Transcript of my Ad Age Podcast talking About Cheddar

Jon Steinberg
Oct 7, 2018 · 28 min read

I did the Ad Lib Ad Age podcast with Brian Braiker. He was pretty tough, I was pretty candid, and I enjoyed it. I decided to post a transcript like I saw Hunter do after his last podcast.

Here ya go…The transcript was created by a third-party service; I did not proof for errors.

Podcast Transcript:

Brian Braiker:

After a five-year stint at BuzzFeed, beginning in 2010, when there were just 15 employees, and a brief run as the CEO of DailyMail.com, the last thing you would probably think to do is start a TV network from scratch; yet that’s precisely what Jon Steinberg did. The former president and COO of BuzzFeed launched Cheddar Inc. in 2016, a new media company with the initial goal of becoming the CNBC for millennials. Two and a half years in, Cheddar is a bona fide media concern, a live and on-demand video news network that broadcasts weekdays from the floor of the New York Stock Exchange, NASDAQ MarketSite, and the Flatiron Building in New York alone, and has raised $54 million in funding.

Brian Braiker:

I’m Brian Braiker, editor of Ad Age, also a bona fide media concern. And you are listening to Ad Lib. Steinberg joins me today to discuss the origins and evolution of Cheddar, which has expanded beyond its financial roots into lifestyle and political news. I, myself, have been on Cheddar twice to chat about Super Bowl advertising and Sir Martin Sorrell. Today, however, the tables are turned. We discuss Cheddar business model, so-called skinny bundles, the future of over-the-top streaming video, and where he goes from here. Jon Steinberg, welcome to the show.

Jon Steinberg:

Thank you for having me.

Brian Braiker:

Lovely to have you on Ad Lib. You know, I’ve been on Cheddar, a couple of occasions.

Jon Steinberg:

Yes.

Brian Braiker:

And I’ve made this joke.

Jon Steinberg:

[crosstalk 00:01:34] Yeah, you want to start right.

Brian Braiker:

We’ll start with a joke.

Jon Steinberg:

[crosstalk 00:01:35] Let’s do it. Go for it.

Brian Braiker:

I’ve been on Cheddar. I know we have a bunch of reporters here who have been on Cheddar; Jeanine Poggi, in particular, had been on a couple times. As a journalist, I think I know more people who’ve been on Cheddar than watch Cheddar. What do you-

Jon Steinberg:

Well, first of all-

Brian Braiker:

I just wanted-

Jon Steinberg:

I like the dig. And first of all, you told my friend, Maria Bartiromo, and Maria has been unbelievably supportive. And she has been a great friend in this, and it was very kind of her to say those kind words. Look, I like the dig, and I’ll tell you why. When I started this company, I thought people would say that Cheddar content is not good. The technology is not good. They can’t get distributed anywhere. They can’t make money. If the worst thing people can say about me, my little, two-year-old company, is that we’re smaller than CNBC, we’re small, nobody watches us, you know, then that’s pretty good, I think. I mean, that’s a bit like, you know, my daughter does gymnastics, right? It’s like saying, like, “Well, she’s not as good as Simone Biles,” right?

Jon Steinberg:

Like, first of all, it’s not true. It’s not true. I mean, you know, we-

Brian Braiker:

She is as good as Simone Biles?

Jon Steinberg:

Yeah. Look, we have hundreds of thousands of live views a day. It’s measured six ways to Sunday. We can go through it. I use Cogent measurement, the same … But you know, we’re on the Roku channel. We’re the second-most watched news source on the Roku channel, installed on every Roku. We’re in every skinny bundle, almost every skinny bundle in the United States. Of those skinny bundles, in a given month, 7% to 10% of people that are subscribers to those bundles, across the board, watch the content. And that’s not even getting into the Facebook views, which I generally don’t want to get into how many views I have, because the month you brag about your Facebook views is the month that they go down.

Brian Braiker:

They [crosstalk 00:03:07] algorithm, right?

Jon Steinberg:

You know, we do 400, 500 million Facebook views a month. So this narrative, it’s a little bit ridiculous, but it’s better than saying our content’s not good.

Brian Braiker:

Yeah. Well, I haven’t said that, because I’ve been on it, and I’ve provided some great content for you.

Jon Steinberg:

And the other thing, too, is all the guests … So you know, we had Omarosa on this week. We had Cynthia Nixon on yesterday. We had Neil Patrick Harris on today. You know, these people come on because they get seen, and we’re really good at distributing the clips, too. You know, our legacy competitors lock these clips up in like crappy web players, that are pre-rolled and no one can get access to. We blast these things out on Facebook, and Twitter, and Flipboard, and Apple News, and all this stuff. And you know, either these celebrities and executives are stupid for coming on and wasting their time, or their stuff’s getting seen.

Brian Braiker:

All right. So let’s walk it back two years. You’ve been, it’s a two-and-a-half-year-old business at this point, business news startup. You podcast, currently, from the floor of the Stock Exchange, NASDAQ, and the Flatiron Building.

Jon Steinberg:

And then LA, we’ve got a whole studio that we use all the time, and then the White House, full White House access every day.

Brian Braiker:

Okay. And in that time, you’ve raised something like $54 million in venture funding.

Jon Steinberg:

That’s right.

Brian Braiker:

What made you think this was a space worth going into, initially? Your background is, you were BuzzFeed president, COO?

Jon Steinberg:

BuzzFeed president and chief operating officer, yes; 2010 to 2014.

Brian Braiker:

So why leave BuzzFeed to start a cable news company that, as far as you knew, no one wanted?

Jon Steinberg:

I did a lot at CNBC while I was doing BuzzFeed, and I did it for two reasons. I always loved CNBC, like that’s what I watched, growing up. When I was a kid, I was obsessed with like Faber, and Kernen, and Squawk Box. And I found that it was really good for our advertising business, because basically, every CEO or CMO, I could just sort of like pick them off as they were coming off of the broadcast that I was on, right?

Jon Steinberg:

And then one day, I learned, as you actually pointed out in your interview with Maria Bartiromo, that these audiences are really small. You know, CNBC’s average-minute audience, according to Nielsen, is like, it peaks during the daytime at 150,000 people. And only about 30,000 or 40,000 of those people are below the age of 54. And CNBC does, it’s been reported, something like a billion dollars a year in revenue. And I said to myself, “Well, that’s a business I want to be in. I want to be in a business where you make a billion dollars a year, and you only need to pull together 30,000 to 40,000 people that are not living in Florida,” right?

Jon Steinberg:

And I also loved the topic area. And I was like, “Let’s do a younger version of it.” And it’s not the food category. It’s not the fashion category. It’s a category where there’s not a lot of competition, and you don’t need a giant audience, because it’s so endemic. It is like your audience for Ad Age.

Brian Braiker:

Right. So, but at what point does business news become commoditized? And how do you stand out? I mean, anyone has, with the 24-hour news cycle, anyone has access to everything on their phone. How do you go in there and stand out?

Jon Steinberg:

I think that there’s almost no competition in live, linear news networks, which is what we do. We have the business one. We have the headline one. Technically, it’s unbelievably complicated. Logistically, we’re doing 30 to 50 guests a day. It’s a lot of content to fill. And you can’t blow up your cost structure in doing it, right?

Jon Steinberg:

So we have virtually no new competition in the past two years. People do an hour a day, a live video, a couple interviews. You know, when we get our deals on Sling, and Hulu, and YouTube TV, the people we do the deals with immediately get calls from all the usual suspects, saying, “Well, Cheddar got a network. We want a network.” And they say, “Well, how many hours a day, live, are you doing?” And the people say, “Well, we do like five, two-minute videos a day.” And that’s laughable. That’s not a network.

Brian Braiker:

You’re live, eight hours a day?

Jon Steinberg:

Two networks that are live, eight hours a day.

Brian Braiker:

Mm-hmm (affirmative). And then the rest is pre-recorded?

Jon Steinberg:

And then we’ve begun to license some content for the overnight. We’re going to expand the programming. And now, we’re launching this eSports news coverage, which will go in the evenings as well, too. Daytime is a less competed, less attractive area. I like to go away from competition. If I start doing something at night, I’m competing with Netflix, and Hulu, and the like. During the day, it’s a smaller pond, but there’s no competition.

Brian Braiker:

Where are they watching it, mostly?

Jon Steinberg:

You know, they’re watching-

Brian Braiker:

Is this the new bored-at-work network?

Jon Steinberg:

No. I mean, I think that we get a lot of viewership on connected television. So you know, you’ll walk into offices, and you’ll see Roku’s playing. People at home, who work at home, use it there as well, too. The desktop viewership is obviously very strong as well, because we’ve got people at work. And by and large, people are not watching the linear networks on their phone. That’s not … People will watch our clips on their phone, but they don’t do that, right?

Jon Steinberg:

So again, I want to win on Roku. I want to win on Apple TV. I want to win on Fire, because again, there’s almost no competition there.

Brian Braiker:

Right. So you’re down with OTT. What … Talk about that. You’re very bullish on the over-the-top space.

Jon Steinberg:

I’m not, it’s not so much that I’m bullish. It’s that it’s a good asymmetric bet. And what I mean by that is, if any of these OTT packages win, Sling, Hulu, YouTube TV, Philo, Fubo, DirecTV Now, if any of them win, I’ve got real estate in them, next to CNN, next to CNBC, in base bundle, in all cases. And if people adopt these packages, we’re going to win, because our program is much younger, and it’s much more attuned to a whole new generation of people that are going to consume this kind of content.

Brian Braiker:

Who’s your favorite, so far?

Jon Steinberg:

You know, I don’t like to choose my favorites, because these are all my important … Look, you know, I won’t equivocate with you. I’ll give you most stuff, but I don’t want to tell you, you know, I don’t want to favor Sling versus YouTube TV, or YouTube TV versus Sling. I want them all to be successful, because I bet the whole company that they all succeed.

Brian Braiker:

Mm-hmm (affirmative). And so it’s not just business news anymore. That’s the way you started out.

Jon Steinberg:

Yeah, yeah.

Brian Braiker:

Now, you’ve expanded into political and lifestyle news, which is also pretty commoditized, but that’s with Cheddar Big News.

Jon Steinberg:

You keep saying, “Commoditized.” That’s completely inaccurate.

Brian Braiker:

[crosstalk 00:08:47] All right. Tell me why.

Jon Steinberg:

Okay. There is not people that are doing … There’s not tons of people doing live, ambient, daytime news programming, okay?

Brian Braiker:

So live is the differentiator?

Jon Steinberg:

Well also, no one wants to watch old news. No one says like, “Oh, I can’t wait to watch Wolf Blitzer at 6:00 tonight.” They say, “I’m going to put on CNN to see what’s happening. I’m going to put on CNBC to see what’s happening.” Our competition is CNBC, MSNBC, Fox, Fox Business, Bloomberg, and CNN. That’s basically it. And we’re the only new entrant into that in forever. And now, I have a headline news network, and I have a business news network. And soon, we have a sports network. The sports network is exclusively eSports. But our competition is basically New Fox. That’s our peer.

Brian Braiker:

That’s a huge opportunity, eSports. And so beyond these over-the-top platforms that are serving you so well, and vice versa, you’re also, you’ve got some actual TV news, also. You’re up on WOW now.

Jon Steinberg:

Yes, yes.

Brian Braiker:

What is WOW?

Jon Steinberg:

WOW is one of the largest of the smallest cable companies. They have like 800,000 subs, as opposed to like, you know, Comcast, which has 20 million subs. We actually are also on the Comcast X1 box. Brian Roberts, today at the Goldman Sachs conference, said, “We don’t care what video you watch, as long as you watch it on the X1 box.” 60% of people that are Comcast video customers now have that X1 box. You say, “Cheddar,” into that voice remote, and most people who have that voice remote, 70%, 80% of them, that’s how they navigate, you get our livestream as well, too.

Brian Braiker:

So going back to the beginning of the conversation, when you were talking about cobbling together these metrics through various sources-

Jon Steinberg:

Yes.

Brian Braiker:

… what does your audience look like, to the best of your ability to-

Jon Steinberg:

[crosstalk 00:10:25] It is a little bit older than I think people think it is. It’s late 20s and 30s. It’s gender-balanced. It’s very, very affluent. Like, the household net worth is in excess of $100,000 in a lot of cases. It’s coastal. It’s major cities. It’s professionals that are interested in business news. Now, the headline network has been … The business news network, the one that’s been around the longest, has, we’ve got far more data on that. We’ve got like nearly two years of data on that. The headline news network, we only have about, you know, a few months. But that’s the composition.

Jon Steinberg:

“CNBC for millennials” is a tagline that got put with us in the beginning, that I kind of felt privileged to be given. And it sort of sticks. It works. That, effectively, is what the audience is.

Brian Braiker:

And you’ve also picked up MTVU in July.

Jon Steinberg:

Yes.

Brian Braiker:

What is that all about?

Jon Steinberg:

We bought, from Viacom, their campus cable system, effectively, which is 1,600 TVs in 600 campuses; dining rooms, student unions, gyms. We changed that programming from MTVU, from music videos, to Cheddar content, August 1st. And we’ll continue to build out that network. It’s currently satellite-delivered. We now own satellite capacity. We have dishes at all these schools. We’re going to migrate it to IP and then double the size of it over 24 months.

Brian Braiker:

Right. So you’ve got the colleges. You’ve got the airports.

Jon Steinberg:

Yeah.

Brian Braiker:

And now, this is my favorite, which you just told me. You were on the Digiday Podcast, my former employer, I’ve got nothing but love. And the editor, Brian Morrissey, joked that you should be at gas stations. And now?

Jon Steinberg:

I walked out of there, and I emailed our head of distribution, Daniel Schneider, and I said, “Why don’t we do gas stations yet?”

Brian Braiker:

That’s amazing.

Jon Steinberg:

And you know, but to your point, again, let’s go back to the like-

Brian Braiker:

These are all captive audiences, right?

Jon Steinberg:

You know, it’s a different kind of programming that works in all these locations. So you know, how big is Cheddar? I can keep getting distribution. There’s an endless amount of old programming, put in all these locations, that’s basically news and sort of a river of content, right? We just keep finding more places to put our content. And in some cases, it’s Nielsen rated.

Jon Steinberg:

So MTVU is rated by Nielsen the same way the CNN Airport network is. The CNN Airport network is unbelievably attractive to advertisers. CNN spends an enormous amount of money, pays airports for that distribution. We don’t pay the schools for the distribution. We have a larger 18-to-34-year-old audience than the CNN Airport network does, as you would expect, because it’s airports versus colleges. We have a 39,000 average-minute audience, as measured by Nielsen. That’s a big number.

Jon Steinberg:

Now the funny thing is, a lot of people hear that number, and they say, “Wow, that’s small.” You find me another 39,000 concurrent average-minute viewership of a news network, you know, I’ll buy you a Subway sandwich. It doesn’t exist.

Brian Braiker:

Mm-hmm (affirmative). That’s-

Jon Steinberg:

I actually should have said a Dunkin’ Donut, because Dunkin’s my advertiser. [crosstalk 00:13:11] I’ve never actually worked with Subway. I was thinking of like a prize, you know?

Brian Braiker:

[crosstalk 00:13:13] You mentioned advertisers. You’re all ad-supported, right?

Jon Steinberg:

Yeah, yeah, for now.

Brian Braiker:

That’s the model?

Jon Steinberg:

Well, it’s funny. You know, what I often say is, people pay for our content. We just don’t get any of the money. And we only provide the full feed on an authenticated basis, so that it’s of value to Sling, and Hulu, and YouTube TV. We only make three hours a day available for free, and we make the clips available for free. And to get in these pristine locations, I thought, going into it, if the major news networks are getting 20 cents a sub, or a dollar a sub, or whatever, we’ll get a nickel, or a dime, or a quarter. I was wrong. We’ll get nothing. That’s what we get, right?

Jon Steinberg:

But I get 100% of the branded content revenue, which is all the integrations. And almost all those clients have renewed with us over the past three years. And almost all of those engagements are seven-figure deals. And we get 50% of the standard commercial inventory. So it’s been a good advertising business. But you know, I mean, advertising is advertising. It’s kind of a big hassle.

Brian Braiker:

So what are the other options? What are you looking at?

Jon Steinberg:

We got this from $11 million last year, and we’ll get it close to $30 million in revenue this year, right? And the business doesn’t lose much money. And-

Brian Braiker:

[crosstalk 00:14:23] It’s low overhead, I would imagine.

Jon Steinberg:

Well, I mean, you know, “low” is a relative term, right? We have 160 employees. That’s unbelievably lean to do what we do, but it’s a lot of heads. And these are all professionals. These are video editors and control room people. And it’s not, you know, it’s not $20,000-a-year kids. We don’t have that in this thing. You know, these are all people that could go work at cable networks if they weren’t working for us.

Jon Steinberg:

If I have to hoof this thing from, you know, 30, to 60, to 120, I’ve done that. I’ll do that again. My preference is that the world breaks in our favor a little bit. And as the cable companies exit video, as we know that they are, and prioritize broadband, maybe they say, “Hey, Jon, we want all the ad inventory. We want to offer this to all of our subs. We want to cut you a check.” That would mean that we have a much bigger business and a much more lucrative business. That’s if fate breaks in our favor a little bit. If it doesn’t, we just hoof it in ads.

Brian Braiker:

Mm-hmm (affirmative). So you feel good, no matter what.

Jon Steinberg:

I mean, I never feel that good. You know, I mean, look, the reality of it, I want to be very candid with you, because people only believe the good things about your business if you tell them the bad things about your business. There are three pillars that make the business hum; the quality of the content, the distribution, and the revenue. In any given day, one of those things, I’m not feeling so good about, and one of those things, I’m feeling elation about.

Brian Braiker:

What are you not feeling good about right now?

Jon Steinberg:

You know, it’s funny. August is a tough month in advertising. And from Thanksgiving to January 15th, there is no business done. Every year, you know, people who are new at this stuff or refuse to learn the lesson are surprised by that.

Brian Braiker:

Yeah. It’s a tough quarter.

Jon Steinberg:

But the agencies, you know, they’re all checked out between Thanksgiving and the New Year, and then they come back, and there’s crises. And I said to the team, as I said last year, “We’ve got to start worrying about 2019 now. We’ve got to sign our big, upfront deals.” And we do deals that are 6 to 12 months. We are not in the $50,000 to $100,000 IO business. We don’t work with anyone for less than $150,000 a month, three-month minimum. Most of our deals are 6 to 12 months, and we offer all sorts of types of exclusivity and categories to do those things, and all sorts of bells and whistles. We’ve got to start doing this.

Jon Steinberg:

We’ve got a lot signed up for next year. We go into next year with, I think we’re already at like 11 million, already contracted, large portions of it, non-cancelable for ’19. I feel good about that now. There’s a couple distribution deals that were supposed to go live in November. And now, some of them are saying, “Well, we’ll get it done in December.” Now, I start thinking, “Oh, well, does December become January?”

Brian Braiker:

Yeah, it’s not going to happen this quarter. You came over from BuzzFeed, where you helped them build out the branded content offerings. Is that something that you do a lot of? Or-

Jon Steinberg:

[crosstalk 00:16:54] Oh, my God. I spend more time on ad sales than I think any of my CEO peers. And I have Melissa Rosenthal, who is my partner. She actually started out as my intern at BuzzFeed, and then became head of creative services, and then got promoted, and promoted, and promoted. She built that branded content thing with me over there. And she, now, is the senior-most person on our business team here.

Jon Steinberg:

So there’s a lot of people that were involved in it, but yeah, I spend 30% to 40% of my time, every day, on clients and ads.

Brian Braiker:

Mm-hmm (affirmative), branded stuff. Building, creating-

Jon Steinberg:

Branded. I mean, you know, [crosstalk 00:17:26] I like to get involved in the creative stuff. I am involved in the creative stuff. But I’m usually the person dealing with the problems. There’s always a problem. There’s always, you know-

Brian Braiker:

What are the clients’ biggest pain points?

Jon Steinberg:

The biggest pain points are that there are so many people involved in an engagement like this. There’s the agency which measured it wrong, right? And they always measure it wrong. There is the Millward Brown survey which didn’t work right, and we told them it wasn’t going to work right. And of course, it didn’t work right, right? And that’s what I’m dealing with. There are new people that were brought into a deal at the 11th hour, and it’s a different team with a different business unit. And suddenly, they didn’t know the budget was going for this, right?

Jon Steinberg:

And we’ve managed to have CMO-level relationships, not because I think I’m cool for having CMO-level relationships, but because if we don’t, these things can get really gummed up, really quickly.

Brian Braiker:

Mm-hmm (affirmative). And what was it about, that you learned at BuzzFeed, that you’re applying to this gig?

Jon Steinberg:

Yeah, that there’s no point in doing small deals. I mean, I learned so many things at BuzzFeed. But the biggest one is that there’s no point in doing $50,000, $100,000 deals, that-

Brian Braiker:

Why?

Jon Steinberg:

Because the amount of work for those deals is as much as the amount of work for a $500,000 to $1 million deal. The $50,000 deals are just as hard to sell. And ultimately, you’re better off. I mean, you’re better off having the scalability challenges with large deals than the scalability challenges with small deals.

Brian Braiker:

Mm-hmm (affirmative). So think big.

Jon Steinberg:

Well, you know, I’ll be even more candid with you. A lot of times, I get on the phone with an advertiser, and they’re trying to figure out like, where is the weakness. What’s wrong with Cheddar? What doesn’t work, right? You know, they’ll ask the kind of things that you ask. “Well, does nobody watch Cheddar,” right? “Does the advertising work? Are you really on Sling? Are you really on Hulu?” And I’ll say to them, “Here’s the problem. You want to know what the problem with my business is? It’s that this works great now. We can do this level of high-touch. We can do sponsored segments, sponsored shows. It worked for 11 million. It works for 30 million. It works for 60 million. I’m pretty sure it works for 120 million. It doesn’t work for $1 billion in revenue. It doesn’t work. It’s not that scalable. Now, that’s actually a benefit to you, because it’s so high-touch, we can’t do this for 100 people, right?”

Jon Steinberg:

But that means that three, four years out, we’ve got to figure out something different, or augmenting this. This is not a solution which can be the totality of our business. This can only be the head of our business.

Brian Braiker:

Are you going to get into the events business at all?

Jon Steinberg:

No. You know, I think that’s equally unscalable. And-

Brian Braiker:

I think there was an events bubble for a minute there.

Jon Steinberg:

I like the events. You know, I think that the clients like the events, the social media throw-off from it, all the Instagrams, all of that, are really good. I think they make sense as part of packages. I won’t say that we won’t do one. People ask for one all the time, a Ched-Con. You know, I’d like to do something in that space, but I don’t think that solves our existential challenges.

Brian Braiker:

What is the one challenge that really keeps you up, or at least, is keeping you up right now?

Jon Steinberg:

Well, that we’re in a world where Discovery was not big enough and had to merge with Scripps. Time Warner was not big enough and had to be bought by AT&T. And you kind of go on and on, right?

Brian Braiker:

Are you going to get bought?

Jon Steinberg:

You know, I think the answer is less linear than that. Now, the answer that, again, a person would typically say to you is, “I want to build a big, independent company, and I want to take it public,” or, “I want to be a big, independent company.” The only problem with that is, there is no such thing as a big, independent media company. It’s like a unicorn or a wizard. Like, I would love to have these things, but they don’t exist. You’re owned by Crain’s, right?

Brian Braiker:

Mm-hmm (affirmative).

Jon Steinberg:

What that means is that we need to do a transaction at some point. That means that an asset gets cleaved off, and we merge with that asset. We do an all-stock deal. When something gets kind of reconstituted, we form a larger entity with other people. Now, that’s not a weakness of our business. That’s a, you know, we can get this to be a business that’s worth … You know, our last round, we were 160 million posts, right? Organically, can we get this to be a $500, $700 million, $1 billion business? Yeah, we probably can if we just hoof it out.

Jon Steinberg:

But this is a business of deal makers and inorganic growth as well, too. And we need to figure out where our moment is and who we get stronger with, especially when we’re, you know, an ever-larger gopher in a world of T-rexes.

Brian Braiker:

Yeah. Talk about the world of T-rexes. When you look across the TV landscape, and even the streaming landscape today, compared to two years ago-

Jon Steinberg:

Yes.

Brian Braiker:

… what are you seeing?

Jon Steinberg:

I see two things that are the most interesting to me. One is what I call the Balkanization of distribution and content, which is, Comcast has their bet with NBCU. AT&T has their bet with Time Warner, right? AT&T owns CNN. Like, they’re going to do special things with CNN. Comcast owns CNBC and MSNBC. They’re going to do special things with them, right? And so that means that, you know, we’re on our own, to some extent. Now, we have these people as investors, but we’re not that … We’re barely, calling us a pimple would be an exaggeration of our importance to them, right? So that’s the first force.

Jon Steinberg:

In that environment, it means, how do we bob and weave? We can still do distribution with them. Are there people like T-Mobile, Sprint, that have no content bets, that maybe need to do something more ambitious? In fact, are there even more interesting opportunities, like Roku? Roku is the third-largest cable company in the United States. I read that article. That’s someone else’s headline, not mine, okay? They have 20 million monthly, active accounts. We went and did a deal, and we’re on the Roku channel. We didn’t pay for it. They don’t pay us. We have an ad split type deal. We don’t pay for distribution, by the way. That’s an interesting one.

Jon Steinberg:

If you go to the Apple TV app, which is an app which is on the Apple TV and also on the devices, we’re one of six news partners that are in there, as well. It means that we need to be very realistic about the environment that we live in and exist in, and we need to look for, where are their friends? They need friends.

Brian Braiker:

Mm-hmm (affirmative). What’s the content that you’re finding is resonating most with your audience?

Jon Steinberg:

Well, it’s interesting, because you know, Facebook can lead you down a confusing path, right? You cannot program for Facebook, and we do. I mean, actually, that’s-

Brian Braiker:

I was just going to ask you, yeah.

Jon Steinberg:

That’s the wrong answer. We do program for Facebook. Our gadget videos do unbelievably well on Facebook.

Brian Braiker:

Is that branded content, or-

Jon Steinberg:

No, those are not. In fact, I wish we could monetize it, but the problem is, the stuff that gets the monetization, the stuff that gets the viewership is not the stuff that’s long enough to get the mid-roll.

Brian Braiker:

It’s a tale as old as time.

Jon Steinberg:

Right. But you know, but I never thought they were going to do anything for me. And when I read those comments that Campbell Brown made in Australia, like, I always thought that, or I’d been thinking that. I thought that for years, right? So we do it there because it’s good marketing for us. It’s good branding for us. It’s cost-efficient. There’s no money there. And if we program exclusively for them, they’re just going to change it, right?

Jon Steinberg:

So in some ways … And we get very limited measurement from the skinny bundles, because it’s a bit like Netflix. They don’t want us to know how well, or good, or bad, we’re doing.

Brian Braiker:

[crosstalk 00:24:40] wall of the Secret Garden, yeah.

Jon Steinberg:

So in some ways, we’ve got to kind of program the way we want to program and hope that the audience is big enough.

Brian Braiker:

Mm-hmm (affirmative). That’s, in some ways, admirable, noble, I suppose.

Jon Steinberg:

I think it’s more realistic, again, which is … Our last valuation was $160 million, right? We’ll do $30 million in revenue this year. And the question is, is our stock overpriced or underpriced, right? People get too caught up in like, “Is company X a gajillion or a zero,” right? Instead, you just can never get in over your skis in terms of the capital you raise, the value of the company for the audience and the revenue, and the margins that you have. And I feel really good about where we are now.

Brian Braiker:

Yeah. You’ve raised $54. You’re still sitting on $30-something?

Jon Steinberg:

We’re sitting on … I looked at it. I think we’re sitting on $37 million in cash and $3.7 million in accounts receivable. These agencies can’t bear to pay their bills, but they pay them 100% of the time. We’ve never had a bad collection. Now, they need to be reminded like seven times that they actually owe money. But-

Brian Braiker:

So do I.

Jon Steinberg:

Yeah. But you know, so we’re in a good capital position. You know, another myth about this business, I had a reporter once say to me, “You know what they say about Cheddar, Jon?” I’m like, “No. Tell me what they say about Cheddar.” I’m like, “That we’re small?” “No. They say that you lose a ton of money.” I’m like, “Oh, my God. That’s one of the things that’s actually completely not true about our business.” The total capex of all the studios, all the control rooms, everything, $4 million on an undepreciated basis. Last month, we were almost EBITDA-positive, right? So the business doesn’t lose a lot of money.

Brian Braiker:

Well, that’s a good place to be.

Jon Steinberg:

Yeah.

Brian Braiker:

Do you pay attention to what’s going on at BuzzFeed these days?

Jon Steinberg:

No. I mean, I read the articles-

Brian Braiker:

No?

Jon Steinberg:

[crosstalk 00:26:26] Look, it was the best chapter of my life. I mean, you know-

Brian Braiker:

Until this one, for sure.

Jon Steinberg:

I mean, so … But, no. You know, I like to look forward.

Brian Braiker:

Yeah. Was the timing right, do you feel? Or would you have done this earlier? Or do you feel like you should have waited?

Jon Steinberg:

To start this company?

Brian Braiker:

Yep.

Jon Steinberg:

I think the timing was right. I’ll tell you why the timing really was right, and it is lucky. You know, it’s a lot of luck. When we started this company, we were desperate to be on Sling. I followed Charlie Ergen, actually, into a bathroom at a conference, to ask him to put me on Sling. And he actually … And I still have the email, where I followed up afterwards, and he introduce me to Roger Lynch, and that happened. It was the only platform that existed. Hulu did not have live. YouTube TV did not exist. There was no DirecTV Now. There was no Philo. There was no Fubo. There was no … Maybe Sony PlayStation Vue had started, although I’m not sure. In the two and a half years since we started, there went from being one OTT television system, to eight. And we got on all of them.

Jon Steinberg:

So we could have ended up producing content with nowhere for it to go. And when Facebook turned off Live, or that’s, you know, only a modest overstatement, when they turned off all the oxygen to Live, had it not been for these other systems, you know, we would have really been up a creek.

Brian Braiker:

Right. Do you pay attention to … You had mentioned earlier, Bloomberg, what they’re doing with TicToc and Twitter-

Jon Steinberg:

Yes.

Brian Braiker:

… is that a competitor?

Jon Steinberg:

Yeah. I mean, look, everybody’s a competitor, and nobody’s a competitor. I would like to do deals with everybody, you know? I mean, I think a big challenge with … I would like to do a deal with Bloomberg. I mean, you know, you talk about like … I would love to merge Cheddar with Bloomberg’s media operations. I would do that in a minute.

Brian Braiker:

I’m sure.

Jon Steinberg:

And you know, that would be a great … So to your point, do I want to sell the company? No, I don’t want to sell the company. But you know, would I want to merge with something like that? If Mayor Bloomberg woke up tomorrow morning and said, “You know what? I want to put all my media operation to a separate company, and I want Justin Smith and Jon Steinberg to run it, and I want to put it all together,” right?

Brian Braiker:

Do you know Justin?

Jon Steinberg:

I like Justin a lot.

Brian Braiker:

Yeah, he’s a good guy.

Jon Steinberg:

I think that sounds spectacular. Wouldn’t you do that deal?

Brian Braiker:

Sure.

Jon Steinberg:

Right?

Brian Braiker:

Yeah. Let’s call Justin.

Jon Steinberg:

You know, don’t think I haven’t pitched it. You know, and don’t think I don’t think he’s going to hear this, you know?

Brian Braiker:

All right. Anything else on your mind?

Jon Steinberg:

Local news, I’m obsessed with as well, too, which is the-

Brian Braiker:

Yeah, it’s tough to make work, historically.

Jon Steinberg:

Well, local news, in every single market, outperforms all the cable news at that moment in time; so the 6:30 news at, pick your market.

Brian Braiker:

For sure. But then you need to cobble together some sort of scale to make it make sense as a business.

Jon Steinberg:

Right, although I think that like, you know, when Sinclair was trying to do the Tribune merger … You know, we already do this local news thing where we do the business news updates for PIX11, which is one of the largest stations in New York, a bunch of Tegna stations. You know, I was like, “Wow, I would love to merge with PIX11.” So like, when all these local station groups merge now, right, what if there’s an overlap, and there’s four stations that need to be jettisoned? We could take those. We’d have one foot in the old world, collecting the retrans revenue, programming that local news to all the old people. And then we could use that reporting capacity to try to create the over-the-top version. On all of our Sling distribution, we could put in local hits from the markets where we were in.

Jon Steinberg:

So I think there’s something there, and there’s really nobody in that business right now. I mean, you look at the leadership teams at all of these local station groups. I mean, you know, there’s no high-energy young people at these things, looking to figure out, what’s the OTT future. But yet, their business, financially, is a gajillion times better than ours. You know, that’s peanut butter and jelly.

Brian Braiker:

So what is the OTT future?

Jon Steinberg:

I believe that everybody gets Netflix, or Amazon, or Hulu for their dramas and their comedies. And everybody gets broadband from their cable company. And for the people that want to have a live package that has the kind of linear, non-appointment viewing, news, sports, weather, HGTV, they’re going to get one of these packages that are in the market right now.

Jon Steinberg:

I mean, look at Verizon’s 5G thing. Verizon’s rolling out 5G. They said, “We’re exiting video, and we’re going to throw in YouTube TV to every 5G subscriber.” Sounds a lot, to me, like the future.

Brian Braiker:

Mm-hmm (affirmative). Sports certainly is the place where TV gets most of its audience-

Jon Steinberg:

Yes.

Brian Braiker:

… especially live. You’re talking about eSports. Is that live? How does that work?

Jon Steinberg:

[crosstalk 00:30:43] So to be the full suite, we needed business news, headline news, and sports news. And we were faced with a challenge. You can’t deal with any of these leagues, right?

Brian Braiker:

Correct.

Jon Steinberg:

In fact, ESPN can’t even put NFL highlights in the ESPN Snapchat thing, right?

Brian Braiker:

Right, it’s nuts.

Jon Steinberg:

So I was like, “Well, this sounds like worse than selling advertising,” right? “I don’t want to get involved in this. I have enough headaches already.” And then I went to the Overwatch Arena Activision Blizzard has in LA, and it was fast, and it was loud, and people were screaming, and cheering. And I liked it more than I liked sports. And my kids started playing Fortnite. And I was like, first of all, people overestimate, in the United States, how many people care about sports. It’s really only 20% to 30% of Americans. That’s really it, right?

Brian Braiker:

Yeah. I, personally, raising my hand, don’t care.

Jon Steinberg:

I know. I don’t care. And of the people-

Brian Braiker:

Alfred cares.

Jon Steinberg:

And of the people there … But you know what? Let Alfred get a full cable package. Like, it doesn’t need to be for everybody. But the question is, how many people are like … Also, tastes are very substitutable. People are willing to substitute stuff, right? So I thought to myself, “Okay. So we don’t watch sports.” But now, my kid is going to grow up wanting to watch Ninja. That’s all my son wants to watch, right? And for those of you who don’t know, Ninja’s like the world’s best video game player, the best Fortnite player, right?

Jon Steinberg:

Let’s do SportsCenter, but just for eSports. And let’s make our two hours a day of sports coverage, only eSports coverage. And that’s what we’re doing.

Brian Braiker:

Great. That sounds like a smart bet. Jon Steinberg, it was great to talk to you.

Jon Steinberg:

Good to talk to you, too.

Brian Braiker:

If you have anything else you want to say, say it now.

Jon Steinberg:

[crosstalk 00:32:11] No, I think we’re good. We’ve exhausted ourselves.

Brian Braiker:

I’m exhausted.

Jon Steinberg:

Okay.

Brian Braiker:

Thanks, Jon.

Jon Steinberg:

Thank you. Thank you for having me.

Brian Braiker:

I want to thank Jon again for joining me today. Jon Steinberg is, of course, the founder of Cheddar TV. I’m Brian Braiker, editor of Ad Age, and you are listening to Ad Lib. Subscribe to us at iTunes. Give us all the stars. You can listen to us at Stitcher, Google Play, Spotify, wherever there are good podcasts. Just tell a friend. Today’s episode was produced by Alfred Maskeroni. Come back next week. We have another very special guest, just for you.

Jon Steinberg

Written by

CEO/Founder @ Cheddar.com