Hi and welcome to this weekly edition of Insider Advertising, where I get into the big stories in media and advertising.
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This week: Media’s horrible year, can SPACs save digital media, and the top stories of November.
How bad was 2020 for media companies? Ashley Rodriguez and Claire Atkinson ran the numbers for the media giants like AT&T, Comcast, and Disney, and came up with an eye-popping $US13 billion in losses.
Not only that, job losses neared 30,000 â€” the worst they have been since the 2008 recession.
Other key points:
- COVID-19 has altered the entire power structure of Hollywood, with studios now taking a back seat to those in charge of streaming video ventures.
- The economy’s K-shaped recovery can be seen in the growing number of streaming subscribers.
- And it’s too soon to tell if media giants can replace traditional TV losses will be replaced with streaming profits.
Read their full story here: Inside one of the worst years in media history, with $US13 billion in value lost and nearly 30,000 jobs cut
Recent news about the tieup of BuzzFeed and HuffPost has me feeling a bit of dÃ©jÃ vu.
Talk of digital media companies combining has been going on at least a couple years, since BuzzFeed chief Jonah Peretti mused about a big digital media rollup that would give these companies more leverage with the deep-pocketed tech giants.
That didn’t happen, though there have been some digital media couplings â€” Vice and Refinery29, Group Nine Media and PopSugar.
The idea of a rollup is back, though, fuelled by the rise of Special Purpose Acquisition Companies, or SPACs, which media consultant Peter Csathy calls “the flavour of the month.”
“Billions of investment dollars are sitting on the sidelines now, aggressively chasing and competing for content-driven opportunities that can be presented to a frothy and liquid public market increasingly driven by new tech-driven platforms like Robinhood,” he said.
Froth over digital media companies â€” we’ve heard that before.
The digital media runup started with VCs throwing money at these companies, pushing them to aim for unrealistic growth targets, without regard to profitability. This approach, with the help of cheap social distribution, produced some successes, but left many others looking for a bailout.
SPACs offer a lot of advantages. Csathy says BuzzFeed is just the kind of youth-driven brand that logically could take advantage of the frothy public market.
They’d find no shortage of companies looking for a lifeline, too.Here are 10 companies that could be acquisition targets.
But whether it’s digital media companies combining with one another or getting rolled up via a SPAC, one constant is that most of these companies won’t live up to their investors’ expectations. They aren’t big enough to compete in the ad game, most lack clearly differentiated content that makes them essential, and few have substantial subscription revenue.
They might survive by making aggressive cost cuts, but they will be far from what their founders envisioned.
It’s been a time of turmoil for media companies and agencies as they undergo consolidation, layoffs, and leadership changes. Many of our most popular stories in November helped break down what’s going on at these companies in transition:
- The rise and fall of J. Walter Thompson, the world’s oldest advertising agency
- Meet 20 firms helping big brands like Sprint and Unilever take their advertising in-house
- David Bradley has talked to 100 people in his search for The Atlantic’s next CEO. Who in the world are they? We found some names.
- WPP is combining two more agencies in another sign of consolidation at the world’s biggest ad holding company
- Inside WarnerMedia as huge layoffs hit the company and speculation swirls around the futures of CNN and HBO Max
- 10 digital media companies that are hot acquisition targets, including Patch and TheSkimm
Other stories we’re reading:
- Under Armour’s new Stephen Curry brand will have trouble replicating the success of Nike’s iconic Jordan line, analysts say (Business Insider)
- TV advertising needs to move a lot faster to fix its targeting problems, because digital video platforms like YouTube and Snap are coming hard after mainstream ad budgets (Business Insider)
- The Luxury E-Commerce Wars Heat Up (The New York Times)
- TikTok creators are paying brokers $US1,000 to get verified on the app (Business Insider)
- Chernin Group invests $US30 million in subscription media company Surfline (Axios)
- Filmmakers say Apple, HBO Max, and digital rentals rescued their mid-budget movies amid the pandemic and will lead to big changes in Hollywood (Business Insider)
Thanks for reading, and see you next week!