In 2023, major legacy media companies such as Disney, Warner Bros. Discovery, Paramount Global, and Fox have all been met with significant challenges. As Hollywood writers take to strike and Netflix recovers its footing, the media industry is in a state of decline. As of now, it is unclear how these legacy media companies will be able to rebound without a clear road to growth.
The media industry had high expectations to bounce back this year from a difficult 2022; however, the first half of 2023 has proved to be a tremendous letdown. Netflix has seen their shares jump over the past several months, far outpacing the S&P 500, due to their efforts to reduce password sharing, potentially leading to numerous new customers. Unfortunately, the manufacturers of legacy media have been unable to make any progress.
"It's been a turbulent period for Disney since Rich Greenfield of LightShed media commented that 'When it rains it pours' - and it just keeps getting worse. Since he returned to lead late last year, Disney CEO Bob Iger has faced a series of obstacles, such as the layoff of 7,000 employees, CFO Christine McCarthy's departure last week, pulling programming from its streaming services, and a lower than expected opening weekend gross for Pixar's latest movie, 'Elemental,' which marks the lowest since 1995's 'Toy Story.' Shares have also been struggling for the past five months.
Warner Bros. Discovery, led by CEO David Zaslav, has continued to lay off employees in a bid to increase free cash flow after thousands of job cuts in the prior year. Recently, Zaslav parted ways with CNN CEO Chris Licht after numerous internal errors and external programming blunders. To make matters worse, DC Studios' much-hyped movie 'The Flash' failed to make a substantial impression at the box office despite being praised by Zaslav and co-chief James Gunn. In an attempt to show his dedication to classic movies, Zaslav held an urgent meeting with Steven Spielberg, Martin Scorsese and Paul Thomas Anderson, but had to discharge more personnel at TCM. To make matters worse, subscribers of HBO Max, now rebranded as Max, still have to deal with the removal of programming.
Last quarter, Paramount Global decreased its dividend in the light of maximum streaming losses this year and a powerless advertisement market deteriorating a hopelessly doomed cable network industry. On Friday, Wells Fargo issued an analyst report outlining that the optimistic and pessimistic perspective for the firm were both the same—liquidating for components. Warren Buffett, possibly the most renowned investor ever, expressed to CNBC that Paramount's streaming service "is essentially not a sound business."
Fox consented to pay Dominion Voting Systems $787 million in order to prevent a court case regarding the knowing circulation of false claims about electoral fraud. Last April, they let go Tucker Carlson, their most popular presenter, and consequently viewership has declined markedly. Even though stocks have not gone down very much in the past five months, this is mainly because Fox sold off most of their media and entertainment possessions to Disney in 2019.
NBCUniversal has survived the turbulent period unscathed, thanks to the financial buffer from its parent company Comcast, which derives its income from both cable and wireless assets. Taking advantage of some errors from its competitors, MSNBC has recently achieved the number one spot in cable news for the first time in 120 weeks, due to extensive media coverage of the indictment of former President Donald Trump. Universal's "The Super Mario Bros. Movie" has been the greatest box office hit of 2021, yet there has been no notable change in its stock.
Despite an ongoing Hollywood writers' strike with no end in sight, media companies are feeling the strain and could soon be without any scripted content. Mark Zaslav, when addressing Boston University graduates, was subject to booing and chants of "pay your writers." On Friday, film and TV actors may join the writers' strike unless a deal is made. Likely benefitting from the Hollywood work shutdowns is YouTube, TikTok, and Netflix, which are still producing international content unaffected by the strike. The 2024 U.S. presidential campaign could bring a small respite for legacy media in the form of increased advertising. There's not much hope of strong growth, though, and the struggles to consolidate media-adjacent deals, such as Microsoft's acquisition of Activision and Penguin Random House's proposed purchase of Simon & Schuster, are indicative of this. Despite this, legacy media executives still found the time and resources to travel to Cannes, France for the annual advertising gala. They came, they partied, and they yachted, yet the overall picture remains a bleak one.
Comments