Nobody knows how many people actually watch Cheddar, but that hasn't stopped it raising millions
- The video startup Cheddar just announced $22 million in new funding and a $160 million valuation, which is eye-opening considering the gloomy mood in digital media overall.
- Even more impressive is that unlike many digital startups, Cheddar's audience appears to be relatively small.
- And given the way Cheddar is distributed, it's also very hard to measure. Founder Jon Steinberg said that his bar is relatively low.
- He looks toward the financial news category, where CNBC's daily live shows regularly attract less than 200,000 viewers. "All I need is a quarter of that," he said.
- He's pushing for better research, and sees an opportunity to own business news on the emerging set of "skinny bundle" cable TV alternatives.
Nobody seems to have a clear idea of how many people actually watch Cheddar. And that probably doesn't matter.
The web video startup, which aspires to become the business news outlet of record for millennials, has just pulled in another $22 million in funding - bringing its total to $54 million overall - landing the company an impressive $160 million valuation after just two years.
Those numbers are eye-opening, particularly in light of the recent fallout in digital media. The fuzzyier math: How many people are actually watching Cheddar?
It's tough to gauge. Even founder Jon Steinberg says so.
Nielsen and comScore don't seem to have an answer. If the biggest TV networks in the US are having a hard time measuring how many people watch their shows on multiple devices and apps, consider that Cheddar produces live eight hours a day on several fledgling streaming services, including Sling TV and Philo, while also distributing live and on demand clips for Facebook and Twitter.
It's also distributed on YouTube, Pluto TV, Xumo, and even at some airports. Can anybody come up with a rating number that captures all of that?
According to the analytics firm Tubular Labs, Cheddar had close to 500 million video on Facebook views in the last 90 days. One clip, featuring a demonstration of a clothes-folding product, has generated nearly 100 million views.
To its credit, Cheddar's main Facebook page has nearly 3 million followers, while its Twitter page has nearly 150,000.
At the same time, it's easy to find individual live clips on Facebook or Twitter that generate under 50,000 viewers
Then there's Cheddar's distribution on various skinny bundles. MoffettNathanson Research estimates that 4.6 million people had signed on to these services by the end of 2017.
Targeting the "skinny bundle" crowd
Steinberg said that while Cheddar initially focused on Facebook, particularly Facebook Live, the plan was always to focus on the emerging "over the top" (OTT) opportunity.
"We knew we wanted to get out of Facebook because we knew Facebook was going to screw publishers," he said. "We needed some Park Avenue real estate."
His thinking: As media and tech giants like DirecTV and Hulu and PlayStation and YouTube have readied scaled down cable TV alternatives known as "skinny bundles," there would be an opening for a cheaper alternative.
Networks like CNBC and Fox are used to commanding high monthly carriage fees from cable distributors. Cheddar would come in cheap. "If they are getting a dollar per subscription, we'd offer 25 cents," he said.
Instead, the skinny bundle companies said they'd be happy to carry Cheddar - but weren't interested in paying for that right. "So I was back in the advertising business," Steinberg said.
He says by the end of this year, Cheddar will have distribution on every skinny bundle, and will pull in $40 million to $50 million in ad revenue by next year.
Does a huge audience matter for a media company anymore?
What's striking about Cheddar's funding announcement is that it came during a time when companies like Refinery29, Mashable, Vice, and BuzzFeed are all going through cutbacks.
And the news didn't contain any claims that Cheddar reaches 100s of millions of unique users. It surely doesn't.
Instead, Steinberg said that his bar is relatively low. He looks toward that financial news category, where CNBC's daily live shows regularly attract less than 200,000 viewers. And the average age of their audience is much older than Cheddar, Steinberg says.
"All I need is a quarter of that," he said. "That network pulls in close to a billion a year."
He's got a point. Nielsen says that CNBC's average daytime audience is only around 30,000 viewers between the ages of 25 and 54. According to S&P Global Market Intelligence, CNBC will pull in $778 million this year.
Is that enough to excite investors, who like to see fast scaling revenue and dream of big exits? What is it about Cheddar?
Some point to Cheddar's fandom.
According to CrowdTangle, a Facebook-owned analytics tool, in February Cheddar's videos generated over 3 million interactions, which is more than CNBC, Bloomberg, and yes, Business Insider. That kind of interaction (shares, comments, likes) is typically seen as sign of audience devotion.
"Building a brand on the internet is hard," said media analyst Rich Greenfield. "Cheddar is trying to define the news category in video online. We all know the legacy ecosystem breaking down."
Greenfield cited other digital brands like Barstool Sports. It's a good example of a company that is far smaller audience wise than ESPN, but has been exploding in terms of its profile.
"It's unclear if Cheddar can be a unicorn, but significant value can be created by the brand. They are a beachhead to build a multi-platform media business."
It's an advantage that Cheddar doesn't have legacy costs or infrastructure, argued Farhad Massoudi, founder and CEO of the ad-supported video hub Tubi TV.
"I do think there's a business opportunity to produce news content and distribute it everywhere, and not be locked into traditional news deals," he said. "They've also done a good job of managing to keep the production costs low."
"Cheddar is the leader in live digital news video, and owns all its IP," said Simon Freer, chief commercial officer of Liberty Global's content investments arm, which participated in the most recent funding round. "We believe Cheddar can go global, and we are excited to collaborate with the company to make that a reality."
It's almost as if what matters to investors now is that Cheddar has built distribution, the ability to produce large volumes of content, and a name. Amassing a significant audience is a secondary concern.
Still, the Cheddar haters are out there
There's little question that Cheddar has become Cheddar in large part due to Steinberg's self-promotion, dealmaking prowess, and connections in the media and ad world.
"He's a real hustler," said one digital ad industry veteran. "I've never seen somebody so transparently trying to sell a business. One thing he's got going for him is the dynamic of anybody will say anything if you stick a camera in their face. But I don't know if 21-year olds want to watch this."
Steinberg definitely has a showman side, which some people love, and some don't. He posts personal workout videos on Instagram and wears funny hats while on Cheddar. He's known for putting together splashy press events, like an announcement on a yacht in Cannes a few years ago that he, WPP CEO Sir Martin Sorrell and Snapchat founder Evan Spiegel were launching a new social ad agency dubbed Truffle Pig.
Steinberg says he loves making deals. Sometimes that results in landing huge sponsors. In other cases, that's meant bum deals, like spending $26 million to acquire Elite Daily while he was running Daily Mail's North American operations. That deal became a big money loser for Daily Mail's parent company, which eventually unloaded the property.
For his part, Steinberg said he's not actively looking to sell Cheddar. "I just raised $22 million."
The other knock on Cheddar is that it's live during an era where young people want everything on demand. "I don't think live TV makes any sense," said a source. "That's dead."
To be sure, Cheddar is pushing into more non-newsy content. And its live footage can easily be turned into clips for the web.
Friends like these
And yes, Steinberg has surely used his connections to land guests such as WPP CEO Sir Martin Sorell and CBS CEO Les Mooves. But he bristled at the idea that Cheddar is just his Rolodex.
"These are not all my friends," he said. "We book 30 or 40 people a day. We had Drew Barrymore the other day. She's not my friend. We had [former US Vice Presidential candidate Tim Kaine."
Going forward, Steinberg said that he'd welcome getting Cheddar on traditional cable packages, and he's interested in getting distribution via local broadcast stations.
He also sees an opening as some smaller local cable companies appear to be shifting their focus to becoming primarily broadband providers, given how high the profit margins are. Perhaps Cheddar could provide video content for those services for a much lower cost, letting cable companies focus on broadband, his theory goes.
Steinberg acknowledges that big names and deals will only take Cheddar so far in the near term. For there's one group that will care about measuring Cheddar's audience. That's advertisers.
To ramp up ad revenue, Steinberg's talking to Google about testing "dynamic ads" that could be delivered automatically during breaks in Cheddar's live streams. In the meantime, he's pushing hard for better third party research that will please ad buyers.
"We get very limited data from the skinny bundles and are prohibited from sharing," he said. He's hired the research company Cogent, which is also used by CNBC, to help track viewership on streaming services, "at great cost to us."
According to Cogent, Cheddar viewership has already climbed to 10% among US millennials. In addition, upstart streaming web platforms like Pluto TV and Xumo add in another million plus viewers, Steinberg says.
Cheddar says that overall, "hundreds of thousands watch Cheddar live each day and hundreds of millions watch Cheddar video clips on social media monthly."
But Steinberg seems to realize this hodge podge of data won't be enough for big marketers long term. It's hard to plug these numbers into a chart and compare them to live TV audiences.
So he's pushing for Nielsen to come up with a solution.
"It will probably cost me an arm and a leg," he said. "But I'm dying for it. If I can get Nielsen to measure us, even if the average viewership they come up with is 5,000 people, our whole audience is in its 20s and 30s. And we are two-years old. That would be victory."