Volume 4: Hail to the Victors

This is a newsletter about transformational change. Pathbreaking M&A. Orthogonal business models. Industries converging. But it would be disingenuous to suggest that such change is the norm. "Slowly, then all at once," the saying goes, and for good reason; slowly still predominates, even if the all at once part sometimes seems like it's catching up.

This feels especially true today, following the Jewish High Holidays. It was an aberrant experience this year – streaming services from my couch, without the coat and tie – but the familiar process of taking stock in one's own modest, halting growth over a single adult year certainly reifies the incrementalism of life. Our goals may be grand, but the exigencies of the here and now tend to slow the pace of change.

So too in the media business. Strategics still acquire similar companies, traditional media channels stay relevant, and, on Saturdays in the fall, American college students play football on national television.

News Feed

College Football + COVID-19 (link)

It appears there will be a college football season after all. After announcing in August they wouldn't play this fall, the Big Ten and Pac 12 as well as two other lesser conferences reversed course and declared they will in fact attempt to hold their seasons amid the pandemic, joining nearly every other team in college football's highest division. In many ways the pairing of elite pre-professional football with university education – a byproduct of the sport’s roots, which trace to Ivy League campuses in the late 1800s – is a curious American anachronism, like tying health insurance to employment, that only makes sense when it’s the only system you’ve known. If you were to start over, professional leagues would probably pay for the job training of their own employees, young players would not be mandated (by a collective bargaining agreement they were excluded from) to wait three years after their high school graduation to join them, and college students would not be required to subsidize their own athletic departments. The past decade has brought greater scrutiny to college athletics, and there are signs – the O'Bannon case, the NCAA blessing athlete endorsements – that the edifice upholding collegiate amateurism is beginning to crumble. Many suggested that COVID would be the last straw, that forcing unpaid players onto the field during a pandemic to generate revenue for their universities would finally lay bare the hypocrisy of an exploitative system. But as with any reform movement, there is always the question of how to minimize collateral damage to those whose livelihoods rely on the current paradigm, which is especially relevant here given how enmeshed college football is in our economy and culture. Might playing prevent more college sports programs from being cut? Forestall layoffs at the networks who broadcast games? Or the media agencies who rely on commissions from buying their ad time? The second-order effects of cancelling the season are immense. So we play on, wholesale change waiting for another day, in the meantime hoping college football provides a bit of economic ballast, and crossing our fingers the players stay safe.

P&G + The TV Upfront (link)

Marc Pritchard, P&G's Chief Brand Officer and one of the most influential figures in advertising, made headlines last week for criticizing the annual TV Upfront as "antiquated" and suggesting that a more appropriate name would be "the FOMOs." Among his demands are a shift to a calendar-year schedule that better aligns with how marketers set their budgets and more flexibility on ad buys. The market already moved a bit in this direction this year, as the pandemic pushed the schedule back and brought greater concessions on flexibility from the major networks. (The latter was as much a response to competition as a concession to customers, as Roku and other connected TV sellers have sought to steal share from traditional TV by touting the superior flexibility of their platforms.) But while there's growing momentum for the idea that the Upfront needs to change, expect evolution, not revolution, given the collective action problem inherent in executing an immediate overhaul. The Upfront isn't some independent governing body with the power to amend its charter with a majority board vote; it's a marketplace driven by custom, economic incentives and the diverse needs of its various stakeholders. Pritchard's comments, which echo recommendations made in May by the Association of National Advertisers, of which he's chair, illustrate the emerging consensus from the brands who invest the most in TV advertising. But agencies and networks still need to get on board.

E.W. Scripps + ION Media (link)

Last week E.W. Scripps acquired ION Media, a low-profile TV station group, for $2.65 billion, with Warren Buffett’s Berkshire Hathaway contributing $600 million in preferred equity to finance the deal. Three takeaways here: first, for Scripps, this is the culmination of a corporate transformation more than a decade in the making. The once-sprawling media conglomerate divested its cable networks business in 2008, its newspaper business in 2014, its radio business in 2018 and its podcast business this year. It is now all-in on TV broadcasting. Second, for ION, the deal is a vindication of an against-the-grain strategy that bucks the trend of broadcasters seeking ever-higher retransmission fees from cable distributors. Instead, ION has focused on maximizing distribution via both “must carry” rules with MVPDs and riding the wave of over-the-air TV adoption among non-Pay TV households, monetizing its large footprint with a dependable advertising offering that delivers the cheap reach that is getting harder to find with cable networks as cord-cutting accelerates. Finally, the deal is a reminder that, despite Berkshire Hathaway’s sale of its newspaper business earlier this year, Buffett remains optimistic about some sectors of the media industry.

PMC + MRC (link)

Last week PMC and MRC announced a deal that would combine six prominent entertainment and music trade publications: PMC’s Variety, Rolling Stone and Music Business Worldwide and MRC’s The Hollywood Reporter, Billboard and Vibe. Billed as a joint venture in the press release, the New York Post reports that PMC will in fact own 80% of the new entity. 

Which would make sense. I typically use this space to highlight "strange bedfellows" coming together in new partnerships, but here the label better applies to MRC's portfolio prior to the deal. Having under one roof both the executives at MRC's film and TV studio and the journalists at The Hollywood Reporter who cover them was always an awkward fit – an arranged marriage owing to their common ownership by financier Todd Boehly. Meanwhile, PMC has been one of the few strategic acquirers of legacy publishing assets in recent years, even launching an ambitious new sports business trade, Sportico, earlier this year. Much is still unknown about how the JV will take shape – and the impact from COVID, which has hammered live event revenue in the B2B publishing sector, is still playing out – but combining these like assets under the control of an owner committed to trade publishing gives them the best chance of finding long-term sustainability.

Content Recommendation Algorithm

• Watch: Wireless. Quibi's struggles belie the quality and inventiveness of some of its programming. Wireless is a fun survival drama – starring Tye Sheridan taking a Ryan Lochte-esque turn as a bro compounding his misfortune by lying to his mother – but what makes it so engaging is the way it uses Quibi's "Turnstyle" technology to deliver an experience that is native to the phone. While the horizontal orientation captures the director's perspective, rotating to vertical shows the main character's phone screen (and occasionally the view from its front-facing camera), where critical plot points unfold. The latter vantage recalls "Noah," an acclaimed short film from 2013 that took place entirely on a teen's computer screen.
• Read: little scratch. Reading Rebecca Watson's debut novel is a uniquely immersive experience. Covering its anonymous protagonist's every thought throughout one ordinary day, Watson uses "typographical tricks to illustrate the cacophonous complexity of inner life," as the Times put it. While the workplace is not the central focus of the book, the rich density of her inner monologue during moments spent commuting and navigating the office vividly brought me back to a life that felt so familiar before this March.
• Listen: Toots & The Maytals. I usually reserve this space for podcasts, but sometimes I open up Spotify and the Your Top Shows menu reads like a demoralizing doomscroll of my Twitter feed. In those moments, I recommend listening to the legendary reggae band fronted by the incomparable Toots Hibbert, who died earlier this month. A bit less Daily and a bit more Toots can do wonders for your mood.

Note: This is the fourth edition of the Strange Bedfellows newsletter. You can find the others here: Volume 1, Volume 2, Volume 3.