Facebook profit soars, unaffected by Russia ad issue
Facebook profit soars, unaffected by Russia ad issue
The company’s shares, which hit a record earlier in the day, initially rose in after-hours trading, but later fell into negative territory. They have gained almost 60 percent this year.
Chief Executive Mark Zuckerberg condemned Russia’s attempts to influence last year’s election through Facebook posts designed to sow division, and repeated his pledge to ramp up spending significantly to increase the social network’s security, something he said on Wednesday would affect profits.
“What they did is wrong, and we are not going to stand for it,” Zuckerberg said of the Russians, on a conference call with analysts.
Facebook is at the center of a political storm in the US for the ways it handles paid political ads and allows the spread of false news stories. US lawmakers have threatened tougher regulation and fired questions at Facebook General Counsel Colin Stretch in hearings this week.
Facebook, in a series of disclosures over two months, has said that people in Russia bought at least 3,000 US political ads and published another 80,000 Facebook posts that were seen by as many as 126 million Americans over two years. Russia denies any meddling.
Facebook’s total advertising revenue rose 49 percent in the third quarter to $10.14 billion, about 88 percent of which came from mobile ads.
Analysts on average had expected total ad revenue of $9.71 billion, according to data and analytics firm FactSet.
Facebook in the third quarter gave advertisers for the first time the ability to run ads in standalone videos, outside the Facebook News Feed, and the company is seeing good early results, Chief Operating Officer Sheryl Sandberg told analysts on a conference call.
“Video is exploding, and mobile video advertising is a big opportunity,” Sandberg said.
More than 70 percent of ad breaks up to 15 seconds long were viewed to completion, most with the sound on, she said.
The 49 percent increase in total ad sales in the latest quarter compares with a 47 percent rise in the prior quarter and a 51 percent jump in the first quarter.
Facebook has been warning for more than a year about reaching a limit in “ad load,” or the number of ads the company can feature in users’ pages before crowding their News Feed.
Advertisers seem unfazed, though, spending heavily as the social network continues to attract users.
The nearly 50 percent jump in ad revenue “is phenomenal, especially when for the past few quarters they’ve been trying to bring that expectation way, way down. Yet it keeps going up,” Tigress Financial Partners analyst Ivan Feinseth said.
Of the Russia scandal enveloping Facebook publicly, Feinseth said: “In the bigger picture, I don’t think it’s a really big factor.”
The company’s performance was strong in comparison with smaller social media firms Snap Inc. and Twitter Inc. , Wedbush analyst Michael Pachter said.
“Facebook grew revenues by $3.3 billion year-over-year for the quarter. This is more than Twitter and Snapchat generate combined for the full year,” he said.
Facebook said about 2.07 billion people were using its service monthly as of Sept. 30, up 16 percent from a year earlier.
Analysts on average had expected 2.06 billion monthly active users, according to FactSet.
Net income rose to $4.71 billion, or $1.59 per share, from $2.63 billion, or 90 cents per share.
Analysts on an average were expecting the company to earn $1.28, according to Thomson Reuters.
Total revenue increased 47.3 percent to $10.33 billion beating analysts estimate of $9.84 billion, according to Thomson Reuters.
Various US investigations into how Russia may have tried to sway American voters in the months before and after last year’s elections are hanging over Facebook and its competitors.
There is also proposed US legislation that would extend rules governing political ads on television, radio and satellite to also cover digital advertising.
“We expect more scrutiny about Facebook’s ad system ahead,” analyst Debra Aho Williamson of research firm eMarketer said in a note. “We’re also monitoring for any signs that this investigation will have a material impact on ad revenue.”
Vox Cinemas brings popcorn and superheroes to 80 screens across Saudi Arabia
- Majid Al Futtaim (MAF), the Dubai-based operator of malls and leisure facilities, is preparing a big roll-out of new cinema screens in the Kingdom
- Cameron Mitchell, the chief executive of MAF Cinemas, revealed the plans in an interview with Arab News
DUBAI: Majid Al Futtaim (MAF), the Dubai-based operator of malls and leisure facilities, is preparing a big roll-out of new cinema screens in the Kingdom.
Following the first film viewing for nearly four decades in April and the opening of four Vox screens in Riyadh Park Mall, MAF is on the verge of a more ambitious initiative to create 80 screens in the Kingdom by the first quarter of next year.
Cameron Mitchell, the chief executive of MAF Cinemas, revealed the plans in an interview with Arab News.
“By the spring of 2019 we will have invested $100 million in cinema in Saudi Arabia, and by the end of next year we expect to have 200 screens. It is one of the fastest programs of openings anywhere in the world. There’s a lot happening very quickly,” he said.
The latest initiative is part of MAF’s $550 million strategy for cinemas in the Kingdom, and will see screens in Riyadh, Jeddah, in the Eastern Province and eventually many other smaller cities. Mitchell, who has been working in cinema in the region for the past 12 years, said the Saudi Arabian market is potentially huge.
“Saudi Arabia has such a young population and a big demand for entertainment, so the potential is enormous. For example, in Australia the average per capita number of cinema visits is five times a year. Even if every Saudi visits a cinema just once a year, that’s 30 million new visits per year,” he said.
MAF is planning to open 600 screens in Saudi Arabia by 2030, but Mitchell said that could be a “conservative” target. Cinemas in the Kingdom will eventually account for 50 percent of MAF’s regional cinema business, he estimated.
Mitchell said that MAF’s experience so far in Saudi Arabia had been very good. “We think we know what will appeal to Saudi audiences. Black Panther was the first, and the reception was fantastic. Movies such as the Avenger series, Ferdinand, Jurassic Park, X-Men all play well there.The big blockbusters go down really well, but there will also be Arabic films, and Hindi films at other times. Jurassic Park was a real hit — it was the first time some Saudis had ever seen a 3D dinosaur on a big screen,” he added.
The four screens in Riyadh are divided into “family” and “bachelor” venues, and films are chosen to be suitable for the particular audience. “Aside from the segregation of bachelors and families, it’s no different from Dubai. Perhaps over time, that segregation will change too,” Mitchell said.
The reintroduction of cinema has gone very smoothly, he said. “There have been no real challenges regarding content. We’ve been working closely with the censors, but there have been no problems so far.
“We’ve learned a lot from how the UAE censors films, and advances in technology allow us to do it in a more subtle way, for instance zooming in on one subject in a controversial scene. We can avoid (bits) ... rather than cutting the whole scene.
“Areas to avoid are pretty obvious — religion and nudity, and we don’t really show films that have that kind of content anyway. It is mainly action films and family films. We will have lots of screens, so we can match whatever the demand is and the law allows,” he said.
MAF wants to make cinema one of the main forms of entertainment in the Kingdom as it goes through Vision 2030 transformation plans aimed at diversifying the economy and allowing a more liberal lifestyle.
“It is not just about a movie. We want it to be the favorite form of all-round entertainment, and so far it has been a great success. We’ve been selling tickets a couple of days in advance. There have been multiple sold-out sessions, and we’ve had a lot of positive feedback on the popcorn and the nachos,” he said.
One of the biggest cinema hubs will be in the Mall of Saudi, which MAF is planning in the Saudi capital, complete with an indoor ski slope.
“Our cinemas win awards for being among the best in the world, quite an achievement for a Middle East company. The Mall of Saudi will be an entertainment hub, equipped for gaming as well,” Mitchell said. Other new screens will be located in existing malls but there will also be some standalone venues.
“We’re spending a lot of money to develop cinemas quickly, so returns will be consistent with what we normally get from cinemas,” he said.
Mitchell said MAF was open to discussions with existing developers, and would be interested in projects in places such as King Abdullah Economic City and Qiddiya, the huge leisure complex planned outside Riyadh.
“We like to see ourselves as the local developer. Of course, there is competition, but we always build the best in the region, and we run the best malls in the region too. We don’t do cheap, we do best in class and we won’t cut corners,” he said.
MAF plans to employ 3,000 mostly Saudi staff in its cinema business, and wants to recruit a Saudi to run the distribution business in which it partners with 20th Century Fox.
The boost to KSA cinema entertainment is also expected to have a big effect on film-making in the region, Mitchell said.
“We’re looking for some big Saudi film premieres in the autumn. I was at the Cannes Film Festival recently, marketing the product and looking at how we can support the film industry in Saudi Arabia.
“Regionally, there is not a lot of locally made content, but we expect a lot more in years to come. We want local content and we see lots of Saudi films in coming years. We will work with the government to help that along. Cinema in Saudi Arabia is a government-backed and endorsed initiative as part of 2030,” he said.