A major media marriage
..between AT&T and Discovery?
Good Monday Morning! It’s May 17th, which means Washington DC is just a few days from its next re-opening phase 🎉. On Friday, most DC businesses can drop Covid-19 restrictions! Here’s a preview of me headed to happy hour on Friday afternoon.
Anyway, here’s the SWIRL:
📱 Tech: Bitcoin tumbles after Musk & Tesla pause trading
📈 Business: Major media marriage: AT&T & Discovery?
🏛 Politics: Cybersecurity gets executive treatment
If this is your first SWIRL, keep reading this part. If not, carry on to the content.
Welcome, new Swirlers! Here’s a brief reader guide: the three teasers above unfurl below to briefly cover a buzzy development in their respective area. You’ll read a little about each one. At the end, we pull on a common thread among all three and explore what it might mean for us. If you missed last week’s SWIRL, tuck in here.
📱 Tech: Bitcoin tumbles after Tesla & Musk pause trading
We talked about Tesla & Elon Musk last week. I try not to repeat major themes or subjects in back-to-back weeks, but this tech story was unavoidable.
In fact, I’m betting many of you also heard a bit about it. (A bit…coin about it?)
In any case, we’re going to surf 🏄♂️ the wavetops of the Bitcoin price drop, the responses, and some conjecture. Fun!
On Wednesday, Elon announced Tesla will stop accepting Bitcoin as payment & has paused Bitcoin trading until ‘mining1 transitions to more sustainable energy.’
Since the multibillionaire’s tweet, Bitcoin has lost 📉 between 10-20% of its value.
The energy use of cryptocurrency has come under scrutiny this year as its popularity reached peak levels alongside several high-profile wins for crypto supporters, like the Coinbase IPO and Wallstreet’s official embrace.
The climate impacts of Bitcoin and its underlying blockchain technology seem like fair concerns for the CEO of an eco-friendly electric vehicle maker. However, Elon’s critique of Bitcoin came as a surprise to many because of his previous and significant support for the digital currency.
Bitcoin stalwarts lined up against Elon’s broadside. Successful investor and Bitcoin advocate Anthony Pompliano hit back:
Others in the same Twitter thread 🧵 point that Elon’s interest may more complicated than a simple concern for the climate. He has other financial interests. For instance, his support for the meme coin, Dogecoin, has received national coverage.
So, what’s the endgame 🤷♂️? Is the Bitcoin & Tesla pause temporary? Will Elon target other cryptos for their climate impacts?
Or…could Elon be launching his own coin? It appears that’s what NYU business professor Scott Galloway thinks is going on. In a Sunday tweet, Galloway seemed to suggest that Elon’s endgame may be ‘another one,’ referencing a new crypto.
📈 Business: Major Media Marriage: AT&T & Discovery?
A deal 🤝 between AT&T and Discovery could be announced as early as this week, according to Sunday reporting from Bloomberg. If combined, the joint effort could open a new competitive threat to media incumbents NetFlix & Disney.
AT&T’s current ownership of popular media 📺 properties like HBO, HBO Max, CNN and others give it a strong foothold in the media landscape. HBO and HBO Max bring 63.9 million global 🌐 subscribers to AT&T’s balance sheet.
Disney+ checks in at 100 million subscribers.
Netflix leads with 207.6 million.
Discovery’s media portfolio features popular reality-TV shows like Animal Planet, HGTV and the Discovery Channel. In the US, 88.3 million homes tune into Discovery shows each year.
Adding those viewers to AT&T’s roster 🧾 could allow the telecom giant’s media arm to reach 152M subscribers, leapfrogging Disney and putting it within striking distance of NetFlix.
Details of the potential mash-up aren’t available. Sources for the Sunday story asked to remain anonymous 🙈; AT&T and Discovery declined to comment 🙊 on the news.
Here’s what we do know — the competition for subscribers has never been tougher. Here’s what we can assume — strategy teams at Disney and NetFlix have a new agenda item on this morning’s standup call.
🏛 Politics: Cybersecurity gets executive treatment
On Wednesday, President Biden signed an executive order that creates a renewed national focus on cybersecurity 🛡.
In recent months, we’ve swirled on previous cyber attacks against the US, like SolarWinds and Hafnium. Last week’s executive order follow’s the latest national hack: a ransomware attack that took the Colonial Pipeline offline.
What’s in the executive order?
👐 Reduced barriers for info sharing between government & private sector
🔐 Mandatory multi-factor authentication (aka MFA) rollout for the federal government
🕵️♀️ A new Cybersecurity Safety Review Board to investigate cyber incidents, much like the National Transportation Safety Board reviews major accidents
📖 A cyber incident ‘playbook’ to standardize US cyber responses
📜 Here’s the more detailed list from the White House.
Yesterday, on CBS’s Face the Nation, Christopher Krebs, the former US cybersecurity chief said that Biden’s order is “a really ambitious plan,” and if implemented properly, would lead to “improved security standards and improved security performance.”
So, how do our three stories swirl together? Volatility.
Change is inevitable. Some change is good and other changes can be bad. In our SWIRL stories this week, we’re featuring three variations on theme of volatility.
💲 Bitcoin: the market volatility and massive price swings are due to increased pressure on the digital currency and its susceptibility to influence.
📺 Media: the cut-throat competition for subscribers continues to create volatility in the media market.
💻 Cyber: the sophistication of cyber hackers is forcing more coordinated responses from organizations who want to reduce volatility and increase security stability.
Each of our features exposes how volatility can be managed in a different way. We can buckle-up and ride it out, like many holders of Bitcoin are doing. We can change our strategy to be more proactive and control the scoreboard ourselves, similar to the potentially game-changing combo between AT&T and Discovery. Or, like the US government’s response to increasing cyber hacks, we can recognize we’re being outplayed and shift our strategy to being much more defensive.
I’m constantly relearning that the second most important feature of good strategy for volatile situations is that it’s the correct strategy.
The most important feature of good strategy is that you recognized you need a strategy in the first place.
And that’s it for this week’s SWIRL - see you next week!
-Matt from SWIRL
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The ATT/Discovery merger press release came early today. Shares in both companies are up, but I wonder with this "Reverse Morris Trust" they're using (tax-free spinoffs of assets), which shareholders will benefit in the long-run?