TFM: The Financial Manager January/February 2021

INFORMATION AND INSIGHT FOR MEDIA FINANCE PROFESSIONALS JANUARY/FEBRUARY 2021 THE FINANCIAL MANAGER

A FUTURE (LESS) TENSE A special report looks at how we can prepare for the next crisis, and ways to improve personal success in a topsy-turvy world.

ALSO INSIDE

Cable’s Changing Dynamics Remembering Jeana Stanley A Newspaper Imperative

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TFM

INSIDE THIS ISSUE

The Financial Manager

FEATURES

The Official Publication of the Media Financial Management Association is published six times annually under the supervision of:

SPECIAL REPORT:

MARY M. COLLINS, President & CEO Mary.Collins@MediaFinance.org

PLAYING IT FORWARD

10 Lessons for the Next Normal

JANET STILSON, Editor TFMeditor@MediaFinance.org BILL KNIGHT, Art Director wknight5@nyc.rr.com

BY CAL MOSTELLA

After the current crisis recedes, others are likely to emerge. There are ways to get ready for whatever happens next.

Limited commercial messages of interest to our membership and readers will be accepted.

Rates and specifications on request to:

MEDIA FINANCIAL MANAGEMENT ASSOCIATION

14 Reach for the Best Version of You

550 W. Frontage Road, Ste. 3600 Northfield, IL 60093 telephone (847) 716-7000 facsimile (847) 716-7004 and at www.mediafinance.org.

BY LORI BROOKS

It’s easy to feel trapped or static during these unusual times. Here are some tips on how to get out of a personal or professional rut.

Subscription $69.00 per year.

Copyright, 2021. All rights reserved.

What is MFM?

18 A Passionate Force of Nature

The Media Financial Management Association is a not-for-profit corporation organized in 1961.

The MFM membership includes more than 1,200 of media’s top financial, IT and human resource personnel, station general managers and other media management personnel as well as associate members in the allied fields of auditing, tax, software, sales and the law.

MFM sponsors telephone seminars and conferences, publishes special studies and surveys, files position papers with federal agencies on behalf of its members and its industry, cooperates with other media industry groups and helps its members grow and learn both personally and professionally.

MFM also is involved in media industry credit matters through its wholly-owned subsidiary, BCCA, which provides members with a Credit Inquiry Service, an annual Conference, directory of Credit Personnel, credit reports accessed via bccacredit.com online credit search, Commercial Credit Reports and a credit and collections handbook.

The information and recommendations contained in this publication have been compiled from sources believed reliable. However, no warranty, guarantee or representation is made by the Association as to the absolute correctness or sufficiency of any representation contained in this publication, and statements contained in advertising and articles submitted to the Association are the responsibility of the authors, not the Association or its officers, directors, staff or members. Moreover, this publication is provided with the understanding that the Association is not engaged in rendering professional services through its distribution. The views and opinions expressed are those of the author, and not necessarily the Association.

BY TRACY CLARK & SUZANNE GRETHEN

As Hearst Corp. and MFM create honors in Jeana Stanley’s name, her colleagues and staff describe the impact she had on their lives.

22 Cable’s Yin-Yang State

BY KIMBERLY M. RANDOLPH & LAURA K. SUNISLOE

Cable providers maybe losing video customers, but they’re more than compensating with broadband revenue.

DEPARTMENTS 4 From the President Cocktail of Wisdom 6 Dear Expert C-Band Paybacks 7 Human Factor Rapid Responses

8 Credit Where Due Remote Relationships 9 Association News Upcoming Events 26 Last Word Saving Newspapers The Financial Manager • January/February 2021 3

FROM THE PRESIDENT

A Cocktail of Wisdom

It’s easy to imagine a New Year’s party attended by the many thought leaders who contributed stories to this issue.

I

n other years, I would have spent New Year’s Eve and early New Year’s Day in a convivial gathering with friends old and new. Inevitably, I’d learn some things, talk about resolutions (mine and others’) and share memories of friends unable to join us. We’d close out the old year and welcome the new one.

I had a sense of that connectedness as I read this issue of TFM, including its special report, Playing It Forward. I can imagine myself standing with WarnerMedia’s Cal Mostella, sparkling beverage in hand, discussing what he learned in 2020 and his resolution to prepare himself and his company for the “next normal.” His thoughts begin on page 10.

Speaking of resolutions for the New Year, my conversation with Siegfried’s Lori Brooks would help there. I first met Lori when she spoke about personal transformation during Media Outlook 2021. Her topic was so well received that we asked her to expand upon it.

I’d pause, canapé halfway to my mouth, engrossed as she passionately explains how mindset leads to growth.

Mindset is at the heart of her example of a mother explaining to her adolescent son that taking out the trash is a privilege; he’s lucky to live in a society that values sanitation and that he is physically able to perform the Jeana Stanley’s passing left a hole chore.

Brooks’ theme of investing in yourself in the MFM and BCCA community also runs through Sarah Levitt’s and in the entire media industry.

“Human Factor” column. We’d talk about becoming and remaining engaged in work, in ourselves, our teams and to look at change as an opportunity.

Cable providers have certainly absorbed the change-as-opportunity message. That’s what I’d discuss with Stout’s Kimberly Randolph and Laura Sunisloe. Their article, the third in our media valuations series, analyzes the two competing revenue trends driving changes in valuations for cable MSOs (multiple system operators). Six of these companies outperformed the S&P 500 in 2020. While multichannel subscriber growth is under pressure, the connectivity side is exploding. We’d also chat a bit about improvements from telcos such as AT&T and Verizon Communications.

This transformation, and perhaps even the pandemic-induced work-from-home policies, may actually be helping newspapers. That would be my conversation with Editor & Publisher’s Peter Conti. He would explain, as Cal also pointed out, that digital is forcing change. It’s allowing the medium to become more creative and increase subscribers.

Talking and sharing a toast with Szabo Associates’ Robin Szabo is always a pleasure.

We’d discuss his thoughts on how to build and continue relationships despite working remotely. Instead, you can read them in “Credit Where Due.” I’d also enjoy learning the latest about C-Band paybacks from Lerman Senter’s David Keir and Jeffrey Carlisle. Did you know that there are incentives for satellite operators to speed the transition? The information is in “Dear Expert.”

Finally, I know I would be spending time remembering Hearst’s Jeana Stanley and raising a glass in her name.

Her passing left a hole in the MFM and BCCA community and in the entire media industry. Hearst’s Tracy Clark and Suzanne Grethen have captured her passion and caring nature in what I can only describe as a well-deserved toast to her memory and to those she left behind.

I hope you, like me, find this issue of TFM an appropriate way to start the new year. It’s a chance to make new friends and keep the old.

Friends support and educate us – that’s at the very core of your MFM and BCCA memberships.

Mary Collins is president and CEO of MFM and BCCA; Mary.Collins@MediaFinance.org.

4 The Financial Manager • January/February 2021

EDITORIAL ADVISORY BOARD SALLY BUCKMAN Member Lerman Senter PLLC MICHAEL DENSON Director, Credit Services NMCP Inc. GREG LECHOWSKI Market Controller, Phoenix Bonneville International CAL MOSTELLA Vice President, Treasurer WarnerMedia JOHN SANDERS Principal Bond & Pecaro MEREDITH SENTER Member Lerman Senter PLLC C. ROBIN SZABO President Szabo Associates JAMIE GRANDE MFM/BCCA Staff Liaison

CONTRIBUTORS LORI BROOKS The Siegfried Group, LLP JEFFREY J. CARLISLE Lerman Senter PLLC TRACY CLARK Hearst Television PETER CONTI Editor & Publisher SUZANNE GRETHEN Hearst Television DAVID S. KEIR Lerman Senter PLLC SARAH LEVITT Magnificent Leadership Executive Forum CAL MOSTELLA WarnerMedia KIMBERLY M. RANDOLPH Stout LAURA K. SUNISLOE Stout C. ROBIN SZABO Szabo Associates Inc.

TOGETHER

d r a t ow a media education & networking event

Virtual Program : May 11 - July 29, 2021 WE HEARD YOU! Media Finance Focus 2021 is coming to you again in 2021. Join us May 11 through July 29 as MFM & BCCA deliver dozens of cutting edge sessions, distinguished keynote speakers, interactive industry roundtables, networking events, and more – to wherever you call your office.

Learn everything you need to know to stay ahead in the rapidly changing world of media finance, connect with industry peers, and set yourself up for success. Together, we will build the road to tomorrow.

LEARN MORE: www.mediafinancefocus.org

REGISTRATION NOTES: • If you attended Media Finance Focus 2020, you have a non-refundable credit and a guaranteed registration rate for 2021; we will send you an invoice.

• If you did not attend in 2020, Advance Registration (lowest rates) ends January 22, 2021

Register Today!

WWW.MEDIAFINANCEFOCUS.ORG/REGISTRATION-DETAILS

DEAR EXPERT

C-Band Paybacks

Legal eagles DAVID S. KEIR and JEFFREY J. CARLISLE explain how the C-band auction now underway will trigger reimbursements to antenna owners.

Dear Expert, I work for a cable company that owns three C-band antennas. We registered our antennas with the Federal Communications Commission when we heard that it was thinking about auctioning C-band spectrum for 5G transmissions back in 2018. Do we need to do anything now?

Nervous in Naperville, IL Dear Naperville, The short answer is, “Yes you do.” The FCC began the C-band auction last month, and companies across the country are expected to bid billions of dollars to use the spectrum for 5G wireless services. Before we get into actions you need to take, here is some background.

The FCC has determined that it’s no longer necessary for C-band satellite operators to use the entire 500 MHz spectrum allocated to them. It is repurposing 280 MHz for 5G; creating a buffer zone of 20 MHz; and restricting satellite transmissions to the remaining 200 MHz. The deadline for making the spectrum available and shutting down current use is December 2025. However, the FCC is providing incentive payments to satellite operators to make it happen faster. It’s set up a deadline of December 2021 for the first 100 MHz in 46 of the largest U.S. markets.

(It includes the top 50 markets except for Atlanta, Baltimore-Washington, Denver and Hawaii.) A second deadline takes place in December 2023 for the remaining portion of the 280 MHz in those markets and elsewhere within the continental United States.

What happens, then, to the current users like you? Earth station owners that want to continue to receive programming from C-band satellites can do so, but they will need to retune, repoint or even replace their antennas and install new hardware and Do you have a professional puzzle that MFM and BCCA experts might be able to answer? We’ll mine the contact base and find the right person to answer your question.

Just contact TFM editor Janet Stilson at TFMeditor@mediafinance.org.

software for compression and filtering.

Winning bidders will be responsible for reimbursing earth station operators for the reasonable costs of this transition. If an earth station owner wants to explore alternatives, including shutting down some or all of its C-band sites and migrating them to another option like fiber, the FCC has

Simple single-feed antennas will average a reimbursement of around $9,000. Large multibeam antennas will average around $50,000. allowed such operators to elect to receive a single lump-sum payment.

To participate in the reimbursement program, the FCC required earth station operators to register their earth stations back in 2018. The final list of earth stations eligible for the reimbursement program was released on Dec. 3, 2020 (as an erratum) and can be found at on the FCC’s website by searching for “DA 20-1448.” To receive a lump sum, an earth station operator had to submit its election to the FCC by Sept. 14, 2020.

The FCC has estimated that reimbursements for simple single-feed antennas will average around $9,000, while large multibeam antennas will average around $50,000.

Multichannel video programming distributors can also receive almost $50,000 per earth station to cover the average installation cost for new compression/encoding equipment.

When and how you get paid hasn’t yet been spelled out in detail. The process will be developed by CohnReznick LLP, an

6 The Financial Manager • January/February 2021

accounting firm selected as the transition’s relocation payment clearinghouse. The auction should conclude by late January or early February. After that, the clearinghouse will determine all costs to date and for the first six months after the auction, and afterwards on a six-month rolling basis. The clearinghouse will collect payments from winning bidders twice a year, and then issue payments to earth station owners.

While exact timing of when those payments might be received is not yet known, it’s reasonable to expect that lump-sum payments could be issued in summer of 2021.

Earth station owners opting to receive reimbursement for their actual costs should receive payment within 30-60 days after submitting invoices, and that process would likely last into the first quarter of 2024 for many earth station operators.

If you visit the FCC’s C-band website where it publishes auction-related information, you can review the commission’s cost catalog for earth station owners and keep an eye out for new information.

Since your earth station is registered, you should also be receiving notifications about transition events from the FCC, the clearinghouse and the satellite operators. Make sure you read through any materials you receive and don’t ignore them. If you have any questions, reach out to an attorney familiar with the FCC. You’ve already completed the biggest step – getting registered – but stay informed about the ongoing process.

David S. Keir is a member and Jeffrey J. Carlisle is of counsel at Lerman Senter PLLC. They can be reached at DKeir@lermansenter.com and JCarlisle@lermansenter.com, respectively.

HUMAN FACTOR

Rapid-Response Preparation

Just as early birds catch the worms, leaders who react to upheaval with decisive, quick actions are more likely to succeed. BY SARAH LEVITT

T

here’s a common denominator shared among my most successful and talented clients. They don’t wait.

They don’t wait for their organizations to catch up.

Or for the “right time.” (Whatever that is.)

They don’t hunker down and hope that a tsunami of change blows over.

Instead, they grow to meet the future, making a deliberate choice to invest in themselves. They know that disruption is always coming, that challenging circumstances and unforeseen obstacles are a given.

They know that the best bet they can make is on themselves, particularly during difficult times.

These leaders are not inclined to wait for things to improve. And they don’t take a back seat when it comes to driving the future. Instead, they get out in front by investing in themselves, rain or shine.

And they do it in four distinct ways.

First, they are invested in their work, and they are engaged by it. It’s something they enjoy and from which they derive meaning.

Rather than viewing it as a drain, they are energized and fulfilled by it.

That doesn’t mean that things are always smooth sailing or without challenges. We’ve seen over these many months of the pandemic that passion does not preclude difficulty. But navigating the choppy waters of business is buffered by their determination, their commitment and their stamina.

Their passion is industry agnostic. I have clients across a wide range of businesses, from technology to professional services, from pharma to higher education. And I see this, over and over again.

Second, leaders who invest in themselves also invest in others. And they do this inside and outside their organizations. You might see their papers in industry journals or read their articles on social media. You likely hear them speak at conferences or see them leading panel discussions. They often serve on boards.

To become exceptional at leading in a work-fromhome context by keeping their teams connected and engaged and ascertaining what team members need most, including flexibility with standard work hours.

To support their direct reports to step into stretch roles that might not have been available before.

Lastly, these leaders don’t Leaders who invest in themselves also hesitate to invest in their invest in others. And they do this inside and own development. Whether through their organizations or outside their organizations. privately, they seek out opporThey take care and effort to help their tunities to stretch themselves and their thinkteam members grow, and they support their ing. They ask for feedback, and they mean it. reports in rising within their organizations.

They commit to a path of growth no I’ve had clients who have literally lost sleep matter how high they ascend. And they over concern for their team members and do this in a multitude of ways. They want their trajectories. These executives make their blind spots illuminated. Oftentimes, themselves available to help peers, even they have assembled a cabinet of supporters, when there’s nothing that they derive from throughout their careers, who will tell them it directly: no credit, no extra compensa- the truth, particularly during difficult and tion, nothing. challenging situations. They cultivate and Leaders of this sort are known as contrib- build relationships with colleagues outside utors who invest in others as part of their their organizations for idea exchanges. brand. It’s what they’ve become known for, By finding trusted spaces with other sometimes without even being aware of it. l i ke-m inded le aders, t he y c a n sha re Their involvement in any project or initia- their challenges and their questions and tive helps, rather than hurts, the effort. their learnings. And they view executive Third, leaders who invest in themselves coaching as a top-tier athlete does: as an also invest in change. Rather than becoming i nve s t ment in f urparalyzed or stymied by disruption, they use thering their career it as an inflection point, as an opportunity. ascension, no matter What kind of opportunity? To be on how ac c ompl i shed the lookout for great talent to add to their they already are. teams. To assess risk and gaps on their Successful people bench so they know where new talent might don’t wait. They get best be utilized. To better prepare for the out in front. next glitch and put processes in place where Sarah Levitt is the architect of the Magnificent they were lacking. To examine new markets Leadership Executive Forum Community. and new product lines. To use the uncerShe works with CEOs and senior executives to tainty to create more certainty for their cuselevate leadership performance and tomers and distinguish themselves and by drive business outcomes. She can be reached at www.sarah-levitt.com. truly knowing what those customers need.

The Financial Manager • January/February 2021 7

CREDIT WHERE DUE

Spanning the Distance

Building strong relationships with internal staff and customers requires different communication tactics in remote work environments. BY C. ROBIN SZABO

I

f there’s one thing that the challenges of 2020 taught us to appreciate, it’s the power of relationships and how they are tied to our success. At the same time, while the remote working environment that we’ve experienced has been beneficial in some regards, it has its shortcomings when it comes to creating and developing a friendly rapport.

Credit a nd collection depa rtments have long known that the order-to-cash process relies heavily on building strong ties between teams, sales departments and customers. The ease and comfort we all had in interacting with people in person, or routinely contacting them by phone in their business offices, has all changed. This has created challenges for these departments as they try to navigate the new dynamics.

Here are a few relationship questions that I’ve heard from team leaders and some solutions that work.

How do I on-board, acclimate and instill our culture with new staff members whom I’ve never met in person?

All new relationships are built with a foundation of fairness, trust and mutual respect.

This does not change in a remote working environment. It just sometimes takes more effort by both parties. Try using a video conferencing tool if possible. It’s the closest thing to face-to-face that we have.

Encourage new team members to be themselves. Let them know you evaluate objectively; are interested in their growth; and welcome their feedback. Discuss your company’s culture with them, describing who you are; why you do what you do; and how you do it.

Clearly lay out your expectations to avoid misunderstandings. Explain the importance of trust and accountability in the relationship; that you trust them already; and will

have their backs so long as that bond remains unbroken.

Don’t overlook training. It’s a continuous process and is needed to advance the team.

Enlist the help of other staff members to help with this and become mentors to newer recruits.

What expectations should I have for the credit and collection team?

Set the same expectations in remote working as you would if in office: work periods; avail-

ability for meetings; preferred methods of communication; how long a task should take; how many customers are to be contacted daily, weekly, monthly; the frequency and methods of contact; how much cash is to be collected weekly and monthly; and when progress reports are due with details of their activity.

In a remote environment, those expectations need to be crystal clear and easily understood from the outset so that work is completed as desired and on time.

What can I do to motivate my team, which is working remotely?

Bring some fun into the day. Celebrate personal and team accomplishments, and let your staff know how much they are appreciated. Treat the team members as people, versus just worker bees. Get to know them, their interests and their life outside of work.

Engage with them “one on one” in addition to team meetings.

8 The Financial Manager • January/February 2021

Consider starting each video meeting with a little social time before laying out goals or projects. This gives everyone an opportunity to interact and strengthens their relationships with each other.

Keep meetings under 30 minutes, with your content no more than 18 of those minutes – the same as a TED talk. This will ensure the longest attention spans.

How do I effectively discuss with sales new orders or problem accounts?

Reassure sales that you and your team are here to help make and complete the sale. Clear orders as quickly as possible. Be objective; avoid confrontations; and provide suggested solutions when customers have marginal credit or are becoming a collection problem.

Understand sales’ perspective and communicate with them like you do with your team. Listen to their point of view, and if your decision is overridden and the account becomes a write off, don’t respond with any “I told you so’s.”

How do I better communicate with my customers?

Understand that, like you, they are facing similar challenges working remotely. Always be professional, courteous, ethical and fair in your dealings. Work with them on how to best communicate and use video meetings to strengthen relationships. Get to know them like you do your team.

Thank them for their business and stress that you are always willing to work with them in solving any problems that might arise.

C. Robin Szabo is president of Szabo Associates Inc., media collection professionals, in Atlanta, GA. He can be contacted at (404) 266-2464 or robin@szabo.com.

ASSOCIATION NEWS

OUR RED-LETTER EVENTS MFM Media Tax Summit 2021

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(VIRTUAL)

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March 2-3, 2021

M

arch roars in like a lion for MFM with this first-of-its-kind event. The MFM Media Tax Summit’s creation was driven by some huge dynamics, not the least of which was the changing role of tax executives. In fact, tax departments as a whole are undergoing a transformation due to technological advances; the evolving workplace environment; as well as recent and proposed legislation.

With “Tackling Tax Transformation Trends” as its theme, the Summit promises to cover all the issues today’s tax professional needs to know with a specific focus on media. Rest assured this is not your normal tax update.

Attendees can expect to gain a clear understanding of what it takes to build a best-in-class tax department and what today’s CFO expects from their tax group. That’s been a special focus of the event’s co-chairs: Sean Hetzler, senior director of tax, TEGNA; Dan McGuire, tax partner, KPMG; and Paul Nesterovsky, vice president, tax, Sinclair Broadcast Group.

The virtual event is comprised of two two-hour sessions on March 2 and 3. It will be free for MFM corporate members. The entrance fee is $100 for each of the first two attendees from a non-corporate member organization and complimentary for each subsequent registrant.

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An economic overview from Drew Marcus, senior advisor, Guggenheim Securities; An analysis of automotive industry trends, provided by Tyson Jominy, vice president, data and analytics with J.D. Power; A look at new revenue opportunities conveyed by Paul Jacobs, vice president and general manager, Jacobs Media Strategies; A CFO Roundtable focusing on current

strategic priorities for the media industry.

MFM reserves the right to refuse registrations that do not meet its “senior financial professional” criteria.

FOR MORE INFORMATION about both events, visit the “Programs & Events” section of MFM’s website, mediafinance.org.

BOND & PECARO The Basis for Your Decisions

ApprAisAls FeAsibility studies expert testimony And relAted FinAnciAl services For the communicAtions industry

MFM CFO Summit 2021 March 11-12, 2021 (VIRTUAL)

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enior financial executives are invited to attend a virtual version of a popular annual event, the CFO Summit. The masterminds behind it are co-chairs Van Allen, executive vice president and CFO, Radio Advertising Bureau; Kimberly Parker, vice president and CFO, Graham Media; and Paul Yates, vice president and corporate controller, Hubbard Broadcasting.

Among the confirmed sessions are:

1990 M STREET, NW SUITE 400 WASHINGTON, DC 20036 (202) 775-8870 E-mail: BP@BondPecaro.com www.BondPecaro.com

The Financial Manager • January/February 2021 9

SPECIAL REPORT: PLAYING IT FORWARD

LESSONS FOR THE NEXT NORMAL After the current crisis recedes, others are likely to emerge.

There are ways to get ready for whatever happens next.

BY CAL MOSTELLA

T

HERE AREN’T ENOUGH WORDS TO DESCRIBE

how unprepared we all were for the global upheaval caused by COVID-19. Months into the pandemic, the phrase “new normal” worked its way into the conversation as we collectively came to terms with our forever-changed existence. Now that we’re almost a year in, the “normal” we are currently experiencing is no longer new.

Rather than long for what was normal previously, we should focus our energy toward the future, the “next normal.” As 2020 showed us over and over again, we can’t predict the future, but by applying recent lessons, we can be more prepared for it.

What if frequent crises and chaos cycles become common – like a 100-year flood that becomes an annual event? What can we do today to be more resilient, better prepared, more flexible and able to pivot faster? How can we use our 2020 resilience muscle to help us not only survive the next crisis but thrive through it?

I want to share a few personal lessons that I plan to carry into the “next normal” and whatever crisis (I mean, opportunity) that triggers it.

lesson 1: Success is a trap – a lovely, comfy, terrible

trap. Before COVID-19, our lives and businesses evolved in a fairly predictable trajectory – small adjustments, incremental innovations, comfortable social routines. Even the considerable disruptions in our industry were nicely defined and incorporated into our budgets and strategic plans.

But one thing this crisis revealed was just how the comforts of success bind us to the practicable and blind us to the possible.

Many media companies have been unknowingly in this 10 The Financial Manager • January/February 2021

trap for years. The pandemic accelerated media disruption well beyond any business plan, and many firms urgently struggled to climb out. For some, it will be too late. Others will ironically survive to play catch-up to the very digital disruption they resisted.

It’s human nature to be overly optimistic about our business stability and trajectory. But next-normal leaders must pursue and invest in exploratory activities to gain new knowledge and become adaptable for the long haul.

In his book, Create the Future + the Innovation Handbook, Jeremy Gutsche suggests that leaders employ a “gambling fund” tactic. At its core, a gambling fund is money you expect to lose.

Sounds crazy, right? But, when successful companies hold on to strict guidelines for profit margin and growth targets, their substantive innovation stops. It is through our failures we create the break-through, disruptive ideas.

Next-normal leaders should release employees from the constraints of how things are done and expand the definition of success to be more about the creative journey than a single end result. When they do, employees think bigger, gain new insights and forge new pathways.

This advice applies to our careers as well. Avoid getting stuck in the habit of doing what you’ve always done. Push yourself to reinvent, explore your curiosities, insist on opportunities in the uncomfortable zone. In that way, you can grow and learn. Your next success could be outside of your current sphere; always have an exit plan.

lesson 2: Innovate like you have nothing to lose.

When going out of business is the next best option, it’s incredible just how creative and unbound to legacy models you can be. Impressive innovations always result from

The Financial Manager • January/February 2021 11

SPECIAL REPORT: PLAYING IT FORWARD crises because they create a heightened level significant hurdles during planning, their contingency plans, forcing an even higher of urgency, and a togetherness that’s needed flexibility allowed them to find solutions level of urgency. Digital must be a significant to take bold risks and make difficult course that went beyond expectations. Produced part of any business endeavor. Those who recorrections. in a matter of months, WarnerMedia’s fuse to embrace the digital mindset and lean I was most impressed with how small DC FanDome was made available in nine hard into their metamorphosis will struggle businesses stepped up. Take, for example, the languages and attended by millions of fans to survive in any “normal.” neighborhood restaurant where doors were across the globe. shuttered for weeks until owners re-centered The team spared no expense putting to- lesson 4: Living fast is so 2019. A surprison their customer’s need for safety. gether slickly packaged content with some- ing benefit of the new normal is the deeper Many of them redirected their resources thing for every fan, including the Zoom fa- connections forged between family, friends, to take-out service, deploying wait staff and tigued. DC FanDome checked all the boxes: colleagues, and our communities. COVIDonline apps for delivery. Business owners re-en- start with the customer, check; think big, 19 forced us to slow down every aspect of our lives – no rushed commutes, frantic gineered their sidewalks, parking lots and carpools, business trips, overbooked dining rooms to accommodate physical There is something beautiful social diaries. This slow-down freed distancing while minimizing the impact about the new level of awareness up valuable time for most households. to capacity.

At first, I experienced withdrawal In addition to incorporating required about myself and those around from the stress-adrenaline but evensafety measures, many went the extra tually found the slower pace restormile by taking patron temperatures me that I must not forget. ative. Not only was I more productive and introducing touchless menus and point-of-sale devices. Some restaurants even check; well-thought-through risk-taking, professionally, but I also made time for atdiverged from their traditional models to offer check; go global, check; act with a sense home workouts, cooking, long walks and meal-prep services, food truck stands and gro- of urgency, check. It’s no wonder DC Fan- reunited with more friends and family vircery shelf space to sell food and wine in bulk. Dome is widely reported as the gold standard tually. In fact, I connected with them more frequently than I ever did in-person before The media industry was dealt its own and future of online fan engagement. unique challenges during COVID. While Once we emerge from COVID safety pre- the pandemic.

I see more neighbors than business acquainthe industry’s digital side expanded, adding cautions, these new revenue lines and efficienmillions of new subscribers, the traditional cies could live on, resulting in a more resilient tances, and I’ve traveled more miles in my side was hit hard by cord-cutters, decreased business model and a healthier bottom line. neighborhood than on the highway. Heck, my ad spend, freezes to production activity and The same unexpected benefits can be real for car’s navigation AI suggests the local Kroger as my work address! shelved blockbuster theatrical releases. our companies.

On the professional front, the amount and However, crisis and chaos brought forward As financial leaders, we must create a conmany impressive innovations across media. stant urgency, unity and empowerment to re- quality of face time with my HQ leader is Take my company, WarnerMedia, as an invent, giving our teams permission and capital now on par with my colleagues down the example. Its most treasured asset is its fans. to explore new products and delivery models. hall from him. Video conferencing leveled Franchises like Friends, the world of Harry We must enable our businesses to reimagine the workplace playing field. And post-panPotter and the DC Comics Universe thrive beyond the incremental and seize the oppor- demic, let’s hope it no longer matters if you’re off the passion of loyal consumers. Engaging tunity to build resilient, adaptable business working from the headquarters, a satellite office or at home. What will matter are our them is at the center of everything we do. models that can weather the next normal. contributions and engagement, not proximity One highlight of our engagement efforts occurs when our fandom brands participate at lesson 3: Embrace your digital disrup- and water-cooler conversations.

Don’t get me wrong; I’m looking forward San Diego’s Comic-Con, along with similar tor. On the one hand, digitization has fan conferences. When Comic-Con became a eroded once-reliable revenue streams and to returning to the workplace, a crowded pub virtual event last year, WarnerMedia quickly created severe cost pressures and employment and shoulder-to-shoulder festivals. But there is something beautiful about the new level responded, launching its own direct-to-fan consequences.

On the other hand, could you imagine of awareness about myself and those around experience called DC FanDome.

As summarized by our CEO, Jason Kilar, faring this crisis without apps for delivery, me that I must not forget. The takeaway is “The premise was wonderfully simple: what superstores and entertainment? Or working that the slower pace and deeper connections can we do that would blow away the fan?” from home without the cloud, collaboration helped us survive an unprecedented time.

If we continue to focus on and invest in With those charging orders, the DC Fan- tools and digital signatures? Digitization is Dome team didn’t let a pandemic get in both a disruptor and an enabler, a destroyer what matters at a personal level, we can thrive through whatever the next normal brings our the way of delighting the public. With no and a savior.

We all knew digital would be the eventual way. gatekeepers sitting between WarnerMedia and their fans, they had the opportunity to victor; what we didn’t realize was just how define and deliver a unique consumer expe- fast digital would win.

Cal Mostella is vice president and While we were sheltering in place, dig- treasurer at WarnerMedia. He can be reached rience from beginning to end.

Even when our team members ran into itization accelerated traditional media’s at cal.mostella@warnermedia.com.

12 The Financial Manager • January/February 2021

The Financial Manager • January/February 2021 13

14 The Financial Manager • January/February 2021

SPECIAL REPORT: PLAYING IT FORWARD

Reach for the Best Version Of You It’s easy to feel trapped or static during these unusual times. But there are actionable ways to get out of a personal or professional rut.

BY LORI BROOKS

H

AVE YOU HEARD YOURSELF THINKING OR SAYING, “EXCEPT FOR COVID”? IT

might seem like the number of things that you could have done, or would be doing, are astronomical, except for, you know, the pandemic.

Yet even though our lives have been dramatically upended, there are ways to progress, so that 2021 isn’t another “wasted” year, during which we track the months, waiting until it is over. We can continue to grow personally and professionally, even though many organizations are trying to figure out when to re-open their offices – or changing their approach to working from home and flexible hours.

This brings to mind some advice that I received as a new mother. I was told that I had to take care of myself before taking care of the baby. This is absolutely true for everyone. Before we can be our best for our families, friends and co-workers, we need to be our best self, for our self. This isn’t selfish; it involves appropriately prioritizing your time to find space and clarity.

This focus on self is essential. We hear a lot about the importance of leadership – how we need to be better at it, how some people are born with leadership skills and some are not.

But what does leadership really mean? A simplified definition is the art of motivating a group

of people to act towards achieving a common goal. But how can you motivate someone else if you aren’t sure what is motivating you?

The concept seems so simple: if you have clarity about your priorities, your goals, your aim, then you can lead others toward a common objective.

GET YOUR MIND RIGHT In order to start down that path, you first must focus on your mindset – the ideas and attitudes you have when approaching a situation. It affects our word choice, our tone and enthusiasm (or lack thereof).

The Financial Manager • January/February 2021 15

A few years ago, I was very fortunate to take a trip with my leadership team. As we were canyoneering and repelling to and from places that I never thought I would go, our guide told us a story about gratitude. It goes something like this: Mother to 10-year-old son: “Please take out the trash.”

Boy: “Aww, mom, do I HAVE to?”

Mom: “No, you GET to! You get to take out the trash today. Think about children who live in a society that does not have a sanitation system or children who are handicapped and never have the opportunity to get up and walk to the curb and back. You are fortunate and should be grateful for what you have and what you get to do.”

Now, I don’t take out the trash in my household; my husband is in charge of garbage removal. (Whew!) But it is a humbling story that I think about often as I grumble at a task I don’t enjoy, and it puts me in check. It is an amazing example that mindset impacts what we do and how we show up to do it.

A lot has been written about mindsets.

And while definitions and categories are all over the map, I’ve found it helpful to consider four different mindsets that follow along a continuum from fixed to growth: FAILURE — People stuck in this rut are not willing to change. They feel sorry for themselves. “Why do I have to be in charge of that report? Why can’t someone else do it?”

FRUSTRATION – It’s hard to figure out how to help yourself, so feelings of scarcity and

It’s unrealistic to believe we will never be frustrated.

But how long do you sit and allow yourself to feel that way? anxiety take over. “That report is a waste of my time. I can’t get anything else done!”

CONVENTIONAL SUCCESS — There’s no sense that anything can be better, and no reason to change the status quo. “Yep, I do

THINK. YES, JUST THINK!

T

HERE ARE TONS OF ARTICLES ABOUT ACCOMPLISHED ENTREPRENEURS AND

billionaires that give themselves time to sit and think. No distractions by phone, email, television or people. Sounds heavenly.

How often do we really give ourselves the time to feel, reflect and plan? When we do this, it allows us to recognize highs, lows and next steps. Use that reflective time to re-visit goals on a regular basis.

If it is hard to find 10 minutes a day, then what about 10 minutes a week? When you give yourself the gift of time, what comes to mind?

■ Are you angry that you haven’t made more progress in a certain area? Then what is holding you back?

■ Are you excited because you are halfway to a goal you set for yourself? How does that feel?

■ What are you doing that is really working? How do you leverage that habit or action to other goals and objectives?

■ What is the one thing you need to do today to achieve success in the next 12 months?

■ What would 2020 have been like for you, except for COVID? Would you have earned or saved more money? Exercised more? Taken a trip?

Imagine your much-anticipated trip to France was cancelled. Rather than sitting back frustrated, perhaps you’ll realize that having additional time will be beneficial. You can study up on more history, so you are even more well-versed in your sightseeing and able to really soak in the experiences and surroundings. Or you can save a few more dollars and extend the trip to visit a few Bordeaux wineries. Or you can spend time learning French so you can order Coq au Vin and Boeuf Bourguignon like a true Parisian.

Instead of focusing on what we unable to do, expand to what will be possible when it is safe to travel again. Take a few minutes to think about what 2020 could have offered. In the reflection time, do not stop with what did not happen; think about what possibility still awaits you.

16 The Financial Manager • January/February 2021

the report every Tuesday, and that is what I am going to keep doing.”

TRANSFORMATION — People in this mindset are always looking to change, learn and grow.

They have feelings of abundancy. “How can I make this report better? How can I be more efficient when I prepare or ensure the information is more useful to my boss?

Mindsets are important because they ooze into what we do and how we do it. We need to have an awareness of our thought patterns. It not only impacts our own progress, but the progress of our team members and co-workers.

When we hold the metaphorical mirror up and really look at ourselves, we can see how we’re perceived by others, and if our attitude is impeding progress or propelling it. It should also be easy to recognize whether or not we are demonstrating leadership qualities that will help motivate and inspire ourselves and others.

Needless to say, mindsets change frequently. It’s unrealistic to believe we will never be frustrated. But how long do you sit and allow yourself to feel that way? How long until you make a change?

You can also have a different mindset at any given time for different areas of your life. You might be transformative in your health and excited and inspired with a new diet and exercise routine. At the same time, you could be in a fixed mindset as it relates to your career if you haven’t seen the progression you desire.

Everyday there is an opportunity to examine our mindset and narrow our focus to what is holding us back or why we feel and act a certain way.

WRITE. IT. DOWN. There is a reason why “to do” lists work. You write something down; you look at it; you hold yourself accountable; you complete a task; and you cross it off!

We should write down more of our goals on a regular basis. I don’t mean type them up and submit them because our company requires annual goals in our HR system.

Instead, we should think about the areas of our life that we really want to change and grow. When we physically write down goals and objectives they are no longer just floating around in our head. It is real and legit, and we better do something about it!

Is your pen and paper out? Now what?

CATEGORIES — List your personal goals (health, financial, spiritual) and professional

SPECIAL REPORT: PLAYING IT FORWARD goals (career progression, certifications, upcoming deadlines, team focused). There needs to be a balance; if our goals are all personal, then our career and organizations will be negatively impacted. Conversely, if our goals are all focused on work, our personal life suffers, and we get burned out, lack motivation and do not feel fulfilled.

YOUR “WHY” — Write down a short note next to each goal concerning why it is important to you. If there is not a why that evokes passion for you, the goal will not be a top priority, and it will likely go unmet.

TIME FRAME — Give yourself a deadline to achieve something measurable. If it’s a shortterm goal, make sure it’s a little time nugget that is attainable and that will give you momentum. Mid-term goals involve one to three years and long-term goals are generally five to 10 years. Are your short and mid-term goals aligned to your long-term goals?

Saving money is an easy example: You might have a short, 90-day goal to stop frivolous spending and save $100 a month.

In a mid-term time frame, you might aim to pay off all outstanding non-mortgage debt. And over the long-term, you might

meet a savings goal.

The thoughtful and attainable short-term goal gives you energy towards the next milestone. If you don’t have $300 extra dollars after 90 days, then your savings plan isn’t working, and you’ll need to reassess it.

How important is this goal (the “why”)?

How far off-track were you? Oh, and since we know mindset is so important – what was your mindset? Were you frustrated that you didn’t save, or can you celebrate that you have

If our goals are all focused on work, our personal life suffers, and we get burned out, lack motivation and do not feel fulfilled. $150 extra dollars? Can you skip those $5 espressos each day to make up the difference?

When goals are reviewed on a regular basis and there is not any progress, it is obvious it is not a top priority. Try to identify what’s holding you back. Maybe there are adjustments to actions or habits that will help you

stay focused and realize the goals you desire.

HOW TO ACT — Identify the ways you can accomplish your goals. Get creative. Ask someone else for their advice – a friend or mentor who wants to help you (just like you would want to help them).

Brainstorm ways to continue to make progress. There’s loads of inspiring content available on LinkedIn Learning, TedTalks and Harvard ManageMentor.

Carol Dweck has a book called Mindset as well as videos on YouTube that are informative. And I also recommend Atomic Habits by James Clear. It is a great read on changes that can be made to help achieve desired results.

Maybe it is the Texan in me, but I fully believe you have the ability to take your life by the horns. While there so much uncertainty in this unprecedented period, consider it an opportunity to reflect, plan and take control of – stay with me here – your own life, despite COVID. Lori Brooks is a director at The Siegfried Group, LLP, an accounting and leadership advisory firm. She can be reached at 404-772-7458 or LBrooks@siegfriedgroup.com.

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The Financial Manager • January/February 2021 17

LEADERSHIP PORTRAIT

A PASSIONATE

Force of Nature As Hearst Corp. and MFM create honors in Jeana Stanley’s name, her colleagues and staff members explain the impact she had on their lives.

BY TRACY CLARK & SUZANNE GRETHEN

18 The Financial Manager • January/February 2021

W

HEN SORTING THROUGH MORE

than 5,000 words about Jeana Stanley from colleagues and friends, we recognized something immediately. Stanley was greatly loved. Until her untimely death last June, she was Hearst Corp.’s vice president of finance and a member of MFM’s Board.

Hearst Television president Jordan Wertlieb, who was a co-worker, boss and friend to Stanley, sums her up this way: “Jeana was one of those rare people who brightened every room she entered. Her positive spirit, passion for our business and love of life was contagious.”

David Barrett, Wertlieb’s predecessor and a Hearst Corp. director, notes Stanley’s “dash of sass,” which he came to appreciate over the 16 years she was at the company. “In life we’ve all met a few special, standout people – individuals we cherish, think about often, who leave an indelible mark. Jeana Stanley is such a person,” he says. “What a personality, what spectacular personal qualities, warmth, wicked smarts, energy, compassion, great wisdom and judgement.”

Hearst Television executive vice president Frank Biancuzzo notes that she was “equally well-versed and passionate about making complicated financial issues as easy to understand as she was describing the ingredients of her favorite recipe.”

Her ability to show both warmth and intellectual insights was also noted by Mike Hayes, another Hearst TV executive vice president: “She always made room for personal connections, a laugh and a smile,” Hayes says. “She sought new ways to find good solutions to financial problems. I miss talking to her about her kids, my kids and the complexities two Midwesterners saw about living in New York.”

Stanley joined Hearst TV as controller at the WBAL television and radio stations in Baltimore in 2004. Three years later, she transitioned to the Hearst TV corporate staff in New York as vice president of finance. While there, she led the regionalization of the company’s accounting department.

Years later she was instrumental during the migration to new technology platforms for the finance and human resources departments.

PHOTO BY LUCY KENNEDY

In 2018, she took yet another well-deserved step up the Hearst career ladder to assume the role of Hearst Corp. vice president of finance, where she came to work more closely with Hearst executive vice president and CFO Mitch Scherzer. He refers to her as a “trusted partner who had nothing but the best interest of the company, her colleagues and those who reported up to her at heart.”

Jeana Stanley poses with Hearst Corp. colleagues at an MFM annual conference.

To her left: Miguel Velez; to her right: William Tobey and Anthony Sharper.

ROLE MODEL & COLLEAGUE Stanley was a mentor to several people within the Hearst organization. Among them is Sierra Dawson, a compensation specialist for the company. “Now more than ever, I’m aware of how much it meant to me to see a face that resembled mine achieving the highest levels of leadership and accolades, all the while reaching back for those following in her footsteps,” she says.

WBAL-TV business manager Patricia Washington describes how proud she is to stand on the shoulders of Stanley, a Black professional woman. “Jeana was influential and shattered glass ceilings as a financial professional,” she says.

In explaining how Stanley looked after her staff,

A LEGACY THAT LIVES ON

Hearst Corp. has created a fellowship in Jeana Stanley’s name that will create minority internships in the media industry.

Piggybacking on that effort, MFM is creating an award honoring Stanley. It will be bestowed on a media industry person or company that employs paid intern(s) from the nonprofit foundation and makes other contributions related to diversity.

MFM is also providing a full conference scholarship, the Jeana Stanley Scholarship, to an intern employed by the person or company that’s honored. More information about MFM’s new award and scholarship will be provided in following months on the association’s website.

The Financial Manager • January/February 2021 19

MORE THOUGHTS ON STANLEY

“Jeana was passionate about MFM and encouraged Hearst TV employees to be active.”

— John MacMillan, northeast region director of finance, Hearst TV

Leona McCarthy, business manager at WCVB-TV Boston, recalls a story that Wertlieb once related.

When he discussed changes or new initiatives with Hearst’s business manager group, Stanley would often respond by saying, “My people won’t like that.”

“That line defines what it meant to work for Jeana,” McCarthy says. “She always had your back. She fought instinctively and fiercely for her group.”

“Fiercely” is a word that Robin Spears, south region director of finance, Hearst Television, also applied to Stanley. “She was fiercely protective and supportive of her managers and the entire team both professionally and personally,” she says.

A similar sense of emotional investment is described by some of Stanley’s colleagues. Hearst Television’s senior vice president of technology, Al Lustgarten, who worked with Jeana over her entire career with the company, says: “Our relationship was based on a passion for working in local broadcast and a love for Hearst. Jeana was not only a competent and respected executive, she was an innovative, compassionate and engaged leader.”

“Our enduring relationship was born from the fact that she was determined to make things work,” adds another longtime co-worker, senior vice president of programming Emerson Coleman.

“From the minute I arrived she invested in me – not just as her employee but as a friend.”

— former finance team member Wendi Rosenblatt

“Jeana was the one everyone wanted to talk to. She was the one you wanted to sit next to at the luncheon. She was the one you went to for advice, and she was the one who truly enjoyed living!”

— Terri Owoc, director of central business operations, Hearst Television

“Being around Jeana was being surrounded by sunshine and laughter.

She was everything a young professional aspires to be, and I looked up to her every single day.”

— Alex Mejia, director FP&A, Hearst Television “She left us wanting more of her light, more of her laughter and good cheer.”

— Katherine Barnett, senior vice president of HR, Hearst Television

MFM's Board, with Jeana Stanley front and center.

STANLEY’S CONTRIBUTION TO MFM

A

S A MEMBER OF MFM’S BOARD, JEANA

Stanley served as the chair of the Membership Committee and eventually rose to become the Board’s treasurer and then its secretary in the current fiscal year.

Cindy Pekrul, a past MFM chairperson, recalls Jeana coming into Board meetings like a “whirlwind.”

When they first met, Pekrul wondered, “Who is this lady with a big voice, laughing all the time?” She soon discovered that Stanley had a natural gift for making it seem like she had known people for a long time, even when she hadn’t.

“No matter the circumstances, Jeana had a way of making you feel that you were the center of her universe at that moment,” adds Mary Collins, MFM’s president and CEO. Jeana was instrumental in organizing MFM’s Young Professional Committee and worked with Collins for

20 The Financial Manager • January/February 2021

over a year to get that off the ground. Stanley also rose to the challenge when COVID-19 concerns threatened to cancel the 2020 conference. “She even helped me edit the messages we ultimately sent to our members,” Collins says.

“Then, when we made the decision to move to a virtual conference, Jeana gave us time on nights and weekends to test our assumptions and make sure that we had a plan that the Board and the MFM/ BCCA membership would support.” One of her final contributions to MFM related to what that association’s response should be to the killing of George Floyd.

Collins reached out to Jeana for some guidance: “Acknowledging that I felt awkward asking her to be the voice for all of our Black members, I asked her if MFM and BCCA should be issuing a statement. She did not bristle or take offense, instead listening to me and helping me talk through the question.”

LEADERSHIP PORTRAIT BEYOND HEARST Tyler and Hannah Knighton, Jeana had a special talent for and her mom, Betty Earley, creating communities and who was Jeana’s “best friend.” strong bonds between others.

Always on the go, her tribe Both of us writing this article went on national and internawere not only professional tional adventures. colleagues of Stanley, but “Jeana was a shining light also members of Jeana’s Book for her family, colleagues and Club, otherwise known as The friends,” says Stanley’s former Bookworms. What started as boss, Hearst Television CFO a standing Friday night postJohn Drain. “More than anywork meet-up at the Italian thing else, Jeana was a person restaurant across the street from with a limitless caring heart the Hearst tower, evolved into a who always looked out for 10-member book club that met others’ welfare.”

Stanley surrounded by her family. From left: once a month over dinner (and For the two of us writing this brother Jimmy Earley; husband Randal Stanley; maybe a little too much wine). Jeana; daughter Hannah Knighton; mother Betty article, Stanley has left a lasting Earley; and son Tyler Knighton.

We held deep discussions impression. She was diligent, about books. But more importantly, there were re- had high expectations, listened to concerns and gave vealing conversations about life and the importance advice – always with a dash of humor. of strong support from a community of friends. This Jeana K. Stanley, who left us far too soon, will ingroup continues to meet monthly and our bond is a deed be missed. testament to the gift of friendship Jeana bestowed on us all.

Tracy Clark is senior director, finance, and Suzanne Grethen Although she was surrounded by work associates is senior vice president of promotion and marketing at Hearst and friends who valued her beyond measure, Stanley's Television. They can be reached at taclark@hearst.com and greatest treasures were her husband, Randal; her kids, sgrethen@hearst.com , respectively.

“[Stanley is] an earthly example of what I can be if I didn’t quit and strived for more.”

— Cher Stewart, business manager, KOAT-TV Albuquerque, NM “She always strived to do better and would not settle for anything less.”

— Cassandra Triggs, director of internal audit, Hearst Television

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The Financial Manager • January/February 2021 21

CABLE’S

YIN-YANG STATE

22 The Financial Manager • January/February 2021

MEDIA VALUATIONS

D

BY KIMBERLY M. RANDOLPH & LAURA K. SUNISLOE

ESPITE COVID-19, THE CABLE

industry continues to experience both a surge in subscriber growth, usage and profitability. At the same time, there’s an acceleration of the already waning traditional multichannel video revenues.

Above all, the pandemic has served to highlight the importance placed on high-quality, dependable home connectivity, particularly given the reliance on broadband networks for remote work, online education and telehealth services. The cable industry has met the challenge as more customers work and learn from home.

However, the economic burden many consumers and businesses are facing, particularly small businesses, is expected to impact the industry.

On March 13, 2020, the chairman of the Federal Communications Commission (FCC), Ajit Pai, issued a call to action to the cable industry to “Keep Americans Connected.” Specifically, he asked broadband and telephone service providers and trade associations to take the so-called Keep Americans Connected Pledge in order to ensure that Americans do not lose connectivity as a result of exceptional circumstances surrounding the COVID-19 crisis.

More than 800 companies and associations have signed the pledge, which waives late fees, expands Wi-Fi hotspots and defers the termination of service to any residential or small business customer due to nonpayment. Many of the pandemic-relief programs introduced by the cable operators include 60-day free access for low-income homes with school-age children. In addition, member companies of the NCTA - The Internet and Television Association pledged over $100 million in

public service advertising for community health education.

According to S&P Global Market Intelligence (S&P), an estimated 1 million high-speed data subscribers fell under a COVID-related relief plan in 2020’s second quarter across three multiple system operators (MSOs), which serve 82% of the cable broadband universe. Of the 1 million subscribers, Comcast Corp. served 600,000, with Charter Communications and Altice USA reporting 386,000 and 54,800 customers, respectively, in that period.

S&P estimates that the incremental revenue potential from this subscriber growth results in a substantial annualized $765.2 million.

(Note: This estimate is as of August 2020 and does not take into consideration third-quarter 2020 performance; an updated projection of the incremental revenue was not available at press time.)

In addition to customer additions associated with the relief programs, the pandemic has also resulted in considerable subscriber growth for cable operators. Wireline highspeed data (HSD) subscriptions grew more than 1.6 million in the third quarter, up from 595,000 year-over year, S&P reports.

The total number of subscribers, including residential and commercial, reached 112.9 million in the third quarter, up 4.7% from Q3 2019.

Even after accounting for changes in reporting due to subscribers associated with the Keep Americans Connected initiative, the cable industry’s broadband gains signal a continued shift to cable from telco, with total cable HSD customers of over 77 million, compared to telco HSD customers of around 36 million.

In the second quarter, Comcast reported its largest net adds amount since 2007, and

Multichannel providers may be losing video customers, but they’re more than compensating with broadband revenue. This is the third in a series of stories on the performance of various media sectors.

The Financial Manager • January/February 2021 23

that is excluding subscribers added under the COVID-19 relief programs.

TELCO LOSSES NARROW Other third-quarter figures show how the telcos have slightly reversed their overall slip in popularity. Their broadband losses were reversed in the third quarter. They added 207,000 net customers, a gain that was driven primarily by fiber subscriptions. This net gain resulted in a 0.6% sequential uptick after consecutive quarters of subscriber losses.

The larger players, including AT&T and Verizon Communications, reported subscriber growth that overcame legacy fiber-to-the-node

and digital subscriber line (DSL) losses for the quarter. In this regard, the smaller telco operators – including Windstream Holdings, Cincinnati Bell and TDS Telecomm – all increased their respective high-speed data customer bases.

Another key trend that has impacted the industry since the beginning of the pandemic, and as shelter-in-place orders became more widespread, is consumers’ desire for higher speeds and increased bandwidth.

Overall, the uptick in broadband usage and demand for higher-speed services suggests a continued trend towards faster, more valuable tiers across the industry.

Public MSOs — Revenue and EBITDA EBITDA Margin (%) Public MSOs — Revenue and EBITDA Margin $32 $31

$32

For the top 10 public cable operators, the subscriber gains and service upgrades helped push EBITDA (earnings before interest, taxes, depreciation and amortization) margins to a record 41.4% in the third quarter and led to a 3.8% year-over-year revenue gain.

The margin uptick was also driven by lower programming costs and a move toward self-installations as a result of precautions related to the pandemic. These factors were offset slightly by underperformance within the group’s residential video services segment.

Advertising revenue, typically a significant contributor in election years, rebounded sharply in the third quarter, after a 30% decline in Q2, driven by political spending Margin 42% and economy reopenings.

41%FACTOR THE STREAMING The pandemic has accelerated the shift $30 $31 40% 41% away from traditional multichannel and the Revenue ($1B) $29 $30 adoption of streaming video, particularly 39% 40% broadband-delivered subscription on-demand $28 $29 services. In addition 38%to consumers’ changing 39% $27 $28 video consumption preferences, specifically 37% the shift away from 38% over the last decade, $26 $27 multichannel is driven in part by a decline 37% $25 in affordability for36% these services. $26 Net gains of broadband-only homes more 35% 36% $24 $25 in the second quarter, with Q1’17 Q2’17 Q3’17 Q4’17 Q1’18 Q2’18 Q3’18 Q4’18 Q1’19 Q2’19 Q3’19 Q4’19 than Q1’20 doubled Q2’20 Q3’20 estimating SOURCES: IndustryS&P data; Kagan estimates that U.S. households not 35% $24 compiled 2020.

Q1’17 Q2’17 Q3’17 Q4’17Data Q1’18 Q2’18 November Q3’18 Q4’18 Q1’19 Q2’19 Q3’19 Q4’19 Q1’20 Q2’20 Q3’20 subscribing to traditional multichannel Includes Altice USA, Atlantic Broadband, Cable One (Sparklight), Charter, Comcast, SOURCES: IndustryShentel, data; Kagan services reached 38.2 million, or 29.5% of GCI Liberty (Cable consumer + business), Mediacom, TDSestimates (Cable) and WideOpenWest.

Data compiled November 2020. occupied U.S. households at the end of the Includes Altice USA, Atlantic Broadband, Cable One (Sparklight), Charter, Comcast, GCI Liberty (Cable consumer + business), Mediacom, Shentel, TDS (Cable) and WideOpenWest. second quarter. That is an 8.5% increase

EBITDA Margin (%)

Revenue ($1B)

42%

Comparing Index Values (January to November 2020) Comparing Index ValuesS&P(January to November 2020) MSO Index 500 MSO 100 Day Moving Avg S&P 500 100 Day Moving Avg

35%

25

MSO Index

S&P 500

MSO 100 Day Moving Avg

S&P 500 100 Day Moving Avg

15 5 -5 -15 -25 SOURCE: S&P Capital IQ

20 20 Fe b 02 20 0 20 Ap r2 Fe b 02 20 0 20 M ay M 20 ar 20 20 20 M ay M 20 ar 20 20 20 Ju n 20 Apr 20 20 20 Ju n 20 Apr 20 20 20 Ju l 2 Ma y2 02 0 02 0 Ju l 2 Ma y2 02 0 02 0 Ju Ju l2 n 02 20 0 20 Au g 20 Ju 20 n 2 02 Au 0 g 20 Ju 20 l 2 02 Se 0 p 20 Ju 20 l 2 02 Se 0 p 20 Ju 20 l 2 02 Oc 0 t 2 Au g 02 2 0 02 0 Oc t 2 Au g 02 20 0 20 No v2 Se p 02 20 0 20 No v2 Se p 02 20 0 20 Oc t2 02 0 Oc t2 02 0 No v2 02 0 No v2 02 0

20

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20 n

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20

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20

20 Jan 20

SOURCE: S&P Capital IQ

MSO Index includes AT&T, Altice USA, Cable One, Charter, Cogeco, Comcast, DISH Network, GCI Liberty, Shenandoah, TDS, Verizon, and WideOpenWest.

M ar

20

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20 Fe b

20

20

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-35

ncludes AT&T, Altice USA, Cable One, Charter, Cogeco, Comcast, DISH Network, GCI Liberty, Shenandoah, TDS, Verizon, and WideOpenWest.

24 The Financial Manager • January/February 2021

MEDIA VALUATIONS over first quarter 2020 and a 32.1% increase year-over-year.

Given the economic impact of the pandemic, it’s likely that U.S. households were looking to cut expenses. At a monthly $100-plus average cost, traditional multichannel services probably stood out as no longer affordable to many subscribers.

S&P projects that cable’s traditional multichannel segment will experience a 5.7% decline in its compound annual growth rate (CAGR) from 2019 through 2024. Overall, the cable industry accounts for 58.3% of traditional multichannel market share.

The downward trend also extends to the direct broadcast satellite (DBS) sector, which accounts for approximately 30% of the total traditional multichannel market share. S&P projects this sector’s CAGR will dip 15.9% from 2019 through 2024. Overall declines in the subscriber pool for the DBS segment are further exacerbated by expensive hardware

and installation and satellite’s limited broadband bundling options.

As evidenced by the cable sector’s performance in the public markets, the subscriber gains and consumer upgrades to more expensive packages have largely offset the weak growth and declines in video service.

OUTPERFORMING THE S&P Of the 12 publicly traded MSOs in the U.S., six outperformed the S&P 500 through the most recent year-to-date period (Jan. 1 to Nov. 23). MSO performance was bolstered in large part by Charter Communications and Cable One, which cited 31.5% and 29.1% increases, respectively. Their growth was driven by sizable subscriber gains (some of which were attributable to additions under COVID-19 relief programs).

Taken as an index, MSOs’ growth eclipsed 24.5% whereas the S&P 500 saw just a 9.8% rise over the year-to-date period. However,

M&A ACTIVITY SPRINGS BACK

T

HE CABLE MERGER AND ACQUISITIONS (M&A) LANDSCAPE RECEIVED A

boost in the second half of 2020 after a slow start to the year, with significant private equity deal making and activity among broadband providers.

A few of the notable transactions include: ■ San Francisco-based investment firm GI Partners announced its partnership with industry veteran Rich Fish to acquire Vast Broadband. Vast serves over 60,000 residential and business subscribers in South Dakota and Minnesota. S&P estimates the deal value at $418.9 million, or an estimated 11.1x projected forward EBITDA. ■ SDC Capital Partners LLC acquired a 48% stake in ALLO Communications for $197 million.

■ Cable One purchased a 45% stake in Mega Broadband Investments Holdings from GTCR for $574.1 million in cash.

■ Wren House Infrastructure Management acquired all of residential and commercial provider i3 Broadband.

■ Stonepeak Infrastructure Partners announced the acquisition of Astound Broadband, the sixth largest U.S. cable and broadband provider, from private equity firm TPG Capital LP for $8.1 billion. Astound had previously acquired RCN Corp. and Grande Communications. At $8.1 billion, Stonepeak’s purchase is the 12th largest cable M&A of all time according to S&P. It pushes the cable industry year-to-date deal volume as of Nov. 1, 2020 to an estimated $9.59 billion.

In addition, AT&T has renewed or continued its efforts to sell DirecTV. At press time, it was in talks with private equity companies to sell a significant minority stake in its DirecTV, AT&T Now and U-Verse pay-TV businesses, according to CNBC and The Wall Street Journal.

Under the terms of the proposed deal, AT&T would retain majority economic ownership of the business and would maintain ownership of the U-Verse infrastructure, including plants and fiber. The buyer would control the pay-TV distribution operations and consolidate the business on its balance sheet.

It is estimated the deal would be worth less than $15 billion to $20 billion, per the Wall Street Journal and CNBC.

not all MSOs fared equally, with three of the 12 companies included in the index showing a significant decline in share price ranging from -15% to -26%.

Prior to the pandemic (as of Jan. 1, 2020), MSOs averaged an enterprise value (EV), or EBITDA, of 8.48x, which is slightly higher than the current EV/EBITDA average of 8.31x (as of Nov. 23, 2020). With increased demand and subscriber upgrades, these multiples are projected to increase.

In comparison, forward EV/EBITDA multiples for the MSO index averaged 8.58x prior to the pandemic and have since returned to a current average of 8.63x. The relative stagnation in these multiples contrasts sharply with the MSOs’ ability to outperform the market.

This may suggest hesitation by investors to pay a premium in a volatile industry despite growing share prices.

As was true for other sectors, multichannel operators experienced a sell-off late in the first quarter. Share-price declines ranged from 10.0% (Charter) to 43.6% (DISH Network Corp.) over the period from Dec. 31, 2019 to March 31, 2020. Overall, MSO shares performed better than the S&P 500, which declined 20.0% during the period.

The MSO industry has typically proved to be resilient in economic downturns, given the subscription-based business model, which provides stable revenue and cash flows. For example, the recession that took place from December 2007 to June 2008 had a limited impact on the industry’s financial performance. In fact, total multichannel revenues increased 14% from 2007 through 2009, according to S&P. The industry did not, however, escape the sell-off during the dotcom bust in 2002; stock price declines ranged from 41% to 88% during this period. It is worth noting that the multichannel sector has experienced significant changes in recent years – notably, the increase in streaming services and decline of traditional multichannel video.

Despite its current headwinds, the cable industry has fared well relative to broader market and is on pace for a record year – both with regard to public company performance and deal volume.

Kimberly M. Randolph is managing director and Laura K. Sunisloe is vice president at the valuation advisory Stout. They can be reached at krandolph@stout.com and lsunisloe@stout.com, respectively.

The Financial Manager • January/February 2021 25

LAST WORD

Saving Local Newspapers

Trends are emerging that could point community publications in a more financially sound direction. BY PETER CONTI

S

ixty newspapers have closed during the pandemic, according to the Poynter Institute. And while others have managed to increase revenue – not huge numbers by any stretch, but enough to keep the presses rolling – it’s likely that more publications will fold before the current crisis ends. Local and community newspapers will bear the brunt of that.

We can only speculate on the long-term effects of the pandemic on newspaper publishing. We have not faced such a dramatic sociological shift since World War That was a tough situation for newspapers, II. It’s a catalyst that will precipitate signifbecause we all know that reading a newsicant changes in the way newspapers operate. paper on a smartphone can be excruciating, Traditional advertising has already been even with the best of apps. in a downward trend for many years but However, data show that smartphone has now collapsed dramatically. app usage is declining, except That source of revenue is not for the logical increase in video Newspapers going to bounce back when the conferencing services, such as pandemic is over. If a newspaper with a Zoom. is going to stay afloat, it needs People are now discovering paywall saw to change its business strategy. a much richer experience using a tremendous their desktop, laptop or tablet And fast. surge in paid COVID is forcing publishers to read their local newspaper subscriptions and other publications. People to become more creative and innovative. Many are turning to after the who were oblivious to their local digital subscriptions to increase newspaper are suddenly reading pandemic revenue. And that may be a the local paper online to underbegan. silver lining. stand what is going on in their To fully understand how community. (Nextdoor usage important this strategy may be, consider a has skyrocketed during the pandemic.) few recent trends related to how people are So, how can newspapers leverage this seeking to entertain or inform themselves shift in viewing habits? It’s now acutely at home. After news of the first COVID obvious that paid digital subscriptions are death in the U.S., on Feb. 29, 2020, vital in keeping a newspaper out of the red.

Facebook traffic roared up by 27% and Since the advent of the web, newspapers Netflix by 16%, all in just one month, have had difficulty convincing their readers according to SimilarWeb and Apptopia. It to pay for their online content. But that’s would not be a shock to learn that Netflix changing. Newspapers with a paywall saw had its most significant growth spurt ever a tremendous surge in paid subscriptions in the first half of 2020. after the pandemic began.

At the same time, another trend related For the last few years, national and daily to smartphone usage has started to reverse newspapers have realized a year-over-year itself. In the past, services like Facebook increase in digital subscriptions. At some and Netflix found their customers major newspapers, the digital subscription increasingly shifting to their smartphones revenue has kept ahead of advertising and as people were more and more on the go. legacy subscription losses.

26 The Financial Manager • January/February 2021

There has to be a significant initiative for local and community newspapers to reinvent their newspaper, improve the online experience and sell paid subscriptions. Newspaper management teams must have a laser-like focus on building the digital side through paid subscriptions.

Few newspapers are the size of The New York Times. Still, it is interesting to note that the paper recently announced that in third-quarter 2020 – for the first time ever – digital subscriber revenue was bigger than the revenue from the print subscriptions.

That success can help smaller newspapers understand the potential of digital revenue.

A Poynter report from April 14, 2020, delivers a concise declaration related to this: “A quality news report and user-friendly experience are essential to the transition from print to digital. Hardly anyone will pay for a meager serving of local content, digital or print. And way too many newspaper sites are a pain to access and navigate ... Print readers will need a nudge to switch, as newspapers simultaneously face the necessity of capturing new audiences willing to pay.”

When implementing a digital subscription, a newspaper can now add extras not available to free users. They might include personalized breaking-news emails, photo galleries, local public-employee salaries and much more information that users will not find anywhere else.

Now is the time for regional and community newspapers to assess what content they are providing online at no cost. Digital subscriptions may be a way to keep newspapers and local journalism alive.

Peter Conti is general manager of Editor & Publisher magazine. He can be reached at peter.conti@editorandpublisher.com or editorandpublisher.com.

Cheers to a half century of collecting MORE media client debts MORE often!

1971–2021

In 1971, Pete Szabo recognized an opportunity to fill a gaping hole in the media finance business. The industry needed expertise in collecting media and entertainment accounts receivable. Szabo Associates met that need and founded the media collection industry. Today, 50 years later, we’re still exceeding our clients’ expectations by delivering MORE. Through the decades, the Szabo brothers guided the company through thoughtful growth, collected MORE debt than all other competitors combined, and committed to earning long-

term relationships. All along, we realized that the key ingredient to Szabo’s success was you, our amazing clients.

We are grateful.

No other media collection company has MORE experience or deeper understanding of the intricacies of collecting media and entertainment debt.

No other media collection company delivers MORE service from long-tenured employees—it’s our promise and our passion.

We work on contingency collecting media and entertainment debts

worldwide; advertising for every medium, content distribution, affiliate and retransmission, licensing, production, and MORE. Our staff’s intensive training in diplomacy and negotiating assure that your valuable client relationships remain solid. MORE services round out our capabilities, including our proprietary database DebtorNet,® Szabo 411, and working as an in-house collections department for you.

Thank you for 50 years, and here’s to the next 50. Cheers!

MORE is better than less.

Szabo Associates, Inc. • 404-266-2464 • www.szabo.com • info@szabo.com