1. Paramount Threatens To Move
In the latest twist to the Paramount-Warner drama, David Ellison said that he is actively looking to relocate the company out of California in response to the lawsuit filed by the California Attorney General (and 11 others) that is intended to block the merger.
Speculation is that he is looking at Austin, Nashville or a city in one of the 38 states whose Attorney General has not joined California AG Rob Bonta’s lawsuit.
Ellison has reportedly put a deadline on this too, giving the AG until October 1st to negotiate a settlement before he begins to put the move into motion.
At stake are some 30,000 jobs, many of them from Hollywood’s already struggling “middle class”--the people who are not household names and whose ability to find work has been severely impacted by the move to streaming with its shorter seasons and less regular schedules.
Why It Matters
There has been much speculation that Ellison is bluffing, that, among other things, many of these employees would not go with him and that people with equivalent skill sets do not exist outside of Los Angeles.
And that the negative PR from the move would not be worth it for Ellison or Paramount, what with people like Evan Shapīro portraying him as a spoiled nepo-baby who likes to grab his toys and go home when he doesn’t get his way.
More than that, it seems to be such an obvious bluff that, if anything, it is going to embolden Bonta and the other AGs rather than put them off the case.
The AGs remain the last obstacle for the Ellisons, and there were some signs of movement this week as Paramount’s chief legal officer, Makan Delrahim, said that “everything is on the table,” including potentially selling CNN (currently owned by Warner Bros.), while reports of a potential oversight board within CNN seemed aimed at assuaging political sensibilities.
But bottom line is it looked like they were in the negotiating stage and so the threat to leave LA seemed doubly puzzling.
But much about the way the Ellisons have approached the deal has been puzzling, as if the laws of business don’t apply to them, so what do I know?
What You Need To Do About It
If you are Paramount, the “we’re moving out of LA thing” is not fooling anyone. Hard to backtrack now so your best bet is probably just not to mention it.
If you are Rob Bonta, you probably don’t want to go the “I double dare you!” route as the more Paramount suffers, the more people are going to lose their jobs and that will not do you any favors in Los Angeles.
If you are one of the other legacy media companies, definitely take notes on how this is all going down because they are not going to make it easy for you when your turn comes either. Much of the government is old and they think that television is stuck in the 90s when cable news networks had a lot more influence and a lot more viewers.
2. Spotify Makes Ad Skipping Simpler
The podcast ad market has been in a tizzy this week following user reports that Spotify has been testing a new ad-skipping button on their platform. The idea is that listeners will be able to skip over a wide variety of ads, including announcer reads, “baked in” ads and creator promos for things like their Patreon site.
The only ads they won’t be able to skip over (allegedly) are ones sold by Spotify directly.
Which has many people freaking out that they are going to destroy the ad-supported podcast business. Or at least make it less profitable for creators.
Why It Matters
Right now, creators keep all of the money on direct-sold inventory and split Spotify-sold inventory 50/50.
The fear is that if only direct-sold inventory is skippable, that will drive down those CPMs and push creators towards less profitable (for them) deals with Spotify.
There’s also the 15-second skip button that already exists on Spotify that many people (myself included) use to skip through any and all ads on the site.
The idea, some suggest, is to acknowledge that behavior and make it easy for Premium members to skip ads on podcasts. This has long been a sore point as Premium users pay to avoid ads when listening to music and are often annoyed to find them popping up during podcasts.
I’d also add that Spotify’s ad targeting seems to be a bit off, just from my own experience. I will often get ads in Spanish even though I do not live anywhere near a community with lots of native Spanish speakers.
But I digress.
The real issue here is whether Spotify really wanted to make a nicer interface for its users, put the squeeze on creators who have a sizable ad base that Spotify is hoping to get its hands on… or a little of both. (The latter would be my guess.)
Regardless, creators are not happy as they don’t see much upside. Spotify argues that users who can skip ads tend to stay on the platform longer but that doesn’t seem to carry much weight with creators who fear the losses in revenue will more than eclipse the revenue they make from increased listening.
What You Need To Do About It
If you’re Spotify, just be honest about what you're up to. The 15 second skip button is not that big a hassle and you tend to get very adept at knowing how many times to push it to get past the ads. So not really that big a hassle and pushing another button once is not exactly a solve.
So it all seems more than a bit cruel.
If you are one of Spotify’s creators, you are right to push back. This seems designed to put the squeeze on you and the blocking of your Patreon ads seems particularly cruel.
Alan Wolk is co-founder and lead analyst at the consulting firm TV[R]EV. He is the author of the best-selling industry primer, Over The Top: How The Internet Is (Slowly But Surely) Changing The Television Industry. Wolk frequently speaks about changes in the television industry, both at conferences and to anyone who’ll listen.
Week in Review is an opinion column. It does not necessarily represent the opinions of StreamTV Insider.