Monday AM Briefing #69

*Need* to know stories and trends for this morning & the week ahead; A Short Essay on Bobby Flay's post-Food Network Future

[Author’s Note: it looks like Substack is having some technical issues this morning. Re-sending.]

A Short Essay on Bobby Flay's post-Food Network Future

Last week we learned star chef Guy Fieri is close to signing an $80MM, three-year deal with Discovery's Food Network, but chef Bobby Flay is parting ways with Food Network after failing to agree to a new contract.

The obvious question is why Fieri can stay with a deal that more than doubles his previous deal and makes him the top-paid chef on cable TV, and Flay walks after 27 years with the network.

But, the better version of that question may be why Flay and Discovery were so far apart on economics before the closure of the Warner Bros. Discovery deal, which promises ~$52B in revenues, ~$15B in pretax profit, and free cash flow of $20B by 2023.

In other words, if Guy Fieri is worth 0.01% of Warner Bros. Discovery’s $20B in spend annually, what makes Bobby Flay too expensive for Warner Bros. Discovery at less than 0.01% of its content spend in 2022?

Chloe Sorvino of Forbes wrote that advertiser demand seems to be the driving factor:

Fieri, one of the first hosts to restart shooting during the pandemic, is one of the network's most popular in terms of the advertising dollars they bring in. Fieri has 1.8 million followers on Instagram, while Flay counts 1.6 million. On Twitter, Fieri commands 3.4 million, while Flay has 2.6 million. 

At roughly $26 million a year, Fieri is now collecting a salary in line with what the top food personalities are making from streamers like Netflix or Hulu….

The tattooed and goateed Fieri is now the Discovery network’s top-paid star, ahead of The Pioneer Woman’s Ree Drummond, and making more than what Chip and Joanna Gaines earned while HGTV’s top stars. 

Another implication is that on discovery+, Guy Fieri may be a better driver of subscribers and engagement than Bobby Flay.

After 27 years, it would not be unforeseeable or unreasonable for talent like Bobby Flay to have declining value to Discovery and its target audiences for growth.

A “Substack-esque” move for Bobby Flay?

I predicted in my Lessons from 2020, Predictions for 2021 presentation that:

At least two high-profile Discovery cooking talents will make Substack-esque moves towards monetizing their brand outside of the Discovery ecosystem.

Flay has made a move towards monetizing his brand outside of Discovery, but the move is not “Substack-esque”: meaning, it is not a bet by Flay on his own Direct-to-Consumer (DTC) audience.

It is especially not a bet on the Hollywood-meets-Creator Economy model (which I wrote about in Member Mailing #276: Hollywood-meets-Creator-Economy, YouTube, Spotify and OnlyFans):

At the root of Hello Sunshine’s business model are four cornerstones that lie within the overlap between both marketplaces:

  1. Production Business

  2. Book Club

  3. E-Commerce

  4. Audio (Podcasts)

Flay has none of those businesses in place except for e-commerce: the “Shop” page on his website offers his cookbooks, only. There is no broader Bobby Flay community.

Nor does Flay seem optimally positioned to monetize a DTC audience like the Gaineses and their Magnolia brand: on Instagram, Flay has 7% of Chip and Joanna Gaines’ 23MM+ collective followers. Substack writers tend to make a tiny percentage of $26MM per year, at best.

So Flay seems to find himself on the outside looking in at emerging Hollywood-meets-Creator-Economy models, and therefore unable to take advantage of the emerging, more favorable economics of these models.

Given the demand for TV talent like Flay, Sorvino predicts that Flay “could possibly land a contract worth as much as $100 million” from other streamers like HBO Max, Amazon Prime Video, and Netflix.

A Potential Hollywood-meets-Creator Economy Outcome

It’s worth highlighting how a deal with Amazon actually opens the door for Flay to solve his pain points and re-imagine his brand into a Hollywood-meets-Creator Economy model.

As Amazon is a natural partner for Hello Sunshine — which I wrote about in Member Mailing #276: Hollywood-meets-Creator-Economy, YouTube, Spotify and OnlyFans — Amazon also seems to be a natural partner for Bobby Flay:

  1. Original Content Productions ↔ Amazon Prime Video

  2. Book Club ↔ Amazon Kindle

  3. E-Commerce ↔ Amazon Prime

  4. Audio ↔ Amazon Music

Meaning, as I had previously suggested for Hello Sunshine, Amazon offers Flay the foundations, infrastructure and scale for moving towards a Creator Economy-type business model. Prime Video also needs more original content, especially in cooking.

Flay is most likely to end up with a streaming-only deal. If he ends up with Amazon, it will likely be more than a streaming-only deal.

Amazon seems unusually well-positioned — in a better position than Discovery, in fact — to help talent like Flay to reach more audiences across platforms at a time when talent increasingly needs to do so.

Must-Read Monday AM Articles

  • Last month AT&T CFO Pascal Desroches shed some light on the Reverse Morris trust structure underlying the Warner Bros. Discovery merger.

Emerging "Metaverse"-type convergence strategies

Aggregator 2.0

  • Lucas Shaw of Bloomberg reported YouTube is looking to hire an executive to oversee its podcasting business, a sign that Google is “starting to take the category seriously”.

Sports & Streaming

Creative Talent & Transparency in Streaming

  • An anonymous hacker leaked 125 gigabytes of data from Twitch–including creator payout records stretching back to August 2019.

  • Spotify is changing the name of its advertising business to Spotify Advertising from Spotify for Brands in an attempt to attract small and medium-size businesses beyond the major brands it has traditionally focused on. 

  • Spotify also added Anchor into the Spotify Audience Network.

  • This blog post argues Spotify’s strategy to allow artists to upload their music directly to Spotify is never coming back, marked by the sale of SoundBetter back to its founders.

  • Patrick Coffee of Business Insider profiled some behind-the-scenes companies help YouTube and TikTok stars like MrBeast and Nick Cho supercharge their videos and posts. ($ -paywalled)

  • The Information’s Mahira Dayal highlighted 10 Startups focused on Creators and NFTs.

Original Content & “Genre Wars”

  • Squid Gamerepresents a payoff from Netflix’s multiyear bet on South Korean content ($ - paywalled). Netflix released a blog post updating everyone on its progress in Korea.

  • Lucas Shaw argues Netflix’s greatest impact “will be globalizing the entertainment business, creating a platform for people from more than 190 countries to watch stories from all over the world.” This Vice piece argues the subtitles on Squid Game is “mistranslating” Korean.

  • Lesley Goldberg of The Hollywood Reporter dove into why executives at NBCUniversal —are focused on securing the biggest audience for L&O rather than airing it exclusively on Peacock.

  • Kim Masters smartly navigated the new, post-Iger dynamics of Disney under Bob Chapek.

  • Condé Nast CEO Roger Lynch discussed transformation and global brands with Recode Media’s Peter Kafka

Comcast’s & ViacomCBS’s Struggles in Streaming

  • Peacock has a market-high 13% churn rate, according to Kantar.

  • Peacock ordered make-and-do series The Makery and musical dance jamboree series Babble Bop! to bolster its pre-school line-up

  • NBCUniversal said former Hulu chief Kelly Campbell would become president of Peacock. Her predecessor Gidon Katz resigned from his role last week. Mr. Katz is joining Roku where he will serve in a newly created role as SVP of product, customer journeys and experience.

  • Comcast-owned Sky launched branded smart TVs, Sky Glass, which will be available in the U.K. starting October 18 and the rest of Sky’s European markets beginning in 2022.

AVOD & Connected TV Marketplace

  • Colin Dixon of NScreenMedia has an excellent breakdown of how “With new content, distribution, and approaches, AVOD and FAST [are expanding] the opportunities for viewers to watch and advertisers to reach them”

  • Dave Morgan of Simulmedia argues “it seems it can’t be very long until Amazon just gives us its TV for free as part of a bundled service of Prime and others of its products.”

Other

  • PARQOR-favorite Dotdash will acquire Meredith in an all-cash transaction at a purchase price of $42.18 per share, and the combined company is to be called Dotdash Meredith and led by Dotdash CEO Neil Vogel (Investor Presentation here).

  • HBO Max revealed at a Europe launch event that it will be launching in seven additional countries in 2022: Turkey, Greece, Estonia, Iceland, Latvia, Lithuania and the Netherlands. It also revealed HBO Max in Europe will get Warner Media theatrical releases 45-days after their theatrical launch.

  • Brian Ring argues in FierceVideo that the data shows “not too many of us” use or need Antenna TV built off of ATSC 3.0, “a better antenna technology than the HD TV antennas we all transitioned to in 2010”.

  • Snapchat unveiled new financial incentives for creators on Spotlight, offer cash prizes for top-performing Spotlight videos that harness specific Lenses, Sounds, or trending topics.

  • Variety dove into why 90%+ of IATSE members voted for a nationwide TV and Film production strike

  • Disney hits roadblocks to distribution of its blockbuster movies in China ($-paywalled)