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$FB - Communicating With Shareholders
In April, I posted an article titled "Disruption & The "Right" Owners". The focus of the post was the difficulties that Jeff Bewkes faced during his tenure as the CEO of Time Warner, most notably his inability to respond to a new business model (SVOD, as pioneered by Netflix).

This was the key quote from Bewkes, as retold in Tinderbox:

I met with our big institutional owners and asked if they would support flatter earnings growth... moving HBO faster to the global Netflix model. None of them thought the Turner networks could make that crossing... Our biggest shareholders didn't want us cutting our earnings.”

As I noted, that conclusion had major implications:

"If you take this at face value (not revisionists history), what Bewkes is saying here is quite interesting. Even after identifying the right long-term trends and the bets that needed to be made, his shareholders and the risk of short-term stock price weakness effectively tied his hands. Said differently, as early as 2013 or 2014, Bewkes already knew that he didn’t have the ability to effectively compete with Netflix given the constraints that Time Warner faced. Despite the fact that the game was still in its early innings, Time Warner was already positioned to lose (the company’s DTC service, HBO Max, launched in the U.S. six years later, in May 2020)."

I was reminded of this write-up as I reviewed Meta's (Facebook's) Q1 FY22 results.

On the company's conference call, it was apparent that management - and specifically CEO Mark Zuckerberg - had come to appreciate the importance of addressing their metaverse (FRL) investments more directly and transparently. Said differently, they did a much better job of addressing some of the key questions / long-term assumptions that helped contribute to the ~$250 billion market cap decline after the Q4 FY21 earnings.

I won't repost the entire call here, but it's worth reviewing. You'll see how management is intelligently balancing their long-term strategic objectives with necessary disclosures / guidance to give shareholders some much needed clarity on how to think about investments that are unlikely to have a payoff for another 10+ years (and at a time when the core business faces short-term headwinds). This can be a tough balance to strike, but I'm of the belief that FB management is now in a much better position to manage the short-term and long-term needs / objectives of the business.

thescienceofhitting.com
Disruption & The "Right" Owners
In late 2021, WarnerMedia CEO Jason Kilar (who just announced his resignation) sat down for an interview with Peter Kafka of Recode Media. During the discussion, Kilar was asked about the views of former Time Warner CEO Jeff Bewkes, who has said he didn’t believe the company could’ve successfully pursued a global DTC SVOD strategy under his leadership; as a result, Bewkes says that he realized as early as 2014

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