused on subscriber growth. Here is Lucas Shaw's, for instance: "Netflix is growing again, and Hollywood can breathe a sigh of relief." (Bloomberg)
"I think the reports of streaming's death or maturity have been greatly exaggerated," analyst Rich Greenfield told Benjamin Mullin after the earnings report. (NYT)
Netflix said it is committed to its "binge" release strategy in which all the episodes of a show's season are dropped at once. (Variety)
Netflix also said that its password-sharing crackdown will roll out globally in 2023. (The Verge)
"Though Netflix may poo-poo the achievements of its rivals, it's clear the streaming wars aren't settled," Toni Fitzgerald noted, pointing in particular to Disney+'s success. (Forbes)
Netflix has also started boasting about its sports content, airing an ad during the NBA opener. (Deadline)
Speaking of streamers and sports content: The big streaming news before the earnings was the NFL striking a deal with Amazon Prime for a first-ever "Black Friday" game set for next season. (CNN)

——— BELOW THE FOLD ———

Showing The Receipts: Tuesday brought two fresh examples of victories for news organizations in their bids to use public records to hold government officials accountable:

► WaPo reveals vets working for Saudis: Atop WaPo's homepage Tuesday was a remarkable investigative piece about how "more than 500 retired U.S. military personnel — including scores of generals and admirals — have taken lucrative jobs since 2015 working for foreign governments, mostly in countries known for human rights abuses and political repression." The Post said the US gov't had fought to keep data on the matter a secret, prompting the paper to sue the Army, Air Force, Navy, Marine Corps, and State Department using FOIA. "After a two-year legal battle, The Post obtained more than 4,000 pages of documents," The Post reported. Read the full story from Craig Whitlock and Nate Jones here.

► Tampa Bay Times shows voter arrests: Video obtained by the Tampa Bay Times and widely circulated Tuesday showed unsuspecting Florida residents being arrested at their homes over voter fraud allegations by Gov. Ron DeSantis' new Office of Election Crimes and Security. The footage, the paper said, was obtained through public records request. Carolyn Fox, managing editor of the Tampa Bay Times, told me she believed it was "important to show readers" what the new office is doing. "It's a new state-funded unit with a particular mission and Florida residents should be aware of how they are enforcing the laws," Fox said, adding that she is "proud when our team is able to give the public transparency on an issue." Read the full story from Lawrence Mower here.

THE BUSINESS

CNN Photo Illustration/The Recount

First in Reliable: The Recount Explores Sale: The digital outlet The Recount is exploring a sale, a person with knowledge of the matter told me Tuesday. The three-and-a-half-year-old outlet, founded by John Heilemann and John Battelle, which saturates social media platforms like Twitter with short politics-focused videos, believes a sale to an established entity might help provide it with greater resources and a larger audience, the person said. The company is in talks with potential partners or acquirers, the person added, noting that the conversations are "active and ongoing."

► A spokesperson for The Recount said, "From the start, we've believed we're doing important, path-breaking work at The Recount. and we're committed to doing whatever it takes to continue that mission and take it to the next level."

Semafor Sings: The ambitious new global news outlet from Ben Smith and Justin Smith got off the ground on Tuesday morning. I spoke to a delirious Ben Smith on Tuesday evening, who had been up since 4am, and asked him how the launch went. "It was remarkably smooth," he told me. "I just feel incredibly proud of the work and the team." Ben said he was "really pleased that people seemed to like the format" of the article pages, which he said they had "made a big bet on." Each of Semafor's articles are broken down into sections, separating "the news" from the views of the author and another expert. One notable tweak did, however, occur on launch day. Initially, every paragraph in articles started with several words in bold. After some feedback, Ben said the team decided to listen to the readers and abandon that format.

IN THE INDUSTRY

James Bennet, who was fired at NYT over Tom Cotton op-ed, unloaded on publisher A.G. Sulzberger in an interview for Ben Smith's debut column: "He set me on fire and threw me in the garbage and used my reverence for the institution against me." (Semafor)
Heidi Chung wrote about Rupert Murdoch's move to unite Fox Corp. and News Corp. under one roof: "Let's put it this way: The fact that absolutely nobody saw this coming tells you all you need to know about the elusive logic at play here." (Variety)
Tatiana Siegel reports that earlier this year the FBI raided ABC News producer James Gordon Meek's home. ABC says he "resigned very abruptly and hasn't worked for us for months." (Rolling Stone)
"The stakes are very high": Joe Pompeo has a deep-dive into the explosive lawsuit filed by Prince Harry, Elton John, and others against The Daily Mail's parent company. (Vanity Fair)
The median salary for journalists of color at six Gannett outlets is $11,500 less than that of their white counterparts, a study found. (Poynter)
Variety is hosting its annual New York Party celebrating the city's most powerful media members on Wednesday, which I will try to attend if I can send this out in time! (Variety)
Bob Woodward is releasing the new audiobook "The Trump Tapes" with eight hours of recorded interviews. (CNN)
Chris Cillizza is writing a book due out next year. (Twitter)

MEDIA MOVES

"Maddow" EP Cory Gnazzo is taking on a new role at MSNBC as senior executive producer at the network; Matthew Alexander has been promoted to EP of "Alex Wagner Tonight." (Variety)
Bryan Thoensen is jumping to Spotify after serving as TikTok's head of content partnerships. (THR)
NYT has named Anthony Rotunno as its fashion editor. (NYT)
Mark D'Andrea has been named global chief revenue officer at AccuWeather. (AccuWeather)

THE INFO WARS

IN THE BATTLEFIELD

Stuart Varney grilled Parler CEO George Farmer on whether the app will allow Kanye West to post anti-semitic content. (Mediaite)
Makena Kelly reports that Parler's parent company had "been trying to offload" the platform for weeks. "One prospective buyer described [the] asking price for the platform as wildly inflated." (The Verge)
Lawyers for the mother of George Floyd's daughter have drafted a cease-and-desist letter to West over his claims about Floyd's death. (CNN)
"Drink Champs" has pulled its West interview over his "false and hurtful" comments about Floyd. (THR)
John Herrman's brutal assessment of Parler: "It's a place with no adjacency to power, elite discourse, or celebrity. It lacks the raw material with which Ye usually works. It's an environment where he'll find neither success nor trouble. It's barely an environment at all." (Intelligencer)

THE VALLEY

CNN Photo Illustration/AFP/Getty Images

Tick Tock for Twitter: Twitter has frozen the equity accounts for employees "in anticipation of the closing of the pending acquisition," Bloomberg's Kurt Wagner and Edward Ludlow reported Tuesday. An update on an employee portal page explained, "This freeze allows Schwab to perform final reconciliation of employee accounts prior to close of the acquisition." The move, after months of legal wrangling, suggests that the takeover saga with Elon Musk could be coming to a close soon. Stay tuned.

TOO MANY TABS

Last week, we reported on the spat between Meta and The Wire. The Wire said Tuesday it is pulling its stories and launching an internal review of its reporting, which Meta maintains is based on faked documents. (The Wire)
Apple announced new iPad Pros and a redesigned iPad model. (CNBC)
Apple also announced a slightly upgraded Apple TV 4K, though we really wish the company would graduate to 8K! (The Verge)
In related news: Jon Victor and Amir Efrati report on how Google, facing a threat from Apple, is trying a "new hardware playbook." (The Info)

CURTAIN CALL

CNN Photo Illustration/Todd Owyoung/NBC/Getty Images

"The Daily Show's" Dilemma: Who will take the reins for Trevor Noah when he signs off from the late-night series? Well, the answer might not lie in a single host. Deadline's Peter White scooped Tuesday that Comedy Central is considering hosting duos and even trios to replace Noah, including one option that would have Roy Wood Jr. and Desi Lydic co-host. A spokesperson for the show didn't deny the report, only saying, "In time, we will turn to the next chapter of The Daily Show and all of our incredible correspondents will be at the top of that list. Until then, we are focused on celebrating Trevor and thanking him for his many contributions."

OFF STAGE

After about five hours on the witness stand, Kevin Spacey has finished testifying in his defense in a civil sexual misconduct trial. (CNN)
Jordan Klepper's next special about election denialism will air ahead of the midterms on November 1 on Comedy Central. (Variety)
Amazon Studios boss Jennifer Salke says "The Rings of Power" has had a "halo effect" on the streamer's other shows. (Deadline)
James Corden has been unbanned from Balthazar after having "apologized profusely" to the NYC hotspot's owner. (Variety)
"The Watcher" is posting strong numbers on Netflix. (Deadline)
The TCM Classic Film Festival will return to Hollywood on April 13 through the 16. (THR)