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Media Companies Take a Big Gamble on Apple



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Like many other media executives, Pamela Wasserstein was wary of tech giants and their attempts to go into business with content creators.

“There was great optimism around partnerships, and I think that optimism has largely cooled, and people are now more cautious,” said Ms. Wasserstein, the chief executive of New York Media, the publisher of New York magazine and web titles like The Cut and Vulture.

But like others in her position at publishers like Condé Nast, Dow Jones and Meredith, she put caution aside and joined Apple’s media initiative, the recently unveiled Apple News Plus app, which promises to blast out content across more than a billion devices worldwide.

The tech giant based the service on an app it acquired last year called Texture, which gave readers access to some 200 publications with a single subscription. The revamped and renamed version, introduced with much fanfare last week at the company’s headquarters in Cupertino, Calif., charges subscribers $9.99 a month ($12.99 in Canada) for content from more than 300 titles, including The New Yorker, Vanity Fair, Vogue, Time, The Atlantic and People, as well as The Los Angeles Times and The Wall Street Journal. (Also included: Airbnb Magazine, Birds & Blooms, Retro Gamer and Salt Water Sportsman, befitting the app’s conceit as an omnibus newsstand.)

Weighing the pros and cons, Ms. Wasserstein concluded that Apple News Plus would allow her publications to reach “a new audience in an environment that feels right for us.”

Going into business with a tech giant was a calculated risk. Like most publishers, New York Media had seen its revenue shrink in an internet environment where Google and Facebook scoop up advertising dollars and have great influence over what people read. (New York Media’s online sales have grown more recently.)
There’s a sense among Manhattan’s media ranks that any deal with Silicon Valley amounts to a fool’s bargain.

Now, by necessity, magazines, newspapers and websites have learned to be promiscuous tradesmen to stop relying on one revenue source. They have embraced new business lines like branded content, conferences and podcasts just to diversify and stay afloat.

Ms. Wasserstein was among the publishers at the Steve Jobs Theater when Apple unveiled the service. On stage, Tim Cook, the chief executive, contrasted Apple’s editorial approach to the “very different choice” other companies have made. It was a notable remark, given the criticism of Facebook and Google over their role in spreading misinformation.
Apple’s plan was something altogether different, Mr. Cook promised. “This is going to take Apple News to a whole new level,” he said. Cheers bounced around the room — half occupied by Apple employees — as glossy magazine covers skated across the giant screen at his back.

The marketing event seems to have accomplished its goal. More than 200,000 people subscribed to Apple News Plus in its first 48 hours — more than Texture had amassed at its peak, according to two people with knowledge of the figures who asked not to be named to discuss confidential information. (Texture’s subscribers have not been counted toward Apple’s subscribers.)

The New York Times and The Washington Post did not join the effort, despite intense lobbying from Apple. Mark Thompson, the chief executive of The Times, said the problem with the app, from his perspective, was how it “jumbled different news sources into these superficially attractive mixtures,” making it difficult for users to know which publication they’re consuming. A spokeswoman for The Post said that the paper’s “focus is on growing our own subscription base” and that it was not interested in offering its wares through another company.

Some executives who said yes to the plan seemed less than sanguine, but they declined to comment publicly for fear of upsetting Apple or violating the ironclad nondisclosure agreements the news companies had signed.

In addition to allowing their publications to be part of Apple’s big bundle, publishers have risked cannibalizing their own subscription efforts by signing on. At $9.99 a month, Apple News Plus is a bargain, especially for casual readers. The Journal, by contrast, charges a monthly fee of $39 for digital access. Online subscriptions to The New Yorker, Vanity Fair and Wired — all owned by Condé Nast — together cost more than $10 a month. The New Yorker by itself costs $7.50.

The day after the splashy announcement, The New Yorker found itself on the defensive after a Reuters headline blared: “Is it time to dump your New Yorker subscription?” In reply, Michael Luo, the editor of The New Yorker’s website, sounded off in a 13-part tweetstorm advising readers not to dump the magazine. Only a portion of its archive would be available on the Apple service, he wrote, and readers could miss out on certain articles by Ronan Farrow, Jane Mayer and Doreen St. Félix, not to mention the weekly crossword.

“The best way to read ALL that we do @newyorker every day and every week is to subscribe,” Mr. Luo tweeted.

Patrick Soon-Shiong, the owner and publisher of The Los Angeles Times, seemed unworried about tying the paper’s fortunes to Apple, saying in an email that the service would “encourage more people to pay for quality content.”

The Journal reported that, thanks to the deal with Apple, it would add 50 people to its newsroom. But the union that represents the paper’s employees noted the new job listings were open to contract workers.

“It would be the first time that we’d see a move toward an unprotected work force,” Tim Martell, the union’s executive director, said. “We don’t like the uncertainty.”

To abide by the union’s contract with The Journal, Mr. Martell added, contract workers in the newsroom would be allowed to work for a maximum of 12 months. That suggests the Journal sees these hires as a temporary assignment — a compromise approach — as it gauges the benefits and costs of the Apple partnership.

The majority of Journal stories will appear on the service, but with only a three-day archive. Content for niche groups, such as CFO Journal, which is aimed at the financial community, and CMO Today, geared toward advertising professionals, will not be included.

For Rupert Murdoch, the owner of The Journal since 2007, the partnership is a way for him to realize his long-held dream of turning the paper into something of interest to readers beyond Wall Street and corporate boardrooms.

The mogul was the driving force behind the Apple deal, according to two executives close to Mr. Murdoch. He wants The Journal to include more general interest, sports and lifestyle coverage, and the partnership with Apple gives the paper a concrete reason to move beyond its core readership.

Unswayed by sentiment, Mr. Murdoch, 88, recently sold off the bulk of his television and film properties as he refocused on the news business and reshaped his empire into an entity built to survive the final steps of the digital revolution. He was able to extract better terms from Apple than other publishers, the people close to him said, including the ability to exit on a time frame that would be more favorable to The Journal.

Mr. Murdoch has worked with Apple in the past. In 2011, when tablets were supposedly going to save journalism, he poured millions into an iPad publication, The Daily, with the help of Apple’s chief executive, Steven P. Jobs. The effort failed to make its mark and was shut down after less than two years.

Publications that originated at the now defunct Time Inc. — like Time, Sports Illustrated and Fortune — are also part of Apple News Plus. They were pushed into the arrangement as part of a deal struck by Meredith, the company that purchased them in 2017, according to two news executives familiar with the matter. Although Meredith sold Time and Fortune last year and is looking to move Sports Illustrated, the three publications appear to be locked in to Apple News Plus, at least for the time being. (Meredith and Apple declined to comment.)

The economics of Apple’s venture will vary from title to title. After the company takes half the subscription price, its partners will split the rest. How much each media company receives is based on the amount of time readers devote to its content. That model mimics Spotify and Apple Music, which pay record labels based on how often their tracks are streamed.

The visibility of individual articles will depend on Apple’s algorithm, which takes into account a user’s preference — you can “follow” a particular magazine or topic — as well as the judgments of Lauren Kern, the editor in chief of Apple News, and her team.

In contrast with Google and Facebook, Apple has promoted the human touch. The presence of Ms. Kern, a former editor at New York magazine, has to some degree assuaged publishers’ fears of algorithmic tyranny.

“Lauren being there gives me confidence, but it’s not that she knows who we are, but that she knows what great content is,” said Ms. Wasserstein, of New York Media.

Although Ms. Kern provides a link between the news media and Silicon Valley, Apple will also have to get used to the journalists now associated with its team. The New Yorker weighed in on the Cupertino event with a satirical story headlined “Tim Cook’s Big Apple Circus.”

Apple got another taste of what it has signed up for after it hosted a private party last week for its new partners at the company’s Lower Manhattan loft. In its coverage of the event, Vanity Fair, one of those partners, included a quote from an unnamed partygoer who summed up the mood of the room and, perhaps, the industry at large.

The quote became the story’s headline: “Are we at a party, or a wake?”


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Netflix (NFLX) reports earnings, lowers forecast





Netflix Inc. attracted a record number of paying subscribers in the first quarter of 2019, but may have accelerated profit growth that could have been spread throughout the year, and shares declined in after-hours trading Tuesday.

Netflix NFLX, -0.82% reported the addition of 9.6 million new paying subscribers in the first three months of the year, a record for a single quarter. The streaming-entertainment company reported earnings of $344 million, or 76 cents a share, up from 64 cents a share a year ago. Revenue for the quarter was $4.5 billion, up from $3.7 billion in the same period last year.

TimeNetflix Inc.Jun 18Aug 18Oct 18Dec 18Feb 19Apr 19

Analysts on average expected Netflix to report earnings of 58 cents a share on sales of $4.5 billion, according to FactSet. Analysts projected 8.06 million new paying subscribers, after Netflix said it expected to add 8.9 million paying subscribers. Investors focus much more on Netflix’s subscriber count than its financial performance, because it is more predictive of where Netflix’s finances are going, and is especially important amid new competition.

Netflix’s report arrives after two high-profile debuts of new rival streaming services from companies accomplished at attracting consumer eyeballs (and dollars): Apple Inc. AAPL, -0.08% and Walt Disney Co. DIS, -1.62% . In its previous earnings report, Netflix altered its quarterly view of the competition to note that it competes with much more than just other streaming services, though, and on Tuesday executives insisted there is plenty of growth available to multiple streaming services as more consumers move away from traditional television services.

“We don’t anticipate that these new entrants will materially affect our growth because the transition from linear to on-demand entertainment is so massive and because of the differing nature of our content offerings,” Netflix executives said in a letter to shareholders Tuesday.

Netflix also provided select viewership metrics on select content, as it began doing in the previous quarter. Netflix said that more than 52 million subscribers watched “Triple Frontier,” a big-budget action movie starring Ben Affleck, in its first four weeks of availability, and that the series “Umbrella Academy” was watched by 45 million member households in its first four weeks.

The company’s forecast for the second quarter was lighter than expected, though, both in profit and new subscribers. Netflix projected second-quarter earnings of 55 cents a share, which would be down from 85 cents a share a year ago and well lower than analysts’ estimates of 99 cents a share. Netflix expects 5 million new paying subscribers in the second quarter, while analysts were projecting 5.3 million on average, but Netflix executives said they “expect another year of record annual paid net adds in 2019,” which means topping 2018’s total of 28.6 million new paying subscribers.

The biggest deficit was in U.S. subscribers — netflix expects only 300,000 new paying subscribers in the U.S., while analysts were expecting more than double that total. Netflix is increasing prices in the U.S., and noted in its letter that price increases can lead to “some modest short-term churn effect.”

Some of the costs of running the business were shifted to later in the year as well, and there seems to be more potential concerns about costs for the rest of 2019.

“Operating margin of 10.2% exceeded our beginning-of-quarter expectation as some spending was shifted from Q1 to later in the year,” Netflix explained in the letter to investors, while maintaining a goal of a 13% operating margin for the full year.

Netflix increased its estimate for how much money it will spend this year, saying that it now expects its free-cash flow deficit to be around $3.5 billion, as it continues to pay for new content. Executives cited “higher cash taxes related to the change in our corporate structure and additional investments in real estate and other infrastructure.”

Netflix said it expects a higher effective tax rate this year, including a 48% rate in the second quarter, “due to one-time discrete events.”

Netflix shares closed 3% higher Tuesday, at $359.46, then declined to less than $350 in immediate late trading after the numbers were released, but later rebounded a bit to a loss of about 1.5%. The stock has increased 17.2% in the past year, as the S&P 500 index SPX, +0.05% has gained 8.5%.

Netflix Inc. shares fell $2.61 (-0.73%) in after-hours trading Tuesday. Year-to-date, NFLX has gained 34.30%, versus a 16.61% rise in the benchmark S&P 500 index during the same period.

NFLX currently has a POWR Rating of B (Buy), and is ranked #11 of 54 stocks in the Internet category.


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PunchOut2Go Sponsors B2B Online: CEO Brady Behrman to Lead B2B…





PunchOut2Go, an eCommerce and eProcurement technology integration provider, today announced its sponsorship of B2B Online in Chicago, the leading US B2B eCommerce and digital marketing conference for manufacturers, distributors, and wholesalers.

Brady Behrman, PunchOut2Go CEO and Co-Founder, will be at B2B Online to lead a session on Harnessing B2B Growth Opportunities with eProcurement to Make Purchasing Easier. The fastest growing B2B sales channel is eProcurement, up 37% year-over-year, surpassing direct B2B commerce. The session will reveal strategies and best practices that manufacturers and distributors can implement to make it easy and seamless for eProcurement customers to purchase from their organization.

Behrman will focus on the practical steps B2B sellers can take to improve integration between eCommerce applications and buyer eProcurement platforms, such as punchout catalogs, eInvoicing, and B2B order automation.

“A growing number of B2B buyers use eProcurement and enterprise resource planning platforms to take control of procurement and spending. They expect manufacturers and distributors to be integration-ready,” said Behrman. “Sellers that are unable to offer punchout catalogs, order automation, and other data interchange capabilities are less attractive to buyers who have invested in eProcurement.”

The PunchOut2Go team will be at B2B Online to meet manufacturers, distributors, and wholesalers to talk about the technical and financial benefits of integration and B2B automation. Integration isn’t as challenging or expensive as it once was, and sellers who are ready to integrate can improve customer retention, increase sales, and reduce the cost of selling.

B2B Online is an unmissable opportunity to benefit from the experience and expertise of executives and professionals from across the B2B sales industry. The conference is dedicated to exploring the future of B2B sales, with a focus on digital innovation and customer experience.

B2B Online takes place on April 29 – May 1 at the Chicago Marriott Downtown in Chicago, IL.

About PunchOut2Go:

PunchOut2Go is a global B2B technology integration and data translation company specializing in the integration of eCommerce applications, procurement platforms, and punchout catalog functionality. Helping simplify the B2B buying cycle by reducing integration complexities and rapidly deploying the right technology, PunchOut2Go’s cloud-based adaptable gateway solution integrates and automates punchout catalogs, electronic purchase orders, eInvoicing, and other B2B order automation integrations with 100% compatibility. Learn more at


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Barclays warns of ‘likely’ second-half slowdown for Sage




sage group plc

Analysts at Barclays have warned that a second-half slowdown for Sage Group PLC (LON:SGE) “seems likely”.

Sage, which makes accounting software for businesses, has seen its share price climb by almost a fifth this year after topping expectations with its first-quarter growth.
But Barclays’ number crunchers have warned that the first half benefits from easier comparatives, while things are expected to get a little tougher in the second half of the year.

“We think Q1 should not be viewed as an especially material data point in assessing the growth rate of the business over the coming couple of years,” read a note to clients.

“It is likely that the [cloud] transition will gather speed over the course of the year – a good thing – but that this will result in revenue growth moderating. This could be further exacerbated by tougher comps in the second half of the year.”

The analysts added: “We think an H2 slowdown is likely and that this could disappoint the market.

“We therefore remain ‘underweight’, albeit on an increased price target of 550p (from 495p), now based on 17x CY20E EPS (from 15x) to reflect increased market multiples.”

Sage shares were 0.1% higher at 702.8p on Friday morning – comfortably ahead of Barclays’ target.


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