View this email in your browser


February 28, 2018
by Eric Peckham
Happy Wednesday, media friends.

There's a new storytelling format I'm excited to see experimentation with: narratives that unfold across both traditional media and social media, blurring the line between reality and fiction. The hit Norwegian TV show SKAM is a case study here. It followed a (fictional) group of high school students through assorted teen drama (compare it to the British show Skins). 

SKAM characters had real-world social media accounts that interacted with each other in alignment with the plot leading up to each week's TV episode: a scene at a party gets posted by one of the relevant characters at 2am on a Saturday when it's supposed to really be happening; a scene in the school cafeteria gets posted at noon on a Wednesday. Characters interact online (with tweets, posts, photos, comments) as you'd expect them to based on the plot. The high-production-quality videos then got compiled into the TV episode of the week, which acted as a recap providing extra context. The plot unfolds in a world broader than just the TV episodes and intertwines with real social media interactions. Watching the TV episodes was only part of watching the show.

The low-production-budget show broke viewership records in Norway, Denmark, and Sweden and gained a large online following around the world. It ended after 4 seasons due to what creator Julie Andem framed as the exhaustion of running a show that's constantly unfolding every day. Simon Fuller's XIX Entertainment is producing a US remake of the show, which will launch on Facebook Watch, and local adaptations are in the works in 5 other European countries.

It's a fascinating case of blending reality and fiction, something we'll see a major way when augmented reality finds widespread consumer adoption. And it offers potential for a dynamic production format that's about storytelling through low-cost daily activity on social media rather than in neatly defined episodes. Why not have fictional characters be real-world social media influencers? Those become channels to monetize too through product placement, etc.
Enjoy MediaDeals? Share it with your coworkers.
  • iQiyi, the freemium video streaming platform 80%-owned by Chinese search engine giant Baidu, has filed for an IPO, aiming to list on Nasdaq with the ticker IQ and raise up to $1.5B (€1,2B). It claims 420M monthly viewers, 50M of whom are paying subscribers, leading to $2.7B (€2,2B) in FY17 revenue (+55% yoy) and a net loss of $592M (€485M). 
    • iQiyi is that largest SVOD platform in China, roughly tied with Tencent Video and closely followed by Alibaba's Youku Tudou.
    • iQiyi - often referred to as the "Netflix of China" - has an exclusive distribution deal with Netflix to stream some Netflix Originals shows/films in China (where Netflix doesn't operate).
  • Performance reports:
    • Alibaba Pictures Group, the separately-listed film/TV studio subsidiary of e-commerce giant Alibaba, reported FY17 revenue of $375M (€307M) and a net loss of $166M (€136M). 
      • The company has a content production arm, which turned a small profit for the first time, and a film promotion & distribution arms, which centers on the Tiao Piao Piao online ticketing service (which is aggressively competing for market share through loss-making promotions).
    • Discovery Communications, in its earnings release yesterday, also highlighted that its Olympics coverage was watched by a record-setting 386M viewers in Europe (across TV and digital). In the company's top 10 European markets, 58% of the population tuned into the Games, and in Sweden and Norway over 90% of the general TV audience tuned in at some point.
      • Thanks to the Olympics, Discovery added 500,000 new subscribers to its sport-focused SVOD platform Eurosport Player over the last two weeks. It had 1M subs before the Games.
    • Sinclair Broadcast Group, the largest owner of local TV stations in the US, reported $2.73B (€2,24B) in FY17 revenue (-0.1% yoy) with $737M (€604M) in operating income (+22%) and $576M (€472M) in net income (+135%). Earnings benefited from a $272M tax benefit from US tax reform.
      • Sinclair generates a lot of revenue from US political advertising, which brought in $200M (€164M) in 2016 but very little in 2017 and is expected to rise again in 2018.
      • Sinclair is 10 months into a regulatory review of its proposed acquisition of Tribune Media. If approved, Sinclair will have to divest a large portfolio of TV stations. The merger would leave its local stations reaching 70% of US households but the max permitted by law is 39%.
        • As I've written about recently, two stations already have tentative buyers and 21st Century Fox is negotiating for 6 others.
    • Sky Plc's on-demand platform Sky Q announced an overhaul that will bring machine-learning to improve the user experience, mainly through recommendations of shows and sports games based on profiles that learn your interests. It will also be adding Spotify as an app on the service.
  • Snap is partnering with Axel Springer and Porsche for a German startup accelerator. The two major German companies announced the accelerator in November as a 50/50 joint venture, and Snap's Evan Spiegel was in Berlin yesterday to announce his company will be involved in the "mobile content businesses" track of the 100-day program, providing startups with access to Snap's internal resources and special opportunities for distribution.
Gaming and AR/VR
  • Performance reports:
    • Super League Gaming (SLG) is expanding to 4 more cities, giving the amateur esports league 16 cities where it's operating. Backed by $15M (€12,3M) from Nickelodeon, Jeffrey Vinik (hedge fund manager of Magellan Fund / Vinik Asset Mgmt fame), DMG, and aXiomatic, the company hosts esports competitions in movie theaters, with the high scorers being nominated to city-wide teams that travel to compete elsewhere.
  • Gaana, the freemium music streaming service in India, raised $115M (€94M) from Tencent. It's the first outside capital in the company. Gaana hasn't released user figures but its CEO said "we have penetrated only 5-6% of India". Given the country is approaching 500M internet users, that'd be ~25M users if true.
    • Amazon also launched its Prime Music streaming service in India today, at the lowest price point in the market.
  • Live Nation Entertainment acquired Robomagic, a UK music company (recording, publishing, artist mgmt) run by former AEG Live president of touring Rob Hallett, who is taking a role at Live Nation. 
  • Bose Corporation is investing in Cambridge, MA-based podcasting startup RadioPublic through its Bose Ventures arm. (link)
  • Performance reports:
    • Live Nation Entertainment reported $10.3B (€8,4B) in FY17 revenue (+24% yoy) with $91M (€75M) in operating income and $7.8M (€6,4M) in net income. It had a $202M (€166M) loss for Q4, in part due to a $110M (€90M) legal settlement with Songkick. (link)
      • Concerts (76% of revenue)
        • Worldwide concert attendance at Live Nation events hit 86M (+21% yoy)
        • Promoted 30,000 shows in 40 countries.
        • Avg ticket prices up 5%.
        • Revenue from this segment was $7.9B (€6,5B) (+25% yoy)
      • Sponsorship (4% of revenue)
        • Revenue was $445M (€365M) (+18% yoy)
        • Due to high margins, $251M (€206M) of this was operating income.
      • Ticketmaster (20% of revenue)
        • Sold 498M tickets with gross ticket volume (GTV) of $30B (€24,6B).
        • Revenue for the segment was $2.14B (€1,75B) (+17% yoy).
Digital Learning
  • Performance reports:
    • Udacity, the San Francisco-based provider of online courses for professional skills like self-driving car engineering and VR development, announced FY17 revenue of $70M (€57M), with a total of 8M students on the platform, 50,000 of whom are currently enrolled in the $1,000-2,500 "nanodegree" programs. That's up from FY16 revenue of $29M (€24M), with 5M students and nanodegree enrollment of 16,000.
      • The company - which has raised $160M (€131M) from Bertelsmann, Andreessen Horowitz, GV, and CRV - released the data in order to share its story with more investors as it looks toward a future IPO.
  • Performance reports:
    • IntelSat S.A., the Luxembourg- and US-based satellite company that has the largest market share of satellite services for media (20%) and telecom (29%) companies, reported $2.15B (€1,76B) in FY17 revenue (-2% yoy) with $1.67B (€1,36B) in adj EBITDA (+2%) and a $179M (€147M) net loss (compared to 2016 which had $990M / €812M in net income).
      • Revenue by customer segment: 42% Media; 40% Network Services (i.e. telecom); 16% Government. 
      • It's been a wild 3 days for IntelSat's share price. The stock crashed 15% on Monday after reporting Q4 losses four-times greater than projected. Then late yesterday, the stock soared nearly 30% after the FCC Chairman said at a conference that he will soon propose opening the C-band to commercial terrestrial use. (IntelSat and SES currently have 90-95% of the congested C-band spectrum; IntelSat proposed auctioning more of that space to telecoms building 5G coverage in exchange for substantial compensation).
    • Sprint announced the first US cities to get 5G networks will be Atlanta, Chicago, Dallas, Houston, Los Angeles, and Washington DC.
    • T-Mobile similarly announced the first cities where its 5G networks will go live over the next few months are Dallas, New York, Las Vegas, and Los Angeles.
MediaDeals is a daily tracker of M&A, investments, and key deals across the global media industry. It is produced by Eric Peckham as part of
Copyright © 2018 Eric Peckham, All rights reserved.

Want to change how you receive these emails?
You can update your preferences or unsubscribe from this list.

Email Marketing Powered by Mailchimp