Pursuit of talent heats up as TV viewing fragments
By Joe Flint and Tripp Mickle
This article is being republished as part of our daily
reproduction of WSJ.com articles that also appeared in the U.S.
print edition of The Wall Street Journal (June 16, 2018).
Apple Inc. has formed a production partnership with Oprah
Winfrey to make programs for its planned subscription-video
service, part of the company's aggressive push into the content
business as competition for Hollywood talent escalates.
Apple has joined an arms race for top producers and actors by
tech giants and traditional media companies alike. All parties are
trying to recruit the most valuable talent they can to help
programming stand out in a fragmented TV landscape where consumers'
choices are growing.
Neither Apple nor Ms. Winfrey offered any specifics about the
content she would make. In a statement Friday, Apple said Ms.
Winfrey would "create original programs that embrace her
incomparable ability to connect with audiences around the
world."
Apple wasn't the only suitor for Ms. Winfrey. Last year
Amazon.com Inc. also had talks with her about making content for
its Amazon Prime service, a person familiar with the matter
said.
Although Apple has very deep pockets, a commitment it made to
spend $1 billion on content pales in comparison to the $8 billion
that streaming giant Netflix Inc. is expected to spend this year.
Among other players, Hulu is expected to approach $3 billion for
programming this year, an amount that HBO also is likely to
approximate.
Netflix, in particular, has signed up an array of star
producers, including "Scandal" creator Shonda Rhimes and "American
Horror Story" producer Ryan Murphy, luring them away from
traditional studios.
The old media companies have vowed to fight back. Last week,
Time Warner Inc,'s Warner Bros. announced a $300 million deal to
keep prolific TV producer Greg Berlanti from jumping ship.
AT&T Inc. now owns HBO and Warner Bros., after closing its
acquisition of Time Warner on Thursday. "I have no trepidation
about making sure we maintain those relationships with the very top
talent going forward," John Stankey, the AT&T executive charged
with overseeing Time Warner assets, said in an interview
Friday.
Apple doesn't have a launch date for its planned
direct-to-consumer video service, but people familiar with the
company's plans say it is expected to debut next year.
Ms. Winfrey is the latest big fish Apple has landed. In recent
months, it has struck deals with actor and producer Reese
Witherspoon, comedy star Kristen Wiig and directors J.J. Abrams and
M. Night Shyamalan.
Though Apple hasn't outlined its distribution plans for the
programming or said what it may charge, the company is expected to
create a subscription offering that bundles access to the
programming with iCloud storage and potentially other services like
magazine subscriptions, people familiar with the plans said.
The video push comes as the company faces a slowdown in sales of
iPhones, which account for two-thirds of total revenue. It is
leaning on its services business -- which includes App Store sales,
mobile payments and its music-subscription business -- for growth.
Apple has set a goal of generating about $50 billion in sales from
services in 2020, up from $29 billion in sales in its latest fiscal
year.The video-subscription service would contribute to that
growth.
"Apple needs an underlying growth driver" and "outside of
increasing prices for the iPhone, it's difficult to decipher where
growth for Apple comes from unless services can deliver," said Mike
Olson, an analyst with Piper Jaffray.
The Oprah partnership comes a year after Apple poached two top
Hollywood executives from Sony Corp. to spearhead the video effort:
Jamie Erlicht and Zack Van Amburg, who oversaw Sony Pictures
Television productions such as "Breaking Bad" and "The Crown."
Their approach is a departure from Apple's initial programming
efforts, which began in 2017 and resulted in shows like "Planet of
the Apps" and "Carpool Karaoke."
Apple Senior Vice President Eddy Cue, who oversees services,
recently reorganized his team and gave former Time Warner Cable
executive Peter Stern responsibility for overseeing business
operations for services, people familiar with the change said. Mr.
Stern is expected to work with Messrs. Erlicht and Van Amburg on
crafting subscription plans for the Hollywood content and Apple's
other offerings, the people said.
Since retiring from hosting her daytime talk show in 2011, Ms.
Winfrey has increasingly focused her efforts on content production
while keeping herself in front the camera as an occasional
interviewer. She co-founded the Oprah Winfrey Network with
Discovery Inc. in 2011. Last year, she reduced her holdings in OWN
to 25.5% from 50% but is still heavily involved in the network.
Ms. Winfrey's relationship with OWN won't change as a result of
this deal, a Discovery executive said. Her agreement with the
network and Discovery runs through 2025. After initially struggling
to find traction, OWN in recent years has turned itself around and
launched several successful scripted shows including "Queen Sugar"
and "Greenleaf."
Ms. Winfrey has also been a contributor to the CBS news magazine
"60 Minutes," and her Harpo Productions makes the popular daytime
shows "Dr. Phil" and "Rachel Ray." Her film company made the
theatrical release "Selma."
--Ben Fritz contributed to this article.
Write to Joe Flint at joe.flint@wsj.com and Tripp Mickle at
Tripp.Mickle@wsj.com
(END) Dow Jones Newswires
June 16, 2018 02:47 ET (06:47 GMT)
Copyright (c) 2018 Dow Jones & Company, Inc.
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