Twitter users soon will be able to see — rather than just read about — more hail Marys, big air, and golden goals. ESPN said today it is broadening its ties to the 140-character world, making ad-embedded clips of several major events available on Twitter and mobile devices, creating yet another potential revenue stream. The sports behemoth becomes the latest TV entity to get cozier with the site as video becomes a bigger part of the twitterverse. Last month, Twitter was said to be holding talks with Viacom and NBCUniversal about hosting clips from those companies’ shows, and BBC America tweeted a few weeks back that it had signed up for the first “in-Tweet branded video synced to entertainment TV series.” The Disney-run “Worldwide Leader in Sports,” as it brands itself, soon will make the clips available on Twitter and mobile devices shortly after they happen live on-air. Expect video from NCAA football, the X Games and action from the pitch during the run-up to next year’s soccer World Cup. The net will detail its plans during its upfront Tuesday in New York.
Media CEOs don’t run their companies by themselves. Having looked at chiefs whose pay is out of whack, and those who are paid the most, here are others of note: the five best compensated company chairs, COOs, CFOs, and General Counsels as well as 10 other execs with standout compensation. We find that the five highest paid chairs collectively made $106.5M (+4.1% vs. 2011), with the COOs at $136.2M (+7.5%), CFOs at $77.9M (-15.0%), and General Counsels at $42M (+6.4%). Keep some caveats in mind with these results: I looked only at chairs who aren’t also CEOs, and there aren’t that many. (To avoid duplication, I combined the compensation that Sumner Redstone collected at CBS and Viacom, and that Charles Dolan received at Cablevision and AMC Networks.) Also, it’s often hard to define the roles that execs play. For example, Disney and Comcast don’t list a COO and Comcast’s CFO is also the Vice Chairman. So these compensation figures from company proxy statements can help you to see how the media power elite stack up, but only tell part of the story. Finally, remember that the SEC requires companies to provide compensation information for their five top executives. It’s safe to assume that several unlisted execs at big companies were paid more than some listed execs at smaller ones. Here’s how some of media’s top non-CEOs fared in 2012:
HOLLYWOOD, CA (May 9, 2013) – Paramount Pictures, a division of Viacom, Inc., announced today that Vince Vaughn has been cast in the comedy “DADDY’S HOME,” directed by Etan Cohen and starring Will Ferrell. The film is set to begin production in early fall 2013. The film, written by Brian Burns and Adam McKay & Chris Henchy and Cohen, is the story of a mild-mannered radio executive (Ferrell) who strives to become the best stepdad ever to his wife’s two children, but complications ensue when their freewheeling, freeloading real father (Vaughn) arrives, forcing stepdad to compete for the affection of the kids. Ferrell and McKay will produce through Gary Sanchez Productions, along with Joe Drake and Nathan Kahane through Good Universe, whose Matt Leonetti and Spencer Wong will co-produce. Gary Sanchez’s Henchy and Jessica Elbaum will executive produce. Vaughn is represented by CAA.
John McCain Introduces Cable A La Carte Legislation To Stop Bundling & Broadcasters Moving To Pay TV
John McCain wants to unbundle cable and to stop broadcasters like CBS and Fox from moving their stations to pay TV. The Arizona senator right now on the Senate floor is introducing The TV Consumer Freedom Act of 2013 (read it here). The legislation is intended to “allow the consumer, the television viewer who subscribes to cable, to have à la carte capability. In other words, not required to buy a whole bunch of channels that that consumer may not want wish to subscribe to,” McCain said moments ago. The former GOP Presidential candidate also went after broadcasters like CBS and Fox who have said that they could move to cable if they lose in the courts against Barry Diller’s Aereo streaming service. “We’ll also establish consequences if broadcasters choose to downgrade their over-the-air service,” McCain told the Senate. His legislation would also eliminate the sports blackout rule “in events that are held in publicly financed stadiums.”
The proposal is expected to meet heavy resistance among the cable companies. ”Only Dish and Cablevision have been for a la carte and smaller bundles because we think it’s consumer-friendly”, Dish Network chairman Charlie Ergen said during his company’s conference call today. “Having said that, there are five big groups that probably have enough clout in Congress to stop that legislation today. He added that “the marketplace is going to determine” if the price is too high. “There’s an awful lot of people who don’t consume (200 channels)”, he said, “and most of us would like to look for creative solutions”.
No surprise about who topped the list of 2012′s highest paid CEOs at the media companies whose compensation practices I track most closely. (See here for an explanation). CBS’ Les Moonves returns to the head of the pack with $62.2M, even though his package was 11.1% smaller than it was in 2011. That was an anomaly: The top 20 collectively made $542.7M, up from $416.6M in 2011, according to company proxy statements filed at the SEC. It took $25.9M to crack the Top 10 — last year Time Warner Cable’s Glenn Britt made it with $16.4M. The most notable change in this year’s list vs 2011 is the jump by Liberty Media’s Greg Maffei to No. 2 from No. 28 as his company adjusted stock options just in case the feds change the corporate deduction this year for performance-based compensation.
Yahoo’s Marissa Mayer also joins the top 10 following her move there from Google. Her appearance also highlights a quirk in this year’s list which has more CEOs than companies: Yahoo had three CEOs last year (Mayer is still there) and there were two apiece at Sirius XM (James Meyer replaced Mel Karmazin) and Cinemark (Tim Warner is now in charge). Also, remember that this list just includes corporate CEOs, not division chiefs or board chairs. I’ll be back soon with a list of the highest-paid media execs. The numbers on the right are the amount in millions of dollars for the total compensation as reported by each company.
Here’s our list of 2012′s highest-paid media CEOs:
EXCLUSIVE: Big Media companies don’t tell you when something’s rotten with the corporate culture. But this list should help you begin your search. This is Deadline’s third annual tally of out-of-whack CEO compensation. It’s an account of chiefs who not only make vastly more than you and me, but also collect far more than their closest colleagues at their own companies. Corporate governance experts become concerned when a CEO consistently makes at least three times more than the median for the four other highest-paid execs that the SEC requires companies to list in the annual proxy statement. That’s the standard I use, and it indicates that 14 out of 31 media companies that I tracked and that have already filed 2012 data failed the test — in many cases miserably.
Out of whack CEO pay can send a poisonous message to employees, including others in the C-suite. Internal pay parity “is critical to ensuring fairness and encouraging a collaborative team effort,” News Corp says in its proxy. Huge disparities also can tip you off to troublesome boardroom beliefs. It might indicate that directors lack faith in the business or leadership team — and fear that things will unravel if the top dog leaves. It may be a symptom of corporate groupthink where people give the chief credit for everything that goes well, and seek scapegoats for everything that doesn’t. Or it might mean that directors are beholden to the CEO — or share a cynical and grandiose sense of entitlement — and see nothing wrong with helping him (it’s almost always “him”) stuff his pockets with shareholders’ money, even where there’s little danger that he might leave if paid less. Whatever the case, researchers find that all too often the damage from such obeisance to the CEO eventually hurts a company’s performance and stock price. (For example, here, here, here, and here.)
This list looks at the biggest and best known infotainment providers. I include Web-based companies such as AOL and Yahoo that produce and sell their own content, and added Facebook which depends on ad sales. But I left out ones including Apple and Verizon that generate most of their revenues from hardware or personal communications services. (I’ve also left out Google, where the top execs benefit from stock performance and only collect a symbolic $1 in compensation.) For context, I’ve also noted how many people the company employs, and how that’s changed since the last fiscal year, to see whether these fabulously rich CEOs were job creators. The data isn’t nearly as revealing as it ought to be. For example, the SEC doesn’t require companies to specify how many jobs are based in the U.S., or even how many are full time. I’ve also included the CEO’s 2012 compensation rank among other media chiefs in our list, as well as among all media executives listed in their company proxies, and the average compensation over the last three years. (To avoid having them counted twice, I combined the compensation that Sumner Redstone collects as chairman of CBS and Viacom, and that Charles Dolan collects at Cablevision and AMC Networks.)
A few things to keep in mind: The SEC reporting rules only cover the top-paid executives of publicly traded U.S. companies. That means we’ll miss a lot of highly paid people who work at subsidiaries of a big company; Universal Studios’ Ron Meyer may be a big deal in Hollywood, but he didn’t make the top echelon at his corporate parent Comcast. Also, the pay data given to the SEC can spike in a year when an executive cashes in stock or collects deferred compensation. Averages also can be skewed when people on the list come and go in the middle of the year. So consider this to be a starting point to judge whether a CEO was paid fairly — not a final verdict.
I’ll be back soon with additional information including a similar list showing CEOs whose pay was more in line with his or her colleagues. Here’s how the out-of-whack CEOs stack up for 2012:
1. Live Nation: Michael Rapino. The concert and ticketing giant had a so-so year generating higher revenues but even higher costs — and a net loss. Last year’s big tours included Madonna, Lady Gaga, Coldplay, Roger Waters, and Bruce Springsteen & the E Street Band. Company shares appreciated 8.1% in 2012, lagging the benchmark Standard & Poor’s 500 which was +12.7%. But the big excitement took place at year-end with the surprising departure of Chairman Irving Azoff, taking performers he represents including Eagles, Van Halen, and Christina Aguilera. That left Rapino clearly in charge — but under the watchful eye of Liberty Media, which owns nearly 27% of the stock. With a flood of option awards, the CEO’s compensation rose 138.4% to $28.5M (The package: $2.2M salary, $243,281 bonus, $2.6M stock awards, $19M option awards, $4.4M non-equity compensation, $46,408 other compensation.) That was a whopping 17.0 times more than the median for the four other highest paid execs — up from last year’s 5.5 times — and 46% of the pie. Even these numbers underplay the disparity in executive pay: The group of other execs includes Azoff who made $27.4M. The company had 7,100 full time employees at year end, up 500. (Pay rank among media CEOs: 9. Among all media execs: 11. Average annual pay over last three years: $18.7M.)
If you can’t beat ‘em, join ‘em, goes the old saying. While the studios continue trying to crack the nut of getting Hollywood films into China, many of the majors also have a wider global strategy that’s proving lucrative both there and elsewhere: Local-language production. Hollywood’s involvement in the area is not new. But, increasingly, movies that are co-produced or distributed by the majors in such places as China, India, Germany, Italy, Spain, Korea and Latin America are finding themselves reaping strong returns.
The markets “are huge,” especially where local box office rivals that of Hollywood pictures. Homegrown films in China, for example, generally snag about 50% of the annual market share and are currently widely outperforming Hollywood films – this week’s Iron Man 3 notwithstanding. In India, the indigenous share of a $2B market can be as much as 90%. There’s an argument to be made that Chinese or Indian films don’t cross cultural borders, but with those kinds of numbers, “Why would the film need to travel?” posits an exec.
Richard Fox, EVP International for Warner Bros., says the studio is looking to develop relationships to make Chinese-language films. “There are a lot of moving pieces in assessing which countries to focus on,” but, “if it doesn’t recoup in the country of origin, we don’t get involved,” he says. Warner recently bet well in Mexico where its comedy Nosotros Los Nobles smashed records with the second biggest opening ever for a non-animated local film.
Another studio exec says local language production “is all relatively opportunistic.” It can be a distraction to try and stay abreast of local material, but “paying attention to local markets, filmmakers and stories around the world gets you more educated in terms of worldwide taste and emerging filmmakers.” Plus, “the minute you have a hit, it’s ‘How much money are we making? Why don’t we up this business?’” Here’s a look at how the studios are speaking in various tongues:
UPDATE, 3:10 PM: Clarifying statements from the involved parties have been flooding in since last night’s news about Netflix losing hundreds of movies from its streaming service beginning today. Reports originally said the vacating titles were from Warner Bros, but it turns out the majority were “older features that were aggregated by Epix,” a Netflix spokesman said this afternoon. Epix’s two-year exclusive deal with the streaming service expired in September; content from Epix — owned by Paramount, Lionsgate and MGM — also streams on Amazon Prime Instant Video. A source tells Deadline that that the number of expiring titles is closer to 1,000, rather than the 2,000 figure floating around online. “This ebb and flow happens all the time”, Netflix said. The company also said it is adding 500 more titles starting today, including Mission: Impossible 2.
The company says this is the first quarter since 2006, when it split from Viacom, that it generated more than $4B in revenues. CBS ended up with net earnings of $443M, +22% vs the first three months of 2011, on revenues of $4.04B, +6.4%. The top line is just a hair more than the $4.02B that analysts expected. Diluted earnings at 69 cents beat forecasts for 68 cents. But if you take away the billboard business in Europe and Asia — which CBS plans to sell, and deems “discontinued” — then earnings hit 73 cents. Ad sales across the company’s properties were up 8.2% to $2.46B. At the Entertainment unit, the largest operation which includes the broadcast network, revenues hit $2.54B (+9.5%) with operating income of $440M (+18.9%). CBS says that the Super Bowl broadcast helped, as did a 62% increase in retransmission consent fees. The cable channels, including Showtime, saw revenues of $478M (+5.8%) with operating income of $227M (+11.3%) due in part to higher affiliate fees.
Jeff Bewkes doesn’t fear that his company will be squeezed by Netflix’s growing desire for exclusive programming — a potential issue at Viacom where Netflix says it won’t renew their broad licensing deal at the end of this month. “We thought that would happen,” Bewkes told analysts today. “It’s a good trend for us….We think we’re in the catbird seat.” Time Warner is already selective about the shows it licenses. Execs add that as much as 35% of the revenue from streaming deals it made in Q1 won’t involve Netflix including a “considerable portion” from outside the U.S. “We’re in active negotiations with all of the major players,” Bewkes says. While streaming revenues are meaningful, they’re just part of a much bigger business: Subscription VOD providers last year accounted for more than $350M in Time Warner’s revenues — a figure that execs expect to grow in 2013. That’s still just about 10% of the company’s TV syndication, although it doesn’t include what Bewkes calls “pretty significant” sales from The CW Network, which Time Warner shares with CBS. Bewkes also says that he doubts many pay TV viewers will ditch HBO in favor of Netflix as the streaming service becomes more popular. “These are very complementary things” for people who are willing to pay extra for TV programming, he says.
Shares opened up more than 4% this morning after Philippe Dauman reassured investors that Viacom will continue to generate lots of cash from deals with streaming services — even if its program licensing pact with Netflix expires at the end of this month. “We’re still in discussions with Netflix…and with others,” he told analysts in a conference call. “We’re open to licensing content, some of it on an exclusive basis.” Netflix CEO Reed Hastings raised some fears last week when he said that his company would let its current deal with Viacom expire. Netflix is shifting its focus to “exclusive and curated content” as opposed to “non-exclusive, bulk content deals,” he said. The streaming service would be fine without Nickelodeon shows because “with all the recently added fresh programming from Disney, Cartoon Network, Hasbro’s The Hub and DreamWorks Animation, we have a great kids offering.” But Dauman also says that Viacom has little to fear without Netflix — and has “enough visibility” to know that the entertainment company can realize its forecast to see streaming revenues grow 10% this fiscal year.
Several key numbers were down, although cost-cutting at Paramount appears to have enabled Viacom to slightly beat the Street’s profit expectations. The company’s fiscal Q2 net earnings from continuing operations came to $489M, -18.4% vs the period last year, on revenues of $3.14B, -5.9%. Analysts thought revenues would reach $3.19B. But earnings at 96 cents per share were a penny above forecasts. At Viacom’s core pay TV networks operation, revenues increased 2% to $2.23B while operating income fell 2% to $873M. Domestic affiliate revenues were up 3%, but the company says that if you factor out the streaming deals that helped last year’s results the number would be up by a low-double-digit percentage. Ad sales in the U.S. and abroad were up 2% — an upturn that many investors wanted to see after last year’s ratings declines at Nickelodeon. Filmed entertainment was the weakest link with revenues -20% to $941M and operating income -43% to $65M. Viacom says its worldwide theatrical revenues fell 15% without a film that provided the same boost it saw last year from Mission: Impossible — Ghost Protocol.
EXCLUSIVE: Alex Winter’s documentary about about the rise and fall of Napster has a new online home. AOL will be making Downloaded available to visitors to its on.aol.com via streaming later this year. This is the portal’s first foray into longform streaming as a part of the distribution deal between the brand company and VH1, which is showing the film theatrically. Downloaded will be on AOL after its big-screen release this summer by the Viacom-owned broadcaster’s VH1 Rock Docs in partnership with Cinetic Media and Richard Abramowitz. The film on the legacy of file sharing pioneer premiered at this year’s SXSW Film Festival. Downloaded will also be on Cable VOD and iTunes later this year as well. “We sold the film to AOL at SXSW,” ,” Winter told me. “Cinetic’s John Sloss, VH1 and I made a deal with our partners that focused heavily on digital/streaming and still gives us room for theatrical and CVOD. It’s a new frontier for distributing movies, and the Internet is finally monetizing in a way that can work for everyone.” The film was directed and executive produced by Winter and executive produced by Maggie Malina. Executive producers for VH1 are Brad Abramson, Warren Cohen, Rick Krim, Bill Flanagan, Shelly Tatro, and Jeff Olde
Analysts expect to hear encouraging news across the board from the barrage of Big Media Q1 earnings reports and conference calls this week and next. But they’ll be listening especially carefully to Viacom on Wednesday. Its shares — which recently hit all-time highs — are down 3.6% since Monday night, when Netflix said that it will let its streaming deal with Viacom expire next month. Netflix says it would rather secure exclusive rights to particular shows instead of broad deals for shows that also appear on other streaming services including Amazon and Hulu. That worries some investors: Viacom has reassured them that all’s well following Nickelodeon‘s ratings dive last year — and backed up its confidence by promising to repurchase $2.5B in stock this year and pay $1 per share in dividends. The question now is whether Viacom can afford to make good on those vows. “Cash, rather than content, remains king,” Pivotal Research Group’s Brian Wieser says this morning. The Netflix news adds to the concerns about Viacom already held by Bernstein Research’s Todd Juenger — the company’s toughest critic on Wall Street. “We don’t think Netflix will bid a big sum for the specific programs it wants from Viacom,” he says this AM. “If they were willing to do so, they wouldn’t have gone through this exercise.” Nor does Juenger believe that Amazon will become a white knight. It “has all the leverage. Anything they offer to Viacom is better than nothing.” He adds that it would be “the ultimate irony if Viacom claimed the loss of Netflix would help their linear ratings, given years of arguing the opposite.” Others are more sanguine about Viacom’s prospects.
This news nugget was tucked into Netflix‘s letter to investors that CEO Reed Hastings and CFO David Wells released today: They say that at the end of May they won’t renew their broad deal with Viacom Networks that enables Netflix to carry programming from Nickelodeon, BET and MTV. “We are in discussions with them about licensing particular shows but have yet to conclude a deal,” the execs say. The change reflects Netflix’s effort to “focus on exclusive and curated content” which lessens its willingness to pay for “non-exclusive, bulk content deals.” Hastings and Wells add that “with all the recently added fresh programming from Disney, Cartoon Network, Hasbro’s The Hub and DreamWorks Animation, we have a great kids offering.” Netflix also says that it will try to appeal to large families by offering an $11.99 a month service that enables subscribers to stream up to four shows simultaneously vs the standard $7.99 service which allows two streams. The execs say that they expect “fewer than 1% of members to take it.”
The streaming video company did it again. Netflix shares are up nearly 25% in post-market trading after it reported that Q1 earnings per share came in at 31 cents not including a one-time loss from a debt payment — far exceeding forecasts for 18 cents. With the $25.1M debt extinguishment loss included, Netflix generated net income of $2.7M, up from a $4.6M loss in the period last year, on revenues of $1.02B, +17.7%. The revenue figure is right about what analysts expected. The February debut of its series House Of Cards helped the domestic streaming operation to end the quarter with 29.2M subscribers, up about 2M from the end of 2012. “Some investors worried that the House Of Cards fans would take advantage of our free trial, watch the show, and then cancel,” CEO Reed Hastings and CFO David Wells say in a letter to investors. “However, there was very little free-trial gaming — less than 8,000 people did this — out of millions of free trials in the quarter.” The political drama “provided a halo effect on our entire service and spoke to the quality of experience members can expect from Netflix.”
The company also had 7.1M international streaming customers, up about 1M from December, and 8M domestic DVD rental customers, -241,000. …
Twitter has notched another deal in its bid to expand from a microblogging site to a full-fledged media platform. BBC America on Thursday evening tweeted it had signed with Twitter for the first “in-Tweet branded video synced to entertainment TV series.” The companies offered no further information, nor did they say which shows would be involved, but the tweet noted that BBC America is home to Doctor Who and Top Gear. Earlier this week, a report surfaced that Twitter may be close to deals with Viacom and NBCUniversal for the site to stream videos and split ad revenue with the networks. The scant info on the BBC America deal reads like the tweet-branded video could be add-on content. Around 32M people tweeted about TV shows in 2012. Twitter already has partnerships with ESPN, Weather Channel and Turner Broadcasting System.
UPDATE: After besting Viacom for the second time in three years in the multi-million copyright infringement suit the media giant brought against them, Google released this statement today:
The court correctly rejected Viacom’s lawsuit against YouTube, reaffirming that Congress got it right when it comes to copyright on the Internet. This is a win not just for YouTube, but for people everywhere who depend on the Internet to exchange ideas and information. – Kent Walker, Senior Vice President & General Counsel, Google
PREVIOUSLY, 2:53 PM: Even though it suffered the second loss in three years on the same multimillion-dollar copyright suit against YouTube, Viacom today said it plans to appeal the latest ruling against it. “This ruling ignores the opinions of the higher courts and completely disregards the rights of creative artists. We continue to believe that a jury should weigh the facts of this case and the overwhelming evidence that YouTube willfully infringed on our rights, and we intend to appeal the decision,” said the company in a statement after a U.S. District court judge in New York granted YouTube yet another favorable summary judgment today. “The Clerk shall enter judgment that defendants are protected by the safe-harbor provisions of the Digital Millennium Copyright Act from all of plaintiffs’ copyright infringement claims and accordingly dismissing the complaint, the costs and disbursements to defendants according to law,” Judge Louise Stanton wrote Thursday (read it here).
Even with plans to appeal, this second verse sounds a lot like the first. Viacom lost a previous summary judgment in the case back in July 2010 on the suit, which it instigated in 2007. Among its many provisions, the Digital Millennium Copyright Act offers legal protection from liability to an unwitting website from infringement that its users may perform. Almost two years later, the plaintiffs then got a second swing at the video-sharing website thanks to the Appeals Court in April of last year ruling that YouTube hadn’t adequately proven it was actually entitled to the protection of the DMCA. The Appeals Court also noted it believed that in fact YouTube did know its users were putting up Viacom-owned material on the site. Unfortunately for Viacom, the judge, who delivered a similar ruling back in 2010, thought the system worked just fine and that YouTube had done all it needs to do in this case.
The Viacom and CBS Corp executive chairman made the donation via his Sumner M. Redstone Charitable Foundation as the museum celebrates its 25th anniversary. The Museum of the Moving Image in New York will rename its main theater the Sumner M. Redstone Theater beginning in May 2013. Redstone has been busy on the charity front this year, giving $10M to USC in January and last month the university christened a building in its Cinematic Arts complex the Sumner M. Redstone Production Building.