Inside Cheddar, the millennial-news network trying to find its footing after a $200 million exit and big layoffs during the pandemic

Cheddar

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In April, Dexter Goei, the CEO of Altice USA, and Jon Steinberg,
the founder of Cheddar, virtually addressed a crowd of curious and
apprehensive Cheddar employees.

This was a rare joint appearance by the millennial-news
network’s two leaders since Altice acquired Cheddar for $200
million in 2019. Altice execs, who worked out of the company’s
headquarters in the Long Island City neighborhood of Queens, had
rarely visited Cheddar’s State Street campus in lower
Manhattan.

Now, with
layoffs sweeping across
the media sphere and everyone working
remotely because of the pandemic, staffers scrambled to log in to
Microsoft Teams for the Altice-hosted videoconference. (The Cheddar
team still used Slack, a holdover from its independent days.)

Five former Cheddar staffers told Business Insider that they
left the call feeling somewhat reassured about the state of the
business during the pandemic, despite hearing the executives use
words like “consolidation.” They requested anonymity to protect
future career prospects.

Steinberg, whom insiders have described as charismatic,
relatable, and always looking to the next big thing, focused on the
positives.

“They went through slides showing how great viewership was doing
across the platform because of COVID,” one of the people said.
“There was no language in that to indicate that there would be mass
layoffs.”

The calls came an hour or two later. Staffers across the
newsroom were laid off and furloughed, including Cheddar’s entire
Los Angeles bureau and producers and anchors who worked on
long-running shows like “Opening Bell” and “Closing Bell.” The cuts
were across Altice.

Three sources estimated that Cheddar’s staff was slashed by 30%
or more, which would be a substantial share of the once growing
operation. Altice said Cheddar now had 160 newsroom employees but
declined to confirm the scope of the layoffs.

Multiple Cheddar insiders said they were stunned by the layoffs,
with one describing them as a “horrible shock” and another saying
they “came out of nowhere.” Layoffs are common after mergers as
companies eliminate staffers doing the same jobs — but these,
more influenced by the pandemic, caught staffers off guard.

The meeting drew a sharp line from the old Cheddar, the startup
where Steinberg, who calls Cheddar his “baby,” shared key
financials and ad-sales figures in weekly town halls, the former
staffers said.

Cheddar isn’t a startup anymore. It’s part of Altice, which has
become the US’s fourth-largest cable operator since being spun out
of a European telecom giant.

“It makes me feel terrible that people were caught blindsided,”
Steinberg told Business Insider of the layoffs. “I had hoped I
never would do a layoff, but I think we handled it with
decency.”

The abrupt layoffs also dashed the hopes of some Cheddar
employees that the backing of a cable giant would give financial
breathing room to a company that had been forced to nearly
constantly reinvent its business model since its founding.

Cheddar made a splashy entry into the media scene in the spring
of 2016, when Steinberg, a former president of BuzzFeed and venture
capitalist,
raised nearly $3 million in financing
to launch a CNBC for
millennials. Steinberg was courting a crowd of young professionals
interested in business news via connected TVs or their smartphones,
rather than the traditional TV that increasingly reached an older
demographic.

Cheddar was to be
the “post-cable network,”
a phrase coined by Steinberg. He knew
the key for a niche network like Cheddar would be landing
distribution on every platform possible, from Twitter to
gas-station TVs. But what he couldn’t foresee was the series of
fits and starts in the industry.

The Altice acquisition was a successful exit at a time when

other new-media outfits like Vice were struggling
and a
lifeline for Cheddar after spending much of its four-year history
chasing monetization — first on platforms like Facebook, then on
streaming pay-TV providers like Sling TV, and recently on free
ad-supported streaming-TV services like Pluto TV and Samsung TV
Plus.

Here’s a summary of the stages Cheddar has gone through as it
chased distribution:

  • Before Cheddar launched,
    Steinberg said
    he hoped to bypass traditional pre-roll and
    post-roll ads and generate revenue mainly from distribution deals
    with streaming services like Netflix.
  • Cheddar got its start in 2016 streaming on Facebook Live and
    posting clips on ad-supported websites like YouTube.
  • In May 2016, Cheddar introduced a
    $7-a-month subscription service
    powered by Vimeo. It was later
    shuttered.
  • That year, Cheddar embraced advertising as it sought
    distribution on streaming pay-TV services like Sling TV, without
    the carriage fees that sustain legacy networks.
  • When the streaming pay-TV services struggled, Cheddar jumped
    into traditional TV, landing a carriage deal with the cable
    operator Spectrum before agreeing to sell to Altice. The deal
    closed in June 2019.
  • Recently, it has also focused on free ad-supported streaming-TV
    platforms like Pluto TV and Samsung TV Plus.

Despite the acquisition, Cheddar has yet to find a stable model.
And after the mass layoffs and Cheddar’s shuttering of its second
network, some insiders questioned how much Altice was willing to
invest to make the millennial-news network a household name as it
leans on Steinberg and other Cheddar leaders to build out its other
news and ad businesses.

Steinberg, the president of Altice’s 500-person
news-and-advertising division, painted a rosy picture of the
future. He said that in five years there would be no difference
between a cable-news network like CNN or CNBC and a digital network
like Cheddar.

“Cheddar has as good a shot at being a mainstay quote-unquote
‘cable-news network’ as any of the incumbents five years out,”
Steinberg said. “There will literally be very few advantages that a
traditional cable-news network has relative to a new entrant in
five years when the landscape and distribution is basically all
mushed together.”

But while Altice’s news-and-advertising segment that includes
Cheddar remained steady during the first half of 2020 — a feat
during the pandemic — it also hasn’t grown meaningfully since the
Cheddar deal.

Roughly 16 months into the merger, Business Insider spoke with
Steinberg, seven former Cheddar employees, and analysts about the
future of Cheddar’s “post-cable-network” strategy within Altice.
The people described a scrappy operation that has molded itself to
every potential avenue of distribution but whose path forward still
faces hurdles beyond the company’s control.

Cheddar has been in a nearly constant state of reinvention
in its 4 years

After Cheddar was acquired, insiders said, little changed
day-to-day, apart from the more layered expense-reimbursement and
other administrative processes that come with being part of a large
company.

Steinberg still led the weekly all-hands meetings, usually in
jeans and a casual blazer. There were occasionally longer gaps
between meetings as Steinberg’s broader role pulled him away from
Cheddar’s offices. A few Altice employees from other news ventures
were integrated into the Cheddar staff.

“Jon was really focused on making it feel like there weren’t
going to be changes,” said Carlo DiMarco, an executive vice
president and general manager of Cheddar’s network on college
campuses, CheddarU, who left two months after the acquisition
closed.

“He was hypervigilant to make sure he didn’t lose that magic in
a bottle that Cheddar had … the spirit of the company where
everybody had a voice and could make a difference,” DiMarco
said.

All this added to the impression that it was business as usual
at Cheddar, despite what other insiders said was a huge unknown in
the influence Altice wielded over the company.

But there were signs that the Altice deal had been a reality
check for Cheddar on how much its business model could sustain. A
healthy skepticism has surrounded post-cable models that rely
solely on ad dollars, as fragmented distribution makes it hard to
measure their audiences. Altice
said
at the time of the acquisition that Cheddar reached
roughly 40 million pay-TV homes and garnered 400 million video
views a month — not quite an apples-to-apples comparison to the
industry standard, TV ratings from Nielsen.

In June, after the layoffs at Cheddar, the company collapsed its
two channels — one for business news and the other for general
news — and rebranded as a
single network
. Cheddar had been broadcasting the same feed to
both networks since mid-March, a stopgap as the company shifted to
remote production during the coronavirus pandemic. With market
forces straining the ad market, the consolidation became
permanent.

The transition, while prompted by the pandemic, signaled how the
streaming-TV sands had shifted beneath Cheddar’s feet yet
again.

Cheddar had launched its second network, Cheddar News, when it
was focusing on distribution on emerging streaming pay-TV services
like Sling TV and YouTube TV. The pay-TV services that positioned
themselves as cheaper alternatives to the classic cable bundle were
happy to take more channels, especially ones like Cheddar that
didn’t require carriage fees, or what cable companies and other
distributors pay networks to carry their channels.

But recently Cheddar has been looking to free ad-supported
streaming-TV platforms like Pluto TV and Samsung TV Plus as the
future. And the so-called FAST platforms pushed for a single
channel.

“The FAST systems always wanted basically one channel that was
sort of our best-of and had breaking news along with business
news,” Steinberg said.

“I don’t think we ever really broke through with a clear
delineation between Cheddar News and Cheddar Business,” he
added.

Currently, Cheddar makes most of its money from six- and
seven-figure deals with brands like JPMorgan Chase to sponsor
weekly segments or other integrated ads. But Steinberg said he
thought the FAST services could help grow the revenue Cheddar makes
from the programmatic and direct-sold local ads.

“The more that we grow the networks and the more that these FAST
systems grow, the more opportunity we have in what I call ‘indirect
revenue,’ or programmatic revenue to supplement the big sponsorship
deals that we do,” Steinberg said.

But it still would not diversify Cheddar beyond advertising,
which has been a flashpoint for some critics.

Cheddar, unlike legacy networks, doesn’t generate revenue from
carriage fees. Not charging them allowed Cheddar to get wider
distribution, but it also made it much more dependent on the
advertising market, which has been hit hard by the pandemic.

Before it was acquired, Cheddar said it
generated $27 million in revenue in 2018
and was on pace to
nearly double it in 2019. Altice doesn’t break out Cheddar’s
revenue, but revenue from the overall news-and-advertising division
that includes Cheddar fell by 3%, to $202 million, during the first
half of 2020, compared with the year earlier. The company blamed
lower ad spending.

Cheddar has a vision of its future, but some insiders say
the path is still murky

As TV advertising looks to rebound from the pandemic, what is
the future of Cheddar’s post-cable model?

Cheddar has two things going for it right now. First, people are
paying more attention to news during the coronavirus pandemic and
the US presidential election, pushing some streaming platforms to
make news programming more prominent.

Fox’s free on-demand service, Tubi, recently added a slew of
live-news channels, including Cheddar and News 12. Hulu added live
ABC News coverage to its on-demand service this year. (The
companies have the same parent, Disney.) Bloomberg Media also said
it would
relaunch its QuickTake video-news brand
as a linear-streaming
service.

Second, streaming viewership as a whole is up. Cheddar’s traffic
in June was up 72% from February, and its user base rose by 86%
during that time, according to Altice’s latest quarterly
report.

“Whether or not [Cheddar] retains the viewership that was gained
during the pandemic is really going to determine the future,” one
former staffer said.

That’s the reality for not only Cheddar. Much of the media
industry — including news organizations like The New York Times,
subscription streamers like Netflix and Disney Plus, and FAST
services like Pluto TV — is trying to figure out to hold on to
audiences gained during the pandemic.

Cheddar has doubled down on distribution on FAST services and
said Samsung TV Plus was its biggest viewership source among them.
But the danger is that growth could stall at these services, like
at the virtual pay-TV services before them.

“I never would have predicted that, certainly not four years
ago,” Steinberg said of the rise of FAST services. “There’s
seemingly a new one launched every day, and around which ones are
going to be the biggest and which ones are going to be most
successful, it’s very hard to forecast.”

While Cheddar has continued to release new programming around
topics like climate change, the presidential election, and
diversity and inclusion, as well as expand distribution to smart
TVs like Vizio, Altice hasn’t made major new investments in the
company since the acquisition.

“It seems to me now … strategically, they wanted to check a
box — local news, domestic, international,” one former Cheddar
staffer said of Altice. “Now they’re reevaluating what they can get
away with in terms of integrating the product and being able to
monetize it. And how much product they really need.”

Altice, meanwhile, has been investing in broadening its cable
footprint, teaming up with Rogers Communications recently
on a bid for Cogeco
.

“It’s not something that’s a focus for investors,” Jeff
Wlodarczak, a senior analyst at Pivotal Research, said of Cheddar.
“This is a nice little thing that seems to be doing quite well. The
fact that it’s growing is nice.”

But the existential question hanging over Cheddar’s head is how
hungry younger audiences are for a cable-TV news experience, its
core value proposition. Cheddar has not been able to get
distribution on major streaming video-on-demand services —
Netflix, Disney Plus, Hulu, HBO Max, and so on — and it isn’t
clear that those have an appetite for news programming besides
documentaries and weekly programs. These services are the titans in
the streaming industry and have become the key distributors to
reach younger audiences.

“At the end of the day,” DiMarco said, “when you’re in the media
business, it’s about distribution.”


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Source: FS – All – Entertainment – News
Inside Cheddar, the millennial-news network trying to find
its footing after a 0 million exit and big layoffs during the
pandemic