CBS 1Q17 Earnings Call Notes

Leslie Moonves – CBS Corp.

Up front is going to be strong

“Yes. Alexia, and I know I sounds like a broken record every year at this time, but the upfront to me is going to be exceedingly strong. You start hearing numbers like high singles in CPM growths, and judging by – the scatter market once again remains very strong. There’s a lot of demand for our product. So we’re looking at a year where we think it’s going to be much better than last year, and we had a very solid year last year. So I know I’m Mr. Broadcast and I’m the cheerleader, but I got to tell you I’ve been right – I sound like Donald Trump – I’ve been right more than I’ve been wrong in terms of those things that are going on.

We wouldn’t mind owning more stations

“Look, these stations, the majority of their money is made by network content. It’s still the best game in town. Once again, you’re talking about a place where there is a battle over affiliates of a specific network group. We view the stations as a very profitable business. We like the business. If there is an opportunity for us to get something that makes sense for us, it is okay. But we don’t feel a need to go out and acquire a large station group. Once again, they still have to come to us for our content. We still have the NFL. We still have Big Bang Theory. We still have NCIS. We still have 60 Minutes. So as this consolidation goes on, we’re watching it with interest. We wouldn’t mind owning more stations, but only if it’s cost effective.”

Facebook (FB) Q1 2017

Mark Elliot Zuckerberg – Facebook, Inc.

On augmented reality

“One of the examples I showed at F8 was around using object recognition and computer vision to be able to point your camera at something and then tap on it and get a card of information and maybe even a buy button. So there are lots of different ways that over time this kind of content is going to both augment existing real-world objects and eventually replace them, which I think is going to be an interesting opportunity. maybe not on augmented reality on the phone but on glasses eventually. When you have that, I think we’re going get to a point where things like TVs, you no longer need a physical TV. You’ll get a $1 app that you can watch it screen on.”

AI will take time

“Over time, the AI tools will get better. Right now there are certain things that AI can do in terms of understanding text and understanding what’s in a photo and what’s in a video. That will get better over time. That will take a period of years, though, to really reach the quality level that we want.”

Sheryl Kara Sandberg – Facebook, Inc.

The shift to mobile

“Mobile ad revenue was $6.7 billion, up 58% year over year, and was approximately 85% of total ad revenue….Our first priority is helping businesses leverage the power of mobile. More businesses around the world are shifting to marketing on mobile. Over 70 million businesses are now using Facebook Pages around the world on a monthly basis, and more and more of them are becoming advertisers. We also recently announced that over 5 million businesses are actively advertising on Facebook, including more than 1 million in emerging markets….People are increasingly recognizing that the small screen is big.  ”

The big question: Can people do without mobile? 

“we are definitely seeing people continue to advertise on TV and use us as a complement. So over time, we believe that the dollar shifts with eyeballs and we want to earn it from our clients and be the best dollar and the best minute they spend and help them measure across channels. I think increasingly, the question is not if you can do without TV, but it’s if you can do without mobile. And we’re working hard to help advertisers develop the video creative that really works for mobile because that really makes a really big difference.”

Leveraging internet to create sales

“We are pretty excited to have 1 million advertisers and 8 million Instagram business profiles on the platform. To share one example, an online store in Brazil called Loja Nama, they sell decorative items and accessories. Their business owner, Joanna [Cariello], took photos of her products on her phone and then created ads with our Shop Now button. She targeted young audiences in Brazil who are interested in fashion, decoration, movies, and architecture. And during the period of her campaign, Instagram accounted for 79% of her sales.”

 

Twitter (TWTR) Q1 2017

Anthony Noto – Chief Operating Officer

Politics driving up user growth

“Audience growth in Q1 was driven primarily by organic growth, reflecting some seasonal strength followed by product improvements and marketing. Contributions to growth from product improvements importantly have been growing steadily for the last four quarters…There also is some evidence that we benefited from our new and resurrected users following more news and political accounts in Q1, particularly in the U.S. That’s a really positive thing..”

They expect Improved ROI to drive up advertising revenues in the near term

“the first thing I think that’s really important to understand and something that we’ll continue to benefit and talk about over the next several quarters is just the four consecutive quarters of DAU (Daily Active Users) growth with an acceleration again this quarter to 14%. That’s on a year-over-year basis. …The current revenue trends that we’re reporting reflect budget decisions based on trends in audience and pricing of 6 months to 12 months ago when we were not seeing the significant acceleration in user growth or the more than 60% year-over-year decline in cost per engagement. The good news is we’ve been out aggressively telling the story of that improved ROI. Early feedback has been positive. In fact, we signed 32 additional upfront deals since our last earnings call. While these represent a small portion of our total expected revenue, we’re seeing momentum in the number of upfront commitments signed. That said, advertisers have long allocation processes that take 6 months to 12 months to turn around, so we have a lot of work left to do.”

Live streaming to younger audiences

“…we had 800 hours of live streaming programming in Q1, up from 600 hours in Q2, and again that’s across sports, e-sports, news, and entertainment…50% of our audience in live streaming is less than 25 years old and over 50% is international.”

Jack Dorsey – CEO

What people use Twitter for.

“..we’ve seen for ten years that people go to Twitter first to see what’s going on and to see what’s happening and what people think about what’s going on and what’s happening. We want to get to a place where we’re the first place they hear of something. Twitter is the first place they hear of something. And that means that we need to get really good at connecting all the dots and all the data that we have to make sure that we’re building something that’s really relevant so that when we notify someone, it’s something that is deeply impactful to them, is relevant, and is important. And they go into an experience where they can dig even deeper and see what’s really happening.”

 

 

Netflix FY 1Q17 Earnings Call Notes

Reed Hastings – Founder and Chief Executive Officer

YouTube has a billion users

“Well, I’m – we’re super excited expecting to cross 100 million this weekend, that’s a big accomplishment. But it’s really just the beginning. When you look at YouTube having a billion active users and a billion hours every day. When you look at Facebook’s, multi-billion numbers. We see that the Internet is just a phenomenal opportunity, of course, we’re pay service, not ad supported. We’re not as deep in international as those companies. But we definitely see a big opportunity around the world to just continue to do what we’ve been doing, which is make fantastic content, get people really excited about that content, and then we’re just continuing to grow.”

Viewing is nowhere near as big as YouTube

“Yes, viewing is very large and growing, but nowhere near as big as YouTube. So we definitely got YouTube envy and we’ve got a lot a room to go. And some of the new shows like Ted was talking about, our movie out of Korea [indiscernible] has great global potential. So, we’re finding great talent around the world and that’s what drives up the viewing.”

We don’t see a wall that’s going to stop us from getting most people in the US

“A couple of years ago, Doug, there was a bunch of fear about the 30 million sub wall, with AOL had hit that and HBO would hit that. And the thing is everybody watches TV and nearly everybody has the Internet. So I don’t see anything that’s going to stop Netflix from getting to most people in the United States and then eventually hopefully most people around the world. But we’re not – we’re just going to focus on the everyday of making the services better and better.”

Competition doesn’t affect us

“Like at one level, Amazon is an amazing company and doing so many different things, it’s really incredible. And then you think of Jeff Bezos in addition to all of Amazon doing a Washington Post and Blue Origin Rocket. So, I will say, we do think about all of that and their tremendous track record. On the other hand, they’re doing great programming and they’ll continue to do that. But I’m not sure if it will really affect us very much, because the market is just so vast. Think about it when you watch a show from Netflix and you get addicted to it, you stay up late at night. You’re really – we’re competing with sleep on the margin. And so it’s a very large pool of time. And a way to see that numerically is that, we’re a competitor to HBOs and yet over 10 years we’ve grown to 50 million, and they’ve continued modestly growing, they haven’t trunk. And so if you think about it as we’re not really affecting them, the answer is, well, why? And that’s because we’re like two drops of water in the ocean of both time and spending for people. And so Amazon can do great work and it would be very hard for it to directly affect us. It’s just home entertainment is not a zero sum game. And again, HBO success, despite our tremendous success is a good way to illustrate that.”

Sirius XM at Deutsche Bank Conference

David Frear

Voluntary churn is 1.4%

“Well, I know — I’m pretty pleased by the results because what it says is that the voluntary churn, which not to say involuntary churn is declining. So, the overall — vehicle really in churn is rising. And so, I think it was — I don’t know, maybe a year or so ago, some of the calls we talked about that some of non-paying and voluntary churn is being sort of in the 1.4% to 1.45% range. It’s actually come below, 1.4% is — vehicle related churn has reason. But, the overall churn rate has stayed flat. So, I know we feel pretty good about it. We’ve got a big team of people that work hard to make that number happen. So, the stickiness to the service really seems to be playing out.”

Only in the Teslas with a sunroof

” I know we’re only in vehicles that have a sunroof because Tesla doesn’t want an exterior antenna. And so the antenna doesn’t pick up signal well when it’s underneath metal. So, what would you put it underneath glass and it’s got that clear view of the sky”

Connected car platform internally

“The other thing about connected vehicles that is a market that is largely unformed at this point is that the they are now building the communications, the entertainment, the electronic modules in the car in a way that they are actually connected internally. And this wasn’t the necessarily the case several years ago where they might have one board in there for satellite radio, and another board for an AM/FM radio, and a different board for a modem, and different board for the BUS that runs in the car. And those boards didn’t necessarily talk to one another. And so even though you might put a modem in the car that because you weren’t sending any information to the modem from the other boards that you couldn’t get any of the information on the car. All the automakers now realize that it makes sense to connect things up until that there is lot of resources they can share in terms of memory and power management, CPUs and things like that. And so, there is going to be a richer and richer set of data that you are going to be able to get out of cars over time. And then the question is who is going to use it, how do you manage the platform?”

There are a lot of pilots going on for data within car

“There are a lot of what I’d characterize as pilots going on in the automotive industry now as — and there is an awful lot of engineering resources going in where the OEMs realize the vast amount of data that they could provide, how do they want to collect it and how do they want to retain it and how they want to process it and who is a good user for that data. One of the things we have to remember is that the customer owns the car. And so the data coming off the car belongs — I think most people feel belongs to the customer. So, you also have to have permission along the way. But with — it’s an enormous amount of data. And I think part of this is that people have to actually see it work with it little bit come and [ph] decide what they think can really be done with that. ”

CBS 4Q16 Earnings Call Notes

Leslie Moonves

NFL improved after the election

“Look, obviously, there’s been a lot of conversations about the NFL and the ratings, and clearly there was improvement after the election was over. That was one of the factors. The good news is the playoffs did extremely well for us, so we made up for that. And as we said, we had fewer games. So going into next year, we plan it – as I said before, it’s still the best content on television. I’m still happy we have our Sunday football and our Thursday night packages, and Jo Ann and her team are planning on selling it aggressively as we always do. The fact that it was down this year is not really going to affect that.”

Thanks for calling us attractive

“Look, we’ve always said we are self-contained and we are very strong and we like our position. Thank you for calling us very attractive. We feel that way too. Obviously, the wireless companies as well as the Silicon Valley companies are all looking at the content companies as being very valuable. They’re all trying to get into the content business. But we feel very secure in who we are and we’re going to continue to play the game that way.”

Scatter pricing is strong

“You know what? Our cancellations, I haven’t gotten the call from my salespeople, so this is the first I’m hearing that they’re slightly up. Maybe you’re talking to the wrong network. No. So anyway, yes, scatter is strong. Once again, it’s too early to predict pricing on the upfront, but we are anticipating another strong upfront. It’s still the best game in town and we’re – I’m optimistic.”

Cable operators are realizing they can’t do their own all original content

“It’s very interesting. You point out something very interesting in that our off-network product initially went to cable, then it went to the SVOD players, then it went to both. And I think on each show that we do, we sort of do a different analysis. And there are more players in the marketplace that are now looking for content, which is great, on the streaming services as well. So it’s really a mixed bag. I think some of the cable operators are coming back to buying off-network product. They realize they can’t do their own all-original content. So as long as we keep doing what we do, which is produce good original content that we own, we’re going to be – not only we’re not going to exploit the international marketplace, but domestically the numbers are – continue to get higher and higher every year.”

We are talking with the NFL to do things about speeding up games

“All right, Tim. I’ll answer the second question first. Obviously, we’ve met with Roger, and we’ve met with the NFL a number of times. We’re all looking at how the product can be more efficient, possibly speeding up the games, possibly things in terms of pods, possibly things in terms of the referees looking at the replays, how long that takes, et cetera. So we’re looking at some reformat ideas. Obviously, we’re not planning on cutting advertising. If there are ways of doing advertising in different ways that are equally beneficial, we’re looking at that, and we’re trying to make the game as good an experience as we could make it.”

Activision Blizzard 4Q16 Earnings Call Notes

Robert A. Kotick

King focused on advertising initiatives

“King also made meaningful progress with its advertising initiatives. Last year’s advertising tests had two primary goals: to design and build an outstanding ad platform that would actually enhance our users’ in-game experience, and to deliver significant value to advertisers. We’re encouraged with the early results. In most tests, our users play more game rounds, spend more time in the game, and have a self reported better game experience with advertising. Additionally, our platform delivers meaningful value to advertisers. ”

Trying to grow consumer products business

“Great question, Eric. It’s Bobby. I think Disney is a great example. They’ve figured out probably better than any entertainment company how to turn consumer products into a multi-billion dollar business, but also to increase the touch points for their franchises around the world. And so we’ve elevated consumer products to a new strategic pillar for the company. We hired Tim Kilpin who is a veteran of both Disney and Mattel, and we think that consumer products can accelerate growth by leveraging our IP and creating new ways for people to connect with our franchises, especially as we’re launching our e-sports leagues. If you think about consumer products as they relate to the NFL or the NBA, these are billions of dollars of revenues for the leagues, and we think they’ll be great opportunities for league and team merchandise. That’ll be important components of what we do in the consumer products business. Generally, we think creating more consumer touch points in a low capital investment, high-return way, adds tremendous value to the franchises”

Dennis Durkin

$1 billion of in game purchases

“For the year, we delivered record digital revenues of $4.9 billion, up 94% versus last year. The primary driver for our digital momentum is the continued growth of in-game content. As Thomas mentioned, in-game purchases were close to $1 billion for the quarter, and a record $3.8 billion for the year, more than double the $1.7 billion we had last year. We believe we still are in the early days of this important vector in our business with more opportunity ahead.”

Ricardo Zacconi

30 min per day of candy crush gameplay

“So, first of all, we have a large user base, but more importantly, it’s a very engaged user base. You’ve heard earlier Thomas saying that we have more than half an hour of gameplay per player per day, and we think this is an attractive opportunity, a very attractive opportunity for advertisers. It’s a very engaged user base.”

Viacom FY 1Q17 Earnings Call Notes

Bob Bakish

We need more focus

“Thanks, Wade. Now, let’s get into the strategy. Having undertaking a comprehensive review of our business, we arrived at four underlying needs for Viacom. We need more focus. We have to align the Company against areas where we can have the greatest impact. We need to be distinct. Our brands, content and culture must truly be unique and differentiated. We need to unlock the benefits of our scale. We need to better harness the power of our portfolio and grow our competitive strength. And finally, we need to be more adaptable. We need to flex the market shifts, create new opportunities, and strengthen partnerships.”

We will put the full power of Viacom behind six flagship brands

“With these in mind, we’ve established a new five-point strategic plan. We will, one, put the full power of Viacom behind six flagship brands; two, revitalize and elevate our approach to content and talent development; three deepen partnerships to drive traditional revenue streams; four, make big moves in the digital world and the physical world; and five, continue to optimize and energize our organization.”

Valuable and distinct brand promise

“A flagship brand must have a compelling, valuable and distinct brand promise; it must resonate with the target audience or in a genre that is big enough to matter; it must have a rich offering comprised largely of wholly-owned content; it must be global; and it must have the ability to deliver at for points of distribution, linear television, digital, off channel, and theatrical. So, here are the flagship six: Nickelodeon, Nick Jr., MTV, BET, Comedy Central and Paramount.”

Rebranding Spike to Paramount network

“I am also excited to announce that we will be bringing the Paramount brand to TV in a big way by rebranding our U.S. Spike Network in 2018 as the Paramount Network. Adopting the Paramount name and fortifying its programming is a natural way for Spike to strengthen its position as a major general entertainment network which will enhance our adult audience delivery and enable us to grow this important sector of the ad market.”

Will increase the volume of originals

“we will increase the volume of originals and push more aggressively into new format and life. And we want to share ideas more aggressively across borders for our flagship brands. Nickelodeon is already very established in this model, and MTV is moving quickly with MTV U.S. now developing several MTV U.K. formats.”

More likely than not OTT is a negative outcome for the US

“if you think about the impact of OTT on the market, on an international basis, you can argue that given current pay TV penetration levels, OTT should be a positive catalyst for growth in penetration and reach. In the U.S., it’s hard to make that argument. In fact, the more likely outcome and one outcome that I think is increasingly talked about is, it’s a negative impact on price at different tiers of opportunities come to market for consumers. As that happens, there is a very compelling market opportunity in the development of an entertainment pack. And if you look at the flagship six, the flagship six is essentially the strongest entertainment pack you could get in the market, because you have preschool, kids, young adults, you have comedy, you’ve got African-Americans and you’re going to have a general marquee general entertainment network”

Shift to scripted didn’t work for MTV

“Ultimately, the scripted strategy for MTV on a large scale basis didn’t really work. And there is no question that under Chris’s — Chris McCarthy’s leadership — he is bringing back a better balance to MTV including a real push on reality, which is very attractive to the audience, has very compelling economics for us and is really right from a brand filter perspective too.”

Twitter 4Q16 Earnings Call Notes

Jack Dorsey

Reversed and reaccelerated usage

“We started 2016 by resetting and focusing on why people use Twitter. It’s the fastest way to see what’s happening, and what everyone is talking about. We reset and refocused on our strengths, and we achieved one of the hardest things to do for a consumer services scale. We reversed and reaccelerated our usage. We’re thrilled to report that daily active usage accelerated for the third quarter in a row, and we see that strong growth continuing.”

Impact continues to grow

“The whole world is watching Twitter. While we may not be meeting everyone’s growth expectations, there’s one thing that continues to grow and outpace our peers: Twitter’s influence and impact. You don’t go a day without hearing about Twitter, how it is used as the fastest way to send a message to the world in an instant, how it carries some of the most important commentary and conversations, how it mobilize people into action. That’s powerful, it’s valuable, it’s fundamental, and it’s the reason we’re all here fighting so hard for the service and company we love. It’s been hard, it will continue to be hard, and it’s all worth it. Twitter changed the way the world communicates. And we’ll do it again.”

President’s use of twitter shows the power of the platform

“Sure. Thank you. Mark. On your first question what I would say is that the President’s use of Twitter has broadened the awareness of how the platform can be used and it shows the power of Twitter. When he tweets, it sparks conversation and discussion. So at a macro level discussion on the platform really helps us be the best at showing what’s happening in the world and more discussions strengthens our key differentiators in comprehensive and fast.”

Hard for one person to drive impressions growth

“As it relates to impressions growth, which is another area we look at, as I mentioned earlier, the magnitude of the impressions of the platform is so large, it’d be very hard for an event or a single person to drive sustained growth in impressions growth. All of that said, having the world’s leaders on our platform, talking about global issues, people being passionately expressing their points of view, that’s all positive for Twitter, and that’s what we’re focused on. ”

We can break news faster than any other service

” as I look into 2017 and we look at what we can do, I just think the superpower we really provide the world is we can break news and get information to people faster than any other service in the world. And in order to do that, people have to do just a ton of work right now to dig through everything that may not matter to them to find something that really does. And that’s why I am excited about really making sure that we apply artificial intelligence and machine learning in the right ways and that we really meet that superpower of being that little bird that told you something that you couldn’t find anywhere else. And that when you get into the application and when you get into the service, that it is as easy as looking out the window to see what’s going on. And we have a lot of work to do.”

Anthony Noto

Weak revenue trends are lagging previous engagement declines

“We do believe that is a matter of when, not if. The budget allocations that are reflected in our guidance they really reflect our audience and pricing trends 6 to 12 months ago when we had no growth in audience or even a decline in audience, and the headlines really questioned our abilities to sustain our audience growth. Those long lead times caused the outlook to reflect 6 to 12 months ago, and the benefit that we’re seeing today to be on the comps 6 to 12 months from now. So what are we doing to (18:50) the audience growth and the engagement growth, we’re sitting down with branded advertisers and we’re sharing with them the positive trends. We’re taking them through the increased inventory, the higher scale, the greater growth, all of which we think can lead to better ROI and helping them run through their models, so that we can get better allocations over the next 6 to 12 months.”

Akamai 4Q16 Earnings Call Notes

Frank Thomson Leighton

I think there’s going to be changes with net neutrality

“With net neutrality, I think there’s going to be changes there with the new administration. I think a lot of rules that existed before may go away, and I don’t think that really makes much difference to our business. We weren’t regulated in the first place, and I don’t see anything coming there that would be bad in any way for Akamai.”

Media business is very healthy

“Even years there are more events, but as we’ve talked about in the past, any given event gives us some revenue, but it’s not really swinging the needle. Now sometimes with Olympics and so forth new devices will come out and someday like VR, for example, we’ve started to do some of that, and that can drive traffic levels on a more sustained basis afterwards. But I wouldn’t read a lot into that, and I think the Media business is very healthy. We’re seeing very strong growth in OTT, very strong growth in our gaming customers and just Modulo the very big, the six platform companies that are doing more on their own, the Media business has been very good.”

OTT growing at a solid pace, but hasn’t exploded yet

” I’d say OTT is growing at a very solid pace. It hasn’t exploded. At times people think that might happen, but that’s not taken place. I think there’s a lot of new offers out there – continue to be new offers. People are going to try lots of different kinds of things, and some will have more success than others in the marketplace. It is a very hard thing to do. Just even the delivery of the videos at high levels of quality is very hard, and that’s where we really excel.”

James Benson

OTT and VR are catalysts to drive growth in media business

“And I’d say that has been the bigger catalyst driving growth in the Media business that those – the gaming and the software download area tends to be much more spiky. And you’ll have surges at times and then it won’t at other times. So I think the catalyst for growth in the Media business is going to be OTT. I don’t think you’re going to see the catalyst. You may see even a catalyst, as Tom mentioned, as you see more VR and things like that in the gaming space that require performance to work well, but I think that between things like that and OTT, that’s going to be the cause of kind of re-acceleration in the Media business.”