TFM: The Financial Manager May/June 2021

INFORMATION AND INSIGHT FOR MEDIA FINANCE PROFESSIONALS MAY/JUNE 2021 THE FINANCIAL MANAGER

HELPING US FLOURISH

Seven outstanding members and two companies with stellar diversity records are picking up MFM and BCCA’s annual awards.

ALSO INSIDE

Google’s Antitrust Woes Esports Revenue Models Tending to the Culture Remote Worker Taxes

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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:

10 Bringing Down the Giants (or Not)

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

A variety of congressional and legal actions are taking dead aim against Google and Facebook. And they could have major ramifications.

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

BY MARK J. PALCHICK

16 Culture During the Crisis

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

Rates and specifications on request to:

A huge wave of new ideas about how to maintain optimal levels of performance and communication surfaced during the COVID-19 pandemic.

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

BY CINDY PEKRUL

SPECIAL REPORT:

media valuations

20 A World Apart

Subscription $69.00 per year.

Copyright, 2021. All rights reserved.

Four major types of participants in the esports business are experimenting with revenue streams that can be quite compelling, for the right investors.

What is MFM?

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 KIMBERLY M. RANDOLPH & COLIN M. O’BRIEN

SPECIAL REPORT: 2021 award winners

25 How Our Garden Grows

Eight awards pay tribute to some very generous contributors to MFM and BCCA along with two companies with ambitious diversity agendas.

BY JANET STILSON

Intro........................................................25 Hearst Corp. & Hearst TV.............26 Mary McKenna................................... 27 Lori Brock.............................................28 Jerry Calixto.......................................28

John Sanders......................................28 Neuhy Hubush....................................29 Christine Pecher...............................29 Darren Wilson.....................................29

DEPARTMENTS 4 From the President Greatest Treasures 7 Human Factor Superficial Thinking 8 Credit Where Due Building Team Spirit

9 Board of Directors With Association News 24 Call for Nominations People to Watch 30 Last Word Taxation Aggravation The Financial Manager • May/June 2021 3

FROM THE PRESIDENT

Our Greatest Treasures

Human capital could become increasingly important as businesses move past the pandemic crisis into new areas of focus.

T

he other night over dinner – socially distanced and eaten outdoors – I was talking with a friend who consults with start-up companies. He contends that COVID-19 and its aftermath are changing businesses’ strategic focus.

According to his line of reasoning, before the pandemic all companies focused on profit and loss. Shutdowns moved attention to balance sheet and cash flow. Once offices reopen, the emphasis will shift to human capital. To remain successful, companies will need to attract and retain the best talent.

I thought of that conversation when I read the pieces for this issue of TFM. Our cover story, written by TFM editor Janet Stilson, profiles the 2021 award winners to be honored during Media Finance Focus 2021 – again being held virtually. These people represent MFM and BCCA’s human capital; they are the volunteers who help the associations fulfill our mission to members.

Cindy Pekrul, a former MFM/BCCA Board chair and a former executive at WarnerMedia, deftly moderated a March roundtable about returning to work. She also contributed an insightful article about maintaining corporate culture during the pandemic. This is important information for leaders and employees.

Three columns also have a human capital focus. In “Human Factor,” Josef Martens tackles – head on – the question of uncertainty. He urges leaders to question their unconscious biases and Josef Martens urges accept that uncertainty is part of the job. leaders to question their “Credit Where Due,” written by Dan McCall, senior manager, U.S. credit and collections for Disunconscious biases and accept that uncertainty covery Communications, focuses on the tension between sales and credit teams. McCall offers three is part of the job. steps to “optimize the relationship.” Even our “Last Word” column, written by TEGNA senior director of tax, Sean Hetzler, focuses on human capital (along with the notion that taxes are always a certainty). Accommodating remote employees can expose companies to unanticipated tax expenses; some analysis before making a decision may be wise.

Two other articles round out this issue of TFM. First is an in-depth look at the move to curb market power currently held by Google and Facebook. Lerman Senter attorney Mark J. Palchick looks at both the findings from a 2020 congressional investigation and lawsuits pending against the two behemoths. A sidebar covers the December 2020 antitrust lawsuit that was filed against Facebook by the Federal Trade Commission along with 46 states, Washington, D.C., and Guam.

Our media valuation feature, written by Stout managing director Kimberly Randolph and analyst Colin O’Brien, offers a deep dive into the business of esports. It’s a newish business with a variety of different potential revenue models and streams. Unlike with other sports competitions, esports games involve intellectual property owned by companies. This directly affects the development of leagues. Investments in franchises also work differently from those for traditional sports. Even the rules around players seem to vary from those for other pro sports franchises. Finally, as outlined in a sidebar to the article, the content platform is an integral part of the business.

As Martens writes in his column, uncertainty is part of what leaders are paid to handle. One of the best ways of doing that is to take advantage of the expertise available from your MFM and BCCA network. And, if you are looking for ways to improve your human capital equation, research shows that investing in employees – offering things such as association membership and participation – pays off. As our conference theme promises, we can move Mary Collins is president and CEO of MFM and BCCA; Mary.Collins@MediaFinance.org.

“Together Toward Tomorrow.”

4 The Financial Manager • May/June 2021

EDITORIAL ADVISORY BOARD SALLY BUCKMAN Member Lerman Senter PLLC DENISE DWYER Accounting Manager/Assistant Controller Morgan Murphy Media —West 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 SEAN HETZLER TEGNA Inc. JOSEF MARTENS NAT McCALL Discovery Communications COLIN M. O’BRIEN Stout MARK J. PALCHICK Lerman Senter PLLC CINDY PEKRUL KIMBERLY M. RANDOLPH Stout

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HUMAN FACTOR

Victims of Superficial Thinking

Conclusions are often shaped by personal biases or false assumptions. Learn how to identify mental traps that can obscure the truth. BY JOSEF MARTENS

“T

here is so much uncertainty at the moment.” I’ve heard a lot of people say that lately, and I have some big problems

with it.

First, there has always been uncertainty. Moments of certainty have been – and always will be – an illusion. In reality, we don’t have control over the future. Secondly, as leaders in our organizations it is our job to deal with uncertainty. That’s one of the main reasons senior folks get higher salaries. It’s to find answers to complex, ambiguous and uncertain problems.

Every time people in senior roles say that there’s more uncertainty today, I’m amazed they really believe what they are saying. How did they come to this conclusion? It’s because they have become victims of their own superficial thinking. That can happen to all of us if we’re not paying attention to our own patterns of thought.

There are three common mental traps that we need to pay attention to. Let’s look at each one in turn.

AVAILABILITY HEURISTICS — How would

you respond if I asked you: “Does the U.S. have more librarians or farmers?”

If you don’t happen to know the numbers (like most people), you might give me a gut answer. Your reaction will depend on whether you live in an urban or rural setting. In all likelihood, it will be based on your experiences and what you remember.

We make assessments and decisions based on our available information all the time, answering questions like: “Is the milk in the fridge still okay?” or “What’s the shortest route to work at 6:45 a.m.?”

Dramatic events get emphasized in the media, and it can lead us to make faulty assumptions that certain events are more (or less) likely to occur. What’s more likely: being struck by lightning or attacked by a shark?

How do we become more conscious of

what we are assuming? Notice what you pay attention to. Where do you get your information? Just because you know an example or an anecdote that relates to a certain situation doesn’t mean you’ve determined a general rule. Seek contrary data to your beliefs.

(There are more farmers than librarians.

And a lightning strike is more likely than shark attack.)

becomes increasingly more difficult to understand.

This results in an unfounded and overconfident way of thinking. It is the key ingredient for a divided society and an “us vs. them” mentality. Challenge yourself to imagine what will happen if you choose to look for evidence that supports a different position. It may not change your mind, but it could help you see a different view. At a minimum, it will allow you to connect better with people who hold a diverse set of ideas.

FALSE DICHOTOMIES — Are you an in-

Confirmation bias shapes how we select information and how we evaluate it. Our memory can more easily recall details that support our position.

CONFIRMATION BIAS — Consider three more

questions. Do beggars abuse alcohol? Are people below the poverty line more violent? Will gun control make the country safer?

Our answers depend not just on the information we have, but also on our belief system. Oftentimes, people choose information that they deem credible based on their beliefs, and that confirm their beliefs.

Confirmation bias shapes how we select information and how we evaluate it. Our memory can more easily recall details that support our position. We find it easier to remember stories of confirming facts and data.

Over time, we become more entrenched in our way of thinking, and a different position

trovert or an extrovert? Is white wine better or red wine? Should you lose weight through more exercise or better eating?

These questions are examples of false dichotomies. They suggest that there are only two possibilities, and they suggest that you have to make a choice.

You probably realize that there are additional options to consider. Or you may think of combinations in the answers.

The examples seem harmless but consider the implications of this statement: “You’re either in favor of the Black Lives Matter movement or you’re against it.”

That may appear subtle, but it labels those who do not fully support BLM as adversarial. It leaves out the options of being neutral, unsure, a little bit of both or looking for a balance.

When faced with false dichotomies, get clear about what is good and what is bad about all the options.

When we apply a critical analysis to our thought process, it leads to better decisions for our own personal growth and that of our companies.

Josef Martens helps organizations dramatically improve their performance. You can reach him at JM@JosefMartens.com or (240) 938 1274.

The Financial Manager • May/June 2021 7

CREDIT WHERE DUE

Building Team Spirit

An adversarial relationship between credit and sales departments can be transformed by taking three simple steps. BY NAT McCALL

“O

h East is East, and West is West, and never the twain sha ll meet.” So said the great Rudyard Kipling in “The Ballad of East and West,” written in 1892. The modern version of that in today’s corporate world may well be: “Sales is sales, and credit is credit – never shall the two meet.” It’s a classic paradigm within most organizations, but really shouldn’t be. Rather than thinking of the relationship between the two departments as a necessary evil, one should look at it as symbiotic.

Each team works for the benefit of the other. Simply stated: “No sales equals no credit, and no credit equals no sales.” The modern credit department should partner with sales departments and view them as equals. Sales teams usually have quicker customer insight and better contacts when the need arises. Three simple steps are key to optimizing the relationship: gain trust, explain the “why” and partnering.

department. This false moniker can be easily avoided when time is taken to walk salespeople through the credit process and help them understand the “why” at each step of the way.

Explain that the credit application is needed to obtain the proper legal name of the company we’re doing business with and

well established in the industry.

“Yes, but” decisions are likely to result in a low credit limit, strict terms and suspended delivery if terms are not met.

Look for ways to say “Yes.” When needed, do not be afraid to ask salespeople for more information or a direct contact. A letter of guarantee, personal guarantee or cross corporate guarantee could mean the difference between yes and no.

PARTNERING — Once the credit

department has gained trust and explained the rationale of credit decisions, the two departments can actually work together. Credit managers can let salespeople know when companies make moves that might allow for more spending. By helping at the front end of the “hunt,” credit teams can steer sales teams away from deals that might not pan out or provide too much risk. This allows salespeople to focus on the most beneficial deals for the company.

Sales and credit departments are Look for ways to say “Yes.” When needed, two sides of the same coin. Both GAIN TRUST — When trying to do not be afraid to ask salespeople for balance each other out; both will improve the credit-to-sales cycle, it is more information or a direct contact. have shortcomings. Salespeople will critical to meet with sales personnel bring some bad deals to the table. and their leadership. Have an open dialogue contacts for billing and payment requests. The credit department will make some bad about the order-to-cash cycle. Find out what It also allows us to check credit and create a decisions. Both are indicators of healthy is working, what needs to be tweaked and customer record showing that the customer risk to fuel growth of an organization. The what is unnecessary. agrees with our terms of business. common denominator is that both departWhen it’s possible, draw the process out In the review process, keep the sales team ments are selling. Sales is selling the reason on a whiteboard. Identify each pain point engaged with what you see or don’t see as why a customer should pick their product. and suggest a solution. Commonly, the you are checking credit, references and the Credit is selling the credit department is at the end of the cycle; like. When gaps in information emerge, ask customer on why they it’s notified only when a given deal is closed salespeople to fill them in immediately; do should pay on time, as and ready to go to order. Propose that credit not wait until the end to provide a laundry “it’s not about collectmanagers be at the forefront of conversations list. Once a decision is reached, let the sales ing money, it’s about in the sales process so that all information team know promptly. eliminating objections needed to make a sound decision is obtained Explain that credit is denied when a com- to payment.” from the beginning. This paradigm shift pany’s financials don’t support the amount of helps lead to the second step. business requested. There may be too much Nat McCall is the senior manager, U.S. credit legal activity or an onerous company history. and collections, at Discovery Communications.

EXPLAIN THE “WHY” — Oftentimes, “Yes” decisions relate to strong financials.

He can be reached at (865) 985-7787 or nat_mccall@discovery.com. the credit department is seen as the “no” Or the company may be publicly traded or

8 The Financial Manager • May/June 2021

ASSOCIATION NEWS

MFM

BOARD OF DIRECTORS As of July 2020 CHAIRMAN MELISSA MITCHELL Bonneville International PRESIDENT & CEO MARY M. COLLINS MFM/BCCA VICE CHAIRMAN/CONFERENCE CHAIR DAVID BOCHENEK Sinclair Broadcast Group

2021’s Steve McIntosh Scholars

MFM is pleased to report that we had a bumper crop of Steve McIntosh Scholarship applications this year. There were such outstanding candidates that the organization decided to honor more than one.

To qualify, applicants were required to be employed by a media company; to have no more than five years’ of experience in media; and to be less than 25 years old as of Feb. 28, 2021. Each scholarship recipient receives a full annual conference registration. Congratulations to: SETH BISHOP, regional accountant,

Sinclair Broadcast Group CHRISTIAN GUTIERREZ, senior technical analyst, The McClatchy Company MARIA HERNANDEZ, business assistant, Lotus Sacramento JASON KOBER, senior director of programming accounting, NBCUniversal

JEFF LEHMAN, business manager,

Sinclair Broadcast Group

CAYLA McGURN, business manager,

Hubbard Broadcasting

XIYU (CHRISTINA) WANG, financial analyst,

Tribune Publishing

ARIK YDE, assistant regional controller,

Sinclair Broadcast Group

We look forward to seeing them in conference sessions.

SECRETARY/CONFERENCE CO-CHAIR MIKE LAVEY Tribune Publications TREASURER DAVE BESTLER Hubbard Radio IMMEDIATE PAST CHAIRMAN RALPH BENDER Manship Media

MFM/BCCA DIRECTORS MARCUS ANJEWIERDEN Deseret Management Corp.

TRACY CLARK Hearst Television

PAUL RAHMLOW Midwest Communications

DEE STEVENSON Gray Media Group

STANLEY HERRIOTT Hearst Television

ELIZABETH BRAMOWSKI Entercom

LORI LOCKE Discovery

CLIFFORD EJIKEME A+E Networks

ANTONELLA RICCIARDI NBCUniversal/ Telemundo

SEAN HETZLER TEGNA

PAUL KELLY KTRK-TV/ABC/Disney

JENNA HARDY Gearbox Software

DAN MCGUIRE KPMG

CAL MOSTELLA WarnerMedia

BCCA Board Member Rep

KIM PARKER Graham Media Group

The Basis for Your Decisions

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

JENNIFER HURLEY The Washington Post

MARIE TEDESCO Beasley Broadcast Group

CHRISTINE OLIVER Deloitte & Touche

BOND & PECARO

ED IENNER Meredith Corporation.

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

The Financial Manager • May/June 2021 9

BRINGING DOWN THE GIANTS (OR NOT)

10 The Financial Manager • May/June 2021

REGULATORY & LEGAL MATTERS

A variety of congressional and legal actions are taking dead aim against Google and Facebook. And they could have major ramifications.

BY MARK J. PALCHICK

I

F YOU’VE BEEN AROUND A TODDLER, YOU PROBABLY

played the “how big” game. How big is baby? Is baby so big? Similar how-big questions are being asked about Google and Facebook these days, but with deadly seriousness. And the consequences could have a dramatic impact on the two giants’ market power.

The U.S. Congress, Federal Trade Commission (FTC), a plethora of state attorney generals and a large newspaper have concluded that both companies are too big. They contend that Google and Facebook became that way by acquiring or killing off competitors; creating barriers to entry; and through collusion – all in violation of antitrust laws.

These allegations are particularly troubling when combined with the fear that Facebook and Google have become instrumental in forging and reinforcing political divisions in the United States. (For more on that, watch the Netflix documentary “The Social Dilemma.”)

The antitrust regulation of technology and media companies has ebbed and flowed over the years. At the previous zenith of regulation, AT&T was broken up; prohibitions were placed on common ownership of television stations with newspapers; and limits were placed on how many outlets a broadcast media company could control. In recent years all of these restrictions were substantially lessened. In fact, 2017 was a low point for media regulation.

The pendulum has swung back from 2017 with a vengeance.

■ Last year the House of Representatives and the Senate released massive reports on the anticompetitive activities of Google and Facebook, as well as Amazon and Apple.

■ In late 2020 the FTC and several states filed antitrust suits against Facebook and Google.

■ In January 2021 HD Media sued Google and Facebook claiming that they monopolized the digital advertising marketplace and strangled a primary source of revenue for newspapers across the country.

■ On Feb. 4, 2021, the Competition and Antitrust Law Enforcement Reform Act of 2021 was introduced by Sen. Amy Klobuchar. Hearings on the proposed Senate bill are scheduled in the near future.

What follows is a summary of the major antitrust claims.

2020 CONGRESSIONAL REPORTS

The U.S. House Judiciary Committee’s Subcommittee on Antitrust, Commercial and Administrative Law concluded its antitrust investigation into the digital advertising market with a 470-page report last October. The Report, as it’s called, was preceded last September by a hearing about whether or not Google has harmed online advertising, which was held by the U.S. Senate Judiciary Committee’s Antitrust, Competition Policy and Consumer Rights Subcommittee.

Although The Report acknowledged that Google, Facebook, Amazon and Apple delivered clear benefits to society, it determined that their dominance came at a price. It also found that each platform now serves as a gatekeeper over a key The Financial Manager • May/June 2021 11

REGULATORY & LEGAL MATTERS channel of distribution and, by controlling access to markets, these giants have picked winners and losers. The Report concluded that the companies diminished consumer choice; weakened the vibrancy of the free and diverse press; and undermined Americans’ privacy. It also determined that the rise of these organizations’ market power online has materially weakened innovation and entrepreneurship in the U.S. economy.

Overall, The Report signals a significant shift. It focused on the barriers to entry created by these companies’ market dominance.

Traditionally, congressional antitrust probes have determined whether a certain company’s dominance has caused, or will cause, consumers to pay more for goods and services.

ACTIONS AGAINST GOOGLE Last October, the U.S. Department of Justice and several states sued Google. Two months later, on Dec. 16, 2020, the attorneys general (AGs) of Texas and nine other states filed a lawsuit against Google in federal court in Texas.

A day later, the AGs of Colorado and 37 other states filed a separate lawsuit against Google in federal court in the District of Columbia.

All three suits allege that Google cornered

FACING OFF AGAINST FACEBOOK

A massive lawsuit filed on dec. 20, 2020 takes dead aim at facebook.

the market in digital advertising and searches, and that it used this to strengthen its dominance as a search engine for desktop, mobile and personal digital assistants (like Alexa and Apple’s Siri). When its ability to control the market and favor its own advertising was threatened, Google conspired with Facebook to freeze out rival advertising platforms, according to the lawsuits. They also claim that Google’s dominance has created substantial market barriers that prevent competitors from successfully entering the market.

Congratulations Neuhy Hubush for receiving the 2021 MFM Rainmaker Award.

We are proud to have you on our team and part of the Gannett | USA TODAY NETWORK!

NEUHY HUBUSH Controller | Gannett

IT WAS

filed by the FTC and 46 states, as well as Washington, D.C., and Guam. The suit builds on the findings of The Report and further alleges that Facebook’s market power was obtained in violation of the antitrust laws.

Facebook’s acquisition of Instagram and WhatsApp were done primarily to thwart two rising competitors, the suit alleges. It also contends that when Facebook couldn’t purchase Vine, it froze the smaller competitor out from network connectivity. What’s more, Facebook conspired with Google to cut off the access of advertisers to digital ad platforms that competed with Google, according to the suit.

The lawsuit asks the court to break up Facebook, place increased scrutiny on any of its future acquisitions and free up access to the data it acquires.

The suits contend that one of Google’s strengths is its ability to gather data on consumers and then market that information to other advertisers. At the same time, it competes for advertising dollars with the marketers that bought its data.

The relief sought against Google is similar to the relief sought against Facebook: make it smaller and prevent it from using its market power to dominate the market.

HD MEDIA’S SUIT Much of the newspaper publishing industry’s woes result from the anti-competitive actions of Google and Facebook, either directly or indirectly. That’s according to HD Media, a publisher with several newspapers in West Virginia, which has filed suit against Google.

HD Media claims that Facebook and Google’s anticompetitive practices are a major reason why newspapers throughout the U.S. are in rapid financial decline. Both companies have monopolized the market for digital advertising to the detriment of newspapers, according to the suit. And in an interesting twist, the suit alleges Facebook and Google’s anticompetitive actions has restricted freedom of speech.

Newspapers can’t compete in the digital advertising arena with Google and Facebook because of their extremely powerful ad exchanges and a special agreement between them, the suit contends.

Approximately 86% of online display advertising space in the U.S. is bought and sold in real-time on electronic trading venues, known as advertising exchanges or ad exchanges. They are the trafficking systems that connect advertisers with publishers selling inventory. The exchanges also include analytic tools that measure ad campaign Continued on page 14

12 The Financial Manager • May/June 2021

REGULATORY & LEGAL MATTERS GIANTS—Continued from page 12

efficiency, including consumers’ interactions with an ad. Similarly, the platforms aggregate and store consumer data from various sources and process the data for analysis. Advertisers and publishers use the data to track, partition and target consumer audiences across websites.

The HD lawsuit claims Google and Facebook control the majority of the digital advertising market in the U.S., capturing nearly all of its growth in recent years. Google operates the leading trading venue and the leading intermediaries that buyers and sellers go through to trade. At the same time, Google itself is one of the largest sellers of ad space.

Google’s ad exchange shares trading information and speed with the Google-owned intermediaries. Buy and sell orders are steered

by Google to its own exchange and websites (for example, Google Search and YouTube).

As such, Google abuses its access to inside information, the suit alleges.

Newspaper publishers sought to break Google’s stranglehold on the ad exchange market by setting up their own exchange, called Header Bidding. It routed ad inventory to multiple

14 The Financial Manager • May/June 2021

neutral exchanges each time a user visited a web page, identifying the highest bid for particular inventory. By 2016, about 70% of major online publishers in the U.S. had adopted Header Bidding and provided a competitive alternative to Google, according to the suit.

Google introduced a service called Open Bidding in retaliation, the suit claims. It was integrated into Google’s ad tech stack and suppressed use of Header Bidding by introducing a fee to advertisers when Header Bidding ads were purchased via Open Bidding. Making matters worse, Open Bidding adopted Accelerated Mobile Pages (AMP), a service that strips down HTML files so that web pages are loaded more quickly on mobile devices. Its framework made Header Bidding incompatible with Open Bidding.

Google also discontinued ranking the pages of sites that did not adopt AMP. According to the complaint, this maliciously rendered “such sites nearly invisible to Google searches.”

Ratcheting up the competitive threat further, Google created the “minimum bid to win” feature in 2019, according to the suit.

This feature allowed buyers using Google’s software (as opposed to Header Bidding) to

receive extra information that allowed them to adjust their bidding strategy and potentially buy the same inventory at a cheaper price.

Header Bidding was adopted by Facebook in its early years. But Google and Facebook reached an agreement that favored Open Bidding, giving Facebook various forms of preferential treatment, the suit claims.

HD Media is seeking treble damages, punitive damages and/or restitution. And it asks the court to stop Google and Facebook from continuing their anticompetitive conduct.

As the congressional reports and the various lawsuits progress, media observers are also keenly aware that Facebook and Google are key resources for the dissemination of news and information. As such, their behavior as corporate citizens spill beyond mere questions of antitrust and competition into the area of freedom of speech and an informed electorate.

Time will tell what results will spring from the legal and regulatory actions, and whether or not more are to follow.

Mark J. Palchick is an attorney with Lerman Senter PLLC. He can be reached at (301) 602-6130 or mpalchick@lermansenter.com.

HUMAN RESOURCES

A huge wave of new ideas about how to maintain optimal levels of performance and communication surfaced during the COVID-19 pandemic.

CULTURE DURING

THE CRISIS

16 The Financial Manager • May/June 2021

I

BY CINDY PEKRUL

n march 2020, indeed.com published an

article titled “What is Work Culture?” The story defined it as a collection of attitudes, beliefs and behaviors that make up the regular atmosphere in a work environment. A place where healthy workplace cultures align employee behaviors and company policies with the overall goals of the company, while also considering the well-being of individuals. An employee’s attitude, work-life balance, growth opportunities and job satisfaction all depend on the culture of your workplace.

That’s all well and good. But what happens when a global pandemic throws a punch that hits your company’s culture square in the proverbial jaw? How do you recover and come out stronger on the other side?

I checked in with some top financial leaders in the media industry and discovered that they employed a variety of actions to maintain and strengthen the dynamics between those who were steering the company “ship” and those further down in the ranks.

W h i le t he pa ndem ic h a s evolved into a situation where people and companies are learning to adapt and vaccines are bringing us a light at the end of the tunnel, the learnings gained will continue well into the future. 2020 and 2021 have certainly brought a “lasting” seismic shift to workplace strategies.

Before describing the many solutions that were shared with me, let me first acknowledge that the media industry is no stranger to disruption. Yet, even for an industry used to changes and pivots, the pandemic resulted in a variety of “where do we go from here now?” scenarios. The immediate focus may have been revenues, cash flow and over-thetop platforms. But parallel to that, financial leaders needed to ensure that employees had virtual connectivity, access to systems and each other. Immediate needs focused on different ways of keeping employees safe. And at the same time, many managers worked to address the emotional impacts employees would face from the quick and massive disruption caused by the pandemic.

It is a testimony to technology, cloud-based solutions, video conferencing capabilities and human grit that day-to- day operations continued in the face of societal shutdowns. The big takeaway is that most companies moved to a remote work environment successfully.

Discovery put a big focus on making home offices work with the same productivity as the traditional office environment. “We learned a lot about our employees during this time,” says Lori Locke, executive vice president and chief accounting officer at Discovery. “As the pandemic goes on longer, we keep rethinking and will continue to rethink because the goal posts keep moving.”

LINES OF COMMUNICATION That sentiment is common among other companies.

Robin Szabo, president of Szabo Associates, says the transition at his company to a remote work environment was pretty seamless but not without its hiccups. There was a difficulty with the phone systems, forwarding calls from desks to employees’ mobile devices. This was solved quickly with a new system.

There were other issues for media-related companies as well. It was quickly apparent to many that one video conferencing platform was not going to cut it. Employees needed access to a variety of them, and IT teams needed to support the flexibility. Some companies set up a policy to reimburse employees for their office setups and supplies while others set the tone with clear guidance on flexibility with work hours.

These solutions are even more important for organizations planning to eliminate some business locations. Mike Lavey, interim CFO at Tribune Publishing, says that his company is reducing its footprint for its financial shared services team and converting to a 100% remote environment with a small office space that will be used for essential in-office needs like check printing and training sessions.

It’s been essential, during the disruption and for companies with longer-term hybrid work environments, for employees to remain connected to their leaders and feel like they are still supporting

The Financial Manager • May/June 2021 17

HUMAN RESOURCES a common goal and vision. Shane Johnson, vice president and group controller at WarnerMedia, said that his company asked its senior leaders to create videos showing their work-from-home situation. They shared some of their own challenges when work lives and home lives collide. “This really went a long way to humanize our leaders and show vulnerability,” Shane says. The videos not only created a sense of empathy, but they also showed WarnerMedia’s employees that their leaders remained focused on guiding the company through the challenges ahead.

Johnson is a member of the WarnerMedia F&A (Finance and Administration) Talent Council, which published a set of 12 tips to help employees achieve a work life balance in the home-office environment. (See sidebar,) The council also asked managers to overcommunicate so their teams stayed informed. And at the same time, the council stressed the need to remain open and honest about resources and flexibility so that everyone could be productive.

Even with travel restrictions, the WarnerMedia council viewed time off as important.

And as part of that “staycations” was seen as a path toward rejuvenation.

WORKING ENVIRONMENTS Ginny Hernandez, CFO of Georgia-based Trilith Studios, notes that flexibility is key, especially in a period where health, family and self-care need to take priority. Trilith took a hybrid approach that involved employees who worked on the lot and others who worked from home, depending on the need and with strict safety and testing protocols.

The company plans to bring all teams back on-site eventually, but with new technology capabilities. It includes an LED-equipped virtual production stage that can simulate scenes that would typically require travel or hundreds of extras. Those groups within Triluth that can work effectively in a remote environment will have the option to do so.

The media industry financial leaders contacted for this story say that a 100%

ACHIEVING WORK-LIFE BALANCE The WarnerMedia F&A (Finance and Administration) Talent Council put together a tip sheet to help guide managers and staff members during the remote working environment. Here’s an edited version of its suggestions.

1. TAKE TIME OFF — Book a relaxing

staycation; even if you can’t travel, everyone needs a break from work.

2. FIND EFFECTIVE DE-STRESSORS — Move around. Set time for exercise, meditation, teatime or reading. Consider the pomodoro technique: work for 25 minutes followed by a five-minute break throughout your workday.

3. COMMUNICATION IS KEY — Leaders should overcommunicate to their team(s) so they stay informed and feel connected. Staff members should be open and honest with managers about the resources and flexibility needed to stay productive.

4. BE AVAILABLE — Set aside and share open office hours so your team can connect with you without an appointment. (It’s like a virtual peek in the office door.)

5. NETWORK — Just because you’re at home doesn’t mean you can’t connect. Take (or create) opportunities to network by socializing virtually with peers and leaders.

6. ENCOURAGE NEW LEARNING — Webcast for continuing professional education (CPE); attend virtual industry conferences; read trade articles.

18 The Financial Manager • May/June 2021

7. ESTABLISH AND DEFEND WORK/HOME BOUNDARIES — Block adequate time for

breaks. When working alternative hours, use the schedule feature in Outlook to avoid disrupting your colleagues’ home time.

8. BE ADAPTABLE — Allow yourself more flexibility to manage work and family priorities. Practice attention management over time management.

9. AVOID OVER-SCHEDULING FRIDAYS — Allow time to catch up and prioritize your deliverables.

10. CELEBRATE BIRTHDAYS AND WORK ANNIVERSARIES — It’s the small things

that matter. Acknowledge important dates with emails, Props (WarnerMedia’s employee platform) or even send a card through the mail.

11. HAVE A LITTLE FUN — Engage your teams through giveaways and friendly competitions for bragging rights. Get creative!

12. PROMOTE TEAM RECOGNITION — Send well-deserved recognition to motivate your team and showcase accomplishments. A little praise goes a long way.

remote working is not a permanent scenario, although a hybrid plan moving forward might make sense. One executive said that employees at her company were asked to remove all of their belongings from the office so that it could be reconfigured into a more collaborative space that will be ready for a new hybrid environment as soon as the pandemic is finished.

Face-to-face communication won’t go away for most. “You get better results in person that you don’t get with video,” says Ralph Bender, CFO of Manship Media. He notes that it’s easier to bring your “water cooler” idea to others in an in-person environment.

To keep the communication flowing in the current environment, NBCUniversal’s senior financial leadership made a commitment to host office hours and allow team members to sign up for one-on-one sessions with the leader of their choosing to discuss what’s on their minds. Antonella Ricciardi, senior vice president and group controller of NBCU, said the virtual office hours has been a great tool for leaders to stay connected to their teams and also engage with team members they don’t see on a regular basis.

In some ways, virtual environments have opened opportunities. “Working virtually has leveled the playing field for those of us working in different locations. No longer do we feel remote,” says Cal Mostella, vice president and treasurer of WarnerMedia. He hopes the virtual communication norms will continue even after people return to the workforce so that those employees who are not centrally located continue to feel as included as the rest of the teams.

To keep the communication flowing, one of Mostella’s managers established quick morning-call meetings for the team. Mostella participates regularly and says there is no agenda; everyone is able to provide an update that is sometimes work-related and sometimes casual.

Mostella believes that a big part of culture is ensuring that employees are connected to the vision, and regular interaction is important to accomplish that goal. “These daily meetings are the virtual version of the hallway or breakroom conversation. And by doing them in the morning we are getting our day started as a team,” he says.

Employee recognition is also an important part of culture and a engaged workforce. Last year, as its global workforce went Continued on page 24

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Visit MediaJobCenter.com From NewsCheckMedia

The Financial Manager • May/June 2021 19

AWORLD APART

BY KIMBERLY M. RANDOLPH & COLIN M. O’BRIEN

Viego, the Ruined King (From League Of Legends)

20 The Financial Manager • May/June 2021

SPECIAL REPORT: MEDIA VALUATIONS

Four major types of participants in the esports business are experimenting with revenue streams that can be quite compelling, for the right investors.

This is the fifth in a series of stories on the financial performance of media.

K

YLE GIERSDORF IS LIKE MANY

other kids growing up in the last decade; he has a love for video games. Bugha – as Giersdorf is known in the esports world – became infatuated with Fortnight, a game launched in 2017 that puts 100 players together on a map, and they fight to become the last one standing.

The teen did not just use the game as a means to unwind after a day at school though.

His skill became so advanced that he was one of 100 players to qualify for the inaugural Fortnight World Cup in New York. To put that in perspective, around 80 million global competitors were actively playing Fortnight at that time, according to Fortnite’s distributor, Epic Games Bugha placed first in the tournament, taking home the grand prize of $3 million dollars. This was the largest earnings ever for an esports player in a single event. The International 8 championship for another esports game, Dota 2, had a total grand prize of $11.2 million, and members of the winning team took home about $2 million. By comparison, when Patrick Reed won the Masters in 2018, he took home just under $2 million While the world of esports has many similarities to the traditional world of professional sports, there are distinct differences – not the

least of which is the need for esports leagues to reach profitability. The industry is still in its adolescence, and business participants are experimenting with different revenue models based on their position in the market. They include developer-backed leagues (professional leagues run by game developers); esports teams themselves and their investors; the players on the teams; and the streamers and streaming companies. Let’s look at each one in turn.

DEVELOPER-BACKED LEAGUES One unique aspect of esports is that the actual games are intellectual property (IP) owned by a company. As a result, the IP owners take a very active role in developing leagues and often provide prize money. While there are separate, sponsored leagues that aren’t backed by developers, they typically have much smaller audiences, and the prize money is not as attractive.

Most leagues include revenue-sharing agreements that are similar to that of traditional professional sports leagues. Teams are able to generate revenue from sponsorships, advertising and merchandising. The digital platform that they use creates a unique way of generating sponsorships. Marketers can create non-traditional brand awareness. For example, they can offer special “skins” that are layered on a player’s avatar and are only available if a player purchases one of the sponsor’s products. Ads can also exist within a league’s virtual playing field.

As revenues and participation grow, so does optimism in the industry for continued investment from both existing and new participants. Developer Riot Games believes that its League of Legends Championship Series (LoL CS) will be profitable in the next two years, as revenue from sponsorships and viewership increases. Legends is a North American-based league with 10 franchises.

According to ESPN, citing data from Nielsen, the league attracted 124,000 viewers in the most sought-after demographic, 18-34, during its 2019 games.

Riot Games reports that its 2018 League of Legends World Championship Finals drew almost 100 million viewers. That’s a larger audience than the National Football League’s

(NFL’s) Super Bowl in 2018, which attracted 98 million, according to CNBC referring to data from Nielsen Major brands such as Mastercard, Verizon, Bud Light and Louis Vuitton are working with the leagues, and individual teams have landed major sponsors of their own, including BMW and PepsiCo. The leagues also have initiatives to create more localized leagues to encourage a more traditional sports path for players to get noticed and recruited to the national teams.

INVESTMENT & FRANCHISE VALUE One of the most direct ways for organizations to participate in the esports industry is investing in the teams themselves.

Franchises in an esports league work differently that traditional sports. Esports organizations have a pool of gamers signed under contract to play in their leagues. Many of the players specialize in a single popular video game, such as League of Legends or Fortnight, but sometimes they play competitively across several games.

Organizations are able to compete in a league by purchasing a franchise spot. This allows them to enter a team comprised of gamers under contract with their organization to play against other teams. In LoL CS, a team is comprised of five players. Many of these organizations have teams across most of the largest esports leagues.

As viewership continues to grow, a sustainable, profitable model has become more realistic. And franchise valuations have skyrocketed in response to the increase in demand. In 2017, Echo Fox, a competitive esports group founded by basketball player Rick Fox, paid $10 million for one of the franchise spots in the LoL CS. The spot was subsequently purchased by rival competitive group Evil Geniuses, for a reported $33 million in late 2019, according to The Washington Post.

Evil Geniuses , in turn, was acquired by investment firm PEAK6 in 2019 for an undisclosed amount. Acquiring entities like Echo Fox and Evil Geniuses gives investors an opportunity to purchase an organization that can quickly assemble new teams to compete in new games as The Financial Manager • May/June 2021 21

SPECIAL REPORT: MEDIA VALUATIONS the industry ecosystem continues to evolve.

TeamSoloMid (TSM) is the highest-valued organization on Forbes’ annual esports list. It was valued at $410 million in 2020, with a revenue multiple of around a 9.1x. While this multiple may seem impressive, it is actually below several of TSM’s competitors. In 2020, Cloud9 was valued at 11.7x multiple ($350 million valuation) and 100 Thieves was at a 11.9x multiple ($190 million value). Each of these groups has teams spread across different leagues in different games, such as FIFA, League of Legends, PUBG, and Fortnite.

It’s important to understand that these organizations are the brand, not necessarily the team that is competing in a franchise spot. Evil Geniuses may sell their franchise spot in LoL CS several years from now and use the funds to start a franchise team in a different game. This dynamic is part of what makes the investment more sustainable. As different games grow less relevant over time, organizations can assemble new teams.

THE PLAYERS Similar to pro sport franchises, having the best talent is very important. Gamers often

sign exclusive contracts with a single organization. However, they will often move to different organizations’ rosters over time. Given the unconsolidated nature of the market, central rules on how players move between competitive groups are not established like in the National Basketball Association or the NFL, where players are drafted or traded.

Most players fall under two categories: competitive players and streamers. Although there is a heavy amount of overlap between the two.

Competitive players are signed to a group like TSM, an esports organization that fields players in several games. Then the players are assembled onto rosters for team games like League of Legends or enter a league for a single play game like Fortnite. They share prize and league earnings with their parent organization.

Most streamers have been competitive players. They gradually transition into part- or full-time streamers. Streamers livestream a video of both themselves and their screen as they are playing. Typically, they are not in a specific league or in competition for prize money. The streamers often play with novice players while commentating over their

THE STREAMING GIANTS

O

NE OF THE MOST CRITICAL COMPONENTS OF THE ESPORTS BUSINESS ARE

streaming companies. They bring content, both competitive and otherwise, to the public via digital video game streaming. They are gradually growing from niche online services to mainstream digital content providers.

In 2014, Twitch was purchased by Amazon for approximately $1 billion dollars, according to the BBC. Since then, the company has become the dominate player in the North American streaming market, with its value estimated by Needham & Co. at $15 billion as of June 2020. Since Amazon’s acquisition, Twitch has grown from 55 million monthly users to around 140 million, according to Backlinko, an online consultancy for increasing web traffic.

Twitch’s earnings are similar to other digital content providers like YouTube and Netflix, with money primarily generated from advertising revenue and from subscriptions, which is shared with content providers. Twitch is the primary platform to watch most competitive esports leagues and events, sometimes selling tickets in advance for high-profile events.

An in-house currency called “bits” boosts Twitch’s revenue as well. Bits are purchased through Amazon and PayPal and allow an individual to “cheer” on the platform while they are watching a streamer they enjoy. The more they cheer, the more likely a streamer is to interact with them. Cheering also generates money for that streamer as it allows them to gain popularity and produce more content.

While Twitch continues to be the dominant player in the North American market, it has had to fend off competition, most notably from Microsoft’s platform, Mixer. However, Mixer was abruptly shut down by Microsoft in 2020 after struggling to reach sufficient viewership numbers need to be competitive.

One of Twitch’s largest challenges has been expansion abroad, most notably in China, the world’s second largest economy. The platform is blocked there. As a result, Huya Live (majority owned by Tencent Holdings) and DouYu have become the dominant players in the market. In late 2020, the two announced plans for a potential merger, with the value of the combined business reportedly worth $500 million, according to a DouYu press release.

22 The Financial Manager • May/June 2021

gameplay. However, they are an extremely important part of competitive esports groups.

TSM has over a dozen streamers under its umbrella. Streamers are capable of generating massive audiences that can be monetized in several ways. The large audiences are an opportunity to promote TSM and its sponsors, as well as draw attention to its competitive teams. Revenue is also generated from ads on social media and streaming platform websites such as YouTube and Twitch.

THE FUTURE Although ample risks remain, there are reasons to be optimistic about the future of esports. Insider Intelligence estimates that total viewership is expected to grow at a 9% compound annual growth rate (CAGR) between 2019 and 2023, up from 454 million in 2019 to 646 million in 2023.

Investment across the industry is expected to continue. A massive $4.5 billion was invested across the esports industry in 2018, up from just $890 million in 2017, according to Deloitte. September 2020 alone saw $186.3 million of funding raised across the industry, according to eSports Insider, an esports business focused platform.

Asia still remains the largest esports market. And PricewaterhouseCoopers estimates North American total revenue will reach a new high of $300 million this year. As market players continue to experiment with different strategies for monetizing viewership and sponsorship, the industry will likely continue to grow from a niche online community to a global leader in entertainment.

That said, the esports business continues to be risky. Most esports leagues are still bleeding red ink, and they are unlikely to become profitable over next few years, at least. Additionally, the fast speed at which the industry moves causes most games to be irrelevant within several years of the launch, assuming they even reach a point of success.

Regardless, it appears that investors’ appetite for the industry is still strong and may mirror that of the more traditional sports world, whereby investors view the opportunity to invest in these assets for reasons other than pure economics.

Kimberly M. Randolph is managing director and Colin M. O’Brien is an analyst at the financial advisory Stout. They can be reached at krandolph@stout.com and cobrien@stout.com, respectively.

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The Financial Manager • May/June 2021 23

PERSONAL SPOTLIGHT

HUMAN RESOURCES CULTURE— Continued from page 18

CALLING ALL

PEOPLE TO WATCH NOMINATIONS Is there someone in the media financial community who is doing outstanding work – raising the bar for themselves or their company in remarkable ways? TFM would like to consider writing stories about them in our annual People to Watch special report.

The deadline for nominations is July 23. We welcome all suggestions. Those who are nominated don’t need to be members of MFM or BCCA. There are just two main requirements. They must: Be part of the media financial community;

n

Have a goal or responsibility that is likely to lead to improvements, either at the company where they work or within the media industry in general.

n

Download an application at mediafinance.org under TFM (People to Watch).

You are welcome to nominate more than one person.

24 The Financial Manager • May/June 2021

remote, WarnerMedia expanded its employee platform called Props. It is a real-time recognition and positive reinforcement program. Users within the company’s F&A team have sent thousands of messages of encouragement and praise for the big and small things accomplished each day.

The employees are all granted “points” and can gift them to other employees in exchange for gifts, charitable donations and custom WarnerMedia awards. Mostella was an early champion of this program and says that Props is “a virtual way for employees to feel like they are a part of something bigger and connect across teams and locations to celebrate each other’s accomplishments.”

Collaboration is another key way to lower anxiety levels and increase empathy. A manager at a consulting firm in Atlanta shared a suggestion: employees at her company who work together on projects are using technology to create “shared virtual rooms” for an afternoon. That allows each person to continue to advance their part of the project, but they have a space and time for informal and immediate collaboration. Another suggestion is to create a “virtual break room” to meet a buddy, so you don’t feel so alone.

INDIVIDUAL NEEDS Employees also need to believe their concerns are being treated individually. Addressing the “what about me” component of employee connection can involve on-boarding new employees in a virtual or hybrid environment and providing development opportunities for established team members.

Managers are finding creative ways to connect with new staff members during virtual sessions.

Part of that involves making sure the technology is working properly. And it pays to quickly assign a virtual “buddy” as a guide and to introduce newcomers to the rest of the team. In some cases, managers

are asking their new team members to come into a safe office environment for a period of time to complete a thorough training plan.

The resounding opinion is that it is important to make a fast and good impression.

WarnerMedia’s Johnson says that he believes his team is experiencing a heightened degree of communication and connection with each other. “In fact, we are more bonded in some ways because we are in each other’s living rooms every day.”

However, he mentions that interactions with peers on other teams or stakeholders may suffer in a virtual environment. One solution might be to invite managers and leaders from other teams to join yours and share what they are working on and how their responsibilities are impacting the company. Development doesn’t always have to be about new technical skills.

The pandemic certainly created a seismic shift in approach to culture and workforce strategies. Yet, in some ways the approach remains the same: a focus on employees and their needs balanced with the company vision. Yet each company takes its own unique approach.

The process can be as big as addressing your strategies in the midst of a pandemic while also rebranding your company, as Trilith Studios did in 2020. “[That] really involved all of our employees shaping and championing our new vision. And in an unexpected way, having this happen during a pandemic really forced us to hone-in on what our company and our industry adds to the world,” says Triluth’s Hernandez.

At Triluth, flexibility remains a key priority, “9-5 is no longer a real-world standard. Meetings are determined by availability, and dogs and children are welcome!” Hernadez adds.

Cindy Pekrul is a former senior vice president and deputy controller at WarnerMedia. She can be reached at cindy.pekrul@comcast.net.

2021 AWARD

WINNERS

How Our Garden Grows

Eight awards pay tribute to some very generous contributors to MFM and BCCA along with two companies with ambitious diversity agendas.

BY JANET STILSON Just as it takes loving care to cultivate healthy, gorgeous flowers, so too does it take the special efforts of some very thoughtful, giving people to help MFM and BCCA thrive. And while there are many proverbial “gardeners” tending to the two organizations’ many needs, each year a few people add an extra dose of sunlight and nourishment to the mix.

And, breaking with tradition, one very special company and its television division are being honored with the brand-new Jeana K. Stanley Memorial Award, which calls attention to superb diversity initiatives. The award is named for an executive who was a huge contributor to MFM and well loved by many of its members.

The following stories highlight the outstanding work of seven people, winners of this year’s BCCA, Rainmaker and Working Capital awards.

Special awards ceremonies will take place during the Media Finance Focus 2021 virtual event. Check the conference agenda for more information.

Janet Stilson is editor of TFM. She can be reached at TFMEditor@mediafinance.org or (212) 694-0126.

The Financial Manager • May/June 2021 25

2021 award winners

JEANA K. STANLEY MEMORIAL AWARD

IN RECOGNITION OF AN ONGOING COMMITMENT TO INCLUSION AND DIVERSITY

Hearst Corp. & Hearst Television

Katherine Barnett, Hearst Television

W

HEN it comes to “walking the walk” of diversity, Hearst Corp. and Hearst Television hit their stride a long time ago. And they’ve done so with such a lack of fanfare that media observers can be easily excused for not noticing their efforts.

Michelle Ray, who has her finger on the pulse of that particular topic as executive director of the Walter Kaitz Foundation, says she hadn’t really focused on Hearst until an

the diversity of his company. “He’s had conversations with not only me, but the NAB board, with his peers, about moving the needle so the industry becomes more diverse,” Duke says.

One of Hearst’s most recent diversity initiatives is the Jeana Stanley Fellowship, named in honor of the company’s longtime finance executive who was also very active in MFM, and who served on its Board.

The new Hearst endowment, which is administered by the Emma Bowen Foundation, is designed to assist undergraduate students from diverse backgrounds who are focusing their studies on finance and seeking internships and career opportunities in media.

The fellowship dovetailed with MFM’s own interest in remembering Stanley with a new award honoring media companies with outstanding diversity initiatives. “Our two missions kind of converged, when we were initiating this award. It made sense for Hearst to get the first one,” says Mary Collins, president and CEO of MFM. MFM is also offering one Stanley fellow-

“Hearst is not new to diversity. They’re not coming at this in the last year or even two years or three.”

— Michelle Duke, National Association of Broadcasters interview request for this story. When she looked into them, her reaction was: “Wow. Hearst is really doing a lot of work behind the scenes. They’re not one of those companies that are lauding themselves. And I respect that very much.”

“Hearst is not new to diversity. They’re not coming at this in the last year or even two years or three,” says Michelle Duke, the National Association of Broadcasters’ chief diversity officer and president of the NAB Leadership Foundation. She notes that Jordan Wertlieb, president of Hearst Television, is very serious about increasing 26 The Financial Manager • May/June 2021

ship recipient free entry to its annual conference every year, beginning with 2022.

“When you meet with people at Hearst, it’s not a sea of white people. They don’t make a point of saying, ‘We’re a diverse company.’ They make a point of hiring people that represent their audience,” says Collins.

Duke notes that Hearst’s diversity efforts go back at least two decades, because the company supported the NAB’s broadcast leadership training program right from its inception, 22 years ago. Wertlieb went through the program himself, but the

majority of Hearst staff members who have attended it are women or people of color.

The company stepped up its game about a year ago, explains Katherine Barnett, Hearst Television’s senior vice president of human resources. “One meaningful demonstration of that is the Hearst RISE document,” she says.

“It’s a report that was issued by Steve Swartz, who’s the president and CEO of Hearst Corp. RISE is an acronym for

BCCA MEMBER CONTRIBUTOR AWARD THOSE WHO RECEIVE THIS ACCOLADE HAVE HELPED THE BCCA CREDIT AND COLLECTIONS COMMUNITY IN NUMEROUS WAYS.

Mary McKenna, NBCUniversal reinforcing inclusion, supporting equity.

The report looked across the entire enterprise and highlighted various efforts around diversity, equity and inclusion that every Hearst business is involved with,” Barnett explains.

“Jordan Wertlieb has communicated to all our employees the commitment to be an organization that’s not going to just stand by,” she adds.

That mandate is exemplified by some of Hearst TV’s program efforts. Among them is “Project CommUNITY,” which launched in 2019. Initially it raised awareness of divisive issues in the various markets that Hearst stations serve. The focus shifted last year to inequality and the racial divide.

And for Black History Month this year, Hearst TV launched “Project CommUNITY: History & Hope,” during which young Black journalists conducted in-depth interviews with Black seniors, exploring the state of race in America.

To expand the diversity of its ranks, Hearst created some new positions in recent years. For example, last year Sinan Sadar, who had been news director of WJCL-TV Savannah, took on the newly created role of director of news talent recruitment at Hearst TV. His mission is to tap into a more diverse talent pools when newsrooms are hiring employees.

Hearst TV also has a very active veteran recruiting effort. Kevin Johnson, who had been director of graphics operations at Hearst TV, became director of veteran recruiting last year. Johnson, a 20-year Army, Army Reserve and Desert Storm veteran, replaced another veteran who held the role previously.

“A lot of people think of diversity as people of color and women only. But there are so many layers of diversity,” says Duke. “For Hearst to recognize that layer of diversity just shows you how mature they are in their walk.” TFM

T

HERE’S an anecdote about Mary McKenna that went all the way up to the CFO of NBCUniversal over the last year.

When COVID-19 struck, couriers were no longer available to pick up checks at agencies and bring them to NBCUniversal’s offices. “Mary drove around the tri-state area meeting some of the [agency] treasurers in person to make sure she had the collections she needed to hit her number,” relates Jason Davidson, senior vice president of ad sales finance and controllership at the company. “She’d offer to meet them behind a strip mall to pick up the checks.”

Davidson, who until recently was McKenna’s boss, says that “she oversees about $14 billion in collections, and she never misses her numbers. She has great relationships with all the treasurers at the agencies.”

McKenna has worked for NBCU for more than 40 years, and she stepped into a much bigger role this past February, moving from vice president of customer financial services to vice president and global head of customer finance operations.

In the new position she leads the management and enterprise strategy of orderto-cash operations across a vast array of the company’s businesses – from syndication ad

sales to Universal Pictures International to domestic and international TV distribution.

McKenna has been tasked with overseeing a finance transformation project, Davidson says. “She’s setting up some of the global processes modeled after what she did in ad sales, leveraging some of those best practices across other business units at NBCUniversal.”

The vast knowledge she’s built up over the years has benefited BCCA members.

“She’s shared her resources with other members of the credit community,” explains Mary Collins, president and CEO of MFM. “Mary and a NBCU lawyer spent time during the last Media Credit Workshop last December, talking about new things going on with bankruptcy, given the pandemic – things to be aware of, how to prepare.”

McKenna also participated in the credit seminar in 2019, giving her insights into outsourcing-related issues.

McKenna’s new boss, Tracy Lockhart, senior vice president, group financial controller of NBCUniversal, says that McKenna has some very distinctive qualities: one is an exceptional level of accountability.

“The second thing for me, which is really critical, is that she has her customers and relationships at the heart of what she does,” Lockhart says.

There’s a natural inquisitiveness about McKenna too, and a desire for continuous improvements, Lockhart says. And finally, “she’s exceptional as a coach, and a mentor.

And she’s a thought leader as well.”

When asked about her accomplishments, McKenna says, “I am most proud of building a strong, cohesive, multifaceted shared services team.” She says she’s worked for, and with, some great people at NBCU who have taught her many things. “While one particular lesson does not stand out, it’s their inclusiveness that I highly value and carry forward,” she says. TFM The Financial Manager • May/June 2021 27

WORKING CAPITAL RECIPIENTS

THIS AWARD HONORS MEMBERS WHO HELP MFM AND BCCA ACHIEVE THEIR GOALS.

Jerry Calixto

Take Two Interactive Software Inc.

E

VER since MFM began serving the interests of the video games financial community, Jerry Calixto has had its back.

The senior director of revenue accounting for Take Two Interactive Software co-chairs the Games Committee, alongside Jenna Hardy, who is interim CFO of Gearbox Software Entertainment and an MFM Board member.

Lori Brock

John Sanders

A

L

Meredith Corp.

FEW years ago, Lori Brock stepped up to the MFM plate, replacing someone on the organization’s Board who could no longer fill his role. After two years on the Board, Brock had to stand down, in accordance with the organization’s bylaws. Now that grace period has ended, and she’s running for a Board seat again, which would become effective July 1.

Mary Collins, MFM’s president and CEO, notes that Brock has been on MFM’s Advisory Board while waiting for her Board hiatus to end. She’s also very active on the Television Committee and serves on the Accounting Committee.

Brock is vice president of finance at Meredith’s Local Media Group. And she’s “especially proud of how my team pivoted a year ago when we sent them all home for what we thought would be a couple of weeks.” She’s focused on keeping her direct reports motivated and engaged. “I think that has led to even more interaction than we had in the past.”

Several mentors have helped guide her.

One thing they taught her stands out: “If you want to be successful, you need to enjoy what you do, care about the people you work with and strive to give it your best every day.” TFM

28 The Financial Manager • May/June 2021

Bond & Pecaro Inc.

“Jerry has really helped us create awareness within the video games community,” says Mary Collins. Whenever MFM takes a new media sector under its wing, there’s a period of time before people in the group recognize how the organization can help them. “It’s a chicken-and-egg situation.

Jerry has been with us pretty much from the beginning. And he’s been very active in helping the Games Committee get off the ground – he and Jenna.”

Most recently, Calixto arranged an event that featured a speaker from EY discussing cybersecurity from a video games perspective. Earlier on, “when we had our first video games local event, Jerry flew from New York to Redwood City, CA, to help us make sure that it went off well,” Collins says.

Calixto oversees Take Two’s global revenue recognition policies and compliance with U.S. GAAP (generally accepted accounting principles) standards. TFM

OOK no further than this magazine as one reason why John Sanders is receiving a Working Capital award this year. As a principal and founder of the consulting firm Bond & Pecaro, Sanders has plenty on his plate. Over the years, he’s been actively involved in both fair market valuations and asset appraisals of over 3,000 communications, media and related businesses.

Despite that, he is a prolific TFM writer and serves on the magazine’s editorial board. He was on MFM’s Board for three years and is currently on its Advisory Board.

And he’s also on the Newspaper Committee. As if that weren’t enough, Sanders cochaired the Media Outlook event last year.

In describing Sanders, Mary Collins recalls that when it became clear the 2020 annual conference needed to go virtual, she asked Board members to create videos explaining why it was important to attend.

“John was one of the first people to do one,” she says. “He took his cell phone out in the backyard and spoke from his heart.”

Sanders is an avid bicyclist and enjoys long rides in the Washington, D.C., area.

He’s also a history buff. “I’ve developed a tour of D.C. that focuses on places where espionage and scandals have occurred. Visitors love it,” he says. TFM

2021 award winners

RAINMAKER AWARD HONOREES

THESE ACCOLADES PAY TRIBUTE TO PEOPLE WHO SUPPORT MFM AND BCCA’S FINANCIAL WELL-BEING.

Christine Pecher Marketron

A

S A member of MFM’s Radio Committee and its Interactive and Digital Media Committee, Christine Pecher has become a matchmaker of sorts. “She’s the one who says, ‘Okay, you have this question; I have this expert who can help. Let me introduce the two of you,’” explains Mary Collins. That’s resulted in information delivered during MFM events of particular

Darren Wilson

Deloitte & Touche LLP

Neuhy Hubush

O

Gannett Co.

I

F SHE were asked to give advice to someone just starting out their career, Neuhy Hubush knows just what she’d say: “Listen and observe. There is much to be learned from all experiences both professionally and personally,” she says. “The desire to learn and reflect on other perspectives is invaluable as one advances through life and a career.”

Little wonder that Hubush, the controller at Gannett, is a big fan of MFM’s educational mission. When cost reductions became an imperative at Gannett, she made sure that MFM wasn’t left on the cutting-room floor. “Gannett didn’t keep all of their MFM memberships, but they kept the majority of them. Neuhy was the advocate for that,” says Mary Collins, president and CEO of MFM. Hubush has been at Gannett since 2017, moving up from her initial role as director of financial reporting. Previously she worked at several public companies, including AOL, AvalonBay Communities and Washington Gas Light Co. She sees her biggest opportunity and biggest challenge as one and the same: “keeping pace with and leveraging digital transformation and technology to optimize operations – and continuing to develop accounting’s role as a business partner versus simply a back-office function.” TFM

value to members. At the same time, Pecher arranged for her company, Marketron, to become a sponsor of the organization.

Pecher is director of marketing at Marketron She oversees brand strategy, communications and outreach for the company, which provides revenue and profitability management solutions.

“I’d say my biggest accomplishment is helping arm the broadcast community with the knowledge and resources they need to become local marketing experts,” Pecher says. “Broadcasters are in a unique position that a large company like Facebook will never be able to [attain] – they are trusted partners in their communities.”

Before joining Marketron, Pecher worked at some ad agencies, and she was involved with national radio and digital sales at Emmis Interactive. She’s based in St. Louis, MO. When she’s not busy helping other people achieve their professional goals, she likes to chase her kids around and practice her kickboxing. TFM

VER the years, Deloitte & Touche has become a big supporter of MFM. And Darren Wilson singlehandedly managed its involvement in both keynote and breakout sessions during the annual Media Finance Focus 2020 conference. He’s doing that again at this year’s event. “When we said we needed a subject matter expert on a certain topic, with his support we found someone from Deloitte,” explains Mary Collins.

Wilson is a partner at Deloitte and leads the firm’s audit-and-assurance practice for telecom, media and entertainment companies. He’s focused on the integrated audits of multinational Securities and Exchange Commission registrants.

His career includes more than 20 years of experience auditing public and private companies in the media, technology, advertising, consumer products and distribution industries. He also has a strong background in mergers, acquisitions and financing transactions.

Wilson says that he sees the pace of change in the telecom, media and entertainment industry as a great opportunity moving forward. And he has some advice for people whose current positions in the business world is more junior than his own: “Drive your own career advances and don’t let others drive them for you.”

When Wilson isn’t working, he likes to travel and play golf. TFM

The Financial Manager • May/June 2021 29

LAST WORD

Taxation Aggravation

Remote workers and their employers can face some unintended consequences when state lines are crossed. BY SEAN HETZLER

S

hifting employees to full-time remote work environments might seem like an attractive solution to some – along with the idea of accommodating employee requests to move outside their traditional markets. “What could go wrong?” you might ask. From a tax perspective, plenty.

As the legendary Yogi Berra once said, “If you don’t know where you are going, you’ll end up someplace else.” It is unlikely that he was referring to the complexities of state taxation, but the sentiment will feel familiar to tax experts.

Eventually the pandemic will be behind us and tax professionals will emerge to find their companies’ employees are indeed “someplace else.” The bad news is that they might not like what they see.

EMPLOYEE ISSUES For many individuals, the allure of a lower cost of living or permanent life in a vacation home is too good to pass up. Unfortunately, a lot of folks are in for a surprise due to the “Convenience of the Employer” rule.

Imagine an employee named Jane who lives in Connecticut and commutes daily to her office in New York. Suddenly, in March 2020, Jane’s employer announces that the office will be temporarily closing and that all employees should work remotely until further notice. Jane works at home for the rest of 2020.

As a Connecticut resident, Jane is subject to Connecticut tax on 100% of her income.

However, since her office is in New York, the Empire State will also tax 100% of her income. Many states, including Connecticut, provide a credit for taxes paid to other states specifically to remedy inequities like this. In normal times, Jane pays New York tax and claims a credit for that amount on her Connecticut tax return. If you think the problem goes away because Jane is no longer working in New York, think again.

Due to the application of New York’s “Convenience of the Employer” rule, if 30 The Financial Manager • May/June 2021

Jane’s assigned office is still in New York, work at home will be treated as in New York and will be subject to New York tax.

Additionally, Connecticut’s credit for other taxes paid only applies to work outside that state. Since Jane was working from home in Connecticut, she cannot claim the credit and will be stuck paying taxes on 100% of her income in both states.

Fortunately, Connecticut passed emer-

gency legislation in March to expand the credit for 2020. However, it is unclear if relief will extend to 2021, and many similar double-tax scenarios remain in other states.

At present, seven states impose “Convenience of the Employer” rules: Connecticut, New York, Pennsylvania, Arkansas, Delaware, Nebraska and Massachusetts. Certain cities, such as St. Louis, also have similar positions. As noted above, some jurisdictions are offering temporary relief, but the underlying conflicts will remain even after the pandemic is behind us.

EMPLOYER ISSUES Media companies must also navigate changes to their corporate tax profile due to mobile employees. In order for a corporation to be subject to state tax, the corporation must have “nexus” with the state. The level of in-state

activity that constitutes nexus varies from state to state, but a full-time state employee is typically enough to cross the threshold.

Imagine a small media company with several corporate subsidiaries in the same line of business. The company has locations in several states where it owns media outlets, but none in New Mexico. The company does not sell to New Mexico advertisers nor does it deliver advertisements in New Mexico. During 2020, a company engineer moves to New Mexico and plans to work remotely on a permanent basis. Despite this minimal level of activity, the company and all its subsidiaries are now subject to New Mexico tax.

The associated corporate ta x liabilit y is unlikely to put the company out of business, but it will probably be unreasonable given the lack of meaningful business in the state. The company will also endure the administrative burden of filing additional tax returns.

Every company needs to carefully consider what its policies will be regarding remote work. In the absence of any clear guidelines, each individual move will need to be analyzed to evaluate its impact on the company. Remote work brings many benefits to media companies and their employees, but it is important to be mindful of consequences from a tax perspective.

Sean Hetzler is a senior director and leads the corporate tax department at TEGNA Inc. Sean is fortunate to have both lived and worked in Virginia for the entirety of 2020. He can be reached at shetzler@tegna.com.

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

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