Hollywood Torrent: TV’s love-hate relationship with technology

Good morning from New York, wherever you may be. I’m about to decamp to a small island nation after a week of listening to TV executives pitch advertisers on their next batch of shows.

With all the major presentations in the books, I can report actors boasted about fresh ideas, even as networks rebooted old ones (Will & Grace, American Idol, Roseanne). Professional salespeople repeated words like targeting, reach and scale to explain why TV still merits billions of dollarseven as viewers defect for online platforms.

TV networks are aware of the doubts about their future, and so each one employed a different way of affirming their clout. NBC talked a lot about This is Us and live sports, while CBS trotted out its late-night stars and teased a trailer for its new Star Trek show. These two networks are in the best position of the big four broadcasters, though CBS’ audience decline this past year is disconcerting.

The leaders of Fox and ABC stressed the stability of their line-ups, an odd move considering their struggles in recent years. ESPN, a cash machine suddenly under pressure, announced a bunch of new shows with `personalities’ at the center, the latest step in its effort to overhaul its SportsCenter.

If there was one subject on which each network could agree, it was their distaste for ``digital.’’ It’s an annual tradition. NBCUniversal’s Linda Yaccarino, the subject of a recent New York Times profile, initiated the criticism Monday.

Online outlets can’t offer the same premium series. No algorithm could have predicted the success of This is Us or the strong showing from Saturday Night Live. Heck, Facebook is broadcasting suicide attempts! Nor can any online outlet guarantee your ads will be protected from race-baiting or hateful speech — hey YouTube! But TV networks can.

Ignore the apparent misunderstanding of how Netflix and Amazon use algorithms and fix your attention on a major contradiction in this criticism of ``digital.’’ The parent companies of most of these TV networks are looking to digital to solve what ails them.

Comcast, parent to NBCUniversal, has invested hundreds of millions of dollars in Vox, Buzzfeed and Snapchat. CBS is going to offer that Star Trek show on a streaming service, All Access, while Comcast, Fox and Disney (owner of ABC) are investing oodles of money on Hulu, another streaming service.

Why? Because digital video recorders and online streaming services have made it easier for people to watch great TV shows whenever and wherever they want. Because young consumers are more familiar with Facebook, Snapchat and YouTube than any broadcast network. And because it makes it looks like they have a long-term plan.

To be fair, some criticism of online players is warranted. Facebook just admitted to flubbing measurement of views for the fifth time in less than a year. YouTube can’t fully control where your ads appear, and has yet to fund an original show that looks worthwhile. Netflix and Amazon aren’t competing for these ad dollars, so they aren’t part of this conversation.

But the facts are inescapable: While millions of people still watch TV every single night, Facebook and Google are increasing their share of overall dvertising sales. TV isn’t, and a big reason is that live audiences are shrinking rapidly.

The networks say their audiences are actually bigger than ever — that viewers are just watching shows elsewhere, whether online or on-demand. Even as they badmouth digital, their bet is that one day soon they’ll get adequately paid by advertisers for those viewers.

Cannes: rumble on the red carpet

Netflix is very adept at needling the entertainment business, so much so that it’s often hard to tell who started the fight. Take the brewing controversy at this year’s Cannes Film Festival.

Netflix is screening a pair of movies there — Noah Baumbach’s The Meyerowitz Stories and Bong Joon-ho’s Okja. Both filmmakers are at the top of their fields. Baumbach made ``The Squid and the Whale’’ while Bong made ``Snowpiercer.’’

Yet the festival said last week that it would not allow Netflix films to compete unless they are certain to screen in French theaters. As a policy, Netflix releases movies on its streaming service at the same time they appear in theaters, and some of its movies have never appeared in theaters. Netflix CEO Reed Hastings criticized the festival’s decision in a Facebook post.

Now two jurors at Cannes — director Pedro Almodovar and actor Will Smith — have stepped into it. Almodovar said no movie should receive the Palme d’Or, the festival’s top honor, unless it is going to appear in theaters. Smith, who is the star of an upcoming Netflix movie, defended his benefactor. Netflix has broadened his children’s ``global cinematic comprehension.’’

Regardless of the outcome, the real winner here is Netflix. Most people still don’t know Netflix makes original movies, even if the company has released several dozen. That will change the more people argue over Netflix movies.

For those not interested in public feuds, Brent Lang counts down the hottest titles up for sale, including a movie starring three icons: Diane Keaton, Jane Fonda and Candice Bergen.

In development

  • Jordan Peele, the director of Get Out, is producing an HBO drama with J.J. Abrams. And Paolo Sorrentino is making a follow-up to his HBO series ``The Young Pope.’’
  • Netflix is turning Polish author Andrzej Sapkowski’s novels into a drama series called ``The Witcher.’’ It’s also making a fifth season of ``Arrested Development.’’
  • TNT and TBS are making shows with Tracy Morgan, Daniel Radcliffe and Ridley Scott. This is all part of Kevin Reilly’s plan to transform those cable networks into destinations for premium programming (a la FX, where he once worked).
  • Katy Perry announced a new album, a tour and her next job: American Idol judge.
  • Vice’s in-house ad agency produced a campaign for Lululemon.

Pandora’s future

Pandora, the world’s biggest online radio service, is fighting for survival in a suddenly competitive online music business.

Just last week, the company reported big losses, due in part to the delayed rollout of its new on-demand streaming service. The company raised $150 million from private equity firm KKR to cover payments to music rights holders, and spend money to market the premium service.

Pandora avoided on-demand for a long time — too long most say. The fast growth of Spotify and Apple Music, along with the billions of dollars Amazon and Google are investing in music, have pressured Pandora to expand beyond its roots as an internet radio company and become a streaming service seeking paying subscribers.

As Pandora diversifies beyond radio, it has also expanded into ticketing and artist services. Yet now Pandora is reconsidering some of those new areas. The company may sell Ticketfly, a concert ticketing business it bought less than two year ago, per a Bloomberg scoop.

The online-radio provider is still looking for a buyer for the entire company, but a sale of the ticketing business could be an option if that doesn’t happen. Pandora paid $335 million for Ticketfly in 2015, a move then-CEO Brian McAndrews hailed as a “game-changer.” Ticketfly handles ticket sales for hundreds of venues across North America, and Pandora has tried to use the data it has about music fans to sell more tickets.

But ticketing is not vital to Pandora’s future. As I wrote a couple months ago, Pandora’s future hinges on the success of this service. Activist investors are clamoring for change, and a successful on-demand service is the only way to quiet them (or get a sale at a better price). It’s probably not a good sign that Pandora’s chief technology officer is leaving just a few weeks after the rollout of the service.

In the board room

  • Bob Iger, CEO of Disney, shows no signs of slowing down or stepping back, per Ben Fritz. Iger has run the entertainment giant for 12 years, and there’s no successor in sight: ``The strongest internal candidates have left, and the most frequently mentioned external candidates are uninterested. Some people who know Mr. Iger believe he simply doesn’t want to retire yet, despite stating repeatedly that he intends to. A contract extension signed in March runs through July 2, 2019. That is the fourth date he has announced for stepping down as CEO.’’
  • Apple invited Steven Levy to tour its new headquarters: 9,000 trees, a 1,000-seat theater and a 100,000-square foot health and wellness center. The office sounds glorious, but what does it say about the company if Jony Ive, its design guru, spent so much time focused on an office?
  • Financial news service Cheddar raised $19 million from AT&T and Amazon (among others).

Chinese Buying Spree

Adam Satariano has a great piece in Businessweek on a ``recent flurry of oddball pairings between Chinese industrial interests and Western entertainment companies.’’ For starters, a Chinese maker of chemical solvents spent $1 billion on a Slovenian company that makes a popular game called Talking Tom Cat. But Talking Tom is not alone.

``A real estate magnate in Beijing bought Legendary Entertainment, the movie studio that made the Dark Knight trilogy, for $3.5 billion. A maker of construction materials bought Framestore, the company behind the special effects in the Harry Potter films. Zhejiang Dragon Pipe Manufacturing Co. acquired app developer Entertainment Game Labs. And perhaps strangest of all, Digital Extremes Ltd., which created an alien battle game, and the studio Splash Damage Ltd., which made an offshoot of the Xbox hit Gears of War, were bought by an enormous Chinese poultry processor.’’

What’s the deal?

``In China, industrial companies trade at valuations they’d never receive elsewhere in the world. Affan Butt, an investment banker who helped facilitate the sale of Jagex, says some may trade at as much as 100 times their annual earnings — more than four times the multiple of General Electric Co. This means they can acquire companies at what is effectively a discount.
Chinese companies are betting that by adding game studios that have better margins than a stodgy industrial business, their stock price will rise. Regulators and investors in China focus almost exclusively on a company’s bottom line. In Shanghai, a company must show three years of profitable operations before listing. And once a stock is trading, it suffers if a company doesn’t have new sources of profit.’

Sellers should be wary. It’s often unclear where the money comes from (or if it will come at all).

New box office champ

  • Alien: Covenant, the eighth movie in a franchise that began in 1979, is expected to dethrone ``Guardians of the Galaxy’’ at the box office this weekend. Analysts expect the sci-fi flick to gross between $40 million and $50 million.
  • Guardians of the Galaxy Vol. 2 has surpassed $600 million worldwide, and should hit $700 million before the end of the weekend. It’s certain to top the first film.
  • King Arthur is the summer’s first big flop. It grossed just $15.4 million in North America its opening weekend, and has tallied just $52 million worldwide. With a $175 million production budget and millions more in marketing, the movie is sure to cost its financiers a sum of biblical proportions.
  • Wonder Woman is looking much stronger. The movie is tracking to open with at least $65 million at home.

Weekend reading

All the stories about the rise of Stephen Colbert overlooked a major factor: the collapse of Jimmy Fallon. Dave Itzkoff talks with Fallon about his shrinking audience, his future in a politicized world and the backlash to his cozy interview with Donald Trump.

Meet the 6-foot-8-inch former basketball player and war refugee who is going to help Time Warner take on Netflix.

Tyler Perry is THR’s TV producer of the year.

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