CPG Consolidation Continues; Pivotal Research Is Down on Video-Centric Media Companies

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The Whole Package

CPG consolidation is real. Spice company McCormick & Co. has agreed to acquire Reckitt Benckiser’s food division for $4.2 billion, The Wall Street Journal reports. Reckitt Benckiser owns products like French’s mustard and Frank’s RedHot Sauce that have strong brands but aren’t doing so well in the grocery aisle. The acquisition comes after a string of divestiture and sales activity in the CPG space, like Unilever offloading its margarine and spreads business, Nestle putting its confectionery business up for sale and a string of failed mega-mergers. The shake-ups across the sector don’t necessarily signify long-term weakness. Analysts expected Reckitt Benckiser’s food group to go for a lower price tag of between $2.5 billion and $4 billion. As Kraft-Heinz has shown through a string of acquisitions, traditional CPG brands with high costs in agencies, media and manufacturing can be consolidated effectively. More.

Linear Decay

Pivotal Research says it is “slightly modifying our financial models for video-centric media companies” due to continued erosion of subscriber numbers. Overall video viewership is still growing, providing cause for optimism, but “much of the growth accrues to newer SVOD services and YouTube,” Pivotal analyst Brian Wieser writes in an investor note. If traditional linear viewing continues to erode at this pace, we may see a rise in mergers such as this week’s rumored tie-up between Scripps and Discovery.

Snap TV

So what does the future of TV looks like, if it’s not cable packages? Here’s one answer: NBC has a full studio team working on a twice-daily show, “Stay Tuned,” that will run two- to three-minute news segments on Snapchat, Recode reports. NBC fronts the production costs and the two companies split the ad revenue. “This is a different audience than typically finds us,” Nick Ascheim, NBC News’ digital chief, tells Recode. “There’s a generation of people, many of whom are the so-called cord-nevers or cord-cutters – we want to bring NBC news to those people.” The investment follows NBC’s Emmy nomination for its Snapchat series based on the TV show “The Voice.” More. Worth keeping in mind: NBCUniversal bought $500 million in Snap stock during the IPO.

Do Not Enter

China’s Great Firewall got even more impenetrable for Facebook on Tuesday when the government blocked some messaging features on WhatsApp as part of a broad internet crackdown. Some of the controls may be specifically targeted to WhatsApp’s infrastructure, as encrypted messaging services provide a particular threat to government censorship. “The ministries and support organizations that undergird the Great Firewall must constantly prove they can keep abreast of technological change, and encrypted messaging apps are just the latest in a long string of innovations that have drawn the attention of the technical wizards behind the Great Firewall,” Paul Triolo, head of geo-technology at Eurasia Group, told The New York Times. The issue could also trickle sideways into brand safety. If Chinese regulators can identify and block live photos and videos that breach censorships rules, why are platforms like Google and Facebook struggling to police for brand-unsafe content?

But Wait, There’s More!