Streaming Stumble

Is inflation nearing an end?

April 13, 2022 Read in Browser TOGETHER WITH Good morning. Today and every Wednesday until May 4, donut chain Krispy Kreme will peg the price of a dozen glazed donuts to the US national average price of a gallon of gas. For example, today a $10 box of donuts costs just $4.11. It’s a chance to fill up your tank with premium unleaded and fill up your arteries with cholesterol without breaking the bank. Morning Brief • The digital ad market just posted a monster year. • WarnerMedia is already contemplating the future of CNN+. • There’s finally a sign that inflation is slowing down. Media The Digital Ad Market Hit a 15-Year Record in 2021 Stay at home and spend. That might as well have been the unofficial mantra of 2021 as consumers found themselves with record savings to splurge online. On Tuesday, new research revealed digital advertisers were a big winner from the phenomenon. US digital ad revenues rose 35% to $189 billion last year as marketers sought out the record number of consumer eyeballs glued to their screens, according to a report by the Interactive Advertising Bureau and PricewaterhouseCoopers. It was the highest growth since 2006. Three Kings US e-commerce sales last year totaled $870 billion, more than the GDP of Switzerland and a 14% increase from 2020, according to the Department of Commerce. Besides Amazon, more and more firms with direct B2C digital relationships — such as CVS, DoorDash, and Walmart — are letting advertisers buy ads on their websites or in their apps. As a result, e-commerce growth has injected massive capital into the digital ad business. The catch is that growth is more heavily concentrated than the frozen orange juice in a Minute Maid advert: • In 2021, 10 digital platforms and publishers pulled in 78% of digital ad revenues, according to the IAB and PwC.  • While the report doesn’t identify those top firms, analysts at Insider Intelligence predicted Google (26%), Meta (24%), and Amazon (14%) would account for 64% of US digital ad revenue in 2021. So far, this year’s success may be a tad muted. “The macro winds of uncertainty — in particular around Europe and Russia — continue to swirl,” said Morgan Stanley analyst Brian Nowak, in a note advising that the bank trim estimates for online advertising revenues by 1% to 2% this year. Can I Sell You a Mattress? Advertising on digital audio, including podcasts and music streaming, was the fastest-growing digital ad category last year, rising 58% to reach $4.9 billion. But it’s just a 2.6% slice of the digital ad market pie. Tik That: TikTok's advertisement revenue will triple this year to more than $11 billion, according to Insider Intelligence. That is more than the combined ad revenue forecasts for Twitter and Snap. If only Twitter had a new board member to shake things up. Streaming CNN+ Reportedly Scaling Back Following Lackluster Debut Here’s a breaking news alert unlikely to receive 24/7 coverage on CNN: CNN+, the cable news giant’s supplementary streaming service, is facing dramatic cuts in funding and investment, according to an Axios report. You may be asking: Didn’t CNN+ just launch, like, last week? Or, perhaps you’re even asking: CNN has a supplementary streaming service? These are the incisive, hard-hitting consumer questions that have left higher-ups at parent company WarnerMedia second-guessing their new venture. The Situation Gloom Let’s not bury the lede: CNN+ has seen, at best, a mediocre launch. Stocked with a backlog of CNN documentaries and headlined by original programming such as Jake Tapper’s Book Club (not a joke) and a new interview show hosted by former Fox News anchor Chris Wallace, the streaming service launched March 29 and was seen as a major stepping stone away from traditional cable for the Cable News Network. WarnerMedia has spent roughly $100 million to market the platform, a company insider told TechCrunch last week, more than the average yearly marketing budget for CNN proper. But, so far, it appears the juice has not been worth the squeeze: • CNN+ had a launch budget of almost $300 million and projected 2 million subscribers (at $5.99 per month) within a year of going live, according to Axios. A total investment of $1 billion was slotted over four years with a target of 15 to 18 million subscribers, enough to reach profitability. • Expectations are now being dramatically cut after a low early adoption rate, according to Axios. Now, investment in CNN+ is likely to be slashed by hundreds of millions of dollars. Undiscovered: Looming over everything is mass turnover at the highest levels across the company. Longtime CNN chief Jeff Zucker resigned in early February, after an internal company investigation uncovered an undisclosed workplace relationship. Replacement Chris Licht isn’t taking the helm until May 1. Meanwhile, WarnerMedia is undergoing a massive merger with Discovery, leading Warner CEO Jason Kilar to resign last week and spurring a hiring freeze across the entire company for the past month.  SPONSORED BY FRANSHARES The Yankees Aren’t For Sale, But You Can Still Become A Franchise Owner Peyton Manning and Shaquille O’Neal may not go down in the history books as franchise owners first and foremost. But like many of the uber-wealthy, they’ve compounded their fortunes through investing in franchises like Papa John’s and Five Guys. FranShares is revolutionizing this hallowed wealth creation engine — you don’t even need a legendary professional sports career on your resumé: • FranShares conservatively targets returns of 16% to 21%, with well-run franchises enjoying returns as high as 160%, according to Financial Disclosure Documents. • Aside from their potential to generate remarkable passive income, many franchises operate in recession-resistant industries. After all, people still hit the gym, get haircuts, and gorge on comfort foods when the stock market tanks. Daily Upside readers can sign up and enjoy no management fees whatsoever. Join today. US Economy Inflation is High Again, But Here’s The Upside Surprise, surprise. Another month, another new four-decade high for US inflation. This latest surge was 8.5% in March from a year ago, the Labor Department said Tuesday.  But we’re not going to bore you with what you already know. Go check out the butter aisle at the grocery store or gas up the car if you want another reminder. Instead, let’s take a look at an underlying sign that maybe, just maybe, things are starting to get better. A Light at the End of the Tunnel? Ignore the big fat headline number. On Tuesday, many traders were elated at the sight of a less-touted figure called the Core Consumer Price Index. The Core CPI — which measures inflation but without including super volatile food and gas prices — rose just 0.3% in March from February, well below the 0.5% consensus estimate of economists surveyed by Dow Jones. On an annual basis, the Core CPI rose 6.5%, also less than its 6.6% projection. The less-watched statistic was welcomed and initially spurred a spike in major US markets, but, ultimately, it wasn’t quite enough to lift the major indices: • The S&P 500 and the Nasdaq inched down 0.3% and the Dow Jones 0.25%, a relatively zen reaction on another day of 40-year high inflation headlines. • In other good news, one of the most publicized markets hit by inflation, used car prices, fell 3.8% last month. Buying a car that’s hit the road before still costs at least 40% more than a year ago, so here’s hoping this becomes a trend.  “It’s a red hot number but the market’s reaction, for now, suggests it’s priced in, especially with the month over month core read coming in below expectations,” Mike Loewengart, managing director of investment strategy at E*Trade, wrote in an investment note. “The big debate is whether elevated reads like these are the new normal, or if we’re beginning to see a light at the end of the inflationary tunnel.” I Saw the Sign: The 10-year US Treasury yield fell from a three-year high Tuesday, another indicator that investors — who use government bonds as shelter in risky times — think the Core CPI reading is a sign that the overheated economy is starting to cool down. Extra Upside • Apple warns of privacy dangers, but wants your vital signs. • Will you still have to mask up on trains and planes? It’s up in the air. • The $800 billion asset class that rarely makes headlines. Equities are (by definition) the most volatile part of the cap structure. Stocks may get all the headlines, but hedge funds and private equity shops are quietly pouring billions into private credit — that’s everything from venture debt to collateralized consumer loans. With Percent, accredited investors can earn up to 18% annualized returns with exclusive deals that mature in as little as one month. Tap into uncorrelated alternative assets on Percent today.* *Must be a verified accredited investor to invest on Percent. Must earn $200k annually or meet SEC qualifications. *Partner You have 0 referrals. Share The Daily Upside, Earn Rewards Or, simply copy and paste your unique referral link and share it with others: https://sparklp.co/bb4b34b2 Just For Fun Old school security. Inventive. Written by Sean Craig and Brian Boyle. ADVERTISE // CAREERS No longer want to receive these emails? Unsubscribe here. 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