Multichannel News - February 22, 2021 by Future PLC

DIVERSITY IN THE SPOTLIGHT AT CRITICS' TOUR RELIEF BILL WOULD BRING FLOOD OF BROADBAND BUCKS

PARAMOUNT QUESTIONS

Uncertainties surround Paramount Plus, ViacomCBS’s soon-to-launch entry into the streaming wars VOLUME 42 • NUMBER 4 • FEBRUARY 22, 2021 • $6.95

VOLUME 42 • ISSUE 4 • FEBRUARY 22, 2021 WWW.MULTICHANNEL.COM

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10 COVER STORY FEATURES

DEPARTMENTS

10 COVER STORY Paramount Plus, ViacomCBS’s entry into the streaming wars, is set to launch March 4. But questions linger about what might be the last big entrant into the direct-toconsumer fray. By Jon Lafayette 14 PROGRAMMING Diversity and inclusion were key themes as cable networks and streaming services bowed their new programming at the virtual TCA Winter Press Tour. By R. Thomas Umstead

6 AGENDA 18 TECH 22 BUSINESS 24 FATES & FORTUNES 26 DATA MINE 32 VIEWPOINT 34 THE FIVE SPOT

20 POLICY The FCC is getting lots of help in deciding to spend $3.2 billion — and potentially much more — in pandemic-related federal aid to boost broadband infrastructure. By John Eggerton

Chief executive Zillah Byng-Thorne Non-executive chairman Richard Huntingford Chief financial officer Rachel Addison Tel +44 (0)1225 442 244

14 PROGRAMMING

ON THE COVER

Sonequa Martin-Green as First Officer Michael Burnham in Star Trek: Discovery.

Future plc is a public company quoted on the London Stock Exchange (symbol: FUTR) www.futureplc.com

Cover: Star Trek: Discovery: Jan Thijs/CBS Broadcasting. This page: Star Trek: Discovery: Jan Thijs/CBS Broadcasting; TV One ; Getty Images

CONTENT VP/Global Editor-In-Chief Bill Gannon, william.gannon@futurenet.com Content Director Kent Gibbons, kent.gibbons@futurenet.com Content Manager Michael Demenchuk, michael.demenchuk@futurenet.com Senior Content Producer - Programming R. Thomas Umstead, thomas.umstead@futurenet.com Senior Content Producer - Finance Mike Farrell, michael.farrell@futurenet.com Senior Content Producer - Washington John S. Eggerton, john.eggerton@futurenet.com Senior Content Producer - Technology Daniel Frankel, daniel.frankel@futurenet.com Senior Content Producer Michael Malone, michael.malone@futurenetcom Senior Content Producer Jon Lafayette, jon.lafayette@futurenet.com Content Engagement Manager Jessika Walsten, jessika.walsten@futurenet.com Assistant Content Producer Chelsea Anderson, chelsea.anderson@futurenet.com Contributor Paige Albiniak Production Manager Heather Tatrow Managing Design Director Nicole Cobban Art Editor Cliff Newman

20 POLICY

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AGENDA

Jessica Rosenworcel Takes FCC Gavel

net neutrality — she voted against the Restoring Internet Freedom order that eliminated the rules against blocking, throttling and paid prioritization — and that the FCC was “assessing right now what the best way forward is, conscious of the composition of the commission.” Most on both sides argue the best way would be for Congress to clearly establish exactly what the FCC’s authority over net neutrality is. Rosenworcel was asked about her plan for a top-to-bottom review of the agency, but suggested it was regular procedure for anyone taking over an agency to review issues in every bureau to see if they need a revamp. One signal Rosenworcel has clearly sent is that there needs to be more intra- and inter-agency cooperation, communication and coordination, including around national security reviews of communications companies and tech.

New Democratic chair looking for ‘way forward’ on net neutrality despite 2-2 agency status By John Eggerton john.eggerton@futurenet.com @eggerton

cting Federal Communications Commission chairwoman Jessica Rosenworcel has sent a clear signal that she is still a big fan of network neutrality rules, and that she is no fan of the Trump administration petition to the agency to regulate social media using Section 230 of the Communications Decency Act of 1996. That was made known as she presided over her first public meeting as acting chair, wielding the gavel from home and saying there was much on the FCC’s plate. The commission’s being currently at a 2-2 political tie, she pointed out, will obviously have an impact on the timing of big-ticket items. Asked about those two issues and how she planned to proceed, Rosenworcel said she had made it clear that as a commissioner she did not favor commission action on the petition from the National Telecommunications & Information Administration asking the

EBB Must Flow

agency to cut back on internet service providers’ protections under Section 230. “I do not believe the FCC should be the president’s speech police,” she said. While she said she had no other insights on the petition, filed by the Trump administration in July 2020, clearly it is not getting traction if she remains chairwoman. On that topic, asked if she anticipated having the “acting” removed from her title, she said she would leave that up to the White House. With respect to net neutrality, Rosenworcel said the record reflected that she supported

Acting chair Jessica Rosenworcel is presiding, for now, over a politically deadlocked FCC.

Getty Images

CABLE ONE BUYS HARGRAY IN $2.2 BILLION DEAL

CABLE ONE HAS agreed to buy the remaining 85% interest in Hargray Communications it didn’t already own in a transaction that values the company at about $2.2 billion. Cable One, based in Phoenix, swapped its Anniston, Alabama, system to Hargray for a 15% interest in the company in October. With the most recent deal, Cable One will own 100% of Hargray, contributing a mix of cash, equity and debt financing for the remaining 85%. The deal is expected to be completed in the second quarter. Publicly traded Cable One said the deal will give it an expanded presence in the Southeastern market — Hargray operates in 14 locations across Alabama, Florida, Georgia and South Carolina — and allows it to tap into Hargray’s fiber expertise. “This transaction will also serve as a potential platform for future organic and inorganic growth in the region as we look to continue to expand our footprint,” Cable One Multichannel.com

CEO Julie Laulis said in a press release. Cable One said Hargray generated about $128 million in earnings before interest, taxes, depreciation and amortization (EBITDA, a measure of cash flow) on an annualized basis in Q4 and it expects to realize about $45 million in annual run-rate synergies within three years of the close of the deal. The purchase price represents a robust multiple of about 17.2 times Hargrave’s annualized EBITDA, and 12.7 times cash flow assuming the synergies are realized immediately. Recent deals, like TPG’s sale of Astound Broadband to Stonepeak Infrastructure Partners, were valued in the 14 times range. Cable One will fund the purchase with a combination of cash, debt and issuing new equity. The company said it has received a $900 million bridge loan from J.P. Morgan and Credit Suisse to finance a portion of the deal. Cable One has been an aggressive buyer of properties over the past few years. In October, it

One big-ticket item that can’t wait is the FCC’s standing up of the $3.2 billion Emergency Broadband Benefit (EBB). The commission has until next week to come up with a framework for handing out that money (see Policy, page 20). It will be based on the Lifeline subsidy program already in place, but unlike Lifeline it is a six-month program using that $3.2 billion congressional allocation rather than an ongoing subsidy funded by fees on telecom bills. At last week’s hearing, Republican commissioner Brendan Carr very publicly said he thought priority should be given to remote learning, an issue right in Rosenworcel’s wheelhouse. But she signaled the FCC was bound by the language of the legislation, which cited multiple constituencies of equal eligibility. ●

said it would buy a 45% interest in Mega Broadband Investments, parent of Vyve Broadband, for about $547.1 million. The most recent deal would be its sixth transaction since 2017, when it purchased New Wave Communications for $725 million.— Mike Farrell

DEAL WITH IT Cable One has struck about a half-dozen systems deals in the past four years, valued at more than $4 billion. YEAR

COMPANY

PRICE

2021

HARGRAY COMMUNICATIONS

$2.2B

2020

MEGA BROADBAND INVESTMENTS*

$547.1M

2020

VALUENET

N/A

2019

FIDELITY COMMUNICATIONS

$525.9M

2019

CLEARWAVE COMMUNICATIONS

$358.8M

2017

NEW WAVE COMMUNICATIONS

$725M

45% interest | SOURCE: Cable One

AGENDA

THE WATCHMAN

WATCH THIS …

Senior content producer Michael Malone’s look at the programming scene Pristine Seas

Superman & Lois

By Michael Malone michael.malone@futurenet.com @BCMikeMalone

Superman & Lois: The CW; Punky Brewster: Peacock; Pristine Seas: National Geographic; Outdaughtered: TLC; She’s the Boss: USA Network

‘Super’ Tuesday on The CW

Superman & Lois debuts on The CW Tuesday (Feb. 23). It starts with the 90-minute series premiere, with Tyler Hoechlin as Superman and Elizabeth Tulloch as Lois Lane, then it’s special Superman & Lois: Legacy of Hope. Clark Kent and Lois Lane face down their most imposing foes ever — their sons. Hoechlin gets a kick out of playing both Superman and Clark. He said there’s more “leeway” with Clark. “You can find those little subtleties, those things that are a little bit more human about him,” he said at a press event. “And it’s a little bit more flexibility to kind of have some fun with it, because in a way he’s putting on a show when he’s Clark.” Tulloch is pumped not only to play Lois, but to portray a journalist in 2021. “She has really represented someone who’s incredibly dogged and determined and uncompromising,” said Tulloch. “And at a time right now when the profession of

Punky Brewster Multichannel.com

journalism has been under siege, as we have seen it for the last few years, it’s especially important and timely and I take it very seriously.” Superman & Lois is written and executive produced by Todd Helbing and executive-produced by Greg Berlanti, Sarah Schechter and Geoff Johns. Helbing cited Everwood and Friday Night Lights as influences, along with feature films. “We approached this as much as we could like a feature, from the aspect ratio, to the cinematography, to the look, everything,” he said. “We’re competing with these shows on streamers and cable networks, and we want to offer the audience something of equal quality.”

‘Punky’ Back on Peacock

Punky Brewster, a redo of the ’80s sitcom about a young girl raised by a foster father, premieres on Peacock on Thursday (Feb. 25). Soleil Moon Frye reprises her Punky role. The new one sees grown-up Punky meet a girl named Izzy who’s in the foster system, who reminds Punky of a kid she used to know. “When she sees Izzy, she can’t resist bringing her into her family,” said Jim Armogida, executive producer, who added that Izzy is Punky “for the next generation.” Cherie Johnson plays Punky’s pal Cherie and Freddie Prinze Jr. plays her ex-husband, Travis. Jim and Steve Armogida executive produce alongside Frye, Jimmy Fox and original creator David Duclon. The Armogidas mentioned how Frye still hears from fans who share how Punky Brewster helped them deal with tough stuff. They mentioned Frye saying that, if people still call her Punky when she’s 80, she’ll be thrilled. Jim called her “a real cheerleader” for the reboot. What makes the new Punky right for 2021? The way it addresses serious situations with warm humor, said the Armogidas. “I think America could use a bit of comedy with heart,” Steve Armogida said. ●

Pristine Seas starts on National Geographic Monday. Nat Geo “explorer-in-residence” Dr. Enric Sala and a team of scientists, policy experts and filmmakers work to create protected areas out at sea. The special ventures from the coral reefs of Palau to the icebergs of the Russian Arctic. Tuesday, Outdaughtered starts on TLC. America’s first all-female quintuplets emerge from quarantine and learn to ride bikes, take an RV trip and start kindergarten. Wednesday, Snowfall is back on FX. President Ronald Reagan promises

Outdaughtered “morning again in America,” but times are tough in South Central. Thursday, it’s She’s the Boss on USA Network. Nicole Walters is a jet-setting entrepreneur overseeing a marketing empire, and three adopted daughters. Sunday, the 78th Golden Globe Awards are on NBC. Tina Fey and Amy Poehler host for the fourth time, and first since 2015. Fey is at the Rainbow Room in New York and Poehler is at the Beverly Hilton in Los Angeles.

She’s the Boss

COVER STORY

PARSING PARAMOUNT PLUS A mountain of questions remain to be answered about ViacomCBS’s entry into the streaming wars

By Jon Lafayette jon.lafayette@futurenet.com @jlafayette

Young Sheldon: CBS Broadcasting

here are a mountain of questions of about ViacomCBS’s plans to launch Paramount Plus, which might be the last big direct-to-consumer video service to enter the streaming wars. Many of those questions will be answered soon. First, ViacomCBS will hold a streaming event for Wall Street analysts on Wednesday (Feb. 24). The service itself goes live in the U.S. on March 4. If you watched the Super Bowl, where Paramount Plus had four minutes worth of promo time, you might have heard about it. Paramount Plus is a rebranded, super-charged version of CBS All Access. Dating back to 2014, CBS All Access was one of the first DTC products introduced by a company engaged in the pay TV universe. It found some success, exceeding expectations by growing to nearly 10 million subscribers, while offering its customers a combination of new and old CBS shows, original programming led by the Star Trek franchise and sports, including CBS’s National Football League games. As the rest of the TV industry pivoted to streaming, following Netflix’s lead, CBS and Viacom, both controlled by the family of aging media mogul Sumner Redstone (he died in 2020),

10 Multichannel.com

were enmeshed in corporate intrigue that resulted in the two companies eventually being recombined at the end of 2019. One of the rationales for the merger of CBS and Viacom was to build the firepower to compete in the streaming world where, as Redstone famously said, content is king. Having a lot of iconic TV shows and movies is important for keeping subscribers, but spending billions to create original content is what attracts new customers.

The Paramount Plus service will mix CBS content like Young Sheldon (r.) and S.W.A.T. (opposite top r., inset) with programming from other ViacomCBS properties like the company’s cable networks and Paramount Pictures. First-run films like Top Gun: Maverick (opposite r.) could be in the mix.

While The Walt Disney Co. went all in on streaming with Disney Plus in 2019, it’s still not clear that ViacomCBS is pushing all of its chips into the pot. It still might want to support the CBS Television Network, the Viacom cable channels and Showtime (which has its own streaming service). It also bought Pluto TV, an ad-supported free streaming service that is now an integral part of ViacomCBS’s streaming strategy. “What we’re doing is progressively building a linked ecosystem of differentiated offerings across free and pay streaming,” ViacomCBS CEO Bob Bakish said in December at the UBS Global TMT conference. “And that ecosystem is centered on Pluto TV in free VOD and Paramount Plus and Showtime OTT on the pay side.” In the third quarter, ViacomCBS reported 17.9 million streaming subscribers, up from 16.2 million in the second quarter and 10.4 million a year ago. Combined with PlutoTV and other assets, domestic streaming and digital video revenue hit $636 million, up 56% from a year ago. “Our domestic streaming and digital-video revenue is growing north of 50% and will generate $3 billion of domestic annual run rate revenue in Q4,” Bakish said. “Again, those are metrics you would invest in, and we’re going to invest in them.” Netflix has 203.4 million global subscribers, while Disney’s streaming services combine for 146 million subscribers, including 94.9 million for Disney Plus, so Paramount Plus also has a mountain to climb. Wells Fargo Securities media analyst Steven Cahall said his model forecasts ViacomCBS having 31 million subscribers in 2025. But he noted that the 57% increase in Viacom’s stock this year as of April 12, to $58.31 a share, implies that the market has a target of 56 million subscribers. Is that doable? “It’s definitely a growing category,” Bakish told the UBS forum. “We see it continuing to grow. We do not believe it is a winner-takes-all market. We believe there’s a place for a number of streaming services to be successful. And in that kind of setup, this is why we believe in a differentiated approach, complementary approach. And in fact, we do have differentiated and valuable assets.” In a survey conducted by Hub Entertainment Research this month, 42% of US TV consumers age 16-74 said they’d be very or somewhat interested in Paramount Plus after hearing a description of the

service. Among 18-to-34-year-olds, interest was higher, at 51%. When asked what they considered to be the main strengths of the service they said they expected it to have high quality content, a wide variety of shows and movies, and a strong selection of their favorite shows. Wall Street analysts and other industry observers will be listening as Bakish and his team provide more details to the strategy for building Paramount Plus. Here are some of the questions they want to have answered.

How will ViacomCBS prioritize Paramount Plus versus its broadcast, cable and other streaming assets? ViacomCBS licensed shows, including Showtime’s Ray Donovan, and films such as The Godfather to help launch NBCUniversal’s Peacock last July and sold the exclusive streaming rights to South Park in 2019 to HBO Max, which added other Comedy Central shows in October. Bakish told the UBS conference that “licensing is an important business.” He said the company doesn’t believe it “makes sense to keep all that content for only an owned-and-operated streaming service,” but added “our strategy is clearly evolving in a more O&O-based direction. In fact, the decisions we made at Paramount Plus, even though we don’t have it in the market, have already impacted our content licensing decisions.” Will ViacomCBS put its movies on Paramount Plus? AT&T’s HBO Max gained traction when the telco decided that its Warner Bros. studio would open all of its 2021 films simultaneously in theaters and on HBO Max, starting on Christmas Day 2020 with Wonder Woman 1984. Disney has put some theatricals, such as Mulan and Soul, on Disney Plus, but is also putting some on premium video-ondemand on a case by case basis. Paramount Pictures has 12 films for 2021, including A Quiet Place Part II, Top Gun: Maverick, Mission: Impossible 7 and Snake Eyes: G.I. Joe Origins. Paramount has already delayed the premiere of some films because of COVID, but others have been streamed.

We do not believe it is a winner-takes-all market. And in that kind of setup, this is why we believe in a differentiated approach. — Bob Bakish, CEO, ViacomCBS SpongeBob: Sponge on the Run, originally slated for theaters, will be on Paramount Plus, and the Paramount Players label is going to be producing made-for-streaming content. “I think the film category will continue to be strategic and valuable, but certainly is evolving,” Bakish told the UBS conference. “And again, that's giving us more flexibility, more optionality as we go unlock value for Paramount and for ViacomCBS writ large.” Can ViacomCBS make deals with distributors? It turns out that after making plans to launch a streaming service, getting carriage on some of the key platforms can be a cliffhanger. HBO Max, launched last May, last didn’t make a deal with

Amazon until November, slowing the new service’s growth. The same goes for cable operators, who are slowly but surely making it easier for their subscribers to access streaming services without disconnecting from their set-top boxes. It also helps when launching a streaming service, to make a deal to offer it free or at a discount on a mobile phone platform. Disney Plus got a boost from its deal with Verizon and Discovery Plus was counting on similar results from its Verizon deal. In a display of synergy, HBO Max is free to AT&T subscribers. Bakish said ViacomCBS believes being distributed everywhere is important. “Our streaming strategy has also been based on ubiquitous distribution,” he said. “We have distribution through traditional operators. We have distribution through mobile operators. We have distribution through over-thetop players, whether that's channel stores or platforms.” CBS All Access is now available via Roku, but a new agreement will be needed for Paramount Plus, said Tedd Cittadine, VP of content distribution at Roku. “The successful streaming services we’ve seen take off over the last year have embraced an abundance mentality that recognizes the incredible growth-curve potential for their businesses through strong collaboration with their platform partners in all areas of the business such as user acquisition, customer retention, brand marketing, advertising and ad tech,” Cittadine said. Exactly how that carries over to Paramount Plus will be a key to how fast it grows.

Top Gun: Maverick: Paramount Pictures; S.W.A.T: CBS Broadcasting; Bakish: Michael Kovac /Getty Images

What will be the key franchises that Paramount Plus will use to lure new subscribers? “Clearly they are pushing a lot of what is already on TV and in their catalog, including a live feed of CBS,” LightShed Partners partner and media & technology analyst Rich Greenfield said. “But the key question is, what are the must-have new franchises? When you look at Disney Plus, think Mandalorian or WandaVision. It’s not clear yet what the big franchise content will be to drive subscriptions.” Leading up to the launch, Bakish has touted some new original programming including The Offer, about the making of The Godfather movie franchise; Lioness, a spy drama; Kamp Koral: SpongeBob’s Under Years, a new SpongeBob SquarePants series, and a Yellowstone prequel. Also coming are new versions of BET dramedy The Game, MTV reality staple The Real World, VH1 music docuseries Behind the Music and The Real Criminal Minds, a true-crime docuseries based on CBS’s scripted procedural.

Will ViacomCBS’s technology support a bigger service and more advertising? CBS All Access has been around for a while, so it has established that its technology is basically sound. “These days, the quality of the tech is not the first driver for subscribers,” Innovid chief technology officer and co-founder Tal Chalozin said. “It’s hard to say this platform is significantly better in terms of caching, or streaming technology or buffering, at least in the first 10, 20 million subscribers.” Innovid has done a number of integrations with CBS All Access’s ad tech and Chalozin said the already hot connected-TV ad market will benefit from having more high-quality inventory. “With lower ratings in linear and cord-cutting, a lot more advertisers are jumping into the

Multichannel.com

COVER STORY

Quiet Place Part II: Paramount Pictures; Sponge on the Run: Paramount Pictures; Super Bowl LV: Getty Images ; Star Trek: Discovery: Jan Thijs/CBS Broadcasting;

A Quiet Place Part II (top l.) is a theatrical that could find its way to Paramount Plus. Definitely headed to the streamer: kid flick The SpongeBob Movie: Sponge on the Run (bottom l.) and NFL games from CBS, like Super Bowl LV (r.).

marketplace for CTV,” Chalozin said. “There is more demand than supply, so when a service launches like Paramount Plus that has a hybrid of ad and subscription, that’s good for the marketplace.” Chalozin predicted that as the streaming market gets more crowded, there will be consolidation. It’s already happened with ad-supported streamers like Pluto TV and Tubi getting acquired. On the subscription side, he expects bundlers to step in to sell packages of streaming services. “CBS All Access was one of the first to team up with Amazon Channels,” he notes How much financial information will ViacomCBS disclose about how many subscribers it expects to attract, how much the service will cost and when it will break even? When Disney decided to pivot to streaming in 2019, it called a special meeting for analysts and investors held at its Burbank studios. At the meeting, Disney unveiled what Disney Plus would look like, showed clips of the programming that would be on the service and introduced many of the people responsible for creating that content. Disney also shared fairly detailed financial information with the analysts. It provided projections about how many subscribers it expected to attract, how much it would spend on programming, how much revenue would be lost because it wasn’t licensing content to others and when Disney Plus, Hulu and ESPN Plus would break even and start to generate profits. The presentation helped make Disney

Star Trek: Discovery’s voyages will continue on Paramount Plus.

12 Multichannel.com

There is more demand than supply, so when a service launches like Paramount Plus that has a hybrid of ad and subscription, that’s good for the marketplace. — Tal Chalozin, CTO and co-founder, Innovid stock a winner and shares have risen to record levels and Disney Plus has exceeded those initial forecasts. “Disney has done a fantastic job on disclosure and sticking to it quarter in and quarter out,” MoffettNathanson analyst Michael Nathanson said. Since the Disney Plus launch, NBCU has held a similar meeting for Peacock; AT&T did one for HBO Max; and Discovery Inc. held one for the launch of Discovery Plus earlier this year. The amount of detail varied and it remains to be seen how transparent ViacomCBS will be about Paramount Plus’s financial performance.

“I have suggested [a Disney-like] approach to Viacom and all my other companies,” Nathanson said. “We should have a breakout of subscribers, RPU and revenues at the least. A P&L [profit and loss statement] is hard because of the way content is valued and sold intra-company … so at least we would love more revenue transparency.” ViacomCBS has $3 billion in cash on its balance before the sale of non-core assets, chief financial officer Naveen Chopra noted on its third-quarter earnings call in November. He said the company plans to use free cash flow to fund its streaming investments. Can Paramount Plus catch Netflix or Disney Plus? Brian Wieser, the former analyst and now global president for business intelligence at GroupM, thinks the streaming business is built on a fairly simple formula. “The thing that drives the business is your share of investment. Your share of spending on programming will generally drive your share of viewing,” Wieser said. “In an industry in which there's $100 billion of spending on programming, if you’re spending $5 billion on programming and all else is equal, you should expect about 5% of the viewership.” Netflix spent about $17 billion on content in 2020 and is expected to spend even more this year. “If someone wanted to replicate Netflix’s success in terms of their audience share, it’s really quite simple,” Wieser said. “They just need to commit to spending as much as Netflix does on content.” Wall Street has stopped worrying about signals that Netflix and Disney will continue to spend more money on programming to boost the numbers that seem to be driving stock prices. We’ll see how aggressively ViacomCBS wants to play the streaming game. ●

COVER STORY

Roku VP of content distribution Tedd Cittadine cites platform’s ‘unique position’

By Jon Lafayette jon.lafayette@futurenet.com @jlafayette

edd Cittadine is VP of content distribution at Roku, the streaming device maker that has the biggest U.S. platform for home streaming services. Being on or off Roku can help or hinder a streaming service’s launch considerably, as NBCUniversal’s Peacock and WarnerMedia’s HBO Max learned when they launched without a Roku deal. Cittadine answered some questions from Multichannel News ahead of the launch of Paramount Plus on March 4. The Q&A was edited for length and clarity. MCN: Does Roku carry CBS All Access? Does that contract carry over to Paramount Plus, or will Paramount Plus need a new, separate deal? Tedd Cittadine: Roku does carry CBS All Access. We don’t comment on any ongoing deal negotiations, but what I can tell you is that typically the launch of any new service requires a new agreement. Our goal is to offer our customers the broadest content possible. MCN: As these big media companies have come to Roku with their new, big streaming services, have each one of them sought a unique deal? Has the relationship between big-media company streaming services and Roku become more uniform now that five or

six of them have come down the pike? TC: Given our position as the No. 1 TV streaming platform in America, we are in a unique position to help partners both big and small connect with audiences and grow their business. The biggest change we have seen in the deal landscape in the past 12 months is that major media companies are shifting away from the legacy carriage mindset of diminishing returns where every dollar negotiated was seen as a potential dollar lost given the shrinking size of the traditional TV pie. The successful streaming services we’ve seen take off over the last year have embraced an abundance mentality that recognizes the incredible growth curve potential for their businesses through strong collaboration with their platform partners in all areas of the business such as user acquisition, customer retention, brand marketing, advertising, and ad tech. This pivot towards focusing on how we grow together has played an important role in the growth of the biggest entrants in 2020 and will continue to shape successful future distribution agreements. MCN: How much has having these big media companies streaming their most popular and most expensive content helped Roku add users and generate revenue? TC: We believe that streaming is TV today. With one in

Roku’s Tedd Cittadine (below) holds the keys to carriage on the top U.S. streaming platform.

MCN: How is Roku's relationship with programmers and consumers different from the relationship between cable operators and programmers in terms of the difficulty in getting deals done, blackouts affecting customers and fees contributing to higher prices for subscribers and users? TC: This really speaks to the shift we are seeing from programmers in how they approach distribution deals with streaming platforms. The old cable playbook that was designed to capture maximum portions of a shrinking pie simply does not apply in the current era of streaming where growth is the mindset of the day. Those services that have leaned in and truly partnered with streaming platforms have been the most successful to date. The other key shift, as you mention, is the consumer. We are relentlessly focused on the value and experience we deliver to the consumer. The deals we negotiate enable us to create a fantastic product at an incredible value. Consumers know this about Roku, and they know that our only business is streaming. And therefore, our only focus is on developing that experience for the user. MCN: After Paramount Plus, do you think we're done with major streaming service launches? Will there be fewer blackouts now that these relationships are established? TC: We have just entered the first year of what we believe is the streaming decade. In the not-too-distant future, we believe a majority of households will have cut the cord. Change is going to be a constant. From the shifting theatrical model to how consumers balance their content viewing habits to navigate the incredible variety and diversity of content available to them, to new innovations in advertising that will unlock even greater consumer choices through AVOD models, the next few years will be incredibly exciting for our industry. I would say we are far from ‘done.’ ●

Multichannel.com

Roku

Gatekeeper to Streaming Success

three households cutting the cord and great new services creating fantastic content, we are clearly seeing strong shifts in consumer behavior away from traditional TV to streaming. What we saw in 2020 was many of the biggest names in entertainment go all in on streaming and this absolutely helped accelerate the shift away from traditional TV to streaming for consumers. Just looking at our platform helps to bring this shift to life. In 2020 streaming hours on the Roku platform grew by 55% — topping 58 billion hours and we added approximately 14 million active accounts. Consumers now know that whether it is sports or news or blockbuster movies or just comfort TV, they can access all of the content they want on Roku’s platform.

PROGRAMMING

Telling Stories Sans Stereotypes

REVIEW

MILLENNIALS (ALLBLK, Streaming Feb. 25)

Diversity, inclusion are keywords during TCA tour’s opening week By R. Thomas Umstead thomas.umstead@futurenet.com @rtumstead30

Genera+ion: HBO Max; Millennials: ALLBLK

he themes of diversity and inclusion resonated through several virtual panels during the opening week of CTAM’s portion of the Television Critics Association Winter Tour. The first of a scheduled two weeks of virtual presentations from more than a dozen cable networks and streaming services showcased a number of new programs featuring diverse casts and producers. Network executives, producers and talent said the shows continue the industry’s efforts to offer more on-screen representation that reflects the diverse audiences that watch television. The need to create more diverse on-air content for Hallmark Channel was the message conveyed during the network’s TCA executive panel, led by recently appointed Crown Media Family Networks president and CEO Wonya Lucas, as well as executive VP of programming and network publicity Michelle Vicary. Hallmark — which has been criticized for not featuring diverse characters in lead roles in its original movies — is now moving toward providing more diversity and inclusion in front of and behind the camera, according to Lucas. “The significant achievements made in the D&I space in 2020 laid the groundwork for us to branch out in our storytelling to approach the complexity of what it means to love and be a family in a more authentic, varied and inclusive way,” Lucas said. “We continue to strive to defy common stereotypes and give our characters more depth and dimension … to more broadly represent the human condition.” Lucas took over in July after former Crown Media Family Networks president and CEO Bill Abbott stepped down last January, following the network’s controversial move to pull a commercial featuring a kissing scene involving a same-sex couple. She referenced as an example of the network’s increasingly diverse slate a 2020 original holiday film — Christmas Comes Twice — which featured a biracial female astrophysicist as a lead character. Vicary also cited the movie Mixed Up in the Mediterranean, debuting Feb. 20 and featuring Hallmark’s first gay lead character. “I would say probably 25% of our movies had diversity in them,” Vicary said. Lifetime, National Geographic, HBO, OWN and other networks touted new shows with

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characters that defy stereotypes often associated with characters of color. HBO Max’s Genera+ion, which follows a diverse group of high schoolers testing the boundaries of race and sexual identity in a conservative community, looks to depict today’s teens in an authentic way, according to 19-year-old executive producer Zelda Barnz. “Something that’s real and authentic is intersectionality, and the people who identify across the gender and sexuality spectrum, and with different races and different ethnicities,” Barnz said of the show, which debuts March 11. “We drew a lot of inspiration from authenticity and real-world influence when we were writing and creating the show.” OWN’s new legal drama Delilah provides a rare look at an African-American lawyer and the unique challenges she faces from a race and gender perspective, said lead actress Maahra Hill. The series, from Greenleaf producer Craig Wright, premieres later this year. “I think she reflects Black women and Black America in ways that we haven’t seen on a consistent basis,” Hill said. “I do think that she’s an accurate reflection of women who are trying to balance their lives, as well as fight for things that are meaningful to them in their life.” HBO’s revival of In Treatment also features an African-American female lead in Uzo Aduba (Orange is the New Black), in the role of the therapist originated by Gabriel Byrne. Executive producer Jennifer Schuur said the new series moves the original show — which ran from 2008-2010 — into the present day and deals with issues prevalent in today’s culture. “We have an opportunity to say some very important things about our particular time,” Schuur said. “We have racial justice movements and the Me Too movement happening; we talk about toxic masculinity and addiction. We cover a lot of topics all set in the present day.” ●

HBO Max’s Genera+ion follows a group of diverse teens growing up in a conservative community.

AMC NETWORKS’ REBRANDED streaming service ALLBLK takes a jump into the original sitcom pool with Millennials. The series, from executive producer Bentley Kyle Evans (Martin), follows four young African-American roommates in Los Angeles as they search for success in the business world and the romance department. In doing so, the guys — straitlaced business student Omar (Kyle Massey), personal trainer Jaheem (Keraun Harris), would-be YouTube star Travis (Philip Bolden) and college dropout Todd (Aaron Grady) — find themselves in some strange and often humorous situations that allow the actors to flex their comedic muscles. Whether it’s conspiring with neighbors (including aspiring actress Mercedes, played by Teresa Celeste) to throw a rent party to keep from getting evicted, or finding clever ways to help their roommate get even with a cheating, fame-chasing girlfriend, the guys’ antics both test and strengthen their relationships as they awkwardly but confidently stumble through life trying to make a name for themselves. The show’s premise isn’t exactly original: the comic exploits of roommates have been explored in shows from The Golden Girls to Friends to Living Single. But Millennials is a fun, lighthearted comedy that has the potential to grow on viewers as they become more familiar with characters over the show’s sixepisode run. Millennials also stars Tanjareen Thomas, Buddy Lewis and Katherine Florence. The $4.99 per month ALLBLK SVOD service — formerly known as UMC — will debut the six episodes on a weekly basis, beginning on Feb. 25. — RTU

Millennials

PROGRAMMING

TV One Pushes the Power Of Representation Network chief Michelle Rice says diversity efforts work because they’re consumer-driven By R. Thomas Umstead thomas.umstead@futurenet.com @rtumstead30

TV One

s TV One parent Urban One celebrates its 40th anniversary in media, the network continues to serve the AfricanAmerican community through original innovative programming and social-justice initiatives. While TV One celebrates black culture throughout the year, its “Represent the Movement” initiative for Black History Month features interstitial programming revolving around four female activists — Zyahna Bryant, Brea Baker, Nupol Kiazolu and Kenidra Woods — who discuss important causes such as women’s rights, criminal justice reform, freedom of speech, LGBTQ rights, racism, immigration and gun control. On the scripted front, TV One on Feb. 28 will debut the original movie Don’t Waste Your Pretty, based on the novel of the same name penned by author and media personality Demetria L. Lucas and starring Keri Hilson (Think Like a Man, Almost Christmas).

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look at cable companies the same way. They are giving us more shelf space in their stores, because the communities that support these businesses are demanding it. Black people and people of color have always been some of the best consumers of digital products and services, so we now understand that power. If you’re not going to give us equal shelf space, then we have other options and opportunities, so now we’re seeing them really investing on screen, and I’m glad to see that. I think it’s about time, but I hope it’s not just fashionable to do this because of the time that we live in. It’s just good business. MCN: Has TV One benefited from the industry’s increased focus on diversity and inclusion? MR: I think that we are definitely asking people to put their money where their mouths are, and one of the ways we’re seeing companies do that is investing more ad dollars into black companies. We’ve definitely been having those conversations with a lot of our partners and those conversations have been fruitful. You see more advertisers targeting this community, and we’re definitely calling those companies out that we think can do better. We have some partners that have always supported us, and our audience has always supported us — we’ve had a great swell in viewership during the pandemic. People are looking for their voice and looking to see themselves reflected positively.

TV One and Cleo TV president Michelle Rice recently spoke to Multichannel News about the increased interest and appeal of African-American themed content across multiple platforms and the network’s role in continuing to foster inclusiveness and diversity both in front of and behind the camera. MCN: What do you see as the reasons behind the explosion of AfricanAmerican images and storylines on the small screen in recent years? Michelle Rice: I can only give you my perspective, and certainly after the death of George Floyd and the Black Lives Matter movement, I think that consumers are demanding it. Consumers are very discerning when they look at brands and they want their brands to represent the communities in which they serve, and I think that companies are starting to understand that. After the George Floyd incident, which really roused the consciousness of the country, you saw a lot of companies — big retailers, like Target, for example — saying that they were going to put money into [the African-American] community and give us more shelf space in their stores. I

Zyahna Bryant is one of a quartet of young woman activists appearing in TV One’s “Represent the Movement” interstitials.

MCN: So how do we keep this momentum going? MR: The reason you see quality content targeted to Black audiences on networks like TV One and BET is because it’s created by Black people telling Black stories. One of the ways to keep the momentum going is to ensure that you have a diverse team of people who are going to advocate and rally around the importance of that — hiring programming executives and making sure you have diverse executives on [company executive boards] in programming and marketing and PR, so that it is ingrained in the DNA of the company and not just a check-the-box thing. Every company should have employees that reflect the communities that they serve, and the only way that’s going to change is if we have a more diverse workforce. TV One has always been a place for providing opportunities to new creative voices from our early days. One of the things that we're really proud of is providing opportunities to a number of young and new black creatives not only in front of the camera, in terms of actresses and actors, but also behind the cameras — particularly to black women directors. [First-time producers] like Tasha Smith, Terri Vaughn, Tamara Bass and most recently Essence Atkins have created [content] for us, so we’re really excited about the opportunities that we’ve given to Black creatives. ●

TECH

Study: Capped 1-Gig Subs Yield 73% Higher ARPU

quarter, rising to a 2020-high average of 483 GB, OpenVault said (see chart). The story was the same for upstream usage, which also peaked in December at 31 GB. For the first time, OpenVault reported, more than half (53.6%) of U.S. broadband customers now routinely use more than 250 GB of data each month. Just a few years ago, OpenVault noted, the 250 GB level was considered power usage. Also for the first time, more than half (50.6%) of users subscribe to a speed tier rated at 100 megabits per second to 200 Mbps. The average downstream speed is 207.11 GB. Notable as well is the significantly higher broadband usage in North America vs. Europe. Last year’s 482.6 GB of average total usage in North America compared to just 301.2 GB in Europe. ●

OpenVault also finds 14.1% of U.S. broadband subs use 1 TB or more of data monthly

.S. broadband consumers are using more data than ever, while service providers have a proven economic incentive to cap their usage. That’s the takeaway from a year-end report just published by OpenVault, a broadband analytics company serving the cable industry. The firm found that operators deploying “usage-based billing” yield 73% higher average revenue per customer (ARPU) compared with those using flat-rate billing. With most usage caps set at around 1 terabyte to 1.2 TB, that’s increasingly an issue for U.S. consumers. OpenVault also found that 14.1% of U.S. high-speed internet subscribers, per weighted average, used more than 1 TB of data per month in 2020, a 94% increase over 2019.

Overall, internet consumption was up big in the 2020 pandemic year. Both flat-rate and usage-based subscribers consumed a weighted average of 482.6 GB a month in the fourth quarter, OpenVault said, up 40% over 2019. Notably, usage peaked in the fourth

BANDWIDTH CONSUMPTION 2020 VS 2019

500

By Daniel Frankel daniel.frankel@futurenet.com @dannyfrankel

450

2020

400

2019

483 402

429

447 409 383

350 300 250 200

339

Apple

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384

274 248

Feb

406 344

Mar

254

259

Apr

May

271

Jun

286

284

275

Jul

Aug

Sep

296

Oct

306

Nov

Dec

SOURCE: OVBI Broadband Insights Report Q4 ’20

WILL PARAMOUNT PLUS BE OFFERED AS AN APPLE TV CHANNEL? IS PARAMOUNT PLUS going to be repackaged and resold through the respective “channels” businesses of Amazon, Apple and Roku, or will it successfully gain direct-to-consumer independence on these company’s OTT device platforms, just as Netflix, Disney Plus and HBO Max have? ViacomCBS, which is planning a full download of Paramount Plus details on Feb. 24 (see Cover Story, page 10), hasn’t spilled the beans. But tech blog 9to5 Mac seems to be predicting which way the wind will blow. “Although not officially confirmed by either Apple or Viacom at this stage, it doesn’t seem like Paramount Plus will be offered as an Apple TV Channel inside the TV app,” 9to5 Mac reported. “This means customers will instead have to download a third-party ‘Paramount+’ app from the App Store to access CBS content going forward.” The report follows the scuttling of an Apple TV Channels promotion, kicked off in August, that gave the Apple TV

407

319

277

Jan

393

app’s users the ability to subscribe to the ad-free version of CBS All Access (standalone priced at $9.99 a month) and Showtime ($10.99) for a bargain price of just $9.99. It was one of the better bargains in the streaming business. ViacomCBS is getting ready to replace CBS All Access with the bigger, broader, ostensibly better Paramount Plus on March 4. It’s a transition similar to the one WarnerMedia pulled off last year, when it added content from the broader Time Warner assets purchased by parent company AT&T to HBO Now and rebranded the service as HBO Max. WarnerMedia had difficulty extracting HBO from Roku Channels and Amazon Prime Video Channels. By some estimates, more than half of all HBO

Now subscriptions originated from Prime Video Channels, and Amazon was said to be reluctant to lose a relationship that gave it a significant revenue cut, not to mention control of user data. HBO Max launched May 27 but didn’t get support as a standalone app on Amazon’s Fire TV platform until November. It didn’t get support for Roku until December. That stunted growth for HBO Max. As of the end of the third quarter last year, only 8.6 million of around 38 million total U.S. HBO subscribers had upgraded to the new “Max” experience. That number has now surpassed 17 million, with HBO Max now on the two biggest connected-TV platforms. Can we infer what will happen with Roku and Amazon based on what

Apple does? Questionable. The pricey Apple TV device is used in only about 2% of U.S. connected TV living rooms, according to Strategy Analytics research published last year. Apple untethered the Apple TV app from the Apple TV device last year, allowing it to run on both Roku and Fire TV, among other gadget platforms. At least in terms of OTT device ecosystems, Apple probably has less leverage to keep ViacomCBS confined to Apple TV Channels, as users of the top OTT device ecosystems, Roku and Fire TV, have other ways of getting Paramount Plus. Notably, both Disney Plus and HBO Max debuted as standalone apps on Apple TV. Apple simply removed HBO from Apple TV Channels in May of last year. Those who signed up for the CBS All Access/Showtime bundle have been unaffected by Apple’s move so far, 9to5 Mac reports. It’s unclear what will happen once the March 4 transition occurs. Apple TV Channels still allows users to purchase apps including Epix, Acorn TV and AMC Plus. But that offer is getting more and more niche as media conglomerates pull the bigger apps. — DF

POLICY

ISPs Prepare for Flood Of Broadband Billions Argue flexible rules, wide access to subsidies are keys By John Eggerton john.eggerton@futurenet.com @eggerton

he Federal Communications Commission is getting a lot of help in deciding how to spend the $3.2 billion — and potentially much more — set aside by Congress in a December COVID-19 relief bill for an Emergency Broadband Connectivity Fund (EBB), as well as new pandemic-driven investment being teed up. The FCC has been seeking input from stakeholders, since it was only given 60 days from when the bill became law at year-end to come up with rules and regulations to implement the fund. Congress is requiring the agency to make all that money available for an internet service available at a $50-per-household discount ($75 on tribal lands). Not surprisingly, internet service providers are focused on making sure they can access as much of that money as possible. That means leveling the playing field with current participants in the FCC’s Lifeline low-income subsidy, to which the new congressional money is tied. Ninety percent of Lifeline participants are wireless carriers, NCTA– The Internet & Television Association VP and general counsel Steve Morris told the FCC

at a roundtable on the new subsidy. In virtual meetings with FCC staffers, ACA Connects, the NCTA, internet and competitive networks trade group INCOMPAS and WISPA (the wireless internet-service providers association) presented a united front in calling for flexible rules regarding “the specific service offerings that are available for the EBB program, the categories of households that may participate, and the verification processes that providers will use to qualify households.” For its part, NCTA said the money should be available to as wide a pool of consumers as possible. It urged the FCC to make sure all providers, including broadband cable operators that have not been Lifeline partici-

Getty Images; U.S. Comgress

NET NEUTRALITY PUSH IS COMING TO SHOVE THE RETURN OF rules against blocking, throttling and paid prioritization is building momentum given that Congress is in the hands of Democrats, most of whom opposed deregulation of internet access, and the FCC is currently being helmed by Democrat Jessica Rosenworcel, who strongly opposed deregulation under the previous chairman. That could mean the return of rules that internet service providers argue limit their ability to create innovative business models or invest in the buildouts that will help close the digital divide or upgrade service. Even as the Big Tech content giants like Amazon, Google, Facebook and Twitter have taken up much of the regulatory spotlight, the Democrats’

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return to control of the government has brought re-regulating ISPs back into the picture. It’s likely both ISPs and social media companies are in for some tough new oversight. House Energy & Commerce Committee chairman Rep. Frank Pallone (D-N.J.) said restoring rules, and getting the FCC back in the business of regulating internet access, will be high on his agenda. “Net neutrality is about more than a prohibition on blocking, throttling and paid prioritization,” Pallone told a virtual audience of competitive carriers and computer companies. “By repealing net neutrality, the Trump FCC abdicated the FCC’s authority over this essential service. That’s not good for consumers or small businesses, for economic production or for

Cable providers want equal access to the federal government’s $3.2 billion Emergency Broadband Connectivity Fund.

pants, have an equal shot at the money, rather than giving current Lifeline participants a head start, and by minimizing administrative and implementation “burdens.” One way that can happen, NCTA said, is by essentially preapproving the vast majority of NCTA members who took the FCC’s Keep Americans Connected pledge via their own existing low-income programs or launching new ones. NCTA argues that for the new EBB program, the FCC should grant “automatic approval of an application for participation by a broadband provider with a pre-existing program,” such as Comcast’s Internet Essentials, rather than participating in Lifeline. The presumption is the low-cost broadband program’s verification process “qualifies as sufficient to avoid waste, fraud and abuse,” which the FCC can review under objective standards to make sure that is the case. Another cable broadband ask is that the FCC make sure participants can access a full list of participating providers since the subsidy can only be used for one provider, Comcast Essentials administrator Trinity Thorpe-Lubneuski told the FCC at the roundtable. Commenters should likely be readying some of the same arguments. Rep. James Clyburn (D-S.C.) has said he will reintroduce a bill that would spend $100 billion to extend internet service to everyone in the country, and has pushed the White House to make that bill a part of any infrastructure package. If the most recent COVID-19 relief bill passes as currently written, the commission will have billions more in broadband dollars to give out, targeted to schools and libraries. One thing is clear: The broadband subsidy spigot appears to be opening wide. ●

free speech. This wrong must be righted.” Seeing that re-regulatory handwriting on the wall — possibly including mandatory access and rate regulation, given the pandemic’s emphasis on broadband for all — advocates for the old rules have come out in numbers to call for their return. In a petition for reconsideration from Common Cause, the Benton Institute for Broadband & Society, the National Hispanic Media Coalition, New America’s Open Technology Institute, the United Church of Christ, OC Inc. and Free Press — all of which opposed the FCC's Restoring Internet Freedom order under Trump-era chairman Ajit Pai — called for reimposition of the rules, tying that to the pandemic. The petition argues deregulation "weakened the FCC’s legal authority to provide low-income households with affordable broadband through the Lifeline program at a time when the COVID-19 pandemic has made the need for connectivity greater than ever."

In a separate petition, competitive carriers and computer companies echoed the call for restoring the rules, but tied it to another hot-button issue: public safety. The Biden administration has also withdrawn the previous Justice Department’s challenge to a tough new California net-neutrality law, though ISPs continue to challenge the measure, which was adopted in response to the FCC’s RIF deregulation. Rosenworcel said of that decision: “Washington is listening to the American people, who overwhelmingly support an open internet, and is charting a course to once again make net neutrality the law of the land.” — JE Pallone

BUSINESS

MoffettNathanson media analyst Michael Nathanson believes that Disney’s DTC business is on pretty much the same path. He predicts revenue in the segment will grow to $41.6 billion in 2025 from about $17 billion in 2021, but profitability will take a little longer. In a research report, Nathanson estimated that earnings before interest and taxes (EBIT) would be negative through 2023, with the segment making a first profit in 2024 — $334 milion — rising to $1.6 billion in 2025.

Peacock’s International Flight

Streamers Look Outside the Lines Direct-to-consumer offerings increasingly turn to international markets for future growth By Mike Farrell michael.farrell@futurenet.com @MikeFCable

WandaVision: Disney Plus

irect-to-consumer offerings are all the rage for U.S. cable networks that have watched cord-cutting and cord-shaving slowly erode affiliate fees from traditional pay TV distributors over the years. But for many — especially smaller, niche networks — the real money is to be made internationally. Over the past 18 months, the TV industry has seen the launches of Disney Plus (November 2019), Peacock (April 2020), HBO Max (May 2020) and Discovery Plus (January 2021). On March 4 the latest entrant, Paramount Plus, will debut (see Cover Story, page 10). So far, The Walt Disney Co. has set the tone, with 94.9 million paid global subscribers to Disney Plus as of Jan. 2. But according to Disney, about 30% of those customers are through its Disney Plus Hotstar service in India — roughly 28.5 million. The entertainment giant continues to expand its streaming reach internationally, launching Disney Plus in Latin America in November. The company plans to expand Disney Plus into Singapore this month, followed by Eastern Europe, Hong Kong, South Korea and Japan later in the year. Although Hotstar’s growth has been encouraging, it also seems to have driven down average

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revenue per unit (ARPU) for the Disney Plus service substantially. Disney said ARPU for the direct-to-consumer service was about $4.03 in fiscal Q1, about 28% below the prior year figure of $5.56. Hotstar wasn’t the only culprit for the decline. In a research note, Barclays media analyst Kannan Venkateshwar noted that differences in averaging methods, lower sports volume and Hotstar promo pricing could have been the reason. But he added that not including Hotstar’s subscriber gains, Disney Plus subscriber additions in the period (between 10 million and 11 million) were about the same as Netflix (8.5 million), despite it being the SVOD pioneer’s 14th year streaming, versus Disney Plus’s 14 months. “This is, of course, due to the footprint differences and the COVID-impaired content release calendar at Disney, in contrast to Netflix, but still speaks to the strength of Netflix’s business model, especially given ARPU differences,” Venkateshwar wrote.

Disney Plus a Growth Engine

Still, the analyst estimated Disney Plus will continue to grow revenue substantially, even as it is expected to lose money for the next two years. Venkateshwar predicted direct-toconsumer revenue — including Disney Plus, Hulu and ESPN Plus — will grow to $42.8 billion by 2025 from $22.6 billion in 2021. Operating income will stay negative until 2023, when it reaches $733 million, rising to $3.45 billion in 2025, he predicted.

Fueled by popular content like WandaVision, Disney Plus has fueled growth in the U.S. and abroad.

Peacock, which NBCUniversal launched in April, has about 33 million subscribers, most of them in the U.S. NBCUniversal CEO Jeff Shell has said publicly that Peacock will launch internationally in select markets, avoiding traditional TV hotspots like the U.K., Germany and Italy, as much of Peacock’s programming is also available through sister satellite service Sky. HBO Max launched on May 27 amid much hoopla. And after some changes — in November it said it would release its entire 2021 theatrical slate on the streaming service — it has managed to grow subscribers to about 38 million. HBO Max plans to expand into 39 Latin American and Caribbean territories in late June, transitioning subscribers who now get HBO Go, the existing streaming product (which will be phased out), to HBO Max. Following the Latin American rollout, HBO said HBO-branded streaming services in Europe — the Nordics, Spain, Central Europe, and Portugal — are scheduled to be upgraded to HBO Max later this year. HBO International head Johannes Larcher said in a statement the Latin American offering would include parent WarnerMedia’s film and series catalogue as well as locally produced content. While most of the emphasis has been on the domestic market, large and small DTC services could see their biggest windfalls internationally. According to Nathanson, Disney Plus is expected to have as many as 230 million international subs by 2025, up from about 55 million in 2020. Even Discovery Plus, launched domestically on Jan. 4 and internationally in late 2020, is expected to hit nearly 40 million international customers by 2025. At a Discovery Plus Investor Day presentation in December, the programmer estimated that the international opportunity dwarfs that of the U.S., particularly in nontraditional TV markets. Discovery identified about 1.4 billion households (not including China), of which about 400 million were in serviceable addressable markets, meaning they were avid TV watchers, they subscribed to OTT services and they had an affinity for Discovery brands. In the U.S., Discovery said of the 30 million broadband-only households and 80 million TV homes in the country, about 70 million would be serviceable to Discovery Plus. Discovery stock has risen by about 60% since that Investor Day presentation, to $45.55 on Feb. 11 from $28.37 each on Dec. 2. Along the way, Nathanson upgraded his rating on the stock from “neutral” to “buy” on Jan. 15, emphasizing the international business. Since then, Discovery has already surpassed his 12-month price target of $45 per share.

BUSINESS

Discovery Leverages Scale

“We expect Discovery to leverage its scale outside of the U.S. to lead to nearly 40 million international subscribers and improve its ARPU, especially in markets that have been structurally more difficult to grow through the traditional pay TV ecosystem,” Nathanson wrote. According to Nathanson, Discovery sees its biggest opportunities in a mixture of traditional fTV markets like the U.K. and Italy and non-traditional locations like Poland, Brazil, Mexico, Argentina and Asia Pacific countries. Nathanson views Discovery Plus’s international expansion as more incremental. That’s because it is in a unique position with more than 1,000 hours of differentiated programming, can expand its reach beyond pay TV penetration and it sees a window to grow ARPU for its linear channels in markets where affiliate fees are less than $1 per subscriber per month. Nathanson sees Discovery targeting the streaming service internationally to consumers outside of the pay TV bundle who haven’t had the opportunity to watch its shows, especially mobile customers. He noted that although some large European mobile companies like Vodafone also have a hand in landline pay TV service — it has about 6 million pay TV subscribers — it has more than 100 million mobile customers, about half of whom Nathanson estimated are postpaid, non-business customers eligible for the Discovery Plus service. Venkateshwar of Barclays noted the allure of mobile-streaming partnerships, and pointed to Discovery’s deal to bundle Discovery Plus with Verizon, where the streamer is free to Verizon Unlimited Data customers for six months, as a prime example. Though mobile partnerships helped drive Disney Plus in the early days, he warned, there is a difference between video bundled with data and data bundled with video. “For wireline and wireless ISPs, bundling a service like Disney Plus or Discovery Plus is about the ability to extract more price for a relatively commoditized data service,” Venkateshwar wrote. “In this context, for a company like Verizon, the key over time is likely to be the upgrade rate to higher priced tiers and retention benefits of various services bundled with wireless. Bundled services that don’t move the needle on these metrics over time are likely to receive different terms vs. those that drive more material differences.” Disney Plus apparently moved the needle for Verizon. Most customers who signed on for the Disney Plus promotion stayed with the service after the promo ended, the telco said. Verizon extended that deal, adding Disney streaming services ESPN Plus and Hulu to the mix. Verizon also has similar promotions with music services (Apple Music), and PlayStation subscriptions. In this sense, services like Discovery Plus may have to justify themselves relative to totally different services like music and gaming. “Therefore, while tie-ups with wholesale distributors during the launch phase is likely

to be a positive, the cadence of this impact may vary over time as bundle structures evolve,” Venkateshwar wrote. At CuriosityStream, a fact-based streaming service that went public earlier last year, international markets are seen as the biggest growth opportunity. CuriosityStream currently has about 13 million subscribers, 70% of them in the U.S. That mix is expected to shift dramatically in the next few years. CuriosityStream’s managing director and head of international distribution Bakori Davis said for streaming services looking to break into foreign markets, targeting traditional areas and partners isn’t always the best idea. For CuriosityStream, created by Discovery founder John Hendricks, broadening the scope and reach of the service is the right path to growth. Davis said CuriosityStream has traditional partners in Western Europe, the U.K., Germany and Latin America, but that there are also huge opportunities in Africa and Southeast Asia. The company has deals with distributors like MultiChoice in Africa, Tata Sky in India, Total Play in Mexico and StarHub in Singapore, but also is looking to expand into countries that have less of a pay TV legacy.

BORDERLINES MoffettNathanson expects international subscribers for direct-to-consumer services to grow substantially in the next few years. (in millions)

2025

NETFLIX

136

303

DISNEY

230

DISCOVERY

SOURCE: Company reports, MoffettNathanson estimates and analysis

A FOOT IN THE DOOR While pay TV penetrations remain high in the U.S. and U.K., less-penetrated markets appear ripe for video streamers to grab market share. PAY TV PENETRATION BY HOUSEHOLD 75%

CuriosityStream Looks Abroad

“Probably the biggest opportunity for us is these emerging markets who are now deploying 5G and are learning how to package up apps and OTT sites and don’t have as much of a traditional pay TV legacy,” Davis said. “Things are really moving fast and they are looking for new partners.” Mobile companies looking to differentiate their phone and data services with content also present an opportunity, ranging from mega-carriers like Vodafone to smaller, regional players. Davis said that while larger mobile companies understand the content business and present the opportunity for more multi-layered partnerships that could include linear as well as streaming content, smaller players looking to differentiate themselves with streaming content also could mean big business. “What we represent to them [smaller players] is an easy way to capture the entire category,” Davis said. And those smaller players aren’t that small. For example, MTN, the largest mobile carrier in Africa, has 232 million subscribers in 20 countries. India’s Airtel is the second largest mobile carrier in the world — behind China Mobile Communications with 946 million — and operates in 18 countries in South Asia and Africa with more than 457 million subscribers. With markets that large and diverse, there appears to be ample room for large and small streamers alike to compete effectively. “We certainly feel like the opportunity for us is as big as the other players you see now that have successfully grown globally,” Davis said, adding that the opportunity is most apparent in markets where 5G infrastructure is just being deployed. “Other players like Netflix and Amazon, they really are making the market for us. They are creating demand.” ●

2020

61%

23%

UNITED STATES

UNITED KINGDOM

BRAZIL

21%

ITALY

19%

GERMANY

SOURCE: Company reports, Ampere, Anatel, Global Data, Statistisches Bundesamt, Vaunet, MoffettNathanson estimates and analysis

DOLLARS IN THE STREAMS Streaming video is expected to account for a growing amount of total segment revenue for the top content companies in the next few years. 41%

26%

25%

24%

20%

18% 9%

2020 2025

DISNEY

VIACOMCBS

DISCOVERY

AMC NETWORKS

FOX Getty Images

In his note, Nathanson wrote that he expects Discovery Plus to be a “true differentiator” given the company’s linear TV experience.

SOURCE: Company reports, MoffettNathanson estimates and analysis

Multichannel.com

FATES & FORTUNES

People Notable executives on the move BRIEFLY NOTED Other industry execs making moves

BAI

BECK

CHARTER

DELOITTE

BAI Communications has named Kathleen Abernathy as a non-executive director. The former FCC member also served as executive VP, regulatory and government affairs at Frontier Communications and as a Dish Network director.

Beck Media & Marketing in Santa Monica, California, has promoted Tom McAlister to president and named him its first-ever partner. He had been a managing director, establishing Beck’s Austin, Texas, office.

Charter Communications has promoted Jessica Fischer to executive VP, finance, adding oversight of procurement, investor relations, internal audit and corporate planning. She had been senior VP, finance and treasurer.

Deloitte has tapped Jana Arbanas to lead its telecom, media and entertainment (TM&E) sector in the United States. San Francisco-based Arbanas was a principal in Deloitte’s Risk & Financial Advisory (RFA) practice.

FOX NEWS MEDIA

HOPPR

MTV

Suzanne Scott has signed a multi-year contract to remain as CEO of Fox News Media. Named Fox News’s first female CEO in 2018, she had been programming president of Fox News Channel and Fox Business Network.

Ad-tech firm Hoppr has named Georges Laplanche as head of network service providers and pay TV partnerships. The longtime Technicolor exec is tasked with pushing Hoppr into European markets.

Lance McPherson was elevated to executive VP, deputy general counsel, business and legal affairs at MTV Entertainment Group, adding responsibility for studios and MTV Documentary Films. He was senior VP, business and legal affairs.

MTV Entertainment Group also upped Bahareh Kamali to executive VP, strategic development. The 20-year Viacom veteran had been senior VP of strategic development and has played a role in company diversity efforts.

NEWSMAX

NEXSTAR

TEGNA

Newsmax TV has hired Rob Finnerty as anchor of its new weekday morning show Wake Up America. He most recently had been an anchor and reporter at Tegna-owned CBS affiliate WTSP Tampa.

Rachel Rollar has joined Newsmax TV as a national and international news reporter on Wake Up America. She is the former co-host of Wake Up Charlotte on WCNC Charlotte, North Carolina.

Nexstar Media Group’s Nexstar Digital unit has elevated Lori Tavoularis to chief revenue officer/executive VP of revenue operations. Tavoularis joined Nexstar in June 2019 and had overseen digital revenue and operations.

Tegna has named Bill Dallman as president and GM of NBC affiliate KARE Minneapolis. He comes from Sinclair Broadcast Groupowned KOMO Seattle, where he had been news director since 2018.

24 Multichannel.com

The American Association of Advertising Agencies (4As) has added four new directorsat-large to its board: Vita M. Harris, chief strategy officer, FCB Global; Kate MacNevin, global chairwoman and CEO, MRM; and Megan Pagliuca, chief activation officer, Omnicom Media Group. … Fox Business Network has added Lydia Hu as a correspondent. She comes from Spectrum NY1 News in New York, where she was a general assignment reporter. … Mark Bauch has joined Imagine Entertainment’s film group as senior VP, features. He had been senior VP of Imagine Television, working on drama and comedy projects. … Nexstar Digital elevated Jennifer Scilabro to senior VP, local digital sales, and Wil Danielson to senior VP, national digital sales, both reporting to Lori Tavoularis. … Video advertising software and insights provider Pixability has tapped Brian Atwood as chief revenue officer. He comes from video tech and data startup NOM, where he was CEO.

DATA MINE

Data provided by

Ad Meter Who’s spending what where

PROMO MOJO Our exclusive weekly ranking of the programming that networks are promoting most heavily (Feb. 8-14)

BIG SPENDERS

MOST-SEEN TV ADS

Brands ranked by the greatest increase in TV spend (Feb. 8-14)

Brands ranked by TV ad impressions (Feb. 8-14)

Discovery Plus

JPMorgan Chase (Banking)

Spend Increase:

▲ 285%

$4.3M

Est. TV Spend: Spend Within Industry:

31%

Est. TV Spend:

$1.2M

Interruption Rate:

1.78% Home Town

Apple iPhone Est. TV Spend:

3.09B

Top Show:

Top Network: Discovery en Español

Spend Increase:

TV Ad Impressions:

GEICO ▲ 220%

TV Ad Impressions:

$6.4M

Est. TV Spend:

Spend Within Industry:

31%

Interruption Rate:

Top Network:

NBC

Top Show:

1.31B $25.3M 2.90%

2021 Daytona 500

Kit Kat Spend Increase:

American Idol, ABC

TOP 5 PROMOTIONS

TV Ad Impressions: 541,887,944

Total TV ad impressions within all U.S. households, including national linear (live and time-shifted), VOD plus OTT and local

Est. Media Value: $3,736,728

ABC

Estimated media value of in-network promos

On the strength of nearly 542 million TV ad impressions, an ABC promo for American Idol takes first place. ABC is joined by rest of the Big Four: CBS for crime drama Clarice in second, Fox for game show Cherries Wild in third and NBC for sitcom Young Rock in fifth. One cable network made the cut: CNN, at No. 4 for a promo for original docuseries Stanley Tucci: Searching for Italy. Notably, the Cherries Wild spot had the highest iSpot Attention Index number (117), meaning viewers were on average highly likely to watch it all the way through (vs. interrupting it by changing the channel, pulling up the guide, fast-forwarding or turning off the TV). Multichannel.com

American Idol, ABC

TV Ad Impressions Est. Media Value

2. Clarice, CBS

TV Ad Impressions Est. Media Value

3. Cherries Wild, Fox

TV Ad Impressions Est. Media Value

541,887,944 $3,736,728 276,392,193 $3,373,302

TV Ad Impressions:

Est. TV Spend:

$3M

Est. TV Spend:

Spend Within Industry:

10%

Interruption Rate:

Top Network:

MTV

Top Show:

L'Oreal Paris Hair Care Spend Increase: Est. TV Spend:

229,930,949 $1,102,829

Liberty Mutual

▲ 136%

▲ 125%

$2.6M

1.28B $12.4M 1.95%

Law & Order: SVU

Progressive TV Ad Impressions: Est. TV Spend:

1.08B $17.3M

Spend Within Industry:

41%

Interruption Rate:

Top Network:

NBC

Top Show: College Basketball

2.38%

4. Stanley Tucci: Searching for Italy, CNN

TV Ad Impressions Est. Media Value

5. Young Rock, NBC

TV Ad Impressions Est. Media Value

209,079,477 $691,281 208,611,017 $2,249,496

Lionsgate Films

Domino's

Spend Increase:

▲ 84%

TV Ad Impressions:

Est. TV Spend:

$2.6M

Est. TV Spend:

Spend Within Industry:

16%

Interruption Rate:

Top Network:

NBC

Top Show:

1.07B $9.68M 1.72%

Law & Order: SVU

DATA MINE

YOUTUBE SURPASSES NETFLIX IN QUARTERLY REVENUE YOUTUBE IS NOW the biggest streaming video company in the world, at least in terms of quarterly revenue. The Google platform generated $6.9 billion in ad revenue in the fourth quarter, which surpassed Netflix’s $6.64 billion in subscription fees. Is this the first time this has happened? That’s difficult to say, since Google only started breaking out

MCN’S MOST VIEWED Top stories on multichannel.com, Feb. 8-17

YouTube quarterly performance last year, and we only have quarterly revenue figures dating back to the fourth quarter of 2019. Suffice to say it’s the first time in the last five quarters that YouTube has made more ad revenue than Netflix generated subscription dollars. — Daniel Frankel For more stories like this, go to nexttv.com.

YouTube vs Netflix 7

NETFLIX

YOUTUBE

1. Paramount Plus Discounted by 58% for Current CBS All Access Customers 2. Newsmax TV Hires Rob Finnerty for Morning Show

3. Peacock Only Has 11.3 Million Active Viewing Households, Report Says 4. CEO Chris Ripley Likes Sinclair’s Gamble on Local Content 5. Charter, Comcast Set New Growth Paths After 2020 To read these stories, go to multichannel.com.

Q4 2019

Q1 2020

Q2 2020

Q3 2020

Q4 2020

SOURCE: YouTube ad revenue vs. Netflix total revenue in billions of USD.

STICKIEST SHOWS Top 10 cable programs ranked by viewer engagement Ratings Rank

Telecast (Week Ending Feb. 7)

Network

Stickiness Index*

Beverly Hills Wedding

Hallmark Channel

154

822

La Rosa de Guadalupe

Galavisión

136

WWE Monday Night Raw

USA Network

136

131

Tyler Perry's Sistas

BET

133

114

Below Deck

Bravo

132

NBA Basketball1

TNT

131

203

Married at First Sight

Lifetime

130

463

Killer Advice

LMN

129

Gold Rush

Discovery

127

206

Street Outlaws

Discovery

125

Stickiness Rank

Tyler Perrie's Sistas: BET

The Stickiness Index looks at viewer engagement based on several factors. A higher number indicates more of the audience is tuned in for the duration of the telecast. * TV Engagement ratings powered by Comscore’s TV Essentials. (Sorted by social media activity.)

Multichannel.com

DATA MINE

Data provided by

STICKIEST SHOWS Top 10 broadcast programs ranked by viewer engagement

Ratings Rank

Telecast (Week Feb. 7)

Network

Stickiness Index*

104

Imperio De Mentiras

Univision

156

160

Enamorándonos

UniMás

152

Blue Bloods

CBS

144

Chicago Fire

NBC

143

Vencer El Desamor

Univision

143

Dulce Ambición

Univision

142

9-1-1: Lone Star

Fox

140

Chicago P.D.

NBC

140

9-1-1

Fox

135

Magnum P.I.

CBS

134

Stickiness Rank

THE WEEK OF FEB. 8 TV Time users track the shows they're watching on TV via the TV Time app. That data is then used to determine the most-binged shows of the week in the U.S.