Net Neutrality on the Chopping Block
Earlier today, Federal Trade Commission Chairman Ajit Pai announced plans to end net neutrality regulations. If his strategy was to sneak this one out on the wire during a holiday week, to make smaller waves, I’m not sure if that’s going to work, because this is potentially pretty major and doesn’t require a ton of technical knowledge to grasp. Under the net neutrality rules enacted in 2015, ISPs are not allowed to offer higher- and lower-grade high-speed internet services for different sums of money. They can’t block users’ access to certain websites, they can’t slow down the load time of sites, and they can’t work out deals with individual sites to make their pages load faster than normal. Pai wants ISPs to be able to make the decisions they want to make about how to treat content from different sites, as long as the ISP is “transparent about their practices.” If the FCC votes to do away with net neutrality–which it’s expected to do in a straight 3-to-2 party line vote on Dec. 14–that’ll put a lot of power back into the hands of ISPs at a time when the media landscape is changing considerably. Let’s remember how back in March, Congress voted to kill a proposal that would have prevented ISPs from selling browsing data without the user’s consent–a move Pai celebrated. The FCC’s line, then as now, is that empowering ISPs is good for competition. Our question is, who do they need to compete against? And who should that competitive edge come at the user’s expense?
Department of Justice Takes Aim at AT&T/Time Warner Deal
Here’s another one you probably already saw in the news (the general-interest news, not just one of these trade pubs): The U.S. Justice Department is suing to block AT&T from acquiring Time Warner, citing anti-trust laws. AT&T and Time Warner had announced last year that they were to be joined in an $85 billion deal. The Justice Department claims that deal would stifle innovation and increase customers’ bills, and that AT&T could use “Time Warner’s popular programming as a weapon to harm competition.” I’m not going to speculate on politics here, but people who do speculate on politics for a living have wondered how President Trump’s attitude toward the Time Warner-owned CNN factor into this whole story. Regardless, it’s hard to tell how legit the Justice Department’s anti-trust concerns are here. The Washington Post and other outlets have pointed out that it’s unusual for the DOJ to intervene in deals that would bring together two different types of companies—a telecom and a media company (a distributor and a supplier), in this case. Bloomberg noted that there are precedents for vertical mergers like this—when Comcast bought NBCUniversal, for example, regulatory/government bodies stepped in and negotiated conditions for how that mega-company would operate. In any case, AT&T intends to fight this one in court.
FCC Says Local Media Consolidation Is Fine, Though
What’s, uh… bad for the goose is evidently just fine for the gander, though? I’m mangling that idiom, but days before DOJ stepped in to block the AT&T/Time Warner deal, the FCC struck down a bunch of regulations from the 1970s, now making it easier for media outlets to be bought at sold. It’ll now be possible for one company to own a daily newspaper and a TV station in the same market, for one company to own more TV and radio stations in the same market than before, and for TV stations in the same market to merge even if that merger leaves the region with fewer than eight independently owned stations. FCC Chair Ajit Pai said the older regulations hinder media companies’ ability to compete with newer, digitally-focused outlets, and that there’s no longer a need for regulations that guarantee a diversity of voices in a particular locale. This is a breakthrough for Sinclair, which is trying to buy Tribune Media, but would have needed to sell a bunch of stations in order for the acquisition to pass regulatory approval under the old rules.
Ziff Davis to Buy Mashable at Bargain Rates
Mashable is going to sell to Ziff Davis for $50 million. That’s a surprisingly low price tag, considering how Mashable was valued at about $200-$250 million, depending on who you ask, in 2016. Founded in 2005, Mashable closed its first round of investor funding in 2014. The site famously “pivoted to video” last year and laid off 30 employees in the process. The Wall Street Journal reported that shift had mixed results–in 2016, Mashable grew revenue to $42 million, a 36% year over year increase, but it also had a net loss of $10 million. Reportedly, its losses are expected to continue in 2017. Mashable had been scouting around for additional funding earlier this year, but didn’t have much luck. In June, when Mashable CRO Ed Wise left his post after a little more than a year (during which time he’d made some SVP-level hires in an effort to bulk up the pub’s programmatic business), the company said it was tracking to hit its revenue targets for 2017. Evidently that revenue forecast hasn’t played out.
BuzzFeed Missing 2017 Revenue Targets
It’s hard out here for a digital pure play: BuzzFeed is reportedly set to fall short of its $350 million revenue target in 2017. According to unnamed sources in the Wall Street Journal, that means a $50-$70 million shortfall, 15-20% of the targeted figure. (For reference, $350 million would have been about 35% greater than the publication’s 2016 revenue.) There was some, um, buzz that BuzzFeed had been looking into prospects to go public in 2018, but the Journal’s sources said it’s now unlikely that the pub will be making an IPO anytime soon. In the past couple years, BuzzFeed has been expanding into video-heavy sites, ecommerce and even smart appliances, but that expansion has evidently cost money. BuzzFeed had also launched programmatic banner ads earlier this year–raising eyebrows among many media-watchers, given the pub’s robust in-house native program and its history (on the part of some of its execs) of laughing off old-school banners. At the time, BuzzFeed had explained programmatic had evolved to become faster-loading and more relevant, but at the same time that decision kind of reads like a quick way to make a few extra bucks.
How Silicon Valley Became Wall Street… and How to Change That
Business Insider’s Linette Lopez published a worthwhile column about Silicon Valley culture and the crass side of capitalism, based around the premise that at some point, in her words, “Silicon Valley became Wall Street.” Ivy League grads and Wall Street vets are taking Silicon Valley jobs, and Jeff Bezos is the biggest name in business in the U.S. today. That all indicates tech looms larger in this society’s collective imagination than finance. The thing is, Lopez says, Wall Street has always been openly about greed, while Silicon Valley has ostensibly been about solving problems–ostensibly, because VC conversations are not about solutions but about money. Lopez argues Silicon Valley has a navel-gazing problem, innovating for its own constituency rather than for the world at large–and that’s how you end up with a ton of new apps geared toward urban dwellers with too much money to throw around. Lopez highlighted, by contrast, efforts by Ankur Jain, the Kairos Society founder (an entity that includes a venture fund) who’s been saying the U.S. middle class is hurting and Silicon Valley is doing too little about it. Jain has announced a fund to aid student debt, stratospheric rents in urban areas, childcare, unemployment relief and retraining, and retirement income. The board includes a bunch of notable names from politics, media, entertainment and business–but no VCs.