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February 18, 2020

Publishing News

American Media Sells Muscle & Fitness, Other Fitness Brands
American Media release: American Media, LLC has agreed to sell Joe Weider's Olympia Fitness & Performance Weekend as well as the Muscle & Fitness, Flex and M&F Hers media brands. "The Olympia Weekend, held annually in Las Vegas, is home to one of the global fitness industry's signature consumer tradeshows, while also serving as the world championships of several professional physique sports, including the legendary title of Mr. Olympia. The sale of the event and media assets marks the latest acquisition for Jake Wood, an Arizona-based fitness industry insider whose growing portfolio includes digital media and event properties... Dan Solomon, hired in 2018 to oversee the overall Olympia property, has agreed to a five-year contract extension and will serve as President and Chief Olympia Officer under new ownership. In addition to his oversight of the Olympia, Solomon will manage the integration and strategy for the newly acquired media portfolio, including Muscle & Fitness... Mr. Olympia, Muscle & Fitness, M&F Hers and Flex create a consolidated social media audience of nearly 17M followers. As part of the deal, American Media has agreed to the ongoing coverage and promotion of the Mr. Olympia event, including support of sponsor commitments, through its popular entertainment-themed publications, both digital and print. American Media purchased Mr. Olympia in 2003 and has grown the event into one of the world's largest gatherings of fitness, strength, performance, and physique enthusiasts"...

Enquirer's Owner to Acquire McClatchy Newspapers
Bloomberg Law: "McClatchy Co., the owner of the Miami Herald, Kansas City Star and other newspapers, has become the latest casualty of the collapsing industry to fall into hands of an investment firm.Only a day after Warren Buffett’s long-time business partner predicted the death of newspapers, the struggling McClatchy filed for bankruptcy in New York with plans to hand majority ownership of one of the industry’s largest newspaper publishers to hedge fund Chatham Asset Management, owner of the scandal-plagued tabloid National Enquirer.The plan further tightens the grip of financial firms on the newspaper industry, renewing concerns over the cost-cutting and loss of local coverage that often follows ownership by financial firms. Funds from Chatham to Alden Global Capital LLC and Fortress Investment Group LLC have swooped in to take stakes in hundreds of papers, including once-mighty names as the Chicago Tribune and the New York Daily News. The nation’s largest newspaper chain is owned by New Media Investment Group Inc., which is managed by Fortress... McClatchy’s bankruptcy marks a grim milestone for a newspaper chain that was founded in 1857 with the Sacramento Bee. Chatham Asset Management, which would be its new owner, holds an 80% stake in American Media, owner of the Enquirer and run by David Pecker"...

Conde Nast Entertainment's Plans for Its New Studios
Digiday: "Condé Nast Entertainment is reorienting its approach when packaging projects to pitch to streaming services, TV networks and film distributors.It’s doing so with five publication-specific studios, and the magazine publisher’s entertainment arm aims to broaden the scope of the projects it pitches to not only adapt articles into TV shows and films but also build franchises around these projects.CNE is creating studios for a handful of its publications — GQ, The New Yorker, Vanity Fair, Vogue and Wired — in order to give itself earlier access to the articles those publications produce and give the entertainment arm more opportunities to develop projects based on those articles, said CNE president Oren Katzeff. “What for the most part has been happening is we were getting access to [the articles that serve as the source material for a project] really far down the funnel,” Katzeff said. An article would publish in print or online, and then CNE would work with outside companies to package that article into a project to pitch, as has been the case with CNE-produced programs such as its 2017 film “Only the Brave.”CNE will appoint heads for each of the studios and assemble teams to work under them. The studio heads will report directly to Katzeff, but he said they will have “a dotted line” to the editors at the corresponding publications to identify potential projects. The company is still sorting out how exactly the studio heads will work with the publications, such as what meetings they will sit in, but they will be “deeply embedded” within the publications, Katzeff said. Having the studio heads work closely with the publications’ editorial teams “allows us to be thoughtful about the franchise opportunities” ahead of an article’s publication, Katzeff said. For example, CNE could develop a podcast series in parallel to the article that would supplement a show and both could be timed to the article’s publication in order to attract more interest for the full suite of content.Creating these broader packages when pitching buyers of shows and movies could help CNE to land deals. Given the glut of programming hitting the market as more major streaming services, such as WarnerMedia’s HBO Max and NBCUniversal’s Peacock, enter the fray, distributors are seeking out producers that can help to ensure a show or movie breaks through the noise. That has helped publishers, like Vox Media, The New York Times and Axios, with media apparatuses that can boost a program’s profile to secure deals with the likes of Netflix, FX Networks and HBO, and it has spurred traditional production companies, such as Bunim-Murray Productions, to invest in marketing firms like Shareability.Additionally, by establishing studios for several of its most prestigious publications, the entertainment division can trade more directly on its publications’ brands when taking a project out to TV networks and streaming services. “Today, for the most part, we have been going to market [in pitching film-and-TV projects] as Condé Nast Entertainment,” said Katzeff"...

New SI Swimsuit Issue Features Diverse Picks
Daily Mail: "The magazine has narrowed down the search to the top six, who will shoot a spread for the magazine in Turks & Caicos Christie Valdiserri is a 25-year-old fitness instructor with alopecia who will be the first model to pose bald. 56-year-old model Kathy Jacobs wants to 'change the views on women over 50.' Plus-size stunner Brielle Anyea, 24, said she hopes 'every chocolate chubby girl and every thick queen around the world sees this.' The other finalists are Miss World contestant Clarissa Bowers, 22, and models Tanaye White, 27, and Jamea Lynne Byrd, 20."

Local Bookstores Create Own Ecommerce Site
Forbes: ", a website that went live at the end of January and is still in beta mode, is designed to be an alternative to Amazon, and to generate income for independent bookstores. And, perhaps more importantly, it seeks to give book reviewers, bloggers and publications who rely on affiliate income from “Buy now” links to Amazon a different option.Profit from books sold through Bookshop will be split three ways, with 10% of the sale price going into a pool that will be divided among participating bookstores, 10% going to the publication that triggered the sale by linking to, and 10% going to to support its operations.Bookshop’s 10% commission for affiliate publications is roughly twice Amazon’s 4.5% affiliate commission. Over 200 independent bookstores already have signed up to participate, and Bookshop has the backing of the American Booksellers Association (ABA).“We believe that there are consumers who shop online and would choose to support indie bookstores if there were a visible and convenient alternative to Amazon and others,” the ABA said when it announced its partnership with Bookshop last month"...

Axel Springer Adopts Netflix-Like Sub Pricing
Digiday: "Axel Springer, publisher of popular tabloid Bild and newspaper Welt, is bullish about the prospect of growing its reader revenue this year by adding new subscribers and increasing the lifetime customer value of existing ones.The German media company has 568,000 digital subscribers across two titles, Bild Plus and Welt Plus. Over the next year, it will grow subscriptions by increasing content output, such as video which it’s found to be a clear subscription driver on Bild; developing products that lead to more dynamic paywalls; and adapting the pricing of its products. It’s already seeing signs of success with the latter, said Stefan Betzold, managing director at Axel Springer. On Welt Plus, which has 110,000 digital subscribers, it now offers two rather than three pricing bundles since it dropped its one-day access pass early last year. According to Betzold, the day pass was preventing the publisher from growing subscribers. Instead, it’s increased the price point of its highest tier bundle to €19.99 ($21.66) a month for a year with the first 30 days free. As a result, Welt’s subscribers grew by a record 26% in 2019. Typically, annual growth hovers around 10%, said Betzold. “I don’t see three prices on Netflix,” said Betzold. “Our lesson from the last six years is to make it simple without too many variations. On Bild, we had six prices six years ago.” Price used to be a binary way of denoting value. Now publishers are exploring how else to communicate the value of a subscription whether it’s through longer-term savings, browsing under without being tracked as German publisher Spiegel now offers, access to membership perks like events or ways for people to customize their subscription, said Shiv Pabari director at strategy consultancy Simon-Kucher & Partners.“It’s more nuanced than the number of packages you offer,” Pabari said. “It’s how you design, communicate and upsell them.” Eye-tracking research carried out by the consultancy found people only look at the first three or four elements to a subscription package. “If the key value isn’t communicated first it’s not going to drive many subscribers,” he added. Last year on Bild, Axel Springer dropped a low-cost first-month free trial of 99 cents, increased the monthly price from €4.99 ($5.41) to €7.99 ($8.66) while offering a 50% yearly discount for the first 12 months. The idea is that building a more regular habit will retain more readers. As a result, a higher number of people stay subscribed for the second and third month and also the 13th and 14th month"...

Zuckerberg Finally Admits Facebook Is a Publisher
Reuters: "Online content should be regulated with a system somewhere between the existing rules used for the telecoms and media industries, Facebook CEO Mark Zuckerberg said Saturday at the Munich Security Conference in Germany. Zuckerberg said Facebook had improved its work countering online election interference, and expanded on his previous calls for regulation of social media firms. “I do think that there should be regulation on harmful content ... there’s a question about which framework you use for this,” Zuckerberg said during a question and answer session.“Right now there are two frameworks that I think people have for existing industries - there’s like newspapers and existing media, and then there’s the telco-type model, which is ‘the data just flows through you’, but you’re not going to hold a telco responsible if someone says something harmful on a phone line""...


Retail News

Analysts: Kroger's Berkshire Hathaway Lift Likely to Be Near-Term Only
SN: "Berkshire Hathaway acquisition of a nearly $550 million stake in The Kroger Co. did little to brighten financial analysts’ outlook for the competitively squeezed supermarket giant.Led by legendary investor Warren Buffett, Berkshire Hathaway on Feb. 14 filed a 13F form with the SEC reporting the purchase of more than 18.9M shares in Kroger for $549.1M. The transaction made the Omaha, Neb.-based investment firm the seventh-largest institutional holder of Kroger shares, with a 2.37% interest. The only holders with at least a 5% stake are Vanguard Group (8.63%), BlackRock (7.24%) and State Street (5.05%). Kroger’s stock price saw a brief lift in after-hours trading when the news emerged late Friday heading into the President’s Day weekend, and the momentum appeared to continue on Tuesday. Kroger shares closed on Feb. 14 at $28.23 and opened this morning at $29.80. As of late-day trading on Feb. 18, the price stood at $29.83. While analysts said it’s hard to dispute the longtime, successful track record of Buffett and the shot in the arm it gives Kroger investors, they expressed uncertainty about the rationale behind Berkshire’s Kroger play, given the Cincinnati-based company’s difficult position in the grocery retail arena.“Obviously, it’s a big vote of confidence in Kroger, the management team and its strategy,” said analyst Rupesh Parikh of Oppenheimer & Co. “We don’t know if it’s Warren Buffett or some of the other portfolio managers that made this investment. But it’s a clear positive to have Warren Buffett involved, and it definitely helps the stock from a support perspective.”Though Berkshire’s backing looks to be a plus in the short term, Kroger’s long-term picture hasn’t changed, according to Jefferies analyst Christopher Mandeville.“We hate to be on the opposite side of a debate with Berkshire Hathaway, but that's where we find ourselves as the company has taken a 2.4% Kroger stake,” Mandeville wrote in a research note Tuesday. “While advantaged versus many, we fail to see Kroger’s long-term appeal, as it's losing share to most scaled peers, its online fulfillment/pricing strategy concerns us and ROIC [return on invested capital] continues to deteriorate. That said, with Omaha in its corner and recent media coverage of Amazon’s new grocery concept proving unexciting, near-term sentiment clearly improves.” In his report, Mandeville and his team at Jefferies noted that Kroger has been losing market share to other major grocers since mid-2016, and the company’s ROIC had declined 400 basis points over the last five years. He also said Kroger has taken a “high-cost/risk approach to online fulfillment,” opting for a centralized fulfillment center (CFC) model to fill online grocery orders via its partnership with U.K.-based Ocado. A recent deep-drive analysis by Jefferies concluded that Kroger’s CFC investment could end up as “a multiyear mistake,” explaining that it will be couple of years before the first Ocado CFC opens, and the potential returns remain questionable on a total capital commitment of over $1B for 20 facilities. “Moreover, food for thought: If Mr. Buffett had truly appreciated the [Kroger] business model, why didn't he simply use a fraction of Berkshire Hathaway’s mountainous $128B cash pile to buy the company outright?” Mandeville said in the research note. Berkshire Hathaway’s involvement doesn’t change the challenges facing Kroger, noted analyst Matt Siler of R5 Capital.“Even Berkshire, our research suggests, will be hard-pressed to change the very difficult competitive situation for Kroger. On Friday after the close, Berkshire filed a 13F indicating a stake of just over $500 million in Kroger. The stock popped a little over 6% after hours,” Siler explained in a research note Tuesday. “While we have great respect for Berkshire, its track record in consumables is mixed (Kraft recently and Walmart a few years ago). We see most of the risk to the upside on Kroger more around events, including selling real estate or some form of M&A, as our research strongly points to continued business pressures.” Kroger continues to feel pressure from thinning pharmacy reimbursements and other grocery retailers, notably Walmart, Aldi, Lidl and Amazon, which debuted the first store of a reported new supermarket chain in the works, according to Siler"...

Walmart Reports Lower Than Expected Q4, Full-Year Earnings
SN: "Walmart fell short of Wall Street’s earnings forecast for its 2020 fourth quarter and fiscal year despite sales upticks in both periods, including robust e-commerce growth.Food, grocery and health-and-wellness sales were bright spots in the quarter at Walmart U.S. and Sam’s Club, fueled in part by grocery pickup and delivery, executives said. Meanwhile, the holiday sales period saw a strong opening and finish in spite of a lull leading up to Christmas, they noted. For the 14-week fourth quarter ended Jan. 31, Walmart totaled revenue of $141.67B, up 2.1% from $138.79B a year earlier. In constant currency, there was no significant change, the Bentonville, Ark.-based retailer reported. Total U.S. same-store sales rose 2% (1.8% excluding fuel) year over year.Full-year 2020 revenue, covering 53 weeks, edged up 1.9% to $523.96B from $514.41B in fiscal 2019, Walmart said. Revenue in constant currency was $528.1B, reflecting a gain of 2.7%. U.S. comparable-store sales in fiscal 2020 grew 2.6% (2.5% excluding fuel).At the bottom line, Walmart posted consolidated net income of $4.14B in the fourth quarter, or $1.45 per diluted share, compared with $3.69B, or $1.27 per diluted share, a year ago. Adjusted net earnings per share were $1.38 versus $1.41 in the fiscal 2019 quarter.Analysts, on average, projected fourth-quarter adjusted EPS of $1.43, with estimates ranging from a low of $1.34 to a high of $1.49, according to Refinitiv/Thomson Reuters.Walmart said adjusted EPS in the quarter excludes an unrealized gain of 26 cents on its equity investment in, a charge of 15 cents from business restructurings, a tax benefit of 11 cents from income tax reduction in India and a charge of 15 cents from other income-tax matters.Consolidated net earnings for fiscal 2020 came in at $14.88B, or $5.19 per diluted share, versus $6.67B, or $2.26 per diluted share in 2019. On an adjusted basis, Walmart reported full-year EPS of $4.93 compared with $4.91 a year earlier. The prior-year result excludes a net impact of $2.65 per diluted share from the loss of a majority stake in Walmart Brazil, unrealized gains/losses from the investments and a tax reform adjustment, Walmart said.Wall Street’s consensus full-year forecast was for adjusted EPS of $4.99, with projections running from a low of $4.90 to a high of $5.05... At Walmart U.S., fourth-quarter net sales advanced 1.9% to $92.27B from $90.52B a year earlier. Same-store sales were up 2% (1.9% without fuel). Walmart said the number of transactions rose 1%, while ticket size grew 0.9%. E-commerce sales surged 35% year over year at the top line and gained 2.1% on a comparable basis. Operating income fell 12.7% to $4.4B, reflecting $450M in business restructuring charges.Overall net sales at Walmart U.S. in fiscal 2020 were $341B, up 2.8% from $331.67 billion in 2019. Comp-store sales rose 2.8%, with no significant impact from fuel price changes. Full-year e-commerce sales climbed 30%. Operating income was flat at $17.38b"...

Walmart Employees Unhappy With 'Great Workplace'
Washington Post: "Walmart last spring said it was testing a sweeping overhaul that would make its stores better run and create more opportunities for employees to “do meaningful work.” The “Great Workplace” initiative, the retailer said, would be “the key to winning the future of retail.” But nearly a year in, workers say the effort, which will reach 1,100 of the company’s 5,300 U.S. stores by year end, has led to widespread confusion.Walmart, the nation’s largest private employer, is telling employees that it is doing away with certain positions — including hourly supervisors and assistant store managers — and replacing them with a smaller set of roles that carry more responsibilities, often for the same pay, according to interviews with current and former store employees, and internal documents obtained by The Washington Post. Workers say they are being asked to apply, interview and test for new positions, essentially pitting them against their colleagues for a shrinking number of jobs. Some are terrified they will lose their job and insurance"...

Food Delivery Companies Merging, Going Public
WSJ: "The biggest food-delivery companies in the U.S. are seeking to shore up their finances through mergers or public listings, according to executives in an industry that has generated rapid growth but spotty profits.DoorDash Inc., Postmates Inc. and Uber Technologies Inc.’s Eats have each discussed merging in various combinations last year, according to people familiar with those talks. None resulted in a deal... At Grubhub Inc., the biggest U.S. public company focused on food delivery, profit has shrunk, and shares have dropped 39% in the past year, as the company ramped up services to restaurants to compete. The Chicago-based company says it has talked to advisers about strategic options and sees itself as a potential buyer"...

Bezos Pledges $10B to Combat Climate Change
CNBC: "Amazon founder Jeff Bezos on Monday announced the launch of a new Earth Fund that the e-commerce chief plans to use to combat climate change. He said that he’s pledging $10B to start the fund, which will be called the Bezos Earth Fund and issue grants to climate-oriented scientists and activists.“We can save Earth,” Bezos wrote on Instagram. “It’s going to take collective action from big companies, small companies, nation states, global organizations, and individuals.”


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