Hollywood Torrent: Your phone company is now a media baron

Good afternoon from San Francisco, wherever you may be. I’m spending most of March up north, so please reach out if you’re here and want to get together.

The news of the week: Richard Plepler will leave HBO, the premium cable network he has led for the past six years. David Levy will leave Turner Broadcasting, the TV group that runs two of the most-watched cable networks in the U.S. (TNT and TBS). Plepler and Levy rank among the most powerful media executives in the country, and their departures foreshadow a major shake-up at the media giant once known as Time Warner.

Now that AT&T has cleared the final legal hurdles to its acquisition, the phone company plans to reorganize networks HBO, TBS and TNT under the same group, and have those networks share resources. Bob Greenblatt, most recently in charge of entertainment at NBC, is going to run the combined entity. If this sounds like boring corporate restructuring, it is. But it’s also hard to overstate the importance of this transition.

Plepler was the face of HBO, where he has worked since 1992. As CEO, he greenlit “Game of Thrones’’ and “Veep,’’ the two most decorated TV shows of the past decade, and shepherded the network’s push into online TV with HBO Now. He was a fixture on the New York cultural scene, a political fundraiser who sits on the board of the New York Public Library and the Council on Foreign Relations.

Levy lacked Plepler’s public profile, but he was one of the most important executives in sports media, the one part of the traditional TV business that’s still growing. He brought NBA basketball to Turner, and then scored a coup by convincing CBS to share March Madness. Levy has worked at Turner for three decades.

Their departures will stoke the entertainment industry’s worst fears about a phone company invading Hollywood. While AT&T has preached it will leave WarnerMedia independent and preserve its culture, the impending reorganization and executive exodus suggest the phone company has strong ideas about how operations can improve.

Plepler, who had enjoyed almost-complete autonomy under the previous regime, didn’t wish to surrender control under the new structure. Levy, who already oversaw most of Turner’s business, harbored ambitions of higher office. In the two-plus years since AT&T announced it is buying Time Warner, it has waved goodbye to the company’s CEO (Jeff Bewkes), the head of Turner (Martin) and now Plepler and Levy.

Some of HBO’s staunchest defenders acknowledge AT&T’s plan could benefit WarnerMedia in the long run. HBO, Turner and Warner Bros. have been run completely separately, which has hamstrung them a bit when competing against a world-conquering behemoth like Netflix. It never made much sense for TNT to make high-end dramas when that is what HBO does best. And HBO has more or less been running the same playbook for at least a decade, adapting it ever so slightly for the new global streaming race.

But whether the strategy works or not, this week sure felt like the end of an era in media. Under Plepler’s leadership, HBO was the grand poobah of media. The company threw the biggest parties on both coasts, with a guest list that often included tech luminaries, diplomats and politicians. Plepler, the well-tanned, eloquent media baron, was the maestro.

While he may not have been aggressive online as some wanted, he possessed a skill you can’t teach — he knew how to make talent feel special. His departure prompted tributes from Oscar-winning documentarian Alex Gibney, basketball star LeBron James and David Simon, creator of ``The Wire.’’

We are now entering an era where the three most powerful companies in Hollywood are run by a phone company based in Dallas, a streaming service based in Silicon Valley and a comic book factory based in Burbank. — Lucas Shaw

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The future of Netflix’s film business

Speaking of that streaming service… 2018 will be remembered as the year Netflix established itself as a film studio. While the company succeeded right away in original TV, it had a lackluster start in features (unless you love late-stage Adam Sandler).

But this past year, it released a culture-shifting romantic comedy (``To All the Boys I’ve Loved Before’’), a holiday sensation (``Birdbox’’) and capped it off with four Oscars.

Several members of the press claimed that this year’s Oscars were a disappointment for Netflix, and that its failure to win Best Picture reflected lingering resentment in the film academy. While there is no doubt that some filmmakers and movie theaters disapprove of Netflix’s release strategy, it’s hard to see this year’s Oscars as a repudiation.

Netflix won its most Oscars ever, including Best Director, the second-most prestigious award. It spent enough money to make a black-and-white film in Spanish perceived as the favorite even though foreign language movies never win the top prize at the Oscars.

Netflix is a company that learns and adapts. It changes strategy more often in a year than some media companies do in a decade. It’s already adapting its strategy to placate Oscar voters and charm directors, per Rebecca Keegan. It aired an advertisement for Martin Scorsese’s ``The Irishman’’ during the Oscars that touted it would be in theaters this fall, and is already trying to make deals to make that boast a reality.

The men of #MeToo are back

One of the most-read stories on the Bloomberg terminal this week is this piece from Jeff Green and Anousha Sakoui on the return of alleged sexual harassers:

Less than 18 months since public allegations of sexual harassment and misconduct began to topple hundreds of powerful men, several of the accused are already back to work. Among them: Pixar co-founder John Lasseter is now head of a nascent animation division at Skydance Media; architect Richard Meier is still plugging away at his firm; ousted Intel Corp. Chief Executive Officer Brian Krzanich is now leading CDK Global Holdings . Even the comedians Louis CK and Aziz Ansari have started performing again, with mixed receptions.

Lasseter’s return prompted Emma Thompson to pull out of a project at Skydance.

“I am well aware that centuries of entitlement to women’s bodies whether they like it or not is not going to change overnight. Or in a year,” she wrote in her letter of resignation, which was published Tuesday in the Los Angeles Times. “But I am also aware that if people who have spoken out — like me — do not take this sort of a stand then things are very unlikely to change at anything like the pace required to protect my daughter’s generation.”

The biggest pop star in the world is…

Drake. The 10 best-selling acts of last year, courtesy of the International Federation of the Phonographic Industry:

Spotify clashes with Warner in India

Spotify introduced its service in India, entering the race for subscribers in the world’s second most populous country.

Why it matters: India is a potentially lucrative market. Music sales climbed 17 percent to $130.7 million in 2017 in the country, according to the International Federation of the Phonographic Industry. Rival streaming services have already gained a foothold amid the proliferation of high-speed internet there.

But it won’t be easy. India presents hurdles Spotify won’t find anywhere else. Music from Bollywood movies is the most popular genre, and the rights to those songs are very fragmented. Users who want to find the songs tend to search in different ways — like by the movie character’s name.

And Spotify’s approach has infuriated its partners. Warner Music Group sued Spotify in India, claiming the service planned to use its music without a proper license.

Spotify is using an Indian rule that governs radio stations to offer songs from Warner’s publishing division, Warner/Chappell Music. (Its roster includes Led Zeppelin and Katy Perry.) It doesn’t have the rights to songs from Bruno Mars or Ed Sheeran, who work with Warner’s record label.

Record labels would rather not clash with Spotify, whose growth is fueling their own financial results. But Spotify’s increasing confidence in its ability to do whatever it wants doesn’t sit well with labels.

Will podcasting become a billion-dollar business?

When Spotify spent $340 million on two companies, Gimlet and Anchor, the company’s co-founder Daniel Ek hailed podcasting as the next big business in audio. ``I see incredible growth potential for the space and for Spotify in particular,’’ Ek said.

Many business leaders share Ek’s enthusiasm. Venture capitalists have invested millions in podcasting start-ups, newspapers have developed original shows and TV networks have turned podcasts into TV shows.

But as a business, podcasting is still minuscule. Industry revenue reached $313 million in 2017 — or about as much money as Netflix made every week last quarter.

Gerry Smith traveled to Seattle for PodCon, an annual event devoted to the podcasting industry, to find out how podcasters plan to turn that hype turn into cash.

``Anyone who lived through the early days of the online video boom, when investment and hype outpaced profit, may have experienced some déjà vu — the same sense of exhilaration, the same thin financial rewards.“People are starting to realize it’s not super easy to make money in this world,” Hank Green says.

There are several lines of thinking about how to close the enthusiasm-revenue gap. One focuses on the programming logjam, which can make choosing something to listen to a frustrating experience. Several startup websites and apps, including Piqd, Listen Notes, and Podchaser, are trying to match listeners with lesser-known shows. Larger platforms such as Spotify and internet-radio giant Pandora Media Inc., which honed this functionality in music, are now applying it to podcasts.’’

China’s ban on Korean Pop may soon end

Chinese concert promoters are seeking permission for South Korean bands to perform in the country, a sign of growing optimism that relations between the two countries are thawing.

The back story: Ties between Beijing and Seoul have been strained since South Korea agreed host a U.S. missile defense system strongly opposed by China. The rift prompted China to launch a slew of punitive measures that cost the Korean economy billions of won in lost business.

K-pop entertainers such as BTS, which last year became the first South Korean band to top the U.S. Billboard charts, haven’t been able to get permits to perform in China for years as part of a broader campaign against Korean businesses.

Next steps: While it’s still unclear whether the country’s Ministry of Culture and Tourism is inclined to approve any of the applications, promoters have received signals the informal ban on South Korean concerts will soon lift.

That would be a boon for K-Pop bands, and the Korea’s three major music companies — YG Entertainment, SM Entertainment and JYP Entertainment. The stocks of all three companies climbed after Bloomberg reported the news.

Demand for music from BTS, Girls’ Generation and BlackPink has soared in China, but musicians make far more money from touring than from recorded music. BTS, the first Korean pop band to top Billboard’s charts, made a reported $40 million from its latest world tour.

Related: Billboard profiles BlackPink, the Korean girl group that’s about to take over the U.S.

The future of Michael Jackson

HBO is about to release its two-part Michael Jackson documentary, which tells the story of two men who claimed they were abused by Jackson as children. The film will force society to re-examine its relationship with one of the biggest pop stars of all time, as we have with the art of so many of the men accused of misconduct over the past couple years.

Wesley Morris addresses this topic better than I ever could:

The story was that Jackson never molested anybody. And we stuck to it, and it stuck to him. And the question now, of course, is what do we do? It’s the question of our #MeToo times: If we believe the accusers (and I believe Wade and James), what do we do with the art? With Jackson, what can we do? Wade became a successful choreographer who’s made a career out of teaching his version of Jackson’s hydraulic bounces, whips, and stutters to Britney Spears, ‘N Sync, Cirque du Soleil and rooms full of aspiring dancers.

“Look Back at It,” the big single from A Boogie Wit Da Hoodie’s №1 album from January, is built out of two Jackson hits. Michael Jackson’s music isn’t a meal. It’s more elemental than that. It’s the salt, pepper, olive oil and butter. His music is how you start. And the music made from that — that music is everywhere, too. Where would the cancellation begin?

Jackson provided us an early occasion to ask the question about the art without ever realizing it was being asked. We simply lived with it, with the possibility of his guilt, and the many compartments we make to contain everything he was: the conscientious enthusiasm for and the comedy of him, the tragedy he so obviously represents. Perhaps we can live it because it’s not unreasonable to wonder whether he was living with the contradictions himself.

The late pop star’s estate is very aware of the damage it could cause to the family trust. It has sued HBO for $100 million.

The week that was

1. Music sales grew 12 percent in the U.S. last year, the fourth straight year of growth. More than 50 million people pay for a streaming service, and all streaming now accounts for 75 percent of the domestic music business.

2. Fox has been ordered to pay $179 million to four actors and producers who claim they were cheated out of profits from the TV show ``Bones.’’ The actors and producers say Fox artificially depressed the show’s profitability so as not to share with them. (For more, read Eriq Gardner.)

3. The Federal Trade Commission fined TikTok $5.7 million for violating child privacy laws. The FTC began looking at TikTok when it was called Musical.ly, an app that lets users make videos set to music.

4. CBS Corp. is nearing the end of its search for a new chief executive officer. The owner of the most-watched TV network in the U.S. has narrowed the potential candidates to a handful of executives, including interim CEO Joe Ianniello and Hasbro CEO Brian Goldner, and aims to make a decision by the end of March.

5. Netflix acquired the rights to ``The Wandering Earth,’’ the second-highest-grossing movie in the history of China. Though Netflix doesn’t sell its service in China, the company has acquired projects for Mandarin speakers elsewhere in the world. It’s also working on its first Chinese-language series.

6. The secret lives of Facebook moderators in America. That’s the subject of a great investigation by Casey Newton.

7. YouTube TV and Hulu have amassed 3 million subscribers for their online TV bundles. The companies created the live services, known as “skinny bundles,” to broaden their offerings and compete with similar packages from conventional pay-TV distributors like Dish Network Corp., the owner of Sling TV, and AT&T Inc.’s DirecTV.

8. ``How to Train Your Dragon 3’’ has neared $300 million worldwide.

Weekly playlist

New music from Gary Clark Jr., Tierra Whack and a 1967 soul classic for Matt Lieber.