A huge slug of option awards propelled the Starz CEO to a compensation package that’s close to what Jeff Bewkes made at Time Warner, a much bigger company. Chris Albrecht benefited from a new contract that coincided with the premium cable channel company’s spinoff from Liberty Media in January 2013, according to the company proxy just filed at the SEC. His package: $1.3M salary, $27.9M option awards, $1.3M non equity incentives, and $16,134 in other compensation. Not much commentary in the proxy about Albrecht’s achievements, but Starz shares basically doubled in value in 2013 following the spin off. His compensation accounted for 71% of the pie for the company’s five top execs, up from 63% in 2012. Corporate governance watchdogs also would consider it way out of whack for the company. Albrecht’s pay was 9.9 times the median for his closest lieutenants, up from 6.7 times in 2012. Many governance specialists flash a warning sign about a CEO’s power when he or she makes more than three times the median for other execs.
“Monetization gap” is the clunky term NBCU chief Steve Burke frequently uses when he laments the low ad rates his company commands after years of flailing in the TV ratings wars. But with NBC poised to end the prime time season No. 1 in its target 18-to-49 demo, he tells analysts today that he’s going into the upfront sales market “with our best position in a decade” and “it’s going to be worth a lot.” He knows better than to offer specific numbers, but notes that “we can’t find any network that’s swung as much in a year.” CFO Michael Angelakis also said that this will be “a very meaningful correction year.” This was one reason CEO Brian Roberts says NBCU “has real momentum and we believe this is sustainable throughout 2014.”
The cabler has fired back at the DVD/streaming service, which earlier today slammed the Comcast-Time Warner Cable merger as anti-competitive. In its response, Comcast said Netflix‘s stance “is based on inaccurate claims and arguments.” Here’s the company’s full reply from Jennifer Khoury, SVP Corporate & Digital Communications:
Netflix’s opposition to our Time Warner Cable transaction is based on inaccurate claims and arguments. There has been no company that has had a stronger commitment to openness of the Internet than Comcast and we are the only ISP in the country that is currently legally bound by the FCC’s vacated net neutrality rules. In fact, one of the many benefits of our proposed transaction with Time Warner Cable will be the extension of Net Neutrality protections to millions of additional Americans. Here are the facts:
UPDATED: CEO Reed Hastings told analysts that the likely price increase is due to the fact that “over the last couple of years we’ve been improving the content selection on Netflix and broadening it.” For that to continue, “we have to eventually increase prices a little bit.” He’d consider having tiers of service but first wants to “be sure we grandfather [existing customers into the new system] cleanly.” As for his opposition to Comcast’s $45B plan to buy Time Warner Cable, Hastings says that Comcast CEO Brian Roberts is “very thoughtful, very long term and very reasonable. But I don’t know that we want anyone to control half of the U.S. internet.”
PREVIOUS, 1:04 PM: Current customers could keep their $7.99 a month price “for a generous time period” if the fees for new customers go up — possibly “a one- or two-dollar increase, depending on the country, later this quarter” — CEO Reed Hastings and CFO David Wells say in a note to shareholders. They slipped that important piece of info into a report that basically reassured Wall Street, sending Netflix shares up 5.7% in postmarket trading. The company generated $53.1M in net income, up from $2.7M in the same period in 2013, on revenues of $1.27B, +24%. The revenue number is on target with the Street’s consensus forecast, and earnings at 86 cents a share beat projections …
Editors Note: The first of three Deadline posts that lay out the issues in the Aereo case, which Deadline Legal Editor Dominic Patten will cover from the Supreme Court next week. Today: A primer about Aereo and what’s at stake in the dispute with broadcasters.
U.S. Supreme Court justices are so mistrustful of technology that they bar TV cameras from their proceedings and require visitors to check their smartphones at the door. But on April 22 they will take an hour to hear arguments in a case that could re-shape television and the Internet. All of the major broadcast companies are challenging the legality of an upstart streaming service: Aereo, a company backed by IAC chief Barry Diller that began to sign up subscribers in New York City in February 2012. The issues both sides will raise are complicated. But the controversy boils down to an important question: What rights do broadcasters and citizens have to content on the publicly owned airwaves?
Q: How does Aereo work?
A: Subscribers in the cities Aereo serves pay a minimum of $8 a month. That gives them exclusive access to one of its thousands of dime-sized antennas that pick up free, local, over-the-air broadcasts. The company then streams the live programming in the same local market to subscribers’ Web-connected TVs, computers, or mobile devices.
Q: Does it just stream live TV?
A: Aereo also offers a remote storage DVR. Just like with a home DVR, each customer can choose programs to record, and then watch later with the same fast-forward and rewind capabilities. The difference is that the digital files are kept on Aereo’s servers, not on a hard drive in the home. Those who pay $8 per month get 20 hours of DVR storage each month and access to one antenna, while those paying $12 get 60 hours and access to two antennas.
Q: Where can people subscribe?
A: Aereo began in New York, and now also is available in Boston, Atlanta, Detroit, Cincinnati, Baltimore, Dallas, Austin, Houston, Miami, and San Antonio. It plans to launch in cities including Washington, DC, Philadelphia, Pittsburgh, Cleveland, Chicago, Indianapolis, Minneapolis, and Kansas City.
Q: Why does that bother broadcasters?
A: Aereo doesn’t pay local TV stations when it streams their programming. Broadcasters say that infringes on their copyrights.
In this week’s podcast, Deadline’s executive editor David Lieberman and host David Bloom untangle the latest twists in the giant Comcast-Time Warner Cable merger proposal, as a Senate committee grills Comcast’s “Jedi Master” of a chief lobbyist and Charter prepares a challenge at the TWC annual meeting. The Davids also talk about the very different tone of two just-signed retransmission deals, at least compared to last year’s Time Warner Cable-CBS brawl; how IMAX reduced its stake in China while increasing its influence; and this week’s National Association of Broadcasters conference, where FCC Chairman Tom Wheeler urged broadcasters to think like “tech disruptors” and NAB chief Gordon Smith called for a federal plan for broadcasting.
The company that owns the largest collection of cable systems plus NBCUniversal has about 3.6 times the market value of CBS — yet CEO Brian Roberts made less than half of what CBS paid Les Moonves in 2013? No need to shed any tears: After all, Roberts’ family controls Comcast, and it gave him his best pay day in years for a period when the stock value appreciated 39.1%. The package consists of $2.8M salary, $5.3M stock awards, $5.3M option awards, $9.2M in non-equity incentives, $5.1M change in pension value and $3.7M in other compensation. NBCU chief Steve Burke came close to his boss with an 18.1% raise that brought him to $31.1M. Roberts’ take includes $192,177 for personal use of the company jet; Burke’s aircraft use came to $390,994. The board says that Roberts “continued to demonstrate strong leadership” and adds that Burke “successfully managed NBCUniversal.” In a letter to shareholders Roberts talks up Comcast’s planned $45.2B acquisition of Time Warner Cable noting that “once again” he has called on his government affairs consigliere David Cohen “to help guide us through the government approval process so we can achieve a timely close.” The EVP, who is becoming a celeb in his own right from his appearances to defend the controversial deal, made $14M last year, down 12.1%. Comcast will hold its annual meeting on …
UPDATED: The Senate Judiciary Committee hearing into Comcast’s $45.2B acquisition of Time Warner Cable wrapped after three hours today. And Comcast EVP David Cohen upheld his reputation as a lobbying Jedi Master, although critics of the deal scored by pointing out how it could lead to higher prices and problems for independent programmers. Cohen started off strong in his opening statement: He cast his company as the embodiment of the American Dream — and announced that it has more than 1M WiFi hot spots with plans to boost their transmission speeds. “This is the 13th time we’ve increased Internet speeds in 12 years,” he says. Public Knowledge’s Gene Kimmelman — a former Justice Department antitrust lawyer — hit back. He charged that it would be “anathema to Comcast” if programmers want to offer content directly to consumers via the Internet for a low cost. The cable giant is committed to “charging top dollar” and, as owner of NBCUniversal, would be like an octopus with tentacles “each capable of squeezing innovation.”
In regard to pricing, Cohen said, in response to a question from committee Chairman Patrick Leahy (D-Vt.), that “there is nothing in this transaction that will make anyone’s bills go up….Consumers today are in the driver’s seat.” He added later that programming costs have appreciated 98% over the last decade. Later he told Sen. Al Franken (D-Minn.) — who wanted to know whether shareholders would demand higher prices — that “we have made it a point of significant discussion about our need to continue to invest to compete better with national and global competitors.” Kimmelman responded that Comcast is in the driver’s seat in the highly concentrated video and broadband markets. “The squeeze will come from Comcast,” he says. “It’s logical. They want to save money….and it could lead to significant price increases for others.”
Franken had Cohen against the ropes in a discussion about Comcast’s efforts to push customers to buy multiple or upgraded products. “When you train [sales]people to upsell, you’re not training them to sell the stand-alone product.” Cohen said that “we are allowed to train people to upsell,” but sales reps also “have to be aware of the stand-alone product” and provide it on request.
It’s not WrestleMania, but Time Warner Cable shareholders can expect more excitement than usual at their annual meeting this year: The company’s preliminary proxy, out this morning, includes proposals from Charter Communications and other investors that could create problems for TWC management as it tries to sell the No. 2 cable giant to No. 1 Comcast.
Charter — which was the runner up in the bidding contest, but hasn’t given up — wants to change the by-laws to fix the size of the TWC board at 13 instead of allowing directors to change it when they want. Charter plans to propose its own TWC board slate, and no doubt wants to ensure that directors don’t boost the size of the body to dilute the impact if the challengers win. TWC naturally urges shareholders to reject Charter’s candidates, and the proposal. “Recruiting qualified candidates is a challenging and time-consuming process, and the Board of Directors believes that it is in the best interests of the Company’s stockholders for the Board to retain the flexibility to either increase its size if a highly-qualified candidate becomes available or to decrease its size if a director declines to seek reelection or for other reasons,” the company says.
Charter also wants TWC investors to support a change in the by-laws to repeal any changes made without shareholder support after July 26, 2012. Here, too, TWC’s board urges a “no” vote saying that the resolution “represents no …
More than two dozen network-affiliated Hearst Television stations went dark on the satcaster tonight after the sides hit a wall in their retransmission talks. Dish Network‘s carriage deal with Hearst TV expired March 1, but the parties had extended the deadline to tonight at 7 PM Pacific. The blackout affects more than two dozen Hearst stations including ABC affil WCVB in Boston, the nation’s No. 7 TV market, and outlets in top 25 markets Sacramento, Pittsburgh and Tampa, FL. It comes the same day that the Weather Channel and satellite giant DirecTV settled their carriage dispute and seven months after Time Warner Cable and CBS settled their bitter retrans fight.
Comcast Sets Stage For Testy Senate Hearing, Telling FCC That Time Warner Cable Acquisition Serves Public
UPDATE, 10:06 AM: Comcast EVP David Cohen just fleshed out in a press call some of his company’s arguments for the Time Warner Cable deal. To those who say the combined company would be too big he says that “in this particular case we think big is good” — it would be better able to offer new and improved services. And if Comcast is wrong “it doesn’t make any difference really because, as a customer, you’ll have the exact number of choices as you had before the transaction.” The only change: With Comcast instead of TWC as a broadband or video provider consumers’ “choice will be better.” He adds that Comcast is focused “like a laser” on improving the customer experience. (Sound familiar?)
PREVIOUS, 8:09 AM: This is the kind of thing you’d expect the cable giant to assert in a regulatory filing — and that will be roundly contested, including tomorrow at a Senate Judiciary Committee hearing on the $45.2B deal. Content companies that might oppose the deal “have strong relationships” with the committee, which oversees copyright matters, Guggenheim Securities’ Paul Gallant says. What’s more, the committee includes two strong critics of media consolidation: Al Franken (D-Minn.) and Richard Blumenthal (D-Conn.).
Comcast detailed its public interest arguments in a 175-page document delivered to the FCC this morning. It “lays out in considerable detail how Comcast and TWC are better together for millions of customers and businesses, describing the exciting enhanced services and other concrete consumer benefits that will be available because of the transaction,” Comcast EVP David Cohen says in a blog post. In addition to cable and Internet services, Comcast owns NBCUniversal.
The company indirectly takes issue with Netflix CEO Reed Hastings’ claim that Comcast imposed an “indirect tax” on the streaming video company in a recent deal: Netflix agreed to pay Comcast directly to access its broadband lines in a way that will deliver the best possible transmissions to its customers. Comcast says it has “no economic incentive” to hit up so-called edge providers because its customers “place a high premium on being able to access any Internet content they want.” Comcast would have about 30M broadband customers after acquiring TWC.
DirecTV subscribers apparently will not be watching any Dodgers games in the near future. Talks have broken down with the satellite TV provider and Time Warner Cable, which handles distribution of the MLB team’s new SportsNet LA channel, according to TWC.
Maureen Huff, Time Warner Cable vice president of public relations, told Deadline, “We can confirm that DirecTV has left the negotiating table. We were advised by their negotiating team that they would not counter our last proposal and that conversations were at an end. We are eager for all consumers in the Dodgers footprint to have access to SNLA and we hope that other providers will come on board quickly so that the frustrated DirecTV consumers have alternative options throughout the region. We will continue to work tirelessly to make that happen. And, in the event that DirecTV would like to re-engage discussions, we stand at the ready to do so 24×7″.
This is sure to hurt Charter Communications’ already long-shot effort to persuade Time Warner Cable shareholders to reject the $45B sale to Comcast. The cable giant plans to add $2.5B in share repurchases to the current plan to buy back $3B in 2014, Comcast CFO Michael Angelakis told Bloomberg. He noted that when the deal with TWC was announced, the No. 2 cable company cancelled its own planned $2.5B stock repurchase. “We’d evaluate whether we’d want to accelerate [Comcast's] plan and increase it above $3 billion, based on the fact that Time Warner Cable had terminated their buyback plan,” he told the news service. His company could finance the stock repurchase from the cash it expects to collect after a merger when it sells systems with at least 3M subscribers, bringing its total to about 30M. Comcast and TWC’s stock prices each declined more than 5% over the last few weeks, but rebounded today. TWC’s +1.4% in afternoon trading and Comcast is +1.3%.
Chad Gutstein, formerly COO at the Ovation television network, has been tapped as CEO at Machinima, the latest move as the online video service revamps itself as a player in original content. Gutstein will spearhead Machinima’s network and brand strategy and oversee programming, sales, marketing, strategic partnerships, product development, and diversification of distribution and revenue. At Ovation, Gutstein grew the arts network’s reach to nearly 55 million households from 5M, booting its original programming plans significantly last fall after Ovation was dropped by Time Warner Cable at the end of 2012 in an effort to control costs. “Machinima is ready for the next level, and Chad has all of the unique qualities we were seeking in a new CEO to bring us there,” said Machinima co-founder and chairman Allen DeBevoise in a release today announcing the hire. “His fresh and respected outlook, deep knowledge of the TV and digital business, and proven track record will all benefit Machinima as we enter our next phase of growth. Chad’s most recent experience building Ovation’s brand and audience, and translating the value of its audience and programming to TV distributors and tier one advertisers, will help Machinima exponentially accelerate its mission.”
Machinima axed 30% of its work force earlier this month and soon after named ex-Fox Networks boss Tony Vinciquerra to its Board of Directors, the body to which Gutstein will report. Machinima also recently raised $67M in financing from the likes of Warner Bros (which led funding with $18M), Google Capital and Redpoint Ventures as the service looks to find ways to make money outside of its partnership with YouTube, which takes about 45% of the ad revenue it sells.
Returned today from the CinemaCon confab, so I’m just now getting a chance to catch up with Charter Communications‘ astonishing SEC filing that urges Time Warner Cable shareholders to support its $37B cash-and-stock bid over Comcast’s $45.2B all-stock offer. I don’t know if there’s enough in the proxy to derail the Comcast-TWC deal. But it’s sure to create some turbulence — if nothing else by giving ammo to class action lawyers who want to argue that the TWC board failed to faithfully represent shareholders’ interests when it stiff-armed Charter and embraced Comcast.
Investors seem to be clearing their heads from the adrenaline jolt they experienced yesterday when Bloomberg reported that Dish Network chairman Charlie Ergen recently approached DirecTV CEO Michael White to discuss a potential merger — in part as a response to Comcast’s $45.2B deal to buy Time Warner Cable. Shares in both satellite companies shot up on the news, but have started to settle as of midday trading today leaving Dish +5.5 over the day and a half period with DirecTV +2.6%. The big surprise in the report was that Ergen is still interested in a deal: He has been focused lately on amassing wireless spectrum to launch a broadband service, and has made skeptical comments about the prospects for traditional satellite TV. But he and White have noted that the companies could save a lot of money — if regulators would let them combine.
Apple and Comcast are looking to team up on a deal for high quality streaming TV, “people familiar with the matter” tell WSJ. News of the early talks between the companies comes a month after Bloomberg reported that Apple was in negotiations with Time Warner Cable for a new Apple TV set-top box. The very next day Comcast and Time Warner announced their $45.2B merger sale. Apple’s potential pact with Comcast would ensure faster streaming to Apple users through the “last mile” channel of internet traffic separate from Comcast’s public web access, delivering high quality streams via Apple’s new cloud-based set-top box. Last week Netflix CEO Reed Hastings called out Comcast for the “arbitrary tax” charged to boost the quality of Netflix’s streaming transmissions via the cable provider’s network, despite Netflix’s part in what last month was announced as a “mutually beneficial interconnection agreement.”
EXCLUSIVE: The Writers Guild of America has offered a chilling picture of the future of television to the Federal Communications Commission in a bid to block the proposed Comcast-Time Warner Cable merger.
In February, Comcast agreed to buy Time Warner Cable for $45 billion in a deal that would combine the two largest cable companies in the United States. The deal must still be approved by the FCC.
“The FCC should deny the proposed merger,” the WGA said in a brief filed with the FCC on Friday, noting that the merged entity “would control almost 30%” of the cable and satellite TV market.
Such a merger, the guild argued, “would give too much power over broadcast and cable networks. Comcast’s ability to blackout one-third of television viewers would force networks to agree to terms and rates set by Comcast, harming investment in programming.”
A merged Comcast-Time Warner would also control approximately 30% of the broadband Internet market, the guild said, “giving the company the means to limit competition from online video providers like Netflix and Amazon. Comcast has already demonstrated its inclination for anti-competitive behavior by exempting its own streaming service from data caps when watched on an Xbox, while applying data caps to competing services.”
In economic terms, the guild told …