Business News
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Endeavor Group Holdings, the parent company of UFC, WME and IMG, posted revenue of $1.2 billion in its third quarter, as foreign exchange rate headwinds pushed it to a net loss of $12.5 million.
Despite the difficult macroeconomic environment being felt across the tech and media sectors, Endeavor remains bullish on its prospects, touting its exposure to sports and live music, which are still posting strong results.
“Our business performed well in the quarter despite a turbulent macroeconomic environment,” said Endeavor CEO Ari Emanuel, in a statement. “Given our unique positioning relative to a set of highly resilient secular industry trends across premium sports and entertainment content and live events, we remain confident in our ability to continue delivering on our long-term growth strategy while also being good stewards of capital.”
Emanuel elaborated on those comments on the earnings call, saying that the company simply isn’t seeing demand for live events and experiences slow down.
“Spending habits have shifted, but our company has a presence at every point on the purchase chain,” he said. “During COVID people were buying stuff, and post-COVID, they are more focused on experiences, and we are the benefit of that side of the equation.”
Endeavor also adjusted its full-year 2022 guidance, raising its guidance for adjusted EBITDA to between $1.145 billion to $1.175, and indicating that revenue will be between $5.235 billion and $5.325 billion, on the low end of its prior guidance.
During the earnings conference call, Emanuel reitrated the company’s position as a middleman, able to carve out pieces of the content and live sports business, and in its owned and operated segments, to take the entire slice.
“These leading tech companies go head to head with major streaming and media players, including Disney, Netflix, NBCUniversal, Warner Bros. Discovery and Paramount for the best video, podcasts gaming, and social content,” Emanuel said.
On the sports side, Emanuel said that “we’ve positioned ourselves on the supply side of this industry, working directly with rightsholders, and sportsbooks to deliver everything from official data, streaming feeds to betting and mobile apps.”
“In sports, the demand for premium talent-led content and shows no sign of slowing. In fact, opportunities for talent are expanding into new formats,” he added.
The company is also undergoing significant change in its structure, as it completed the acquisition of OpenBet (and prepares to launch a new sports betting division) and with the sale of 80 percent of Endeavor Content, which impacted revenues at the company’s representation unit.
In representation, revenue was $388.3 million, down 42 percent from the same quarter a year ago. That drop was almost entirely due to the loss of Endeavor Content, which was sold to CJ ENM. When excluding revenue tied to Endeavor Content, the company’s representation business was up 17 percent compared to last year, suggesting continued strength in the sector.
In sports, which is led by UFC and Professional Bull Riders, revenue was $402.3 million, up 39 percent, thanks to increased rights fees, an extra live pay-per-view event, and more live attendance at events.
And in Endeavor’s events, experiences and rights segment, revenues were $440.6 million, down 1 percent compared to last year, due to the timing of some events.
Endeavor says it also paid off some $250 million in debt in Q3, and plans to pay down the same amout in Q4.
This article was originally published by The Hollywood Reporter.
Deezer named Maria Garrido chief marketing officer. Based in Paris, Garrido will lead the company’s marketing team and help further the development of the Deezer brand. She will report directly to CEO Jeronimo.
Ron Savage was named vp and executive director of the Berklee College of Music, where he previously served as dean of the college’s professional performance division and chair of the ensemble department; he also attended Berklee as a student. Savage will be responsible for oversight and direction of all academic programs, facilities, operations and faculty and staff for the college’s three divisions. He will additionally join the core leadership team at Berklee and help devise a strategy for the organization as a whole. He reports to executive vp and provost Dr. David Bogen. Savage can be reached at rsavage@berklee.edu.
Universal Music Canada promoted Craig “Big C” Mannix to vp of Black music. In the role, Mannix will continue leading UMC’s commitment to Black music with “an integrated approach to marketing and A&R,” according to a press release. His expanded purview includes an A&R remit to discover, sign and support Black music created by Canadians while continuing to lead the teams responsible for domestic international Black music marketing. He reports to Universal Music Canada chairman & CEO Jeffrey Remedios. Mannix can be reached at craig.Mannix@umusic.com.
ASM Global named Gary Jacobus president of business development. He will oversee the company’s plans to grow its sales efforts and strategies for securing new accounts across the Americas while providing support to ASM Global’s European and APAC business development teams. Jacobus can be reached at gjacobus@asmglobal.com.
Sound Royalties is expanding its West Coast team, tapping Andrew Stess and David Blutenthal of StessCo Consulting Group as new representatives for the music financing company in the western U.S. Out of Los Angeles, the pair will help songwriters, artists, rights holders and other music creatives seek out funding solutions to support their careers. Stess can be reached at andrew@stess.co.
iHeartMedia Los Angeles named Doug Hall regional digital program director for the iHeartMedia radio clusters in Los Angeles and San Francisco that encompass 14 stations. In the role, Hall will handle strategy, audience growth and maximizing iHeartMedia’s digital platforms in those markets while reporting to John Peake, senior vp of programming for iHeartMedia in Los Angeles. He was previously senior digital director on the national iHeartRadio team out of Nashville.
UTA promoted a slew of staff members in its music department, including Brennan Duffy, Noah Friedlander, Alana Gift, Akhil Hegde and Lauren Holland to manager and Mackenzie Coberley, Alexis Lesko, Gabriella Librizzi, Lauren McClusky and Hope Murray to coordinator.
Bailey Sattler and Stephanie Marlow formed another/side, a new creative and public relations agency. The company “will focus on where the underground and mainstream culture collide,” according to a press release. Sattler comes from Grandstand Media and Marlow built her own brand independently before joining forces with Sattler. The roster at launch includes Blessed, Circle Jerks, Cold Cave, Drab Majesty, Emma Ruth Rundle, Have A Nice Life, High Vis, Knocked Loose, Narrow Head, Power Trip, The Spits and Trust Records. Sattler can be reached at bailey@another-side.net and Marlow can be reached at stephanie@another-side.net.
Vickie Nauman, founder & CEO of music and tech consulting company CrossBorderWorks, joined the board of directors for Evan Bogart‘s Seeker Music, which boasts a portfolio of music publishing, master recordings and ancillary rights as well as a roster of songwriters, producers and artists.
Jessica Bonner was named vp of publicity at Milestone Publicity, where she was previously an account executive. In addition to continuing to serve clients, she will be more involved in an internal leadership role at the firm. Bonner can be reached at jbonner@milestonepublicity.com.
DJ and music journalist Dani Deahl was named head of communications and creator insights at BandLab Technologies. She will serve as a cultural liaison, highlighting the company’s impact on the music industry and surveying industry changes.
Many music companies’ stocks soared on Thursday (Nov. 10) on news that U.S. inflation was less than expected in October. The Bureau of Labor Statistics revealed the consumer price index rose 0.4% last month, less than the 0.6% Dow Jones estimate. Although the annual inflation is still high at 7.7%, it had been as high as 9.1% in June and hadn’t been below 7.5% since January.
Spotify shares jumped 9.9% to $78.44. Universal Music Group shares rose 3.3% to 20.81 euros. Sony shares spiked 6.6% to $44.15.
Live music companies fared especially well: U.S.-based Live Nation and MSG Entertainment improved 5.1% and 6.6%, respectively, while German promoter CTS Eventim climbed 3.8%. Ticketing companies Eventbrite and Vivid Seats rose 8.3% and 9.2%, respectively.
Radio company stocks, recently hurt by the softening advertising market, enjoyed the biggest gains as iHeartMedia was up 10.0% and Audacy rose 14.0%. Cumulus Media and Townsquare Media had smaller gains of 3.3% and 2.5%, respectively.
U.S. stocks had their biggest single days since 2020. The Dow Jones Industrial Average, a group of 30 prominent stocks, rose 3.7%. The S&P 500 improved 5.5% and the tech-heavy Nasdaq climbed 7.4%.
The good news quickly spread to Asia after U.S. markets closed. Shares of South Korean music companies HYBE and SM Entertainment were up 8.3% and 4.5%, respectively, early on Friday morning. Likewise, the Hang Seng Index, a selection of companies on the Hong Kong Exchange, was up 5.0% in early trading Friday.
Persistently high prices have had damaging effects to economies of the U.S. and other countries re-opening from COVID-19 restrictions. Businesses have encountered higher costs for labor, manufacturing and services, and often pass them along to consumers rather than absorb them. Everything from vinyl manufacturing costs to tour buses have soared. Some bands, such as Anthrax and Cold, pulled out of tours because of logistical issues and high costs. “There are tours being canceled left and right,” Jamie Streetman, operations manager for Nashville-based Coach Quarters, told Billboard in Sept.
To tame inflation, the U.S. Federal Reserve Bank, which targets 2% annual inflation, has raised the federal funds rate six times in 2022 to tame inflation. That has made borrowing more expensive for everyone from investors in music publishing catalogs to consumers with credit card bills.
The pairing of high interest-high inflation has wreaked havoc on stock prices, too. Year to date, the Dow index is down 7.2% and the S&P 500 is off 17.0%. Music companies that are otherwise having a solid year have seen their share prices sink, too. UMG shares are down 16.0% and Spotify shares are off 66.5% this year.
While investors celebrated the improvement in the CPI, inflation is still abnormally high and energy costs – a significant cost for touring musicians – were up 17.6% year-over-year in October. Presidents of the Federal Reserve indicated on Thursday that more rate hikes would probably be forthcoming, although at a slower pace.
Irving and Jeffrey Azoff‘s recently-launched Giant Music record label signed Detroit rapper Tay B in partnership tie AFLN Music Group. Tay B released his most recent album, 4Eva In My Bag, earlier this year. Run by Shawn Holiday, Giant Music previously signed Atlanta-based trap artist SwaVay in partnership with Def Jam. Giant Music is a resuscitation of the Giant name for the Azoffs, with Irving having launched Giant Records in 1990 as a joint venture with Warner Bros. Records.
Podcast company Audio Up, which focuses on trying to create hit tracks by leveraging podcasts as the launch pad, announced a new strategic partnership with WME to support the development of artists from Audio Up’s podcast slate. Under the deal, WME will advise Audio Up on its touring and content opportunities across film, TV and digital and provide the company with access to its network across music, entertainment and brands. One of the first initiatives under the partnership is the development of Latin artist Balam, who will star in and contribute original music to the forthcoming Audio Up scripted podcast Day of the Dead. In tandem with promotional efforts around the podcast, WME served as an advisor on booking Balam’s Dec. 10 debut performance at reggaeton festival Viva Urbano. WME will also work with Audio Up on the podcaster’s Apple Music show The Ballad of Uncle Drank by turning the show’s title character into a real-life touring country experience.
Sony Music Masterworks made a majority investment in Dubai-based concert promotion, talent management, events and production company MAC Global. Day-to-day operations of MAC Global will continue to be led by co-founders Rob McIntosh and Daniel Goldberg, who will work with Sony Music Masterworks president Mark Cavell, senior vp of business development Josh Lerman and managing director of Senbla Ollie Rosenblatt. Under the arrangement, MAC Global will expand its remit to include comedy, sports, virtual events, orchestral events and immersive music experiences.
The Black Music Action Coalition (BMAC) teamed with Jimmy Jam and Terry Lewis for the Jimmy Jam & Terry Lewis Music Makers Grant, which will award $5,000 annually to an emerging BIPOC songwriter or producer. BMAC will screen applicants, with Jam and Lewis personally picking the finalist. Online applications for this year’s grant close Nov. 15, with the winner to be announced in December.
Townsend Music signed Kaiser Chiefs in partnership with Absolute Label Services/Utopia, V2 and The Orchard for the band’s next studio album, which is slated for release next year. Townsend and Absolute will provide physical and digital distribution for the album in the U.K. under Townsend’s D2C+ model, while V2 will distribute it in France and Benelux and The Orchard will distribute it in other territories.
SoundExchange struck deals with Zelle and Cash App allowing registered creators to elect to receive their royalty payments via either of those mobile payment apps. Creators can contact the SoundExchange customer services team to learn more about app-specific eligibility requirements and sign up to receive royalty payments via the platforms.
Country newcomer Dalton Dover, who appeared on Season 16 of The Voice and has since garnered a following on TikTok, signed with Universal Music Group Nashville. He will release his upcoming music via Mercury Nashville.
Pop and melodic rap artist Zzz. signed with Warner Records in partnership with Lil Bibby‘s Grade A Productions. His major-label debut single is “All I Never Wanted.”
Live Nation has signed on as the exclusive booking partner for the nonprofit Capital One City Parks Foundation SummerStage festival. Ahead of the 2023 summer season, Live Nation will book all benefit concerts between June and October at the flagship Rumsey Playfield site in New York’s Central Park.
Composer Max Richter appointed Huxley as his global publicity and brands agency, which will also represent Richter and Yulia Mahr‘s Oxfordshire recording studio and multi-arts production facility Studio Richter Mahr.
U.K.-based Logan Media Entertainment teamed up with BMG to create a new record label, Tag8 Music, that will “specialize in the growing market for resurgent established artists,” according to a LinkedIn post by Logan Media. The label will launch with a roster including Blue, Pixie Lott, Roachford and a cast album of The Drifters Girl musical featuring Beverley Knight.
Naxos Music Group signed an extensive partnership with Downtown-owned FUGA. Under the deal, Naxos will have access to FUGA’s full suite of services including digital distribution, marketing services, royalty accounting and use of FUGA’s trends and analytics platform for Naxos and associated labels.
Los Angeles-based queer singer-songwriter Olive Klug (they/them) signed with Nettwerk, which will release their single “Out of Line” on Nov. 18.
European music royalty investing marketplace ANote Music partnered with Revelator, which provides digital IP infrastructure to music rights holders and music companies, for an arrangement that will allow Revelator clients to list their shares of tracks in their catalogs on ANote. The two companies will also collaborate on integrating Revelator’s technology, data management, predictive models and payment systems into ANote.
Symphonic partnered with music company Ropeadope for exclusive global distribution and marketing. Under the deal, Symphonic will provide digital and physical distribution and playlist pitching for Ropeadope’s full back catalog and key new releases. The partnership will encompass forthcoming releases by The Headhunters, Sarah Elizabeth Charles and Mthunzi Mvubu.
North Dakota pop-punk band Brooklane signed to Los Angeles-based Adventure Cat Records, an indie label from the artist management team at KMGMT. The band has new music in the works with producers Andrew Wade and Steve Knight. They are managed by David Pinder and Desanka Ilic at Cold Coffee Entertainment.
Vancouver-based artist management company Macklam Feldman Management signed on to represent acoustic folk-pop trio Tiny Habits, comprised of Maya Rae, Cinya Khan and Judah Mayowa.
BET president and CEO Scott Mills is adding to his portfolio at Paramount Global.
In the latest piece of reorganization at the conglomerate, VH1 will move under Mills’ BET Media Group. The cable outlet was previously part of the Chris McCarthy-led Paramount Media Networks, along with Paramount Network, MTV, Comedy Central, CMT and others.
Paramount CEO Bob Bakish wrote in a memo to staff Wednesday (see it in full here) that the move will allow for better alignment of priorities and make VH1 “best positioned for future success as a key part of the powerful BET ecosystem.” VH1 is the second most popular entertainment cable outlet among Black viewers, behind only BET.
It also lightens the load for McCarthy, a Bakish favorite who will add premium cabler Showtime to his purview following David Nevins’ departure at the end of the year. MTV Entertainment Studios, headed by McCarthy and Nina L. Diaz, will continue to produce a number of VH1 series, including the Love & Hip Hop franchise, RuPaul’s Drag Race and Black Ink Crew.
The VH1 move also separates it from MTV in Paramount’s structure, ending almost four decades of close association between the two networks. The cable network started in 1985 as a music-video channel targeting a somewhat older audience than the youth-driven MTV. It eventually branched into original programming with shows like Behind the Music, I Love the … and a host of “celebreality” shows like Rock of Love and The Surreal Life. And, like MTV, it has mostly left its music roots behind.
As has been the case across the cable universe, VH1’s on-air audience has declined in recent years as increasing numbers of TV consumers opt out of cable subscriptions. Within that smaller ecosystem, however, it still ranks in the upper third of cable networks in the key ad demographic of adults 18-49.
VH1 will join a BET Media Group that also includes the namesake cable channel, streaming platform BET+, BET Her, BET Studios and BET Digital. “Scott and his team continue to drive the evolution and growth of BET by building an interconnected set of leading platforms — linear, streaming, digital and studios — centered around the Black community, Black culture and content,” Bakish wrote.
Read Bakish’s full memo.
Following Adidas’ highly publicized split from Kanye “Ye” West last month after he espoused antisemitic sentiments on a multi-stop media tour, the sportswear company has plans to do what many predicted might happen: rebrand Yeezy products in order to continue selling them without Ye.
On a quarterly earnings call this morning (Nov. 9), according to Insider, Adidas shared that it intends to release more Yeezys without the artist, who began his business partnership with the company in 2013. Adidas CFO Harm Ohlmeyer confirmed what the company’s public statement, released in late October, said: “Adidas is the sole owner of all design rights registered to existing product. We intend to make use of these rights as early as 2023.”
Following Adidas’ highly publicized split from Kanye “Ye” West last month after he espoused antisemitic sentiments on a multi-stop media tour, the sportswear company has plans to do what many predicted might happen: rebrand Yeezy products in order to continue selling them without Ye.
On a quarterly earnings call this morning, according to Insider, Adidas shared that it intends to release more Yeezys without the artist, who began his business partnership with the company in 2013. Adidas CFO Harm Ohlmeyer confirmed what the company’s public statement, released in late October, said: “Adidas is the sole owner of all design rights registered to existing product. We intend to make use of these rights as early as 2023.”
In announcing their split from Ye last month, the company explained, “Adidas does not tolerate antisemitism and any other sort of hate speech. Ye’s recent comments and actions have been unacceptable, hateful and dangerous, and they violate the company’s values of diversity and inclusion, mutual respect and fairness.”
This article originally appeared on The Hollywood Reporter.
Adidas on Wednesday lowered its earnings forecast for the year to account for losses from ending its partnership with the rapper formerly known as Kanye West over his antisemitic remarks.
The German shoe and sportswear maker cut its sales and profit outlook for the year as part of its third-quarter earnings statement, even as the company’s chief financial officer said the profitability of the Yeezy shoe collaboration with Ye had been “overstated.” The company would largely offset the impact of the breakup next year by no longer having to pay royalties and marketing fees for the brand, CFO Harm Ohlmeyer said.
The company halved its expectations for net profit from continuing operations to 250 million euros ($252 million) this year from 500 million euros. That matched its earlier statement that ending the partnership with Ye would cost it 250 million euros in profits.
Adidas also lowered its revenue forecast for the year to a low single-digit increase from a mid-single-digit increase.
The Oct. 25 split with Ye, with production of all Yeezy products halted and royalty payments ended, will leave Adidas searching for another star to help it compete with ever-larger rival Nike. Adidas also is facing internal upheaval, with its CEO Kasper Rorsted stepping down Friday. He was previously expected to hand over next year, but the company announced the quicker change on Tuesday as it named Puma CEO Bjørn Gulden as his replacement.
Adidas faced pressure to split with Ye as other brands did earlier over the rapper’s antisemitic comments in interviews and social media, including a Twitter post earlier this month that he would soon go “death con 3 on JEWISH PEOPLE,” an apparent reference to the U.S. defense readiness condition scale known as DEFCON. He was suspended from both Twitter and Instagram.
Adidas owns the rights to product designs except for the Yeezy name and is developing plans for what to do with existing inventory.
Ohlmeyer said on a conference call with reporters that the profitability of the Yeezy business had been overstated because its costs only included expenses directly related to the products and not central overhead costs borne by the company.
“In other words, it does not include any further central cost allocation for sourcing, digital, retail, or any other services that this part of our business has been benefitting from and that were essential for its success,” Ohlmeyer said.
“At the same time, we will save around 300 million euros related to royalties and marketing fees; in combination, this will help us to compensate the majority of the top and bottom line impact in 2023,” he said.
The Yeezy brand accounted for up to 15% of Adidas’ net income, Morningstar analyst David Swartz said in a note Oct. 26.
The company had already cut its full-year earnings forecasts five days before announcing its split with Ye. The earlier outlook revision cited slowing activity in China, where severe restrictions aimed at limiting the spread of COVID-19 have held back the economy, and clearance of elevated inventory levels.
Net income for the third quarter from continuing operations was 66 million euros, down from 479 million euros in the same quarter a year ago.
The decrease largely reflected 300 million euros in one-time costs, the majority of it from winding down the company’s business in Russia.
Wasserman Media Group received an investment from private equity firm Providence Equity Partners that will provide capital for the talent agency’s growth initiatives and buy out two existing Wasserman investors, RedBird Capital Partners and Madrone Capital Partners. Financial terms of the deal were not disclosed.
Wasserman’s founder, chairman and CEO, Casey Wasserman, who continues to own a controlling ownership stake, said in a statement “there is no better partner to help us accelerate and scale this purpose-driven model than Providence. Their long relationship with our executive management group plus their extensive experience and established investment approach across the sports, media and entertainment sectors, and a shared commitment to culture will help accelerate the next phase of Wasserman’s expansion.”
Providence Equity Partners has experience in the music and entertainment space. In 2019, the firm created a $650 million investment platform — Tempo Music Investments — with Warner Music Group to invest in music publishing and recorded music catalogs. With interest rates rising in 2022, however, Providence is shopping its stake in Tempo and wants out of the music catalog market, according to reports.
Wasserman is a natural fit for Providence’s numerous investments in the live entertainment space. Providence has a portfolio of music festivals through its Superstruct Entertainment division, including International Concert Service, organizers of the Wacken Open Air metal festival, Dutch promoter ID&T, and Advanced Music SL, which operates Spanish music festival Sónar. Providence also owns majority stakes of U.S.-based music instrument retailer Sweetwater and U.K.-based Ambassador Theatre Group, which owns and operates 58 venues in the U.S. and Europe. Providence also owns a stake in Sofar Sounds through its investment in The Chernin Group.
Scott Marimow, managing director at Providence, complimented Wasserman’s “client-first approach” and influence in sports and music talent representation. “Wasserman is a natural fit with our firm, and we look forward to partnering with Casey and the entire Wasserman team to help fuel the Company’s next phase of growth and success,” he said in a statement.
“Wasserman has the potential to set the bar for the future of talent representation and brand and marketing consultancy,” said Davis Noell, senior managing director and co-head of North America at Providence, in a statement. “With our strong existing relationship, similar cultures and shared passion for media, sports, and entertainment, we are pleased to have reached this agreement to partner together.”
Wasserman became a powerhouse in music through its acquisitions of Paradigm’s North American live music roster in 2021 and U.K. live music business in April from Platinum Equity. Artists on the Wasserman roster include Coldplay, Kenny Chesney, Billie Eilish, Imagine Dragons, The Lumineers, Dave Matthews Band, Janelle Monáe, Kacey Musgraves, Old Dominion, Phish, Ed Sheeran, Lorde, Sturgill Simpson, Black Pumas, Brandi Carlile, Tyler Childers, Kaytranada, Normani, Run the Jewels, Tash Sultana, Diplo, DJ Snake, Flume, Jack Harlow, ODESZA and Skrillex.
Twitter has announced a subscription service for $7.99 a month that includes a blue check now given only to verified accounts as new owner Elon Musk works to overhaul the platform’s verification system just ahead of U.S. midterm elections.
In an update to Apple iOS devices available in the U.S., Canada, Australia, New Zealand and the U.K., Twitter said users who “sign up now” for the new “Twitter Blue with verification” can receive the blue check next to their names “just like the celebrities, companies and politicians you already follow.”
But Twitter employee Esther Crawford tweeted Saturday (Nov. 5) that the “new Blue isn’t live yet — the sprint to our launch continues but some folks may see us making updates because we are testing and pushing changes in real-time.” Verified accounts did not appear to be losing their checks so far.
It was not immediately clear when the subscription would go live. Crawford told The Associated Press in a Twitter message that it is coming “soon but it hasn’t launched yet.” Twitter did not immediately respond to a message seeking comment.
Anyone being able to get the blue check could lead to confusion and the rise of disinformation ahead of Tuesday’s elections, but Musk tweeted Saturday in response to a question about the risk of impostors impersonating verified profiles — such as politicians and election officials — that “Twitter will suspend the account attempting impersonation and keep the money!”
“So if scammers want to do this a million times, that’s just a whole bunch of free money,” he said.
But many fear widespread layoffs that began Friday could gut the guardrails of content moderation and verification on the social platform that public agencies, election boards, police departments and news outlets use to keep people reliably informed.
The change will end Twitter’s current verification system, which was launched in 2009 to prevent impersonations of high-profile accounts such as celebrities and politicians. Twitter now has about 423,000 verified accounts, many of them rank-and-file journalists from around the globe that the company verified regardless of how many followers they had.
Experts have raised grave concerns about upending the platform’s verification system that, while not perfect, has helped Twitter’s 238 million daily users determine whether accounts they get information from are authentic. Current verified accounts include celebrities, athletes and influencers, along with government agencies and politicians worldwide, journalists and news outlets, activists, businesses and brands, and Musk himself.
“He knows the blue check has value, and he’s trying to exploit it quickly,” said Jennifer Grygiel, a social media expert and associate professor of communications at Syracuse University. “He needs to earn the trust of the people before he can sell them anything. Why would you buy a car from a salesman that you know has essentially proved to be chaotic?”
The update Twitter made to the iOS version of its app does not mention verification as part of the new blue check system. So far, the update is not available on Android devices.
Musk, who had earlier said he wants to “verify all humans” on Twitter, has floated that public figures would be identified in ways other than the blue check. Currently, for instance, government officials are identified with text under names stating they are posting from an official government account.
President Joe Biden’s @POTUS account, for example, says in gray letters it belongs to a “United States government official.”
Seven-time Formula One champion Lewis Hamilton, who has 7.8 million Twitter followers, told the AP, “I could actually just delete my Twitter account, I never use it. I find it really healthy to delete social media from my phone for periods of time.”
“But it’s also a really powerful tool to connect with people, so I appreciate that and I try to use it as that and not as something that’s veering me off course of the journey that I’m on in life,” he said.
The announcement comes a day after Twitter began laying off workers to cut costs and as more companies are pausing advertising on the platform as a cautious corporate world waits to see how the platform will operate under its new owner.
About half of the company’s staff of 7,500 was let go, tweeted Yoel Roth, Twitter’s head of safety and integrity.
He said the company’s front-line content moderation staff was the group the least affected by the job cuts and that “efforts on election integrity — including harmful misinformation that can suppress the vote and combatting state-backed information operations — remain a top priority.”
Twitter co-founder and former CEO Jack Dorsey took blame for the job losses.
“I own the responsibility for why everyone is in this situation: I grew the company size too quickly,” he tweeted Saturday. “I apologize for that.”
Musk tweeted late Friday that there was no choice but to cut jobs “when the company is losing over $4M/day.” He did not provide details on the daily losses at Twitter and said employees who lost their jobs were offered three months’ pay as severance.
He also said Twitter has already seen “a massive drop in revenue” as advertisers face pressure from activists to get off the platform, which heavily relies on advertising to make money.
United Airlines on Saturday became the latest major brand to pause advertising on Twitter, joining companies including General Motors, REI, General Mills and Audi.
Musk tried to reassure advertisers last week, saying Twitter would not become a “free-for-all hellscape” because of what he calls his commitment to free speech.
But concerns remain about whether a lighter touch on content moderation at Twitter will result in users sending out more offensive tweets. That could hurt companies’ brands if their advertisements appear next to them.
U.N. High Commissioner for Human Rights Volker Türk on Saturday urged Musk to “ensure human rights are central to the management of Twitter.” In an open letter, Türk said reports that the company’s whole human rights team and much of the ethical AI team were laid off was not “an encouraging start.”
“Like all companies, Twitter needs to understand the harms associated with its platform and take steps to address them,” Türk said. “Respect for our shared human rights should set the guardrails for the platform’s use and evolution.”
Meanwhile, Twitter cannot simply cut costs to grow profits, and Musk needs to find ways to raise more revenue, said Dan Ives, an analyst with Wedbush. But that may be easier said than done with the new subscription program for blue checks.
“Users have gotten this for free,” Ives said. “There may be massive pushback.”
He expects 20% to 25% of Twitter’s verified users to sign up initially. The stakes are high for Musk and Twitter to get this right early and for signups to work smoothly, he added.
“You don’t have a second chance to make a first impression,” Ives said. “It’s been a train-wreck first week for Musk owning the Twitter platform. Now you’ve cut 50% (of the workforce). There are questions about just the stability of the platform, and advertisers are watching this with a keen eye.”
Even with BTS on hiatus, the band’s label and agency HYBE grew revenues 445.5 billion KRW ($308.7 at the Sept. 30 exchange rate) from July to September — up 30.6% from the year-prior period, according to the company’s third-quarter earnings report released Thursday. But compared to second-quarter revenue of 512.2 billion KRW ($354.9 million), revenue was down 13%.
The “artist direct-involvement” segments of the business showed mixed results in the quarter. Music sales of 129.2 billion KRW ($89.5 million) were 0.4% year-over-year and 38.7% lower than the previous quarter. Concert revenue of 47.2 billion KRW ($32.7 million) was a vast improvement over zero in the third quarter of 2021 but lower than the first and second quarters. Revenues from ads, appearances and management fell 11.7% year-over-year to 29.8 billion KRW ($20.2 million).
HYBE saw better performance from its “artist indirect-involvement” segments that are less dependent on the timing of music releases and tour dates. Merchandising and licensing revenue grew 49.5% year-over-year to 144.7 billion KRW ($100.3 million). Contents revenue climbed 22.9% to 107.2 billion KRW ($74.3 million). And fan club revenue improved 27.5% to 17.3 billion KRW ($12 million).
Though the first nine months of the year, HYBE’s revenue improved 55.7% year-over-year to 1.24 trillion KRW ($859.2 million) and its operating profit increased 59.% to 185.9 billion KRW ($128.8 million). Operating margin improved from 14.6% to 15%.
Despite the impressive growth, HYBE is facing a dilemma. The company is without its biggest artist, BTS, after members went on hiatus earlier this year and will soon face mandatory military service in Korea. Losing its cash cow — until “around 2025,” according to an Oct. 17 letter to shareholders from CEO Park Ji-won — leaves Hybe with a tricky balancing act: In the absence of BTS new music and tours, the company must make up the difference with individual members’ solo projects and a slate of successful and up-and-coming artists. With only a retrospective album, Proof, and no concert dates since April, BTS will still account for 60-65% of HYBE’s 2023 revenue, Park said during the earnings call. The remaining 35-40% of revenue will come from a growing roster of young artists and Ithaca Holdings, which HYBE acquired in 2021.
In recent years, HYBE has diversified to reduce its reliance on BTS and build a more stable portfolio of companies and artists. Through its nine record labels in Korea, Japan and the U.S., HYBE has built a diversified roster that “helps us avoid a risk of concentrating on a certain country, a certain genre, and allows us to flexibly respond to the changing external situations and trends, thereby reducing the overall business risk,” said CFO Lee Kyung-Joon.
Ithica Holdings added both recorded music catalog (through Big Machine Label Group) and artist management clients (through SB Projects). Its founder, Scooter Braun, is now co-CEO of HYBE America. When asked by an analyst what synergies Ithaca provides more than a year after the merger, Park pointed to the newfound ease and efficiency of launching projects in the U.S. under Braun and co-CEO Lenzo Yoon. Also, Ithaca’s U.S. artists will join HYBE’s WeVerse social media platform in 2023, Park added, and HYBE is pursuing opportunities for the businesses of Ithaca artists Justin Bieber (Drew House) and Ariana Grande (R.E.M. Beauty) in Asia.
In Korea, HYBE’s roster includes such up-and-coming artists as Le Sserafim, released through its Source Music imprint, whose first two albums have surpassed a combined 1 million units sold. NewJeans, released through HYBE’s ADOR imprint, has cumulative sales of 620,000 of its debut, self-titled EP released in August. Outside of Korea, HYBE is taking its model for discovering and developing new artists to the world’s two largest music markets. In Japan, HYBE Labels Japan is prepping the December launch of &Team, a nine-person, multinational boy band. In the U.S., HYBE has a joint venture with Universal Music Group’s Geffen Records and is developing a global girl group.
Hybe’s plan for global growth goes beyond its growing artist roster. A broad strategy termed by Park as “expansion through cooperation across boundaries” includes mergers and acquisitions, joint ventures, equity investments and partnerships. “In order to expand the multi-label strategy, we’re considering various partnerships and investments with labels, catalog companies and talent management companies in overseas markets such as the U.S. and Japan, thereby strengthening our music I.P. portfolio,” Park said. “Through this approach, we except that greater synergies will be created with our superior solutions capability on concerts, merchandising and content to deliver greater results.”
But in the short term, HYBE doesn’t have a quick solution for replacing BTS, and Park warned that declining BTS revenue — namely lost concert revenue — will put pressure on HYBE’s margins in 2023. That should change as groups such as Seventeen and Tomorrow X Together gain popularity and perform in larger venues. Compared to BTS, those artists’ margins are “not very different from the margin of BTS — other than concert revenue,” he said. “Therefore, as these groups continue to grow, I believe that margin will improve accordingly…starting from 2024.”
With HYBE’s share price down 64.9% year to date, mostly due to BTS’s hiatus, the company is considering additional ways to improve shareholder return, including share buybacks and dividends. Park said the company will reveal more about those plans in early 2023.