Bob Iger, CEO of The Walt Disney Company, has left; David Zaslav, CEO and president of Warner Bros. Discovery, downtown; and Bob Bakish, president and CEO of Paramount Global.
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Firms and industries have ups and downs. The normal media industry is situated in the valley.
The primary half of 2023 was a colossal disappointment for media executives who wanted this yr to be a rebound from a dismal 2022, when a slowdown in streaming subscribers lowered valuations for Netflix, Disney, Discovery Warner Bros AND Paramount Global roughly half.
As an alternative, investors were once again enthusiastic about the future prospects of Netflix cracking down on password sharing, potentially resulting in tens of thousands and thousands of recent sign-ups. Netflix shares have surged over the past five months, outperforming the S&P 500.
Meanwhile, old players cannot exit of their way.
Netflix vs S&P 500 in the last five months.
“When it rains, it pours,” said LightShed media analyst Wealthy Greenfield. “It’s just getting worse.”
It has been a bumpy ride for Disney CEO Bob Iger since he returned to guide the company late last yr. Disney recently accomplished lay off 7,000 staff. CFO Christine McCarthy stepped down last week. The corporate is downloading programming from streaming services to lower your expenses. His animation business is in a serious rut, along with her latest Pixar movie “Elemental” filming lowest gross opening weekend for the studio since the release of the original Toy Story in 1995. Stocks have struggled over the past five months.
Disney versus the S&P 500 over the past five months.
Warner Bros. Discovery vs. S&P 500 over the past five months.
Paramount Global slashed its dividend last quarter as streaming losses hit a peak this yr and a weak promoting market is exacerbated by a terminally ailing cable network business. Wells Fargo released an analyst note on Friday saying that the bull case and the bear case for the company are the same: selling for parts. Warren Buffett, perhaps the most successful investor in history, said CNBC, which offers Paramount streaming “principally, it is not good business.”
Paramount Global vs S&P 500 in the last five months.
Fox Corp. vs S&P 500 in the last five months.
NBCUniversal weathered the storm best, protected by its parent company, Comcast, which derives its income from cable and wireless resources. The mistakes mentioned above were also used. MSNBC became the #1 cable news network this month for the first time in 120 weeks, dethroning Fox News amid coverage of the federal indictment of former President Donald Trump. Universal’s Super Mario Bros. movie” is by far the biggest box office hit of the yrnevertheless, the stock hasn’t modified much.
Comcast vs S&P 500 in the last five months.
All this is happening in the background of the prolonged strike of Hollywood screenwriters, the end of which is not in sight. Writers know that the longer the strike lasts, the more pain will likely be felt by media corporations, which can eventually run out of finished scripts. Fame recently provided the starting address to Boston University and was drowned out by the hum and chanting “pay your writers”.
This week could bring much more bad news. Film and TV actors are to hitch striking writers unless they reach an agreement with Hollywood studios by Friday.
The beneficiaries of the Hollywood shutdown are prone to be YouTube, TikTok and Netflix, which proceed to provide international content unaffected by the strike, Greenfield said.
The normal media might take somewhat breather if ads bounce back as the 2024 U.S. presidential campaign picks up steam. But there is still little evidence that investors will reward media corporations for simply cutting costs. Currently, there is no strong growth narrative for legacy media and the prospects for consolidation are murky as regulators block media related deals such as Microsoft’s acquisition of Activision and Penguin Random House’s proposed purchase of Simon & Schuster.
The industry has just wrapped up its annual promoting gala in Cannes, France. Senior media executives continued to spend corporate dollars to spend time on yachts and drink rosé. The background was beautiful as at all times.
But the landscape is gloomy.
Disclosure: Comcast owns NBCUniversal which is the parent company of CNBC.
SEE: WPP CEO Mark Read on the state of the promoting market, from Cannes Lions 2023