AT&T's latest buy helps it compete with Google, Facebook

If anyone ever doubted AT&T’s seriousness about competing with Google and Facebook for digital ad dollars, Monday's confirmation that it purchased AppNexus for $1.6 billion, one of the biggest digital ad platforms, should dispel those doubts.

The deal comes shortly after AT&T closed its $85.4 billion acquisition of Time Warner — a move that AT&T has said will help open the door to selling highly lucrative ads by combining content with its distribution network. 

The company confirmed the news in a press statement on Monday.

AppNexus provides the plumbing that helps pair online content with ads, offering tools to both content supplies and ad buyers through tis platform.

When consumers open an application, a complex auction occurs with advertisers bidding to serve their ads to that consumer. AppNexus picks the winner in a fraction of a second and takes a slice of the revenue. The firm also helps advertisers figure out how effective its campaigns are.

AppNexus competes with Google's DoubleClick Ad Exchange. Back in 2016, the New York-based AppNexus was on the path to a $2 billion public offering, but the market went soft for ad tech. Monday's acquisition is a win for AT&T, which hopes to use the AppNexus technology to improve the amount of money it can earn from digital advertising on its TV channels, which include Turner's CNN and TNT. The new firm will become part of AT&T advertising and analytics unit. 

In other AT&T news, the WSJ reported Sunday that it had talked to CBS's controlling shareholder about a possible acquisition before turning its attention to Time Warner. The WSJ reports that CBS controlling shareholder Shari Redstone axed the idea, though her reps say she simply met the AT&T chief, Randall Stephenson, and no more was said. Either way, the story looks like it helps CBS build its legal case that Redstone made decisions that weren't in the interest of all shareholders.




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Amazon charges up online ad rankings

Amazon’s advertising business is growing so fast that measurement firm eMarketer is now predicting it will be the third-biggest digital ad sales entity by the end of the year, behind behemoths Google and Facebook.

On Wednesday, eMarketer revised an earlier projection published in March that had Amazon coming in fifth behind Microsoft and Verizon’s Oath, which includes AOL and Yahoo. 

Amazon is now expected to book more than $4 billion in ads. The company’s popularity among advertisers is driven in part by consumers' shift to conducting product searches on Amazon and the firm’s two-day shipping service. Amazon is also selling ads on its streams of NFL Thursday Night Football and its gaming destination Twitch.

The report states that Amazon is projected to generate $4.61 billion in advertising revenue versus an earlier year-end forecast of $2.89 billion.

Notably, Google and Facebook’s share of the pie shrinks, according to this forecast. The so-called “duopoly” will take a 57.7 percent share of digital ad revenue in 2018 versus 59.2 percent last year, with smaller players also capturing some of the market.

Woodward book on Trump is a record breaker

"Fear," is officially a record breaker.

Bob Woodward's book about disarray in the Trump White House recorded first-week sales of 1.1 million in all formats, a record for publisher Simon & Schuster.

The last record holder was Walter Isaacson's "Steve Jobs" biography, according to the publisher. That book sold 379,000 copies back in November 2011.  

"There is only one word to describe the sales of 'Fear' - and that word is huge," said Jonathan Karp, president and publisher of Simon & Schuster, which is part of CBS Corporation. "What's especially gratifying is the appreciation readers and reviewers have for the integrity and importance of Bob Woodward's reporting."

The publisher has ordered a 10th printing, bringing the number of hardcover copies in print to 1.2 million. First day sales were 900,000, the company said in a statement.

Still, the book, only its second week on sale, is already fading from the news cycle as another title about President Donald Trump has emerged — this one from Stormy Daniels, who claims she had an affair with Trump more than a decade ago. Her book, "Full Disclosure," published by St. Martin's Press, is now attracting headlines after The Guardian wrote about its contents.

And there's more Trump-related books on the way. Earlier today, the Associated Press reported that former FBI official Andrew McCabe has signed a book deal for "The Threat: How the FBI Protects America in the Age of Terror and Trump," out on Dec. 4.  

Will more tech investors step up for print media?

Staff and former editors of Time Magazine are celebrating the news that Marc Benioff, the Salesforce CEO worth $6.6 billion, and his wife Lynne Benioff are acquiring the iconic magazine from Meredith Corporation.

Richard Stengel, who ran the newsweekly between 2006 and 2013, told that was happy to hear about the acquisition.

"It sort of like a dream come true in the sense of here's a tech billionaire who believes in the brand and in impartial news coverage and growing Time both domestically and internationally and doesn't want to play an editorial role," Stengel said. "It's the best of all possible worlds."

Nancy Gibbs, who was the first woman editor of the magazine from 2013 to 2017, said: "I'm over the moon, because obviously we've been living with uncertainty for a long time and hoping for the best outcome.

"What struck me, is this is not some bloodless business transaction," Gibbs said. "You can feel the passion and the purpose that he and Lynne bring to this."

Gibbs said she met Benioff, who is spending $190 million on the magazine, at a dinner in Davos, Switzerland, when she was running the Time Inc. news group. 

Gibbs, who is now the Edward R. Murrow Chair of Press, Politics and Public Policy at the Harvard Kennedy School, added: "When it comes to imagining a new future, I can't imagine a better steward. I'm thrilled for my colleagues and readers and everyone who spent so much of our careers there and rooting for the best possible outcome."

Time magazine's editorial staff were also celebrating the change in ownership on Twitter. Chris Wilson, the director of data journalism, tweeted: "I'm delighted that it will be in wise and benevolent hands with the Benioff family."

Columnist Susanna Schrobsdorff tweeted: "There's no better owner for Time and no better time to own Time."

Recode noted the magazine sent the famed bar cart around the office to celebrate.

Benioff said in a text message exchange with a New York Times reporter — conducted while he was receiving a massage — that Time is still in a strong financial situation. "It's a very strong business," he reportedly texted. "Very profitable."

The WSJ reported on Monday that Time is projected to see a 9 percent decline in revenue in 2018 from $173 million in 2017.

Jennifer Grygiel, assistant professor of communications and magazine at Newhouse School, wondered about the all-round rejoicing given tech's role in wrecking the traditional economics of publishing. 

"I am not one of those people who are celebrating the sale of legacy publishing to a tech insider," Grygiel said.

While she says Benioff is well liked because of his stance on human rights and same sex marriage, legacy publishing has been decimated by tech disruption. 

While Amazon CEO Jeff Bezos and philanthropist Laurene Powell Jobs have shown what investment and expertise can do for publications such as The Washington Post and The Atlantic, other wealthy individuals have found publishing a tough road and have given up their investments. 

Facebook co-founder Chris Hughes sold The New Republic after a rocky period of ownership, and billionaire Joe Ricketts folded DNAInfo after he couldn't find a way to make it profitable. Peter Barbey, a wealthy investor, said he would sell The Village Voice just three years after buying it.

Still, Grygiel said there may be more Silicon Valley luminaries headed for the publishing world. Alibaba's Jack Ma acquired the South China Morning Post, while Pierre Omidyar, the eBay founder, created The Intercept. 

Meredith is looking to sell other major magazine titles including Fortune, Money and Sports Illustrated.

Online video viewing continues to rise, says research firm Magid

Magid Advisors President Mike Vorhaus gave one of the most popular presentations at Goldman Sachs' annual Communacopia conference on Thursday. No prizes for guessing it was about the explosion of online video trends and cord cutting.

Vorhaus said that three-quarters of all internet users are now paying for a subscription video service, and online video viewing is up 8 percent per year.

The presentation also suggested that there's more consumer demand for smaller selections of cable channels, or skinny bundles, a point also brought home by Discovery Communications CEO David Zaslav, who confirmed his company has a deal to provide a host of its TV channels to smaller online bundles offered by Hulu and Sling TV.

But Vorhaus also touched on the topic of China, asking how many investors in the media had actually visited the country that is likely to be the lead topic of earnings presentations in the not-too-distant future. By his count only a quarter of the audience responded that they had.

Vorhaus told The Query that the Chinese digital middle class is around 700 million people, while there's another 600 million blue collar workers who will be digitally connected in the coming years.

"If you claim to cover a U.S. studio and you don't know about China, you are out of touch," he said. "There is this whole image that it is very agricultural.

He noted there are more than 150 cities in China with a population of one million or more.

Still, he noted that even Chinese players such as Tencent are still operating at the whim of government rules. Tencent stock dropped last month after the Chinese government banned the content of one of its games. Here's how CNBC covered it. Tencent Holdings also owns RIOT Games which produces the popular "League of Legends" computer game.

Magid Advisors
Magid Advisors

Take-Two Interactive CEO on challenges in China

The CEO of games publisher Take-Two Interactive, Strauss Zelnick, used his perch at the Goldman Sachs Communacopia conference on Thursday to launch a broadside against China.

Zelnick, a newly appointed board member at CBS, told investors of the many hurdles of growing the gaming business while Chinese companies can operate without any challenges.

"We have a completely odd and unequal situation where Chinese companies can come to the U.S. and buy companies no problem in our space," he said. "And if they don't want to do that, they can bring a title here and market it and keep all the proceeds."

Zelnick added: "In order to go to China, we've have to have half our business owned by a local company in China. The good news is they provide expertise. We are in business with companies like Tencent and we are thrilled to be in business with them, but we don't have a choice to be clear."

The Take-Two chief executive added that the firm needs government approvals to launch games in China, which in itself is a political process, and added: "China's been stealing our intellectual property for a really long time. Those things just have to change." 

So far, the tariff wars with China have not included any measures involving the entertainment sector to any large extent, but Zelnick wants to see some changes. "I'm not sure why the U.S. government thinks that it's an OK thing to do with our sector." 

Here's the link to the webcast to listen to the full session, and here's a link to Zelnick's CNBC interview where he talks about the need for boards to have good compliance, a clear reference to CBS. 

Zelnick also used the stage to promote his new book, “Becoming Ageless,” which drew a few laughs from the crowd. 

Survey shows Kaepernick campaign has already taken a toll on Nike

Nike’s new ad campaign featuring former NFL quarterback Colin Kaepernick is tanking the company’s favorability ratings, according to a survey from Morning Consult, a polling company.

The company, which surveyed more than 8,000 people before and after the print and TV ads were released earlier this week, said that Nike’s favorability ratings have dropped sharply.

"Before the announcement, Nike had a net +69 favorable impression among consumers, it has now declined 34 points to +35 favorable," Morning Consult wrote in its report.

The ad campaign features Kaepernick, the athlete-turned-activist who knelt during the national anthem to protest mistreatment of minorities in the U.S.

The ad copy reads: “Believe in something, even if it means sacrificing everything.” 

Kaepernick has not played for an NFL team since opting out of his contract with the San Francisco 49ers in March 2017. Since then, the NFL has been dealing with an ongoing controversy over players protesting during the national anthem.

President Donald Trump even tweeted about the Nike ad campaign.

"Just like the NFL, whose ratings have gone WAY DOWN, Nike is getting absolutely killed with anger and boycotts," the president tweeted. "I wonder if they had any idea that it would be this way? As far as the NFL is concerned, I just find it hard to watch, and always will, until they stand for the FLAG!"Morning Consult’s First Poll released on Thursday morning found:

  • Only 2 percent of Americans reported hearing something negative about Nike recently. That number jumped to 33 percent following the announcement.
  • Republicans had the biggest swing, with those "like to purchase Nike goods" declining from 51 percent to 28 percent.

There's a book about Matt Drudge on the way

Investigative reporter Matthew Lysiak has just signed a new book deal to write about one of the biggest names in conservative media: Matt Drudge.

Lysiak signed a deal for the book with his publisher, Benbella Books, he and the company confirmed on Tuesday.

There's been a lot of ink spilled about influential figures in conservative media from Infowars' Alex Jones, to Fox News' Roger Ailes, and talk radio's Rush Limbaugh, but not much is known about Drudge, a relatively anonymous figure despite his eponymous website. hit the national consciousness in January 1998 after he published an allegation that Newsweek was sitting on a story about then-President Bill Clinton's affair with a White House intern, Monica Lewinsky. 

Back then the format looked like a word processing tool. Here's a link to the original Clinton/Newsweek story. Now, Drudge Report has one main story with a photo and giant headline and three columns of links to the most gripping stories of the day. 

The website remains one of the most-read news websites, with Drudge's own website on Tuesday touting 22 million visits within the past 24 hours and some 817 million visits in the past 31 days. For many journalists, a link on Drudge means a guaranteed audience.

Lysiak, the author of "Newtown: An American Tragedy," said: "This is a man who dictated the stories we read more than any person in history. It is not just a revolution in the way we consume news. He has seized a narrative and little remains known about the guy."

Lysiak, a former New York Daily News reporter, is however having trouble reaching the man himself. He has sent a number of certified letters, he said, and reached out to friends who say they are too afraid that he'll cut them off.

The book is due out in 2019. Drudge didn't return an email request for comment.

NewsGuard gives Fox News a thumbs up, Breitbart a thumbs down

Trying to rate the trustworthiness of America's news destinations isn't the easiest task — just ask Facebook.

But NewsGuard Technologies, a digital media start-up, is working its way through thousands of publications and media outlets to allocate a green flag for good journalism or a red flag for questionable practices.

Run by the founder of Court TV, Steve Brill, and former WSJ publisher Gordon Crovitz, NewsGuard wants to bring ad dollars back to news destinations after social platforms muddied the waters about what's real and what's fake.

The aim is to replace algorithms with humans who are writing short "nutritional labels" with details about the provenance and reliability of news. 

The company has already discovered a few dilemmas; they questioned how to identify websites that simply have sports scores and websites set up by industry associations.

Steve Brill, speaking in a phone interview, added that the service has been emailing Breitbart, which currently has a red flag to help it gain a green verification.

"Breitbart is red but if it makes one change it becomes green, if it would list its owners on the website," Brill said.

Breitbart scores positive marks for five of the nine criteria that help readers determine what's trustworthy. Brill said NewsGuard received no response to its outreach. Breitbart was not immediately reachable for comment.

Rating the quality of news site will almost inevitably stir controversy, and the Nieman Journalism Lab at Harvard is already questioning the start-up's decision making process, which gives Fox News a green (for good) flag.

Still, Brill and Crovitz say they've had a lot of talks with companies in Silicon Valley and also with advertisers who told NewsGuard that they have ways to flag pornography and hate speech online but so far have found few ways to filter for fake news sites. NewsGuard flagged as a bogus service. A spokeswoman for Buzzfeed said they are aware and that they've reached out to the owner with a letter of copyright infringement.  

NewsGuard will also leap into action to provide a rating when an unknown news service is catapulted into the news.

NewsGuard is backed by advertising holding company Publicis Groupe. The company raises revenue from licensing its services, but everyday consumers can use the Microsoft and Chrome extensions, located at NewsGuard's website, to see how it works.

Owner of The National Enquirer stays silent on Michael Cohen plea

American Media, Inc., owner of The National Enquirer, has so far kept silent about the implications of Michael Cohen’s guilty plea.

Cohen, President Donald Trump's former personal attorney, pled guilty in federal court on Tuesday and said he had paid an executive from a media company to keep allegations of an affair out of the public eye — a violation of campaign finance laws. He said he did so at the direction of a federal candidate, which Cohen's lawyer later said was Trump.

Karen McDougal, a former Playboy model that has alleged she had a relationship with Trump, and her lawyers have said that the National Enquirer paid her $150,000 in August 2016 to keep her story about Trump from circulating.

Calls to American Media CEO David Pecker and the publisher’s public relations staff made Tuesday night were not returned. 

AMI executives were reportedly subpoenaed as part of the Southern District of New York’s case against Cohen. 

Court documents suggest that Pecker had an agreement to keep an eye out for damaging stories against Trump as early as 2015, according to the New York Times.

Cohen's guilty plea puts the company in an awkward position. The owner of the supermarket tabloid has been shopping around high-yield bonds with the help of bankers to raise as much as $450 million to pay off debt, according to Debtwire. The company recently spent $80 million acquiring competitive titles from Bauer Publishing, including InTouch, Life & Style and Closer. 

But audiences for The National Enquirer are on the decline. According to the Magazine Publishers Association’s 360 Report, National Enquirer’s print and digital numbers are down 19.8 percent year-to-date through June versus the same period last year. 

Whether American Media is in any legal jeopardy remains to be seen. Cohen reportedly created a shell company to pay McDougal for her story about a long-term affair with Trump and then didn’t run it, according to a 2016 article in the WSJ

The practice is known as “catch and kill," and American Media's relationship with candidate Donald Trump is thoroughly detailed in this The New Yorker article. 

Media group to FTC: rein in the tech giants

One of the biggest media trade groups has a message for U.S. regulators — it's time to act.

The News Media Alliance, which represents 2,000 news and media organizations, told the Federal Trade Commission it is fed up with big tech platforms hampering their digital businesses, and it wants the government to rein in their anti-competitive behavior.

The NMA made the comments in a letter issued ahead of the FTC's upcoming hearings on "Competition and Consumer Protection in the 21st Century."

“The news industry receives 80 percent of referral traffic from the platforms but only about 14 percent of revenue on average comes from that traffic," Danielle Coffey, vice president of public policy at NMA, said in a statement. "Something is not translating.

The filing stated that Google and Facebook dominate both the distribution and the monetization of news, since most online users get their news via search and social media.

Among the NMA's arguments:

  • “Dominant platforms use secret and unpredictable algorithms to determine whether and how content is delivered to readers."

  • The platforms have grown by serial acquisitions and exclusionary conduct. “Action by the FTC is thus needed and justified to rein in the tech giants’ anticompetitive conduct.”

  • The tech platforms are forcing policies on the news industry that threaten its viability. Google, for instance, asked news publishers to provide news stories under a "first click free" program. When the WSJ declined, its traffic fell.

The News Media Alliance had a stark warning for the FTC if no action is taken: “If the news industry is permitted to continue deteriorating as the technology platforms take over, it is almost impossible to exaggerate the consequences.”

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