This was the quarter when Facebook left behind memories of its troubled IPO last year: As it reassured investors that it has a strategy to sell ads on mobile platforms, its shares closed Q3 at $50.23 — a 101.9% gain since the end of June. That’s the biggest jump on the list of media company stocks we track. The sector did well as the economy, and advertising, improved: The Dow Jones U.S. Media Index rose 8.3% beating the Dow Jones Industrial Average (+1.5%) and Standard & Poor’s 500 (+4.7%). Radio company Cumulus Media came in second in our group, rising 56%, followed by Netflix (+46.5%), Best Buy (+37.2%), Pandora (+36.6%), and Yahoo (+32%). Among Big Media companies, Viacom (+22.9%) saw the biggest improvement followed by Time Warner (13.8%), CBS (+12.9%), Comcast (+8.1%), Disney (+2.1%) and Sony (+1.7%). We left Fox and News Corp off the list for this quarter; their stocks were essentially brand new after Rupert Murdoch’s company split in two at the end of June. Companies that probably were glad to see the quarter end include 3D technology company RealD (-49.6%), Barnes & Noble (-19%), Rovi (-16.1%), and Outerwall — the parent of DVD rental kiosk owner Redbox — which was -14.7%.
This will be the highest-profile test to date whether big prelaunch online buzz and awareness translates into big ratings. ABC‘s upcoming drama series Marvel’s Agents Of S.H.I.E.L.D. yesterday crossed the 1 million Facebook fans mark, believed to be a record for a new series. A look at the list of the new fall shows with the largest FB following illustrates why the networks are so eager to expand existing franchises or bet on presold titles, like S.H.I.E.L.D., an off-shoot from blockbuster film The Avengers. The No. 2 and 3 new series in number of FB fans are spinoffs: the CW’s The Originals (528,690), which will face off with S.H.I.E.L.D. in the Tuesday 8 PM slot later this fall, and ABC’s Once Upon A Time In Wonderland (498,846). In an indication there is some correlation between online popularity and premiere ratings, Fox’s Sleepy Hollow, which got off to a strong start this week, is No. 4 on the FB fans list with 362,013. (NBC’s Dracula is No. 5 with 215,295). Like Sleepy Hollow, which just got a big Live+3 DVR boost, S.H.I.E.L.D. and the other shows ahead of it on the list appeal to younger audiences who won’t necessarily tune in to watch the show live.
It took about 440 days, but shares in the social network company today finally closed above $38 ($38.05 to be exact) — the price Facebook charged for its stock when it went public in May 2012. After gaining 23 cents on Day One, the IPO became a symbol of Silicon Valley hubris — and investor gullibility — as institutional buyers began to fear that Facebook wouldn’t be able to grow. It was unclear whether the company could squeeze many ads into the small screens on smartphones and tablets where users increasingly accessed the service. The stock closed at its lowest price, $17.73 on September 4, the day after The New York Times’ Andrew Ross Sorkin observed that the $50B in Facebook’s lost market value was more “than Lehman Brothers gave up in the entire year before it filed for bankruptcy.” Facebook remained under a cloud. Rupert Murdoch commemorated the first anniversary of the IPO by tweeting: “Look out Facebook! Hours spent participating per member dropping seriously. First really bad sign as seen by crappy MySpace years ago.” But investor perceptions changed dramatically on July 24 when Facebook beat the Street’s earnings expectations with strong sales of mobile ads. Shares are up 45.6% since then.
Facebook had better be careful. A lot of users may find it creepy later this year when, Bloomberg reports, the social network plans to let marketers insert 15-second video ads directly into people’s news feeds. Buyers could target the age and gender of the users who’d find the ads in their feeds the news service says, citing “two people familiar with the matter.” Ads could sell for as much as $2.5M a day depending on how many people watch them. Execs appear to appreciate the possibility of a backlash: CEO Mark Zuckerberg has delayed the plan “at least twice” as he considers ways to minimize user ire over the ads, for example by offering them in high-def and ensuring that people won’t see the same pitch more than three times a day. But the sales opportunity apparently is too lucrative to resist. Advertisers likely will spend nearly $64B in the U.S. this year on TV ads vs $36B on the Internet. That’s why digital powers including Google, Yahoo, and AOL are gunning for TV advertising — including by staging their own NewFront sales pitches to ad buyers as they also gather for television networks’ upfront presentations. Last week Facebook COO Sheryl Sandberg told analysts that her company has “a massive and engaged audience around …
Listen to (and share) episode 44 of our audio podcast Deadline Big Media With David Lieberman. Deadline’s financial editor talks with host David Bloom about Time Warner Cable’s week all over the news; Yahoo’s billion-dollar buyback from Daniel Loeb; Amazon‘s skyrocketing content costs; and Facebook‘s skyrocketing share prices.
The stock is up more than 19% in after hours trading following a Q2 report that appears to have reassured investors who feared that smartphones and tablets don’t have enough screen space for ads. Facebook says that mobile ads accounted for 41% of the total ad sales in the quarter, a big jump from 30% last year. The company generated $333M in net income, up from a $157M loss in the period last year, on revenues of $1.81B, +53.1%. The revenue number was well ahead of the $1.62B that analysts anticipated. And adjusted earnings at 19 cents a share beat forecasts for 14 cents. CEO Mark Zuckerberg drove home the main message, saying, “The work we’ve done to make mobile the best Facebook experience is showing good results and provides us with a solid foundation for the future.” Ad sales accounted for 88% of Facebook’s revenue, and were up 61%. The company saw $214M from payments and other fees, +11%. While the report has little detail about particular sources of income, the company says that it introduced video for Instagram in Q2, and 5M videos were uploaded in the first 24 hours.
Related: The First Ever Instamovie?
UPDATE, 11:35 AM: The social network company wasn’t making a judgment about Kirk Cameron‘s upcoming religious movie Unstoppable last week when it blocked links to the promo site. “To protect the hundreds of millions of people who connect and share on Facebook every day, we have automated systems that work in the background to maintain a trusted environment and protect our users from bad actors who often use links to spread spam and malware,” Facebook says today. But “in rare instances they make mistakes.” And this was one of them: The link “was blocked for a very short period of time after being misidentified as a potential spam or malware site. We learn from rare cases such as these to make our systems even better.”
PREVIOUS, SUNDAY AM: Former Growing Pains star Kirk Cameron‘s upcoming movie Unstoppable vows to answer the question “Where is God in the midst of tragedy and suffering?” But considering that theaters
The social network’s blog post this afternoon blames the security breach on a “bug” in the process it uses to make friend recommendations. Facebook improperly stored some of the matchmaking info. “As a result, if a person went to download an archive of their Facebook account through our Download Your Information (DYI) tool, they may have been provided with additional email addresses or telephone numbers for their contacts or people with whom they have some connection,” the company says. About 6M Facebook users were affected. In addition, “other email addresses or telephone numbers [were] included in the downloads, but they were not connected to any Facebook users or even names of individuals.” The company is sending emails to notify the people whose info was mistakenly distributed, and has alerted regulators in the U.S., Canada, and Europe. Facebook adds that it has “no evidence that this bug has been exploited maliciously” and has not received any complaints.
The popular photo-sharing smartphone app now also will handle 15-second videos, and include an image stabilization feature for iPhones that “will change video forever,” Instagram CEO Kevin Systrom says. In a brief demonstration at the announcement today, he showed how the process, called Cinema, can eliminate the shakiness that characterizes videos made from hand-held smartphones. In addition, Instagram will have 13 filters designed to help users enhance and edit images. “We’re still committed to making sure you have control over all of your content,” he says in a blog post. “Only the people who you let see your photos will be able to see your videos. And as with photos, you own your videos.” The initiative will help Instagram compete with Twitter‘s Vine video sharing. Some 130M people use Instagram. The new apps for iPhones and Android powered phones are available today. Facebook paid $1B last year to acquire Instagram.
If Google moves forward with a reported $1.3B acquisition of Israeli navigation and traffic app Waze Inc., it would be the search giant’s fourth-biggest deal by dollar value, The Wall Street Journal says. Waze was founded in 2008 and uses crowdsourcing to provide routing and real-time traffic updates, including police presence, road accidents, speed cameras, and hazards. It has nearly 50M users in about 190 countries. Waze and Facebook had been in talks, but Israel’s Globes reports the social network balked at the price tag and at a stipulation that Waze’s Israeli employees continue working in Israel. (Google has an office in Israel.) Apple had been thought in the running for Waze, but CEO Tim Cook said in May that the company had not made a bid.
The satellite company isn’t ready to give up on the single-screen TV viewing experience yet. It just rolled out an app, called Social, that it says is the industry’s “first and only set-top app that delivers on-screen social content relevant to the show or channel a viewer is watching.” Subscribers who have Dish’s Hopper Whole-Home HD DVR can keep their eyes on the TV screen to watch a program while they also read and write posts to Facebook and Twitter (up to four accounts apiece). When the app is open, they’ll have three options on the right side of the screen: “Now Watching” will offer the Twitter feed for the show the user is watching. “My Twitter” will enable the viewer to see and send tweets on his or her personal Twitter feed. And “My Facebook” offers similar functionality for Facebook. At the bottom on the screen users will see a data bar with statistics and information including, as Dish describes it, “the top areas in the country where people are Tweeting about the program, the program’s sentiment rating, percentage of Tweeters by gender and frequency of Tweets.” Dish’s Director of Product Marketing and Management Jimshade Chaudhar says that last year “Twitter saw 32 million Americans tweet about TV programming, an incredible display of consumer interest in wanting a more social experience from TV. Through our Social app, we’ve made it easier for consumers to follow social conversations and post …
“Look out Facebook!” the News Corp CEO wrote today in a tweet. “Hours spent participating per member dropping seriously. First really bad sign as seen by crappy MySpace years ago.” Easy to see why he’s still smarting over the “crappy” asset that he bought in 2005 for $508M and sold two years ago for $35M. But his warning also reflects the passion Facebook inspires among supporters and critics alike on the anniversary of its ill-fated initial public offering at $38 a share. The stock closed today at $26.25 — down 31.3% — and has been pretty much flat for more than five months. Bears say that Facebook can’t sustain its torrid growth as it faces potent competitors — including Google, Twitter and Tumblr — and a shift among users from personal computers to advertising unfriendly small screened mobile phones and tablets. “Facebook is now scrambling to boost revenues through bigger ads that take over the entire screen,” BTIG’s Rich Greenfield notes today. He contrasts that to Google+, a social network that “is not out to harm the user experience through disruptive, annoying, spammy ads, they simply want the data to improve search and other products.”
Facebook‘s Mark Zuckerberg and Sheryl Sandberg were bullish about mobile ads and the apps that help drive them during the company’s Q1 earnings call today. Facebook posted revenue of $1.46B for the quarter, up 38% from $1.06B in the same period last year. Earnings excluding items were $312M, or 12 cents a share, a penny shy of Wall Street estimates. Mobile ads accounted for almost 30% of ad revenue in the quarter, up from 23% in Q4 2012. Total revenue from ads was $1.25B, up 45%. The company had an average of 665M daily active users in March, up 26% year-over-year, and 751M mobile monthly users, up 54%. The social media company’s numbers follow its recent unveiling of Facebook Home, a software-only adaptation that will “turn your Android phone into a great social device” — that also eventually will sell more mobile ads. Facebook’s share price is flat in after-hours trading.
One of Silicon Valley’s top investors — and a key, early supporter of Mark Zuckerberg’s social network company — won’t stand for re-election at the June 11 annual meeting, Facebook says in an SEC filing. James Breyer has been on the company’s board since 2005. This isn’t a complete surprise: Breyer has been selling Facebook shares at least since October, when he unloaded about $81M of his holdings in the company. Breyer is a board member at News Corp and privately held Legendary Pictures as well as Walmart and Dell. Facebook shares closed Friday at $26.85, well below the $38 IPO price last May but up from the low of $17.55 in September.
These are among investors’ top concerns following Facebook’s unveiling yesterday of its Facebook Home smartphone super-app, which will put its services front and center on Google‘s Android operating system. It’s an important initiative for Facebook. Many on Wall Street fear that the social network company is caught in a dilemma: It needs to sell ads, but will turn off lots of smartphone and tablet users if it clutters their small screens with sales pitches. That’s why Sterne Agee’s Arvind Bhatia says that early versions of Facebook Home will be ad-free, but “over time the ‘Home’-based home screen will start to display very relevant, targeted, slightly larger, and visually appealing ads –all positive for ad rates.” If that happens then “Facebook Home will be a lot less appealing to consumers,” BTIG’s Rich Greenfield says. Even without the ads, he wonders whether many users want their news feeds prominently displayed on their home screens noting that “always on pictures from what you/your friends/your family did last night could be a wee bit embarrassing when you turn on your phone next to someone.” He and others also want to see whether Google will see Facebook Home as a threat.
David Bloom is a contributor to Deadline Hollywood
The software-only adaptation will “turn your Android phone into a great social device,” Facebook CEO Mark Zuckerberg says during an event today’s at the company’s HQ. Facebook Home transforms the look and feel of the operating system. For example, it enables the lock screen to display updates from Facebook friends as they come in. The software also allows people to send and receive texts while using other phone functions. Home will be available for free beginning April 12 through the Google Play online app store. It initially will work on five top-end smartphones from HTC and Samsung. Each month thereafter, Facebook plans to expand Home compatibility to additional phones. HTC also announced the HTC First, a Facebook Home-optimized smartphone for the AT&T network that will be available April 12 for $99.99. Zuckerberg, who took no questions during today’s announcement, didn’t say whether Facebook will adapt its software for Apple, Microsoft and Blackberry phones. Samsung, the biggest Android smartphone maker, recently debuted its latest flagship, the Galaxy S4, which is among the first five models that will be compatible with Facebook Home. Facebook shares jumped 2.8% to about $27 in afternoon trading. Google shares dropped about 1.6% to …
This will “make it easier and more fun to find TV shows and movies to watch and discuss with friends,” Netflix says this morning. Starting today, streaming subscribers in the U.S. can add “Friends’ Favorites” and “Watched by your friends” rows to their search screens. They can choose whether to share info about the videos they watch just in Netflix, or to also add Facebook. By the end of this week, Netflix says the social network tie-ins will be available to all of its U.S. members. The features have been available in other countries for more than a year; Congress’ amendment in January to the 1988 Video Privacy Protection Act made it possible to introduce them here. ”There are few better ways to find a movie or TV series you’ll love than hearing about it from your friends,” says Tom Willerer, Netflix VP Product Innovation. The company says that members will have to opt in if they want the Facebook integration: They can go to ”Social Settings” on Netflix.com to make the change.
The leading social network appears to have heard the complaints from marketers, including many in Hollywood, who say that their stuff often is lost in Facebook News Feeds that are awash with clutter. Pictures and images will become a lot more prominent in what execs describe as a more attractive and more customizable News Feed that they introduced this afternoon. The company will begin to offer it in a limited way on the web today, and make the version for mobile devices available over the next few weeks. In the new designs, individual photos and albums will be larger. So will logos from the publishers of linked articles, and maps when people identify locations. Users also can tailor the experience, for example by following and isolating what friends are sharing, photos, posts about music, and news and other material from people and content providers the user likes. The goal is to make the News Feed “the best personalized newspaper” CEO Mark Zuckerberg says. He notes that about half of all posts include photos. The enhanced ability to tap into music could help Facebook lure people from destinations including YouTube, Spotify, and the revamped MySpace. The company said little about ads, a big concern for users (who dislike clutter) and investors (who like the sales revenue). Facebook shares …
Brett Ratner has joined with Six Eleven Media to produce a TV version of the successful online game FarmVille. The Hercules director and the Canadian production company aim to make a half hour animated series out of the farming simulation social networking game. “FarmVille is one of the most exciting brands out there today and its cross-platform opportunities are endless. I am thrilled to be expanding the brand with existing fans and also engaging a whole new audience,” said Ratner in a statement Thursday. No network is attached currently to the proposed FarmVille series. Ratner will serve as executive producer with Six Eleven Media’s Kirk Schenck & Charles Bishop and Independent producer Nina Gelb. FarmVille was launched in 2009 by game maker Zynga and has become one of the most popular games on Facebook and MSN Games. A FarmVille 2 sequel was released last Fall. Ratner’s upcoming Hercules, with Dwayne Johnson in the title role, is set to be released by Paramount on August 8, 2014.