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May 24, 2018

Publishing News


Note to Readers: MBR Daily will be off for the holiday weekend starting Friday 5.25. Back on Tuesday 5.29.
 

''Good Outcome' Predicted for Auction of 4 Time Inc. Titles
In VF Hive, Joe Pompeo confirms that, with the bidding underway for Meredith's sale of the former Time Inc. titles Time, Sports Illustrated, Fortune and Money, it looks like the titles have "reason to be optimistic. Interest has been strong and the bids, from a mix of private-equity players, wealthy individuals, and traditional media companies, have been high. Sources familiar with the matter [confirmed] there were roughly 80 potential buyers sniffing around across the four titles, and that of those who ended up making first-round offers (non-binding indications of interest, to be precise), Meredith is presently engaging with around 15 serious suitors, with some bids for individual titles topping $200M. SI alone drew more than 20 bidders, roughly half a dozen of which are now in real talks with Meredith, according to my sources, which means there are about 10 others, give or take, vying either for Time or for a package deal that includes Fortune and Money. Meredith’s bankers and representatives of the individual brands, including various editors, are meeting with each party in New York this week and next, to give presentations... Meredith CEO Tom Harty [has said] the company was aiming to wrap things up by the end of June. I’m now told that given the level of interest, it could take longer, with more time needed for negotiations. (Meredith declined to comment.) Several people involved in the conversations resisted having their arms twisted into divulging names, but they all said that the options on the table were, by and large, attractive ones. 'There’s gonna be a good outcome for these brands, and that’s not bullshit,' one of them told me, while an insider who isn’t privy to the sale talks said, 'Editors have been walking around with big grins for a few weeks.' There is, of course, one type of buyer that staffers at any one of the titles on the auction block are particularly hopeful about. 'We’re all crossing our fingers for a benevolent billionaire,' the insider said. 'Everyone looks at The Washington Post under [Jeff] Bezos and is praying for the same.' Who among the filthy rich might make sense? That’s harder to say. The Edgar Bronfman Jr. ship already sailed. Laurene Powell Jobs has become the white-knight du jour in the dreams of struggling publications everywhere, but she appears to have her hands full with The Atlantic. Jay Penske’s name has been floated as someone who likely has his eye on the bounty, but his interest hasn’t been confirmed. The inevitable rumors of Mike Bloomberg being interested in Fortune were swiftly swatted down, and the wishful thinking among some Fortune staffers about how Marc Benioff would make a good boss seems to be just that. As for SI, one media banker told me, 'You can see every owner of a sports team wanting it,' while 'Time is a vanity play,' and the Fortune-Money mash-up would make the most sense for a company that already owns a business publication with which synergies could be achieved. The one note of caution, of course, is that high interest doesn’t mean anything until the ink is dry. 'There can be a lot of kicking of tires and a lot of people looking,' the banker said, 'but nothing’s certain until it’s done.'"


 

High Times Suitor Also Interested in Buying Penthouse
NY Post: "Penthouse Global Media, which landed porn star Stormy Daniels in its latest issue, is heading to a bankruptcy auction next month with the company that is trying to buy High Times magazine submitting a “stalking horse” bid to become its new owner. Adam Levin, whose Oreva Capital agreed to buy High Times in mid-2017, formed a company called Dream Media Corp., which took over a secured two-year-old $10M loan to Penthouse that was in default. It is believed there are several other potential suitors. Levin’s bid is said to come in at $3M at auction, sources said. Beth Young, an attorney for Dream Media, confirmed that they 'did buy the loan' from ExWorks Capital, but she declined to answer further questions. Under terms of the bankruptcy asset purchase agreement, any bidder who wants to top Dream Media’s bid must pony up $3.1M to stay in the game. The auction is set for June 4. Penthouse filed for a reorganization under terms of Chapter 11 in January, which would have allowed it to continue to operate under the current ownership, headed by CEO Kelly Holland. Holland said that Stormy Daniels posed for 'the standard modeling fee' of several thousand dollars. The court-appointed bankruptcy trustee, David Gottlieb, said last month that the company was insolvent and was expected to lose $732,000 over the next three months. Holland, who was active in producing adult movies, took over the assets in 2016. She was paying a 23% interest rate for a $9M loan from ExWork Capital, sources close to the situation said. The lender eventually received about $5.3M before the loan went into default and the sky-high interest rate pushed the loan amount to over $10M. In court filings, the company listed its debt levels as unsecured creditors of only $128,553 but a secured creditor of $10.3M. Levin could not be reached for comment, but Oreva Capital, his L.A.-based venture firm, last year bought out Here Media, which operated LGBT brands, including The Advocate, Pride, Plus, Out Traveler and LBGT.com. In December 2017, Levin’s Oreva said it was purchasing High Times from a family trust that controlled it for a reported $70 million through Origo Acquisition Corp. a so-called special purchase acquisition corp.—also known as a blank check corporation. But SEC filings said the deal was not finalized and the company is now fighting a move by NASDAQ to delist its stock. Penthouse’s current CEO Holland had purchased the assets from Friend Finder Networks, Inc. which had filed for bankruptcy in 2013"...
 

Vanity Fair Names Samira Nasr Exec Fashion Director
WWD: Vanity Fair EIC Radhika Jones has named Elle’s Samira Nasr executive fashion director... "Nasr is Elle’s fashion director. Prior to that, she was style director for InStyle. Originally from Montreal, Nasr came to New York for journalism school and got her start in fashion working as an assistant to Grace Coddington at Vogue. Vanity Fair’s fashion director Michael Carl has been let go from the title, along with several others. As executive fashion director, Nasr is filling a new role, essentially combining aspects of the position held by Carl with that held by Jessica Diehl, who stepped down as creative director, fashion and style in March. Combining top-level positions is one way to keep budgets down--something that Jones was expected to do when she took the position. Meanwhile, Jones continues to put her stamp on the magazine. The summer issue, which hits newsstands next week, features Emilia Clarke on the cover and represents a visual departure from former EIC Graydon Carter’s Vanity Fair.
 
WWD 

Hearst U.K. Launches Incubator, The Nest
InPublishing: "Hearst UK has announced the launch of a new incubator initiative, The Nest. Harnessing the creativity of rising talent, The Nest is designed to generate original products and explore revenue streams for Hearst UK and commercial clients. It will offer diverse talent from across the UK the chance to get involved in the media industry, and provide internal candidates the opportunity to step out of their everyday role and leverage their expertise to stimulate innovation in new areas, says Hearst. Hearst U.K. will recruit eight individuals for each intake, for a period of six to eight weeks. Led by Julian Linley, Business Development Director, The Nest will be rolled out at least twice a year, with a combination of both internal and external intakes.During each program, the recruits will be set a brief by Hearst UK’s Senior Leadership Team or clients, addressing a product area with prospective opportunity for growth. Over the course of each project the groups will explore, research, develop and present their ideas. According to Hearst, they will gain unique access to the expertise of Hearst UK employees across various departments, from editorial and digital to commercial and finance, who will provide guidance and support throughout.Hearst UK says it values a diverse and inclusive working environment, and The Nest will attract a wide range of talent. In addition to a salary, external candidates will receive a contribution towards living costs in order to make accommodation in London more accessible and affordable.The launch of The Nest follows the completion of a successful pilot model. The trial intake resulted in an innovative finance concept that is currently out to market. The pilot also led to employment opportunities, with participants entering roles spanning digital editorial for HarperBazaar.co.uk, advertising operations for Hearst and commercial content for Liz Earle.Julian Linley, Business Development Director, Hearst UK, says; “The Nest is staffed entirely by the next generation of creative talent. It is a platform for change as it enables talented people to tackle career challenges and create jobs for themselves. We have demolished the traditional hierarchical structure by putting members of The Nest in the driving seat and giving them the support of Hearst’s vast infrastructure to enable faster growth and learning'"...
 

Shared Tech Platform Is Paying off for WaPo
Digiday: "Arc, The Washington Post’s technology platform, is increasingly paying off for the newspaper company. Arc has signed five major publishers as clients this year--Bonnier Corp., Advance Local, Boston Globe Media Partners, Philadelphia Media Network and Le Parisien. With those additions, Arc supports 90 sites and apps representing 500 million monthly unique visitors, the Post said. By year’s end, the figure will be between 150 and 200 sites, the Post said. A company spokesman said Arc revenue has doubled over the past year, but declined to provide a raw dollar figure. Its clients’ fees range from $10,000 to $150,000 per month, depending on the amount of client content Arc hosts for them and processes it supports, and the Post sees Arc becoming a $100M business. The Post-owned Arc is powered by Amazon Web Services, generating some nice synergies for Post owner and Amazon chief Jeff Bezos"...
 

Some Frustrated Publishers Sitting Out Google's GDPRA Meetings
Digiday: "Google is set to have meetings today with media trade associations and various publishing company representatives to address their concerns about Google’s position on the forthcoming General Data Protection Regulation. But the meetings themselves have become a flashpoint of controversy, dividing publishers... Publishers feel in the dark on critical points. Google has said it expects publishers to gain user consent on its behalf, in order to continue working using its ad tools. In doing so, it has proclaimed itself co-controller of that data, and some publishers worry that means it can decide whatever it does with that data--something that would previously have been purely in the realm of the publisher. (Google disputes this, saying having controller status doesn’t give it unlimited rights to the data, and that the use of data is limited by its contracts with publishers.) They say Google hasn’t shared any detail on how it then plans to use that data with any of its publisher partners. With the risk of costly penalties, publishers aren’t willing to be kept in the dark on how audience data is used, for which they are directly liable... Publishers have demanded that Google share this information with them immediately. They also want to know on what grounds Google deems itself a co-controller and if it has sought guidance from GDPR regulators to make such a decision.A Google spokesperson emailed a statement, saying: 'The GDPR is a big change for everyone. Over the last year, we’ve engaged with over 10,000 of our publishers, advertisers and agencies across nearly 60 countries through events, workshops and conversations around the changes we’re making to be compliant with the GDPR. We will continue to open our doors to our publisher partners to engage in these discussions on GDPR compliance.' The May 24 meeting situation has divided publishers and trade groups. The four publishing groups that sent the letter to Google declined to attend the meeting. Google invited others including the Local Media Consortium and International News Media Association as well as individual publishers, for a total of around 100 invites. Digital Content Next CEO Jason Kint, a regular critic of Google and Facebook, said his preference was that Google first answer questions that his and other trade groups put to Google about how it would implement the privacy law. Kint said more than 30 members of the association told him they’re not going. He’s 'not telling [members] not to go' but that 'No one thinks this is a good idea to take this behind closed doors'"...
 

Theater Chain Owner Uses Print for 'Avengers' AR Platform
MediaPost: "With the release of "The Avengers" last month, Regal Entertainment introduced Moviebill, a new print, mobile and online media platform that uses augmented reality to take readers deeper into the film’s world to audiences. Moviebill was distributed to 1M moviegoers opening weekend. According to Matthew Shreder and James Andrew Felts, cofounders of Moviebill, the magazine has recorded 2M scans since then and sold out at theaters within 48 hours. Shreder and Felts have worked together in film for a decade. They’ve been working with Regal to learn how to target theater audiences. 'Moviegoers are some of the most valuable consumers out there. They’re willing to drive to the theater, turn off their phones and pay a premium price to see a movie,' Shreder said. 'Their consumer behaviors make them incredibly valuable.' The company likens the pub's initial print run to Entertainment Weekly, which reaches 1.5M, and Vanity Fair at 1.2M, per Regal. According to Shreder and Felts, the scans represent the highest reader engagement with augmented reality in a print magazine to date. The collectible magazine features 28 full-color pages all tied to "The Avengers," with each featuring fully-integrated augmented reality technology. Using the Regal mobile app--which has 9M users--readers can scan each page and access exclusive content, including videos, editorial and three-dimensional characters. The Regal app was the top trending app in the Apple app store over the weekend of Moviebill’s release. Readers spent an average of four minutes on a page with a 10% click-through rate across all activations. Two weeks after its distribution, the magazine was still receiving scans from readers. Total impressions from the campaign came in at 56,000,000 across all marketing with 16,507,333 from social media. What makes these numbers significant, according to the founders, is the ability to connect advertisers with a consumer audience that is guaranteed to engage with the product. While a brand may pay millions for a tie-in to a popular movie like "The Avengers," a product like Moviebill takes the advertisers directly to a concentrated group for a fraction of the cost. Moviebill is producing tie-in publications for summer blockbusters, such as "Jurassic World: Fallen Kingdom" and "Mission: Impossible--Fallout" with a run of eight issues expected this year."
 

Opinion: Social Media Rivals TV for News Consumption, As Sinclair Exploits Trust in Local News
MediaPost's Joe Mandese writes in part: "At a time when certain local broadcasters are becoming more aggressive in their political advocacy (think Sinclair Broadcasting), more Americans say they trust their local TV news outlets by a margin of two-to-one over national sources of news.The finding, which comes from the just-released 2018 edition of a bi-annual survey by Washington, D.C-based agency Rad Campaign and analytics firm Lincoln Park Strategies, indicates that two-thirds of Americans trust local TV news vs. only 35% who say they trust the next most trusted news source: national evening news.The survey did not ask about print media, but found Facebook is now deemed almost as trustworthy a news source as national network TV news outlets, with 32% of the respondents trusting it. These findings may seem surprising given the revelations about the role social media in general and Facebook in particular have played in disseminating actual “fake news” in the past couple of years. It’s also scary considering that social media is closing in on television as the primary source for accessing news. According to an August 2017 survey by the Pew Research Center, the gap between TV and social media as a news source narrowed to just seven percentage points from a 19 point spread the previous year, with 50% of Americans citing TV vs. 43% citing social media as their source for news.Scarier still is the fact that the new survey finds that 50% of Millennials get their news from social media.Remarkably, the percentage of American adults who say they use Facebook regularly has actually gone up--73% in 2018 vs. 70% in 2016 and 68% in 2014--despite its role in disseminating fake news, as well as revelations about Cambridge Analytica’s illicit use of the personal data of millions of Facebook users to help target them with it.These trend lines are troubling for sure, but my biggest concern is the role biased political news reporting could play in local television given the degree of trust Americans place in it, and the less than transparent way Sinclair is beginning to editorialize"...
 

OTHER NEWS OF NOTE:






Retail News


Kroger to Buy Meal-Kit Service Home Chef for $200M
MediaPost: "The Kroger Co. is purchasing meal-kit service Home Chef, further accelerating the move of subscription-based, mail-order-only kits into the stores and strategies of brick-and-mortar grocers. The kits will complement Kroger’s own Prep+Pared line. Part of the Cincinnati-based grocer's own Restock Kroger strategy to modernize operations and better meet consumers needs, the deal will cost $200M, and future earnout payments of up to $500M over five years are contingent on achieving certain milestones, including significant growth on in-store and online meal-kit sales. Kroger decided to purchase the brand following Home Chef’s 150% growth in 2017, $250M in revenue and two profitable quarters. 'Customers want convenience, simplicity and a personalized food experience. Bringing Home Chef’s innovative and exciting products and services to Kroger’s customers will help make meal planning even easier and mealtime more delicious,” said Yael Cosset, Kroger’s chief digital officer. 'This merger will introduce Kroger’s 60M shoppers to Home Chef, enhance our ship-to-home and subscription capabilities, and contribute to Restock Kroger.' Following the transaction’s closure in quarter two, the kits will begin rolling out in Kroger-owned stores, as well as via its ecommerce operations platform"...
 

IRI Study: Shopping Economy Still Unstable
MNB: "IRI is out with a study suggesting that 'stable inflation, low unemployment, and recent tax cuts,' rather than creating an expanding shopping environment, instead have resulted in a more uncertain spending climate, related to “irregular weather, household finances, and an evolving marketplace.' Among the stats: 44% of consumers said their household finances are strained in Q1 2018; 85% are buying private label options to ease their struggles; just 25% say they expect to buy more premium products in the next 6 months; and to ease their struggles, shoppers are embracing a wide range of strategies, including comparison shopping, brand switching and price shopping. However, IRI also says that while the CPG industry is off to a slow start in 2018, 'the remainder of the year looks promising.'"
 

Albertsons, Rite Aid Bullish on Merger's Potential
SN: "Citing opportunities from meal kits and clinics to private label and omnichannel retail, executives from Albertsons Cos. and Rite Aid Corp. are bullish on potential growth avenues from their pending merger. Rite Aid chairman/CEO John Standley, who has been tabbed as CEO of the combined company, noted that the $24B deal would vault Albertsons-Rite Aid into the top five U.S. food and drug retailers, behind Walmart, CVS Health, The Kroger Co. and Walgreens Boots Alliance. What’s more, he said, the new company would stand out from these competitors by being able to boast a presence in six key areas: freestanding pharmacies, fresh foods, pharmacy benefits management, click-and-collect and home delivery of groceries, in-store and subscription meal kits, and loyalty programs. 'We will be a unique combination of grocery and pharmacy that will be well-positioned to deliver a differentiated experience,' Standley said in the companies’ analyst call last week. 'We will be the only grocer with stand-alone pharmacies. We will be the only drugstore with the fresh food and consumables expertise of one of the nation’s largest grocery companies. We will be able to utilize our integrated PBM, EnvisionRx, to drive lives into our stores and pharmacies, and we will have unique omnichannel capabilities with the combination of home delivery and Drive Up & Go for groceries, pharmacy delivery in our drugstores and meal kits available in-store and through subscription home delivery, a truly unique offering'... The transaction is expected to close early in the second half of 2018, pending approval of Rite Aid shareholders, regulatory clearance and other closing conditions. At press time, Rite Aid had not yet set a date for a shareholder vote on the deal. Together, Albertsons and Rite Aid would field 4,868 stores under 22 banners, including 4,327 stand-alone and in-store pharmacies, across 38 states and the District of Columbia, generating sales of about $83B and drawing more than 40M customers weekly. The combined retailer would be No. 1 or No. 2 in market share in 66% of the metropolitan statistical areas in which it operates. Plans call for most Albertsons pharmacies to be rebannered as Rite Aid. The companies’ chief target: the pharmacy customer, who tends to buy far more groceries per transaction and have a much bigger overall shopping basket than the average non-pharmacy customer, according to Standley. 'An Albertsons Rx customer spends $92 per week versus a non-pharmacy customer, who spends $24 a week, or 3.5 times more. If we take the pharmacy spend out of the equation, the pharmacy customer spends $66 a week in grocery compared to the $24 [of the non-pharmacy customers], or 2.5 times more,' he said. 'So we can see how valuable this pharmacy customer is to the grocery network, and with 4,300 convenient pharmacies densely populated in the markets that we’re going to compete in, we’re going to have a fantastic opportunity to use this network to bring lives into our stores'"...
 

Albertsons Cos. Hires Kohl's Exec to Build Out Omnichannel Operations
PG: "Albertsons Cos. has hired former Kohl’s executive Gautam Kotwal as its new EVP and chief data and analytics officer, where he will be responsible for building out the retailer’s omnichannel operations. He will be based at the retailer’s Pleasanton, Calif., office. In his new role, the former department store executive will lead innovation efforts to help differentiate and further personalize where, when and how its patrons shop, and add value to the process...During his two-year stint as VP of analytics, data platform and data science engineering at Kohl’s, Kotwal built the retailer’s BigData team with the goal of enabling “an insights-driven organization by democratizing data and science.” He began his tenure at the Milwaukee-based retailer as director of innovation before moving into his subsequent role there"...
 

Walmart, Chicken of the Sea Settle Antitrust Suit
PG: "Walmart Inc. and seafood provider Tri-Union Seafoods LLC, which does business as Chicken of the Sea Chicken of the Sea International, have reached an agreement resolving antitrust claims brought by the retailer in relation to a price-fixing scheme affecting canned tuna, of which Bentonville, Ark.-based Walmart is the largest U.S. retailer.Under the terms of the multi-pronged agreement, Chicken of the Sea will pay a cash settlement and the two companies will take part in a series of joint programs and new product promotions in Walmart stores, including the launch of new products across the chain. A Walmart spokesman quoted in the Pittsburgh Post-Gazette declined to discuss the settlement’s terms... 'The canned tuna industry has been and remains a low-margin business, which is particularly challenging for a player of Chicken of the Sea International’s size,” noted Christianna Reed, VP and general counsel, legal and risk management at the El Segundo, Calif.-based company. 'The settlement reflects Chicken of the Sea International’s status as the first tuna producer to engage the U.S. Dept. of Justice as a whistleblower in this case. This resolution is a significant achievement for Chicken of the Sea International and the newly appointed leadership team. We look forward to reaching additional pragmatic solutions to resolve the ongoing litigation'"...
 


Tesco Closing Non-Food Site; Consolidating Into One Platform
The U.K.'s Tesco has announced "the planned closure of its lossmaking non-food website, Tesco Direct, in an effort to streamline operations and rid it of uncompetitive product lines as it prepares to increase investment into one online platform," writes Thomas Brererton, retail analyst at data/analytics company GlobalData. 'The recent news of Sainsbury’s and ASDA’s proposed merger would not only create a market-leading grocer, but a powerful force across markets including clothing and general merchandise--and the closure of Tesco Direct will help prepare Tesco for the competitive road ahead. ‘It follows a review of the unprosperous arm of the UK-based conglomerate, with U.K. and ROI boss Charles Wilson announcing that there is 'no route to profitability' after failing to deliver a sustainable offer as a standalone non-food business. And although it may seem Tesco (with revenues of £51B for the latest financial year) has the financial influence to turn around any flailing fascia, it must first turn its attention to long-term survival in the face of intense competition from an upcoming powerhouse created by the proposed merger of Sainsbury’s and ASDA. ‘The website will cease trading on the July 9 and Tesco will subsequently close the Fenny Lock, Milton Keynes fulfillment center, which handles the Tesco Direct orders--putting 500 jobs at immediate risk. But...it is the right move... ‘Tesco’s position as the U.K.'s leading grocer is under immediate threat from the CMA pending Sainsbury’s-ASDA entity, with the 23.4% combined share casting Tesco in a distressing shadow in the food & grocery sector. So the news--which falls on the same day as the announcement of a waste reduction initiative--is clearly Tesco taking an active role in defending its core food business"...
 

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Family Fresh Market Launches Curbside Pickup
SN: "Grocery wholesaler and retailer SpartanNash has brought its Fast Lane click-and-collect shopping service to its Family Fresh Market stores.Under the program, customers at five Family Fresh Markets in Minnesota and Wisconsin can order groceries online at ShopTheFastLane.com and pick up their items in their selected time frame at a designated curbside parking spot. Orders placed before 3 pm are available for same-day pickup"...
 

OTHER NEWS OF NOTE:






 
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