Market's Media Melt-Down - Exhibit A

Media stocks drop again.  Shock and awe?  Really?  Some will brush it off as being a market over-reaction.  But, Viacom's shareholders apparently don't think so.  Its stock has plummeted more than any other major media company (about 45% in the past six months).  And, the company is amongst those that have moved most slowly to address the new transformative market forces of voracious OTT and mobile consumption.  After all, just look at any young person around you.  What do they have in their hands and where are they looking?  Down, that's where -- at that thing in the picture to the right.  So, big media, that's where you need to be.  And not timidly either.

But, are you?  Are you boldly going ... or going, boldly?  Make no mistake -- it's "go" time.  In fact, it has been "go" time -- as in, all-in "go time" -- for a long time.  That's why Disney's Maker move 18 months ago was both bold and smart (very smart) (as I discussed in my recent Variety article "It's OK to be Bullish on MCNs").  Disney recognized that it needed a jolt of new DNA and immediate mobile reach to thrive in media's new world order.   But many are still just waking up to that fact.  Many more continue to reject it.

Mobile is Exhibit A in this fundamental media transformation.  It's absolutely the first screen for millennials (and increasingly for non-millennials).  It's not the only ingredient -- after all, let's not forget that this is a MULTI-platform world that is hungry for the most powerful stories told by the most compelling story-tellers who know how to play in it -- but it is absolutely vital.

So, media companies, which ones of you are going shopping for the multi-platform ingredients you need?  

I'd grab a cart now while the shelves are still relatively well stocked and some gourmet brands exist ....

ESPN, the New YouTube for Brands? Welcome to The Age of Lifestyle Media Companies

ESPN is not just for us couch potatoes anymore.  It is now a home for those selling those very potatoes from which the chips-we-eat-as-we-watch are made -- i.e., major consumer brands.  Huh?  What?

Here’s the story.  ESPN just announced -- nay, invited -- major brands to develop programming for their distribution platform, initially focusing on its TV Everywhere app.  Not commercials.  Not ads.  Not traditional sponsorships.  Actual entertainment programming.  Engaging video.  Case in point -- major media company, Dick’s Sporting Goods (well, perhaps not “major” yet, but possibly with major aspirations to become one some day -- Marriott anyone?) developed the documentary series “Hell Week” for ESPN.

Pause and chew on that for a moment.  Dick’s didn’t go to YouTube first with its videos -- historically, the standard path for brand-backed videos.  It went to ESPN first.  And, it paid ESPN for that privilege.  That is precisely ESPN’s goal -- to become the first choice for major brands to produce original, differentiated and compelling programming for its audience.  Outside the YouTube ecosystem.  And, here’s the beauty of it -- not only does ESPN get compelling (hopefully) new programming developed on someone else’s dime, they also get paid by that content creator (in this case, Dick’s) for that privilege AND ... wait for it ... ESPN also gets to run their traditional ads against that programming which pay yet again.  That is some Trifecta!  Kudos to you ESPN!

ESPN is not alone in its goal of being “the first choice” over YouTube for video creators, including brands.  This “divorce” from YouTube -- perhaps not a complete divorce, but at least a trial separation -- is a persistent theme in digital media circles these days.  Content creators of all stripes increasingly loudly express dismay (that’s a soft way of putting it for some) over YouTube’s 55/45 revenue split to creators.  The result is a burgeoning number of YouTube alternative platforms that promise better times for those video creators who enter their world first.  Think big OTT guns like Netflix and Amazon.  Think old stalwarts like Yahoo!, Comcast and Xbox.  Think major MCNs like Disney-fied Maker Studios, Otter-ized Fullscreen and hot young MCN Whistle Sports (which bills itself as a new kind of ESPN for millennials).  And, think newbies like Vessel and Zealot Networks.  Something is most definitely in the air ... on the air?  Yes, in more places than ever before.  High times indeed for the creative community.

Which brings us back to Dick’s.  Dick’s is not alone.  Marriott, as glibly noted above, just recently busted a move (reference, too dated?).  Pepsi just made major “noises” to that effect.  Starbuck’s.  And an increasing list of “others” all trying to pull a Red Bull and smartly transform themselves into lifestyle media companies that are significantly more interesting -- and engaging -- to consumers (especially to the coveted mobile-savvy millennial).

In any event, ESPN’s bold move is not to be denied.  Or overlooked.  It is yet another major data point demonstrating that brands increasingly see (or strategically want others to see) themselves as becoming media companies.  My business team and I at Manatt Digital Media see this directly.  We have already guided brands in this kind of media morphology.  We just recently finished a media transformation engagement for a respected beauty brand.  

This is real.  It is not fashion or fad.  And it is accelerating ...

Brands -- grab your lifestyles now while they last!  And, become storytellers, not just marketeers ...

The Disney-Maker Mega-Deal -- A Big Win for All Involved, Including LA-Based Content-Focused Investment

Well, those rumors were true -- Disney has, in fact, bought Maker Studios for the $500 million price-tag that we had come to expect (and with kickers that could bring it up to nearly $1 billion).  I wrote a feature article about this “possibility” 10 days ago in Variety (this is the link to that story) -- and I just shared my thoughts with Variety now that this deal has, in fact, become reality.

I lay out the business rationale for this mega-deal in these Variety articles (and won’t repeat them here). I also discussed them in this CNBC segment.  Certainly, this is a big big win for Maker’s investors.  I also believe it is a smart deal for Disney -- the strategic value and justification of which is not captured by looking at Maker’s financials alone.  Maker has tremendous value that can be unlocked uniquely in the Mouse House Machine.

Ultimately, this deal also is a big win -- a very big win -- for LA-based content-focused investment.  LA is a serious hub of digital media and tech-focused entrepreneurialism.  The Silicon Beach community is vibrant and alive with innovation.  But, up to now, LA has felt a bit insecure about its position in the world of venture capital and investment.  Next to its older and bigger NorCal sibling, it frequently felt unworthy (and that Silicon Valley sibling certainly frequently fueled that insecurity by not believing in content-focused investments).  The LA digital media/tech community has been looking for its first “big win” -- essentially its poster child.

Well LA, you have found that win in the guise of Maker Studios!  So shake off that insecurity, and get ready for a continuous string of significant SoCal-focused M&A activity in the next 12-18 months.

Strap on your seat-belts, it’s going to be a bumpy ride ... but an exhilarating one too.

Looks like NorCal’s little brother is growing up ....