AT&T buys AppNexus for $1.6 billion as it prepares to take on Google and Facebook

Another day, another handful of multi-billion dollar deals in media.

Local broadcast TV owner Gray Television said it was buying Raycom for $3.6 billion on Monday, a deal that would put it in 24 percent of US homes, according to The acquisition is the latest effort to consolidate ownership of local stations following Sinclair’s still-pending deal to acquire Tribune Media for $3.9 billion.

As part of the deal, Raycom said it will spin-off its 100 local newspaper assets, which are housed under Community Newspaper Holdings. Raycom has held the newspaper group less than a year, and at the time explained the acquisition would help strengthen local content. Here’s the AP report on the Raycom acquisition of Community Newspaper Holdings and what the Raycom president Pat LaPlatney said back in September of last year.

“While it is contrary to the trend of separating newspapers and television properties, we believe the synergies this merger creates will only enhance our ability to deliver exceptional local content, extend our community presence and grow our respective multimedia footprints,” he said. 

In order to avoid any government issues, Gray said it would shed stations in nine markets. Meanwhile the Federal Communications Commission is holding a July 12 meeting in which it may consider raising the cap on how many stations a single company can own. The current rules limit companies to a total reach of 39 percent of the U.S. audience, though Bloomberg reports Sinclair’s tie-up with Tribune could hit 59 percent of the national audience with 200 stations in total.

If anyone ever doubted AT&T’s seriousness about competing with Google and Facebook for digital ad dollars, Monday’s confirmation that it purchased AppNexus for $1.6 billion, one of the biggest digital ad platforms, should dispel those doubts.

The deal comes shortly after AT&T closed its $85.4 billion acquisition of Time Warner — a move that AT&T has said will help open the door to selling highly lucrative ads by combining content with its distribution network. 

The company confirmed the news in a press statement on Monday.

AppNexus provides the plumbing that helps pair online content with ads, offering tools to both content supplies and ad buyers through tis platform.

When consumers open an application, a complex auction occurs with advertisers bidding to serve their ads to that consumer. AppNexus picks the winner in a fraction of a second and takes a slice of the revenue. The firm also helps advertisers figure out how effective its campaigns are.

AppNexus competes with Google’s DoubleClick Ad Exchange. Back in 2016, the New York-based AppNexus was on the path to a $2 billion public offering, but the market went soft for ad tech. Monday’s acquisition is a win for AT&T, which hopes to use the AppNexus technology to improve the amount of money it can earn from digital advertising on its TV channels, which include Turner’s CNN and TNT. The new firm will become part of AT&T advertising and analytics unit. 

In other AT&T news, the WSJ reported Sunday that it had talked to CBS’s controlling shareholder about a possible acquisition before turning its attention to Time Warner. The WSJ reports that CBS controlling shareholder Shari Redstone axed the idea, though her reps say she simply met the AT&T chief, Randall Stephenson, and no more was said. Either way, the story looks like it helps CBS build its legal case that Redstone made decisions that weren’t in the interest of all shareholders.

Martin Sorrell, the advertising industry legend who stepped down from the world’s biggest ad agency  in April amid an investigation into his personal conduct, wants to talk.

Sorrell said during an interview at the Cannes Lions Festival in France that he is considering breaking his confidentiality agreement with his former employer, WPP Group, in light of leaks about the circumstances of his departure.

The pugnacious executive exited WPP Group six weeks ago under a cloud after the company said it concluded a mysterious investigation into alleged inappropriate behavior. The Financial Times reported on allegations that Sorrell had visited a prostitute, paid the bill in petty cash, and had mistreated his assistants and sacked his chauffeur after a 12-day shift.

Speaking as part of a conversation with New Yorker journalist Ken Auletta, Sorrell declined to comment on aspects of his departure and ensuing negative press coverage, citing his confidentiality agreement. But when Auletta suggested he could break it, given all the leaks, Sorrell responded: “There may come a time when that’s what we’ll do. I wouldn’t necessarily rule it out.”

The session, one of the most unvarnished in recent memory, was full of drama, including several criticisms from Sorrell about Auletta’s latest book, “Frenemies,” about the decline of ad agencies at the hands of penny-pinching management consultants.

Sorrell wanted to know why Auletta had not spent more time interviewing the big tech companies and the management consultants, which have increased competition for the traditional advertising business.

But then Auletta turned the tables on Sorrell, asking him about the elephant in the room.

“What is the elephant in the room?” asked Sorrell coyly.

“The circumstances under which you were compelled to leave WPP,” Auletta said. “People complained that you were not just verbally abusive but cruel. Any reaction to that?”

“Am I an easy person to deal with? No. Am I demanding? Yes,” Sorrell said. “So I don’t think that was fair. I demanded high standards.”

Sorrell, who is now setting up his own communications and marketing focused company, S4 Capital, was asked why he had been so quiet in the face of controversial accusations. “We responded formally to everything that has been said,” Sorrell insisted.

“You used a not insignificant amount of corporate funds, relying on petty cash rather than credit cards, for inappropriate spending,” Auletta said.

“That has been dealt with too. It was strenuously denied,” Sorrell said.

When Auletta asked who he thought was leaking about him, Sorrell said he would leave that to Auletta’s fertile imagination.

“I don’t write books,” Sorrell said. “yet.”

Cannes Lions is, at its heart, a competition of creative advertising ideas.

And this year, the judges liked what Apple was selling.

The tech giant had a low-key presence at Cannes compared to its brethren, with Google, Facebook, Twitter and Pinterest each boasting huge beachside presences.

But Apple shined in the competition. The company shared the Grand Prix in the “entertainment in music” category for its Home Pod campaign with Jay-Z’s music video about his mom. Here’s Apple’s ad featuring a dance routine by FKA Twigs. It was directed by filmmaker Spike Jonze.

Apple also won a Grand Prix in “brand experience” for its in-store education program. Apple also quietly launched its messenger service for business, working with a company called LivePerson to provide messenger chat services for Cannes Lions festival goers.

Perhaps the biggest mystery of Cannes Lions is why a giant tobacco company is here. PMI Science, which is an arm of tobacco company Philip Morris International, has a sleek setup on the beach. Executives have been telling attendees that if people are going to smoke, then the company is trying to make it as healthy as possible. The question on most people’s minds? Will they begin some big marketing campaigns and start spending on TV and digital ads.

Sinclair Broadcasting Group is showing a video on its local broadcast news stations across the U.S. in which a political commentator attacks media coverage of the Trump administration’s policy of separating immigrant children from their families. 

Boris Epshteyn, chief political analyst for Sinclair, declares in the new video that the U.S. immigration system “is undeniably broken and the discourse around this topic is toxic.”

“Many members of the media and opponents of the president have seized on this issue to make it seem as if those who are tough on immigration are somehow monsters,” he adds. 

Sinclair, which owns or operates more than 190 broadcast stations across the U.S., has come under increased scrutiny for what media watchdogs claim are efforts to push conservative viewpoints to viewers — many of whom do not realize that their local stations are owned by the TV company. Sinclair is known to require that their stations air segments produced by the company known as “must runs.”

Media Matters, a left-leaning media analysis organization, reported that the segment had aired in at least 18 states, according to data from iQ Media, which tracks TV broadcasts.

Many of these segments feature Epshteyn, a former White House press officer whose recurring “Bottom Line” videos have defended President Donald Trump on everything from Trump’s comments after the fatal Charlottesville rally to the North Korea summit.

Other segments have featured local anchors reading from a prepared script. A video from sports website Deadspin that stitched together various anchors reading one such script went viral, bringing attention to the company’s practice of pushing conservative narratives. 

Sinclair did not immediately respond to a request for comment.

Roger Lynch joined internet radio company Pandora as chief executive almost a year ago at a time when the company’s wasn’t doing so great. 

Now, things are looking a little better. On Thursday, the company announced a new tie-up with AT&T that will bring Pandora to the telecom company’s “&More” plan. 

Lynch, whose digital bonafides include starting Sling TV, is spearheading Pandora’s battle for a slice of the $15 billion terrestrial radio ad business. He told how he is trying to reverse user declines amid competition from Spotify and Apple Music. Lynch is set on growing partnerships beyond Pandora’s tie-ups with Snap, AT&T and T-Mobile and personalizing the business of podcasting. 

Q: What made you join Pandora and what are its challenges?

A: I was intrigued by the scale of the business. Almost one in three adults in the U.S. uses Pandora every month. There was a lot of negative press around the time I was joining. It’s starting to turn now mainly because we are making some changes and the momentum of the business is starting to change. I thought it had real strength in digital audio advertising and I looked at that as a growth opportunity. 

When I worked at Sling TV, it was let’s go kill cable and satellite and replace it with internet delivery and that’s what going to happen in radio too.

Q: What are you active uniques?

A: Seventy-two million last quarter. Last year the business saw year over year declines start to slow towards the end of the year. 

Q: What do you attribute that to?

A: It was competition having an impact. It was more execution challenges. Think about how much growth has happened in music streaming services. Pandora has been surprisingly resilient. Job one was stopping that decline. We were able to do that quickly by the end of the first quarter. Hopefully, we will be back to user growth. 

Q: How will you do that?

A: Pandora has huge capabilities in data science, and we use it well for our advertisers. That’s why we can generate well over a billion dollars in ad revenue. Pandora didn’t use it very effectively in its own marketing. That to me was one of the quick wins. We built a new marketing team, built new marketing datasets for our marketers, so that is starting to happen now.

Q: Marketers are looking for a hedge against big technology firms and mega-media mergers. Audio streaming is something that’s growing. How are home voice assistants changing that too? 

A: Digital audio is one of the only formats not controlled by one of the FANG [Facebook, Apple, Netflix, Google] stocks. That to me is one of the opportunities. There is a lot of growth around new devices and new content.  To be really good at creating anything around monetization around voice, you have to have the data and you have to be really good at audio. 

Q: Let’s talk about rights deals with the three big music labels? They don’t like free.  They’d rather have a piece of a subscription model.

A: We have a good relationship, which was not the case three to four years ago. That’s changed dramatically. 

If we could all wave our wand and turn every listener into a paid customer, we would, but that’s not how consumers behave. and the labels are starting to understand that. They were and are enamored with a subscription, as are we. Subscription revenue grew 62 percent last quarter. But huge numbers of consumers aren’t going to be [subscribs] and it’s not about ability to pay. Lebron James said he still uses the ad-free version of Pandora. That’s an example of how it’s not a money issue. He just prefers not to pay. As Pandora gains share from radio, the labels benefit. They don’t get paid from them — they get paid from us. Pandora in 2016 did its first deals with labels and those were two to three-year deals.

Q: What are you doing in talk radio?

A: We have announced we’re moving into podcasts and spoken word in a much bigger way. Think about podcasts today. It’s about lists. It’s not really personalized. What Pandora has done for music, we’re going to do for podcasts. Use all the data science we have to promote content to you that we know will be relevant. In some ways, podcasts are still in the stone ages.

Q: Where do you see the future of the media business on a macro-level?

A: Given the AT&T ruling, I think you are going to see lots of changes. I was a bit surprised [the Department of Justice] tried to block that deal. The judge’s ruling really reflected that the dynamics have changed. It’s not about companies that produce content and companies that distribute. Its about big, vertically integrated tech companies. It remains to be seen. Someone will write a book about what [spurred] the initial investigation in the first place. How politically motivated was that?

Time magazine has published a variety of covers about President Donald Trump, but few have struck a chord like the one released on Thursday. 

Against a red backdrop, the image of a crying immigrant child — a cutout from a Getty Images picture from photographer John Moore that has come to represent the ongoing border crisis — is juxtaposed next to the president. Trump looks down at the child alongside the words, “Welcome to America.”

The cover comes a day after Trump signed an executive order to stop his administration’s policy of separating immigrant children from their families at the U.S. border. The policy has become a flashpoint across the U.S., drawing extensive media coverage and fundraisers for nonprofits dedicated to helping immigrant families.

Time’s previous covers have portrayed Trump in a variety of ways, including one from earlier in June in which Trump saw himself in the mirror as a king. No other cover, however, has so plainly questioned the morality of a Trump policy in a visual context. 

Many journalists have pointed out that the separation of immigrant families is a policy owned by the Trump administration. But with its new cover, Time puts the issue, quite literally, at Trump’s feet.

Time Magazine's cover

Watch your back, MoviePass. AMC is coming for you.

AMC Theatres, the largest theater chain in America, says it is launching a subscription plan. AMC Stubs A-List will allow members to see up to three movies a week for $19.95 a month — and get discounts on concessions.

The move comes amid a tense battle between AMC and MoviePass, the app-based service that charges subscribers $9.95 a month to see one movie per day, upending the traditional exhibition business model. 

In its press release announcing the news, AMC touted the “sustainable price” of the Stubs A-List program — an apparent shot at MoviePass, which has raised eyebrows with its suspiciously inexpensive monthly fee.

MoviePass, for its part, fired back in a tweet on Wednesday morning: “AMC has repeatedly disparaged our model as a way to discourage our growth because all along they wanted to launch their own, more expensive plan.”

“We want to make movies more accessible, they want more profit,” the company added.

AMC, however, plans to offer subscriber perks that might sweeten the deal. Stubs A-List subscribers will be able to watch all three movies on the same day, get into movies they have already seen, and reserve tickets in advance.

MoviePass, it should be noted, offers none of those perks.

Apple retail chief Angela Ahrendts wants her company to distinguish itself from other tech companies by embodying a philosophy of enriching lives. 

“Apple has taken a leadership position when it comes to environmental responsibility. We have human responsibility,” Ahrendts said. “I think it’s important that the largest tech company in the world invest in humans.”

The top Apple executive was interviewed at the Cannes Lions Festival in France on Wednesday by Tor Myhren, Apple’s vice president marketing communications.

Ahrendts revealed that for the first time Apple is measuring how well it is doing on that mission, surveying Apple store customers and examining employee feedback. 

She explained that the company has an internal social network called Loop that is examined by Ph.D. students for data that helps improve systems. 

Commenting on the retail environment in the U.S., where big retailers are often closing storefronts, she said that Apple was expanding its stores so that they are not just retail outlets but places of learning, adding that she told Apple CEO Tim Cook she wanted to renovate Washington D.C.’s Carnegie Library, which will become the city’s biggest classroom when it opens. 

Apple staff, she said, were hired for their empathy skills.

“They are not hired to sell,” she said. “There is no commission, no quotas. What we’ve tried to do is keep uniting them around the big vision and the impact we want to make.” 

Ahrendts, who said she hadn’t initially intended to join Apple from fashion company Burberry but was persuaded by Cook, noted that Apple was not measuring for quantity but measuring, “how we made you feel. We’re trying to be the largest platform ever built for enriching lives. Did we help you unlock your creative thinking?” 

“I hope there are not too many finance guys watching,” she joked.

“Retail is not dying,” she said, but stores have serve a bigger purpose than “just selling things.”

One major media buyer is willing to put his job on the line to persuade advertisers to be more responsible about whether they put their advertising dollars. 

Scott Hagedorn, CEO of Omnicom’s Hearts & Science agency, said in an interview that advertisers should think hard about what they are supporting and the societal effects of what some platforms are serving up to consumers. 

Hagedorn criticized YouTube just moments after YouTube CEO Susan Wojcicki delivered her keynote address at the Cannes Lions Festival, where she underscored the company’s commitment to openness and transparency in dealing with the ad community. 

The ad executive, who is responsible for placing as much as $6 billion in ad buys a year, said he watched 30,000 videos as part of a client audit and was disturbed by some of the content he came across. 

“As a client, you would not know where your ads ran,” he said. “They would aggregate together videos into channels, and it was done using an algorithm.  When one video was vetted to start a channel, the rest of the videos were never vetted. So there was a complete lack of transparency.”

Hagedorn said the company had improved but remained a risky proposition.

“I’d say on extremist content they were failing 20 to 30 percent of the time to filter out, or didn’t figure out the [advertisers’ buying] criteria, and now its gotten down to 7 to 9 percent,” he said.

But Hagedorn added: “The system is not built for audits.”

The agency has partnered with Tristan Harris, the co-founder of the Center for Humane Technology and a former design ethicist at Google, to try to evangelize for better monitoring of the big tech platforms and to use the power of advertising as a weapon to demand improvements. 

“This is about the future of society,” Harris said. “We need much more aggressive controls.”

Harris said the topic should be on the front pages every day until there’s a way to stop the ill effects of tech platforms exponential growth. 

Hagedorn and Harris were part of an official Cannes Lions sessions called: “Addicted to likes,” outlining the need for a more responsible technology. 

Hagedorn said his agency only uses Google search now and is still testing with YouTube. 

“If these apps were built to be addictive and most of the money in advertising has shifted from traditional TV and traditional media into more of an ad base and mobile world, then how in the world is this effective?” Hagedorn said.

Image: Scott Hagedorn, CEO of Omnicom's Hearts and Science agency, talks with Tristan Harris, co-founder of the Center for Humane Technology

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