Media business

Twitter Posts $270M Quarterly Loss As Revenue Slips

By Associated Press
July 22, 2022

The social media company lost $270 million in the April-June period after revenue declined 1% to $1.18 billion.

Twitter reported a quarterly loss Friday as revenue slipped even as its number of users climbed.

The social media company’s latest quarterly earnings figures offered a glimpse into how the social media business has performed during a months-long negotiation with billionaire and Tesla CEO Elon Musk over whether he will take over the company.

The company lost $270 million in the April-June period after revenue slipped 1% to $1.18 billion, reflecting advertising industry headwinds, as well as uncertainty” over Musk’s acquisition bid.

The number of daily active users rose 16.6% to 237.8 million compared with the same period a year before.

Twitter chalked up the gains to “ongoing product improvements and global conversation around current events.”

Overshadowing Twitter’s latest sales results is its legal fight with Musk to make good on his April promise to buy the company for $44 billion. Twitter last week sued Musk to complete the deal and both sides are bracing for an October courtroom trial to resolve the dispute.

Given the pending acquisition, Twitter said it wouldn’t hold its usual quarterly earnings conference call or issue a shareholder letter.

Additional reporting by The Associated Press.

Source: newsy.com

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Word of Trump Media Deal Is Said to Have Leaked Months in Advance

Months before former President Donald J. Trump’s social media company unveiled an agreement to raise hundreds of millions of dollars last fall, word of the deal leaked to an obscure Miami investment firm, whose executives began plotting ways to make money off the imminent transaction, according to people familiar with the discussions.

The deal — in which a so-called special purpose acquisition company, or SPAC, would merge with Mr. Trump’s fledgling media business — was announced in October. It sent shares of the SPAC soaring.

Employees at the Miami investment firm, Rocket One Capital, had learned of the pending deal over the summer, long before it was announced, according to three people familiar with the firm’s internal discussions. Two of the people said that Rocket One officials at the time talked about ways to profit off the soon-to-be-announced transaction with Trump Media & Technology Group by investing in the SPAC, Digital World Acquisition Corporation.

a surge in trading in a type of security known as warrants, which entitled investors to buy shares of Digital World at a preset price in the future.

Federal prosecutors and regulators are now investigating the merger between Digital World and Trump Media, including the frenzied trading in the SPAC’s warrants, according to people familiar with the investigation and public disclosures. Digital World said in a recent regulatory filing that a federal grand jury in Manhattan had issued subpoenas seeking information about Rocket One, among other things.

The exact scope of the federal investigations remains unclear. Authorities have not accused anyone of wrongdoing, and representatives of Mr. Garelick and others denied doing anything improper.

A lawyer for Rocket One and its founder, Michael Shvartsman, denied that they had any advance knowledge of the merger between Digital World and Trump Media. He added that “any assertion otherwise is untrue.”

a recent news release that neither Mr. Trump nor Devin Nunes, the former California congressman who is the company’s chief executive, received grand jury subpoenas. (The release identified the men only by their job titles.)

The investigation into unusual trading in Digital World securities is the latest blow to Mr. Trump’s social media venture, which has struggled with technological problems and slow user growth.

Federal authorities are also investigating whether Digital World’s disclosures about the merger talks with Trump Media violated rules governing SPACs. And the Securities and Exchange Commission is considering whether to block the merger, according to regulatory filings by Digital World. If the deal doesn’t go through, it would deprive Trump Media of $1.3 billion.

There is scant public information about Rocket One, which has fewer than 10 employees and has made about 20 early-stage investments over the past decade, according to a review of archived web pages and an analysis by PitchBook, a data company. Rocket One disabled its website soon after its name appeared in a Digital World regulatory filing.

Two of the people familiar with Rocket One’s internal discussions said Mr. Garelick, a former Boston hedge fund manager who is now Rocket One’s chief strategy officer, mentioned the possible deal with Trump Media to some employees last summer. Around that time, a Rocket One employee was told to conduct a financial analysis of Digital World, including its warrants, one of the people said.

investigate whether the leaders of Digital World and Trump Media started negotiating a potential merger before Digital World sold shares through an initial public offering in September. At the time of Digital World’s initial public offering, the company said in public filings that it had not yet identified a merger target. But The New York Times previously reported that talks between Mr. Orlando and Trump Media officials were already underway.

previously reported that they were involved in some of the early talks with Mr. Orlando.

Mr. Moss and Mr. Litinsky, who at one time were senior executives with Trump Media, didn’t respond to requests for comment. Mr. Litinsky no longer works for Trump Media; Mr. Moss’s job status is unclear.

Securities regulators also have asked for information from Digital World about the role played by the SPAC’s financial adviser, Shanghai-based ARC Group, according to regulatory filings. Federal regulators previously have reprimanded ARC. In 2017, the S.E.C. stopped ARC’s executives from listing shares of three companies, citing “material misstatements” in their securities filings and a lack of cooperation from the executives.

Ben Protess contributed reporting. Susan C. Beachy contributed research.

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Amazon Accused of Manipulating Prices by D.C. Attorney General

The District of Columbia sued Amazon on Tuesday, accusing it of artificially raising prices for products in its ubiquitous online marketplace and around the web by abusing its monopoly power, a sign that regulators in the United States are increasingly turning their attention to the company’s dominance across the economy.

In the lawsuit, the D.C. government said that Amazon had effectively prohibited merchants that use its platform from charging lower prices for the same products elsewhere online. That, in turn, raised prices for those products not just on Amazon’s website but in other marketplaces as well, it said.

“Amazon has used its dominant position in the online retail market to win at all costs,” said Karl Racine, the attorney general for the District of Columbia. “It maximizes its profits at the expense of third-party sellers and consumers, while harming competition, stifling innovation, and illegally tilting the playing field in its favor.”

Jodi Seth, a spokeswoman for Amazon, said in a statement that Mr. Racine “has it exactly backwards — sellers set their own prices for the products they offer in our store.” She added that Amazon reserved the right “not to highlight offers to customers that are not priced competitively.”

others raise their prices elsewhere or choose to list solely on Amazon, the largest e-commerce site in the country, to avoid losing their listings. The complaint said “Walmart routinely fields requests from merchants to raise prices on Walmart’s online retail sales platform because the merchants worry that a lower price on Walmart will jeopardize their status on Amazon.”

Absent the policing, sellers “would be able to sell their products on their own or other online retail sales platforms for less than they sell them on Amazon’s platform,” it said.

“Most favored nation” contracts are common across industries, including the cable industry with media business partners. Mr. Racine’s office will have to prove how the price agreements harmed other sellers and were anticompetitive.

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How AT&T Got Here, and What’s Next.

AT&T is painting a rosy picture for the future of its media business, which it will spin off and merge with Discovery. That new streaming giant is a formidable stand-alone competitor to Netflix and Disney. The move leaves AT&T to focus on its telecom business, which looks less bright after being overshadowed by its expensive — and ultimately futile — deal-making binge in media and entertainment under its previous chief, Randall Stephenson.

The DealBook newsletter explains how AT&T got here, in three key deals:

A $39 billion bid to buy T-Mobile. After regulatory pushback, in 2011 AT&T walked away from an effort to become the country’s largest wireless company. T-Mobile paired up instead with Sprint, and the two went on to buy huge amounts of spectrum in the high-stakes battle for 5G, leaving AT&T behind as it lobbies regulators to step in. The failed deal hit AT&T with a $3 billion dollar breakup fee, at the time the largest ever.

The $67 billion acquisition of DirectTV. In 2015, AT&T bet on cable TV as a way to amass customers whom it could eventually convert to streaming. But DirectTV bled subscribers as customers cut the cord, and AT&T unloaded a stake in the company last year to TPG that valued DirectTV at about a third of its acquisition price. The deal also cost AT&T about $50 million in advisory fees, according to Refinitiv.
The $85 billion acquisition of Time Warner. In 2018, Stephenson called the deal a “perfect match,” but the combined group struggled to invest in its telecom business while also spending enough to compete with the entertainment specialists at Netflix and Disney. Three years later, AT&T is now spinning off the company so it can (re)focus on its quest for 5G market share. AT&T paid $94 million in advisory fees to put the two companies together and an estimated $61 million to split them apart.

buy another independent studio, MGM.

In a sign of the pressure that players face to spend big to bulk up, shares in Comcast, the telecom company that owns NBCUniversal, fell 5.5 percent on Monday.

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AT&T’s WarnerMedia Group to Merge With Discovery

It’s as if Logan Roy, the fictional patriarch of the Waystar Royco media empire on HBO’s popular series “Succession,” masterminded the deal himself: AT&T has thrown in the towel on its media business and decided to spin it off into a new company that will merge with Discovery Inc.

The transaction will combine HBO, Warner Bros. studios, CNN, TNT, TBS and several other cable networks with a host of reality-based cable channels from Discovery such as Oprah Winfrey’s OWN, HGTV, the Food Network and Animal Planet.

But it raises numerous questions about what that will mean for popular shows and streaming platforms, whether entertainment bills will go up or down, or what will happen to the people working at WarnerMedia and Discovery.

What shows do WarnerMedia and Discovery produce?

WarnerMedia is known for producing some of the industry’s biggest theatrical and television hits.

HBO last year captured more Emmys than any other network, studio or platform, and its hit shows include “Succession,” “Curb Your Enthusiasm” and “Last Week Tonight With John Oliver.” It also has a huge library that includes “The Sopranos,” “Game of Thrones” and “Sex and the City.”

Netflix, the industry leader, has over 200 million subscribers, and everyone else is far behind.

Both WarnerMedia and Discovery have invested heavily in streaming. WarnerMedia has spent billions building HBO Max, which together with the HBO cable network has about 44 million customers. Discovery has 15 million global streaming subscribers, most of them for its Discovery+ app.

The companies plan to invest more in both services to get those numbers much higher. David Zaslav, the chief executive of Discovery, who will run the new business, said on Monday that he envisioned hundreds of millions of subscribers around the world, but that will be tough as Netflix and Disney invest in new shows of their own to keep a grip on the market.

Jason Kilar, who was hired to run AT&T’s media group only last year, is most likely on his way out. He was kept in the dark about the deal until a few days ago, and he has hired a legal team to negotiate his departure, according to two people briefed on the matter.

But it could mean the elevation of other executives within WarnerMedia. On Monday, Mr. Zaslav praised Toby Emmerich, the head of the film division, Casey Bloys, who runs HBO, and Jeff Zucker, the leader of CNN. Mr. Zucker and Mr. Zaslav are also longtime golfing buddies.

When asked about his plan for the management team, Mr. Zaslav said he would not favor Discovery executives.

“Philosophically, our view is we don’t know better,” he said. “There’s a reason WarnerMedia is where it is today.”

Will people be laid off at WarnerMedia and Discovery?

The companies expect the deal to be finalized in the middle of next year, and they anticipate annual cost savings of $3 billion. That usually means layoffs are coming.

WarnerMedia already went through several rounds of deep staff cuts after AT&T’s purchase of the company in 2018 as Mr. Stankey, who led the unit for a time, slimmed down the operations. Executives and managers were let go as he combined HBO, Warner Bros., CNN and the other cable networks under a single management team.

When Mr. Kilar came aboard last year, he cut further. Over 2,000 employees were laid off in the process.

To realize $3 billion in cost savings will inevitably mean more layoffs — at both WarnerMedia and Discovery. Mr. Zaslav said there was “a treasure trove of talent” at WarnerMedia, and emphasized the fact that Discovery doesn’t make scripted shows.

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AT&T, in Abrupt Turn, Will Shed Media Business in Deal With Discovery

The merger is a significant about-face for AT&T, a telecommunications giant that got into the media business with its Time Warner foray. Industry experts questioned AT&T’s deal, and now the spinoff indicates a failed acquisition strategy.

John Stankey, the chief executive of AT&T, has looked at its media business as a way to keep its phone customers from switching to other companies. AT&T Wireless subscribers get discounts and free access to HBO Max. A deal with Discovery could include stipulations that customers would maintain those benefits.

Before he took over as chief executive last year, Mr. Stankey was the company’s chief mergers strategist. But his track record has been spotty. In addition to planning AT&T’s purchase of Time Warner, he was behind the company’s $48 billion acquisition of the satellite operator DirecTV in 2015. The service has been bleeding customers for years; in February, AT&T sold part of the business to the private equity firm TPG for about $16 billion, a third of what it originally paid.

For Discovery, the WarnerMedia deal could finally give Mr. Zaslav the size and scale he has long sought. A swashbuckling executive who can recall ratings figures off the top of his head, Mr. Zaslav represents the last of the old guard in media, a hobnobbing mogul known for hosting lavish get-togethers at his house in the Hamptons.

The new company would create a new kind of media behemoth, one that is still living off the fat profits of old-school cable, while spending those profits (and more) on streaming.

Even with increased competition, HBO remains a standout in television, and last year, once again, captured more Emmys than any other network, studio or platform, including Netflix. It has several hit shows, including “Succession,” “Curb Your Enthusiasm,” “Barry” and “Last Week Tonight With John Oliver.” It also has a huge library that includes “The Sopranos,” “Game of Thrones” and “Sex and the City.”

The Warner Bros. TV studio likewise has produced successful shows for both its parent company, WarnerMedia, and outside studios with series like “Ted Lasso” (Apple TV+), “Riverdale” (CW), “The Flight Attendant” (HBO Max) and “The Bachelor” (ABC). The Warner Bros. movie studio recently released movies like “Godzilla vs. Kong,” “Mortal Kombat” and has big coming releases like “Dune” and “The Matrix 4.”

Brooks Barnes and Lauren Hirsch contributed reporting.

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AT&T-Discovery Deal Would Create a Media Juggernaut

Less than three years after AT&T spent over $85 billion and millions more fending off a government challenge to buy Time Warner, one the biggest prizes in media, the phone company has decided on a completely different strategy.

AT&T is in advanced talks to merge its media business, including CNN, with Discovery Inc., two people briefed on the deal said on Sunday. The plan would incorporate all of AT&T’s Warner Media assets, which include HBO and Warner Bros., one of the people said. The parties could announce a deal as soon as Monday, this person said, saying that the talks were not yet complete and final details had not been worked out.

Should AT&T and Discovery agree on a deal, it would combine two of the largest media businesses in the country. AT&T’s WarnerMedia group also includes the sports-heavy cable networks TNT and TBS. Discovery has a strong lineup of reality-based cable channels, including Oprah Winfrey’s OWN, HGTV, the Food Network and Animal Planet.

WarnerMedia is run by Jason Kilar, 50, one of the early pioneers of streaming and the first chief executive of Hulu. David Zaslav, 60, has been the head of Discovery for 14 years and helped it grow into a reality behemoth. It’s unclear who would lead the new business.

reported on the possible deal.

The transaction would create a new company bigger than Netflix or NBCUniversal. WarnerMedia and Discovery together generated more than $41 billion in sales last year, with an operating profit of over $10 billion. That would have vaulted it ahead of Netflix and NBCUniversal and behind the Walt Disney Company.

In other words, to compete for audiences increasingly glued to Facebook, YouTube or TikTok, media companies need to get even bigger. It could set off another round of media deals.

Both AT&T and Discovery have invested heavily in streaming in an effort to compete with Netflix and Disney. AT&T has plowed billions into creating HBO Max, a streaming platform that now has about 20 million customers. Discovery has 15 million streaming subscribers around the world, most of them for its Discovery+ app.

The merger would also be a significant about-face for AT&T, a telecommunications giant better known for servicing fiber lines and cell towers than producing entertainment and courting Hollywood talent. Industry observers questioned AT&T’s daring purchase of Time Warner at a time when cord-cutting was only accelerating. The spinoff indicates a failed acquisition strategy.

“AT&T didn’t know what they were buying,” said Brian Wieser, a longtime Wall Street analyst. “The strategy underpinning” the acquisition “was probably flawed.”

Brooks Barnes, Lauren Hirsch and Andrew Ross Sorkin contributed reporting.

This is a developing story. Check back for updates.

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