Bob Iger, CEO of The Walt Disney Company, left; David Zaslav, CEO and president of Warner Bros. Discovery, middle; and Bob Bakish, president and CEO of Paramount Global.
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Companies and industries have ups and downs. The legacy media business is in a valley.
The first half of 2023 has been a colossal disappointment for media executives who wished this 12 months to be a rebound from a horrible 2022, when a slowdown in streaming subscribers lower valuations for Netflix, Disney, Warner Bros. Discovery and Paramount Global roughly in half.
Instead, traders have as soon as once more turn out to be excited by Netflix’s future prospects because it’s cracked down on password sharing, doubtlessly resulting in tens of tens of millions of latest signups. Netflix shares have surged the previous 5 months, outpacing the S&P 500.
Meanwhile, the legacy gamers cannot get out of their very own manner.
Netflix vs the S&P 500 over the previous 5 months.
“When it rains it pours,” stated LightShed media analyst Rich Greenfield. “It just keeps getting worse.”
It’s been a bumpy experience for Disney Chief Executive Officer Bob Iger since he returned to guide the corporate late final 12 months. Disney lately completed shedding 7,000 workers. Chief Financial Officer Christine McCarthy stepped down final week. The firm is pulling programming from its streaming providers to save cash. Its animation business is in a serious rut, with its newest Pixar film, “Elemental,” recording the bottom opening weekend gross for the studio for the reason that unique “Toy Story” premiered in 1995. Shares have struggled prior to now 5 months.
Disney vs. the S&P 500 over the previous 5 months.
Warner Bros. Discovery vs. the S&P 500 over the previous 5 months.
Paramount Global lower its dividend final quarter as streaming losses peak this 12 months and a weak promoting market exacerbates a terminally unwell cable community business. Wells Fargo launched an analyst notice Friday saying the bull case and the bear case for the corporate have been the identical: promoting for components. Warren Buffett, maybe essentially the most acclaimed investor in historical past, advised CNBC that Paramount’s streaming providing “fundamentally is not that good of a business.”
Paramount Global vs the S&P 500 over the previous 5 months.
Fox Corp. vs the S&P 500 over the previous 5 months.
NBCUniversal has weathered the storm the very best, shielded by its dad or mum firm, Comcast, which will get its income from cable and wi-fi belongings. It’s additionally taken benefit of missteps from the aforementioned. MSNBC turned the No. 1 cable news community this month for the primary time in 120 weeks, dethroning Fox News amid protection of former President Donald Trump’s federal indictment. Universal’s “The Super Mario Bros. Movie” is by far the most important field workplace hit of the 12 months, but shares have not moved a lot.
Comcast vs the S&P 500 over the previous 5 months.
All of that is occurring with an prolonged Hollywood writers’ strike occurring within the background endlessly. The writers know the longer the strike lasts, the extra ache might be inflicted on media corporations, who will finally run out of already-made scripted content material. Zaslav lately gave a graduation deal with to Boston University and was drowned out by boos and chants of “pay your writers.”
This week might convey much more dangerous news. Film and TV actors are set to hitch writers on strike except they attain a cope with Hollywood studios by Friday.
The beneficiary of Hollywood work shutdowns will probably be YouTube, TikTok, and Netflix, which continues to churn out worldwide content material that’s unaffected by the strike, stated Greenfield.
Legacy media might get a small reprieve if promoting jumps again because the 2024 U.S. presidential marketing campaign heats up. But there’s nonetheless scant proof traders will reward media corporations for merely slicing prices. There’s at the moment no sturdy development narrative for legacy media, and consolidation prospects are murky as regulators block media-adjacent offers equivalent to Microsoft’s acquisition of Activision and Penguin Random House’s proposed buy of Simon & Schuster.
The business simply wrapped up its annual promoting gala in Cannes, France. Legacy media executives nonetheless spent firm {dollars} to make the journey to hang around on yachts and drink rosé. The backdrop was as stunning as ever.
But the panorama is bleak.
Disclosure: Comcast owns NBCUniversal, which is the dad or mum firm of CNBC.
WATCH: WPP CEO Mark Read on the state of the promoting market, from Cannes Lions 2023
Source: www.cnbc.com