Recently, two tech heavyweights, Sheryl Sandberg, COO of Facebook (NASDAQ:FB) and Jack Dorsey, CEO of both Twitter (NYSE:TWTR) and Square, announced they wouldn't stand for reelection to Walt Disney's (NYSE:DIS) board of directors at its Mar. 8 annual meeting. Disney investors shouldn't panic, though. The reasons behind the departures do not involve any problems with Disney or any pessimism regarding Disney's acquisition of Fox (NASDAQ:FOX) (NASDAQ:FOXA).
In a statement, Disney said, "Given our evolving business and the businesses Ms. Sandberg and Mr. Dorsey are in, it has become increasingly difficult for them to avoid conflicts relating to board matters."
Here's what Facebook and Twitter are doing on the original-content front, and how they each conflict with Disney.
Facebook's video communities
Original shows make perfect sense for Facebook, as it already has tons of data on its over 2 billion users. This data trove has allowed Facebook to target users with precision and thereby charge high rates to advertisers. But could this data mining also enable Facebook to produce hit shows?
This past summer, Facebook divulged it was looking to develop content for the 13-to-34 year-old demographic -- in a volley against upstart competitor Snap, which has strong cachet among young people. Since Facebook isn't a network, it was open to all kinds of formats -- short form, non-scripted, and scripted shows up to $3 million per episode.
Then in August, Facebook launched a "Watch" tab, where it hosts content from users a la YouTube, though Facebook also said it had "funded some shows" itself, according to TechCrunch.
Upon the launch of the Watch tab, CEO Mark Zuckerberg said:
We believe it's possible to rethink a lot of experiences through the lens of building community -- including watching video. Watching a show doesn't have to be passive. It can be a chance to share an experience and bring people together who care about the same things.
The initial offerings include a lot of mini-documentaries, reality/game shows, and sports-related content, which could potentially compete with Disney's ESPN and other Fox properties.
Like Facebook, Twitter believes it can benefit from more original video content on its feed. Even more so than Facebook, Twitter is focused on live events. In May of last year, Twitter announced partnerships with 16 different video content providers, including Viacom and Live Nation for music-related programming. Twitter also reportedly has its eye on content around fashion and food -- very much within the "reality TV" realm.
But the real conflict with Disney is around sports. Sports is nothing new to Twitter -- the company had exclusive streaming rights to Thursday night NFL games in 2016 before losing those rights to Amazon last year. In 2016, Twitter also inked deals with the MLB, NHL, and NBA, followed by deals with the WNBA and PGA Tour in 2017. Just this past August, Twitter upped the ante, launching a 24-hour network for college sports called Stadium. And last week, Twitter signed a deal with Fox Sports (Fox will retain its FS1 channels after the Disney merger) for "companion content" around the World Cup.
With Twitter's expanding sports focus, combined with Disney's recent acquisition of Fox's regional sports networks, it appears that Disney's streaming ESPN service will be facing off more directly with Twitter than perhaps any other TV network. As Twitter has featured sports for some time now, the question may not be why Dorsey is departing Disney's board now but rather why it took so long.
The short and the long term
The departures of Sandberg and Dorsey shouldn't worry Disney investors right now, but the long-term picture is murkier. Silicon Valley companies have set their sights on video content, and as the cable and tech worlds collide, media companies will increasingly clash with their social media brethren. While media companies have traditional content expertise, social media companies are gold mines of data with plenty of cash to boot. The winners and losers in the fight ahead are yet to be determined, and companies and individuals that were previously partners may increasingly become rivals, as is the case here.