Power

With nothing left to watch, the entertainment business turns on itself

Relations between content companies and distributors were strained before. COVID-19 is pushing them to the breaking point.

Drive-in theater showing Trolls World Tour

AMC Theatres has taken NBCUniversal's words about "Trolls World Tour" as a declaration of war.

Photo: Vic Micolucci/AFP via Getty Images

The gloves are off in the movie business: AMC Theatres announced late Tuesday that it will not show any films from Universal Studios in any of its 1,000 theaters around the globe going forward. The threat came just hours after reports broke that Dish and other TV service providers were feuding with Disney over hundreds of millions of dollars in fees for ESPN — the most expensive cable network, and one that has become a lot less valuable with live sports shut down.

Conflicts between content production and distribution companies are nothing new. But while the two sides have ultimately always made peace in the past, these latest spats may be a sign that some of these relationships, and the business models they are built on, may not survive in a post-coronavirus world. It's yet another example of the way the current crisis could reshape the power balance between old and new media.

AMC's boycott threat comes after Universal revealed that it had generated around $100 million with premium streaming rentals of the movie "Trolls World Tour," which it released online earlier this month just days after its official theater release date due to the COVID-19 shutdown. "The results for 'Trolls World Tour' have exceeded our expectations and demonstrated the viability of PVOD," NBCUniversal CEO Jeff Shell told The Wall Street Journal, using industry shorthand for premium video on demand. "As soon as theaters reopen, we expect to release movies on both formats."

AMC took Shell's words as a direct attack on the theatrical window — the time a movie is shown exclusively in theaters before making its way to internet and cable on-demand distribution. "This radical change by Universal to the business model that currently exists between our two companies represents nothing but downside for us and is categorically unacceptable," said AMC CEO and President Adam Aron.

"Jeff's comments as to Universal's unilateral actions and intentions have left us with no choice," he added. A Universal spokesperson shot back later Tuesday, telling Variety that it was "disappointed" by AMC's statement, alleging that the theater chain was looking to "confuse" its position.

The back-and-forth between AMC and Universal happened just hours after the New York Post reported that Dish was looking to skip the $80 million to $100 million it is supposed to pay Disney for the right to carry ESPN this month. Dish isn't the only operator unhappy about the April ESPN bill, according to Lightshed Partners analyst Richard Greenfield. "We believe multiple [TV service operators] informed ESPN that affiliate fees should not be paid starting in April 2020 because sports content is not being delivered as specified in their affiliation agreements," Greenfield wrote in an analyst note this week.

Cable subscribers pay around $10 per month for ESPN and Disney's other sports networks, a fact that has long bugged TV fans who are not interested in sports. All together, Greenfield estimated that close to half of a $100 cable bill is going to sports channels — channels that haven't been showing live sports in weeks.

Disney has reportedly rebuffed any demands to reimburse operators, but the conflict isn't likely to go away anytime soon. Outlining plans for reopening his state, California Gov. Gavin Newsom said Tuesday that live sports with audiences won't return until all of the stay-at-home restrictions are lifted, which could take many months. Even sporting events produced for TV without live audiences are being classified as a higher-risk workplace and won't be allowed soon.

The same is true for movie theaters, which will likely have to institute significant social distancing measures before getting the go-ahead to reopen in California and a number of other states. And if there's a second wave of COVID-19 in the fall, as many health experts predict, chances are that most of us won't see the inside of a theater until well into 2021.

That's bad news for AMC, which recently announced that it was raising $500 million in debt to keep the lights on, leading Greenfield to quip on Twitter that "no movies will be released in theaters until after [AMC] files for bankruptcy."

At the core of both disputes are long-simmering conflicts over the business agreements between content companies and distributors, which have a lot to do with the emergence of the internet as an alternative distribution channel. Theater chains have, for instance, long boycotted Netflix for its insistence on releasing movies simultaneously on the big screen and on its service, resulting in the streamer buying its own theaters just to qualify for awards.

Similarly, TV operators have long balked at the fees they have to pay studios to carry their networks, especially as cord-cutting, prompted by cheaper streaming options, is accelerating. This has regularly led to retransmission disputes, with cable networks going dark on some operator services for days or weeks. In the past, networks have had the upper hand in these disputes, but that power dynamic is quickly shifting. Not only is the current crisis, and the economic outfall from it, likely going to accelerate cord-cutting, media companies like Disney are also finding that sports networks, their erstwhile sports network crown jewels, are a lot less valuable these days.


Get in touch with us: Share information securely with Protocol via encrypted Signal or WhatsApp message, at 415-214-4715 or through our anonymous SecureDrop.


At the same time, Hollywood is set to benefit from a power shift on the theater side. Studios like Universal aren't just finding premium video rentals that have consumers paying $20 for one-time-access to a newly released movie to be increasingly profitable. Many media companies are now also running their own video subscription services, with NBCUniversal's Peacock set to launch in July. The widening rift with theaters could accelerate plans to boost the subscriber base of these services by streaming movies to paying subscribers — something that Disney has already begun to do with films like "Artemis Fowl."

Outlining his plans to open up California, Newsom cautioned that we will have to face a new reality once the shutdown is over. "Our stores will look different. Offices will operate differently," he said. And if this week is any indication, the business of media, sports and entertainment will look very different as well.

Fintech

Judge Zia Faruqui is trying to teach you crypto, one ‘SNL’ reference at a time

His decisions on major cryptocurrency cases have quoted "The Big Lebowski," "SNL," and "Dr. Strangelove." That’s because he wants you — yes, you — to read them.

The ways Zia Faruqui (right) has weighed on cases that have come before him can give lawyers clues as to what legal frameworks will pass muster.

Photo: Carolyn Van Houten/The Washington Post via Getty Images

“Cryptocurrency and related software analytics tools are ‘The wave of the future, Dude. One hundred percent electronic.’”

That’s not a quote from "The Big Lebowski" — at least, not directly. It’s a quote from a Washington, D.C., district court memorandum opinion on the role cryptocurrency analytics tools can play in government investigations. The author is Magistrate Judge Zia Faruqui.

Keep ReadingShow less
Veronica Irwin

Veronica Irwin (@vronirwin) is a San Francisco-based reporter at Protocol covering fintech. Previously she was at the San Francisco Examiner, covering tech from a hyper-local angle. Before that, her byline was featured in SF Weekly, The Nation, Techworker, Ms. Magazine and The Frisc.

The financial technology transformation is driving competition, creating consumer choice, and shaping the future of finance. Hear from seven fintech leaders who are reshaping the future of finance, and join the inaugural Financial Technology Association Fintech Summit to learn more.

Keep ReadingShow less
FTA
The Financial Technology Association (FTA) represents industry leaders shaping the future of finance. We champion the power of technology-centered financial services and advocate for the modernization of financial regulation to support inclusion and responsible innovation.
Enterprise

AWS CEO: The cloud isn’t just about technology

As AWS preps for its annual re:Invent conference, Adam Selipsky talks product strategy, support for hybrid environments, and the value of the cloud in uncertain economic times.

Photo: Noah Berger/Getty Images for Amazon Web Services

AWS is gearing up for re:Invent, its annual cloud computing conference where announcements this year are expected to focus on its end-to-end data strategy and delivering new industry-specific services.

It will be the second re:Invent with CEO Adam Selipsky as leader of the industry’s largest cloud provider after his return last year to AWS from data visualization company Tableau Software.

Keep ReadingShow less
Donna Goodison

Donna Goodison (@dgoodison) is Protocol's senior reporter focusing on enterprise infrastructure technology, from the 'Big 3' cloud computing providers to data centers. She previously covered the public cloud at CRN after 15 years as a business reporter for the Boston Herald. Based in Massachusetts, she also has worked as a Boston Globe freelancer, business reporter at the Boston Business Journal and real estate reporter at Banker & Tradesman after toiling at weekly newspapers.

Image: Protocol

We launched Protocol in February 2020 to cover the evolving power center of tech. It is with deep sadness that just under three years later, we are winding down the publication.

As of today, we will not publish any more stories. All of our newsletters, apart from our flagship, Source Code, will no longer be sent. Source Code will be published and sent for the next few weeks, but it will also close down in December.

Keep ReadingShow less
Bennett Richardson

Bennett Richardson ( @bennettrich) is the president of Protocol. Prior to joining Protocol in 2019, Bennett was executive director of global strategic partnerships at POLITICO, where he led strategic growth efforts including POLITICO's European expansion in Brussels and POLITICO's creative agency POLITICO Focus during his six years with the company. Prior to POLITICO, Bennett was co-founder and CMO of Hinge, the mobile dating company recently acquired by Match Group. Bennett began his career in digital and social brand marketing working with major brands across tech, energy, and health care at leading marketing and communications agencies including Edelman and GMMB. Bennett is originally from Portland, Maine, and received his bachelor's degree from Colgate University.

Enterprise

Why large enterprises struggle to find suitable platforms for MLops

As companies expand their use of AI beyond running just a few machine learning models, and as larger enterprises go from deploying hundreds of models to thousands and even millions of models, ML practitioners say that they have yet to find what they need from prepackaged MLops systems.

As companies expand their use of AI beyond running just a few machine learning models, ML practitioners say that they have yet to find what they need from prepackaged MLops systems.

Photo: artpartner-images via Getty Images

On any given day, Lily AI runs hundreds of machine learning models using computer vision and natural language processing that are customized for its retail and ecommerce clients to make website product recommendations, forecast demand, and plan merchandising. But this spring when the company was in the market for a machine learning operations platform to manage its expanding model roster, it wasn’t easy to find a suitable off-the-shelf system that could handle such a large number of models in deployment while also meeting other criteria.

Some MLops platforms are not well-suited for maintaining even more than 10 machine learning models when it comes to keeping track of data, navigating their user interfaces, or reporting capabilities, Matthew Nokleby, machine learning manager for Lily AI’s product intelligence team, told Protocol earlier this year. “The duct tape starts to show,” he said.

Keep ReadingShow less
Kate Kaye

Kate Kaye is an award-winning multimedia reporter digging deep and telling print, digital and audio stories. She covers AI and data for Protocol. Her reporting on AI and tech ethics issues has been published in OneZero, Fast Company, MIT Technology Review, CityLab, Ad Age and Digiday and heard on NPR. Kate is the creator of RedTailMedia.org and is the author of "Campaign '08: A Turning Point for Digital Media," a book about how the 2008 presidential campaigns used digital media and data.

Latest Stories
Bulletins