Moliphino
DIS Veteran
- Joined
- Jun 29, 2016
I sign up for a month once or twice a year for the couple of shows I like, but I don't see the point in staying subscribed. I used to back when they were doing the Marvel shows, but it's gotten so expensive.
DIS Shareholders and Stock Info ONLY
- Thread starter hhisc16
- Start date
wabbott
DIS Veteran
- Joined
- Aug 4, 2021
https://www.cnbc.com/2023/07/20/how...ywood-strike-in-a-way-disney-cant-afford.html
How Netflix can end the Hollywood strike in a way Disney, Paramount can’t afford
Published Thu, Jul 20 2023 - 9:00 AM EDT
Tim Mullaney@timmullaney
Key Points
Even as most people focus on the fact that Netflix has big inventory of content that could let it ride out a long strike, its burgeoning financials suggest another possibility: That Netflix will, in months to come, drive a nascent streaming industry where nearly all of its rivals lose money toward a deal that Netflix can afford but rivals can’t.
Netflix spent years tolerating losses and, later, burning cash to build up its library of Netflix-produced content, betting on the day when it would get big enough to generate big returns on that investment. The second-quarter results released Wednesday are the least of it. The most bullish analysts on Wall Street think profits could more than double by 2025, with even average estimates saying profits will rise to $8.3 billion from $4.5 billion last year. After the report, Evercore ISI analyst Mark Mahaney estimated that Netflix would earn $25 a share in 2025, at the current share count, more than $11 billion.
Now, analysts speculate that Netflix will, in months to come, force a settlement to the strikes by the Writers Guild of America and Screen Actors Guild-American Federation of Television and Radio Artists before its rivals so it can get back to business. Their theory isn’t based on inside information, but on the inexorable logic that Netflix’s expected profit surge will simply overwhelm its share of the costs of settling the strikes, giving co-CEOs Ted Sarandos and Greg Peters different incentives than legacy players like Disney
and Paramount Global, and tech rivals including Amazon
“Netflix is likely to position itself to be seen as [friendly] to the actors,” Wedbush Securities analyst Michael Pachter said. “It’s kind of perverse that Netflix is in the AMPTP [Alliance of Motion Picture and Television Producers, the group negotiating for studios],” he said. “The right solution is to do whatever is best for Netflix.”
For the second quarter, Netflix reported adding 5.9 million subscribers, generating a slightly-below-expectations revenue gain of 2.7% and well-above forecast profit of $3.29 a share. Its stock has been volatile around earnings reports in the past, since it frequently gets rewarded big for beating estimates and punished for narrow misses. Its shares were down by as much as 8% on Thursday morning.
The war of words from the studios turned ugly last week, with an article in the trade Deadline quoting an anonymous studio executive as saying executives planned to squeeze the unions until members gave in out of fear of losing their homes, on issues led by residual payments to artists for streaming programs as they are reused. That was followed by a CNBC interview in which Walt Disney Co. chairman Robert Iger said the unions’ demands were unrealistic and add to the problems of a film-and-TV industry not yet recovered from the Covid pandemic.
“There’s a level of expectation that they have that is just not realistic and they are adding to a set of challenges that this business is already facing that is quite frankly very disruptive and dangerous,” Iger told CNBC’s David Faber at the annual Sun Valley conference.
Netflix spent its earnings call sending a strikingly different message, with co-chief executive Ted Sarandos bringing up his family history as the son of a union electrician who joined strikes “on more than one occasion” and saying it wants an equitable deal as soon as possible.
“The strike is not something we wanted,” said Sarandos, whose company is negotiating jointly with competing movie studios like Disney and Paramount whose parent companies also own streaming services. “We make deals all the time. We are at the table constantly. I was raised in a union household.”
The leverage equation is not as simple as big, rich companies starving poor workers, since major streaming services other than Netflix all lose money or barely break even like Warner Bros. Discovery’s HBO’s Max service. Some big-media companies that own streaming services, like Paramount and Disney, have seen their shares drop even in the renewed bull market of the past year.
LightShed Partners analyst Rich Greenfield says Netflix made $6.5 billion last year excluding interest, taxes, and non-cash charges, while rival streaming services at Paramount, Disney and NBC lost more than $8 billion. The culprit: The high costs of making new programs. Mahaney says Netflix’s annual EBITDA will hit $12 billion in two years.
How much settling on artists’ terms will cost Hollywood
Settling the strike on the artists terms would make programming even more expensive, but Netflix said in May that it did not expect a deal with writers to materially affect its profits. (Actors had not yet scheduled their strike). The bond-rating agency Moody’s Investors Service puts the potential tab to settle both strikes, along with a new contract with directors, at $450 million to $600 million a year. That’s a relatively small number for an industry with revenues topping $70 billion, $31.6 billion of it last year at Netflix. But studios are digging in partly because most of the industry is already struggling.
Moody’s numbers are consistent with a statement from the Writers’ Guild of America saying its proposals for expanded residuals, higher pay and adjustments in compensation schemes to account for the fact that streaming shows have shorter seasons with fewer episodes, would cost producers $429 million a year, or $86 million more than management’s counter-offers.
WGA did not respond to interview requests. The Screen Actors’ Guild hasn’t released any such estimates, and the joint negotiating arm of the studios did not make a spokesperson available for comment.
Netflix spokesman Jake Urbanski declined comment for this story.
With about a 20% share of the streaming market, measured by subscribers, and no more than 40% of streaming industry revenue, Netflix’s share would be correspondingly smaller, said Jamie Lumley, an analyst at research firm Third Bridge.
Moody’s report shows why a deal with the artists won’t dent Netflix. The company’s roughly one-third share works out to $150 to $200 million, less than 50 cents per Netflix share, or about 3% to 5% of last year’s profit and less than 4% of what analysts project for this year. Indeed, it’s about the same as compensation for Netflix’s top five executives, about $160 million last year. Netflix shareholders voted down its executive compensation plan in an advisory vote this month, as the WGA said on Twitter that its leaders’ pay exceeds the cost of the union’s proposals.
New Netflix efforts to make money
Aside from executive pay, Netflix has a series of plans in the works that will recover the cost of any settlement many times over.
The company’s new crackdown on password sharing is likely to boost earnings, Mark Mahaney said in a note to clients. And its initiative to offer a lower-priced plan that includes advertisements, reversing two decades of resisting ads as the company has seen subscriber growth mature, will add $3 billion in high-margin revenue by 2025, Mahaney projected.
Indeed, advertising revenue dominated the discussion on Netflix’s earnings call, with executives saying that the $3 billion estimate will eventually prove too low, and suggesting the dollars they are targeting are now spent on so-called “linear TV” networks, which happen to be owned by streaming rivals they are battling, a pool of money Peters called “a sweet spot we can speak to right now” as it builds the technology to compete with highly targeted online ad sellers.
“We wouldn’t spend all this effort, time and effort if we didn’t think it could be at least 10% of revenue,” Netfix chief financial officer Spencer Neumann said. “That’s a bar we’re shooting for to meet or beat over time. There are a lot of branded TV ad dollars we have set our sights on over time because we think we’re a great ecosystem...Our goal is to be a better-than-TV model.”
Netflix’s robust health stands in contrast to its rivals. On top of Disney’s Disney+ losses, its growth reversed in the most recent quarter as it moved to cut spending, helping to prompt a 9% drop in Disney shares. The Hulu service it co-owns with Comcast saw its operating profit (which Disney did not break out) drop in the quarter ending April 1, Disney said, and has also seen growth peter out. Paramount Global’s Paramount+ service lost $1.8 billion last year, but saw losses shrink in the first quarter. Comcast has said it expects to lose $3 billion on its Peacock streaming service this year.
Netflix’s fundamentals story is getting stronger not weaker, says Evercore ISI’s Mark Mahaney
Where Amazon, Apple stand in streaming
Profitability is harder to discern at Amazon’s Prime Video Service and Apple
’s Apple+ TV, whose parent companies report their results as part of larger divisions. Amazon reported spending $16.6 billion on producing movies, music and TV shows last year, virtually the same as Netflix’s $16.7 billion, while Apple spent about $7 billion.
Netflix closed the first quarter with 232.5 million subscribers, making them the only one to crack a threshold of 200 million that has proven to be a threshold for meaningful profitability, Pachter said.
At the same time, the media players have many other issues to fix in their old-media assets, Moody’s analyst Neil Begley said. Disney may be open to selling its ABC and ESPN divisions, which have lost viewers and revenue to cord-cutting and viewers spending more time on streaming platforms. Paramount slashed its quarterly dividend to a nickel from 25 cents in May after its traditional TV businesses, including the CBS Network and Nickelodeon, saw first-quarter revenue drop 8%.
“Netflix already ditched its legacy business,” renting DVDs through the mail, Begley said. “The others are trying to fix their cars while driving 50 mph. They’re under enormous pressure from Wall Street, from their boardrooms,” he added.
The problems in other businesses, and the lack of scale, both make it harder for the old-media rivals to add more costs, like bigger residuals for writers and actors, than it is for Netflix, Pachter said.
“Disney’s ability to continue propping up loss-leading businesses is part of this,” Lumley said. “People wonder if Paramount could become an acquisition target. Netflix does seem to be the top of the pack [because] they don’t have pressure from underperforming traditional businesses.”
That may mean all the studios, including Netflix, dial back on the number of shows they greenlight in order to pay artists better, Moody’s Begley said. The victims after the eventual settlement will be people who make marginal shows, Pachter said, with a barb at “the third season of Santa Clarita Diet,” a black comedy on Netflix about suburban cannibalism starring Drew Barrymore, as content consumers won’t miss.
And that leaves Netflix an opening to force deals that only it, among the streamers, can easily afford, Lumley and Pachter said, especially as customers begin to notice the absence of new content, first on traditional TV and later on streaming. The hardball tactic, if Netflix deploys it, would be to step in as the artists’ friend and prod rivals toward a deal only it can easily afford, Pachter added.
“Ted Sarandos shows up at every awards show and sits with actors,” Pachter said. “He wants to be seen as simpatico.”
Disclosure: Comcast is the parent company of NBCUniversal, which includes CNBC.
How Netflix can end the Hollywood strike in a way Disney, Paramount can’t afford
Published Thu, Jul 20 2023 - 9:00 AM EDT
Tim Mullaney@timmullaney
Key Points
- Netflix is in much better financial shape than its legacy entertainment industry rivals, according to Wall Street analysts, and can make deals others will find more difficult to afford.
- While Netflix stock was down after a revenue miss, subscribers and cash on hand were up, and Street estimates have Netflix earning as much as $9.5 billion annually by 2025.
- Netflix spent its earnings call sending a strikingly different message than other media CEOs, with co-chief executive Ted Sarandos bringing up his family history as the son of a union electrician who joined strikes “on more than one occasion.”
Even as most people focus on the fact that Netflix has big inventory of content that could let it ride out a long strike, its burgeoning financials suggest another possibility: That Netflix will, in months to come, drive a nascent streaming industry where nearly all of its rivals lose money toward a deal that Netflix can afford but rivals can’t.
Netflix spent years tolerating losses and, later, burning cash to build up its library of Netflix-produced content, betting on the day when it would get big enough to generate big returns on that investment. The second-quarter results released Wednesday are the least of it. The most bullish analysts on Wall Street think profits could more than double by 2025, with even average estimates saying profits will rise to $8.3 billion from $4.5 billion last year. After the report, Evercore ISI analyst Mark Mahaney estimated that Netflix would earn $25 a share in 2025, at the current share count, more than $11 billion.
Now, analysts speculate that Netflix will, in months to come, force a settlement to the strikes by the Writers Guild of America and Screen Actors Guild-American Federation of Television and Radio Artists before its rivals so it can get back to business. Their theory isn’t based on inside information, but on the inexorable logic that Netflix’s expected profit surge will simply overwhelm its share of the costs of settling the strikes, giving co-CEOs Ted Sarandos and Greg Peters different incentives than legacy players like Disney
and Paramount Global, and tech rivals including Amazon
“Netflix is likely to position itself to be seen as [friendly] to the actors,” Wedbush Securities analyst Michael Pachter said. “It’s kind of perverse that Netflix is in the AMPTP [Alliance of Motion Picture and Television Producers, the group negotiating for studios],” he said. “The right solution is to do whatever is best for Netflix.”
For the second quarter, Netflix reported adding 5.9 million subscribers, generating a slightly-below-expectations revenue gain of 2.7% and well-above forecast profit of $3.29 a share. Its stock has been volatile around earnings reports in the past, since it frequently gets rewarded big for beating estimates and punished for narrow misses. Its shares were down by as much as 8% on Thursday morning.
The war of words from the studios turned ugly last week, with an article in the trade Deadline quoting an anonymous studio executive as saying executives planned to squeeze the unions until members gave in out of fear of losing their homes, on issues led by residual payments to artists for streaming programs as they are reused. That was followed by a CNBC interview in which Walt Disney Co. chairman Robert Iger said the unions’ demands were unrealistic and add to the problems of a film-and-TV industry not yet recovered from the Covid pandemic.
“There’s a level of expectation that they have that is just not realistic and they are adding to a set of challenges that this business is already facing that is quite frankly very disruptive and dangerous,” Iger told CNBC’s David Faber at the annual Sun Valley conference.
Netflix spent its earnings call sending a strikingly different message, with co-chief executive Ted Sarandos bringing up his family history as the son of a union electrician who joined strikes “on more than one occasion” and saying it wants an equitable deal as soon as possible.
“The strike is not something we wanted,” said Sarandos, whose company is negotiating jointly with competing movie studios like Disney and Paramount whose parent companies also own streaming services. “We make deals all the time. We are at the table constantly. I was raised in a union household.”
The leverage equation is not as simple as big, rich companies starving poor workers, since major streaming services other than Netflix all lose money or barely break even like Warner Bros. Discovery’s HBO’s Max service. Some big-media companies that own streaming services, like Paramount and Disney, have seen their shares drop even in the renewed bull market of the past year.
LightShed Partners analyst Rich Greenfield says Netflix made $6.5 billion last year excluding interest, taxes, and non-cash charges, while rival streaming services at Paramount, Disney and NBC lost more than $8 billion. The culprit: The high costs of making new programs. Mahaney says Netflix’s annual EBITDA will hit $12 billion in two years.
How much settling on artists’ terms will cost Hollywood
Settling the strike on the artists terms would make programming even more expensive, but Netflix said in May that it did not expect a deal with writers to materially affect its profits. (Actors had not yet scheduled their strike). The bond-rating agency Moody’s Investors Service puts the potential tab to settle both strikes, along with a new contract with directors, at $450 million to $600 million a year. That’s a relatively small number for an industry with revenues topping $70 billion, $31.6 billion of it last year at Netflix. But studios are digging in partly because most of the industry is already struggling.
Moody’s numbers are consistent with a statement from the Writers’ Guild of America saying its proposals for expanded residuals, higher pay and adjustments in compensation schemes to account for the fact that streaming shows have shorter seasons with fewer episodes, would cost producers $429 million a year, or $86 million more than management’s counter-offers.
WGA did not respond to interview requests. The Screen Actors’ Guild hasn’t released any such estimates, and the joint negotiating arm of the studios did not make a spokesperson available for comment.
Netflix spokesman Jake Urbanski declined comment for this story.
With about a 20% share of the streaming market, measured by subscribers, and no more than 40% of streaming industry revenue, Netflix’s share would be correspondingly smaller, said Jamie Lumley, an analyst at research firm Third Bridge.
Moody’s report shows why a deal with the artists won’t dent Netflix. The company’s roughly one-third share works out to $150 to $200 million, less than 50 cents per Netflix share, or about 3% to 5% of last year’s profit and less than 4% of what analysts project for this year. Indeed, it’s about the same as compensation for Netflix’s top five executives, about $160 million last year. Netflix shareholders voted down its executive compensation plan in an advisory vote this month, as the WGA said on Twitter that its leaders’ pay exceeds the cost of the union’s proposals.
New Netflix efforts to make money
Aside from executive pay, Netflix has a series of plans in the works that will recover the cost of any settlement many times over.
The company’s new crackdown on password sharing is likely to boost earnings, Mark Mahaney said in a note to clients. And its initiative to offer a lower-priced plan that includes advertisements, reversing two decades of resisting ads as the company has seen subscriber growth mature, will add $3 billion in high-margin revenue by 2025, Mahaney projected.
Indeed, advertising revenue dominated the discussion on Netflix’s earnings call, with executives saying that the $3 billion estimate will eventually prove too low, and suggesting the dollars they are targeting are now spent on so-called “linear TV” networks, which happen to be owned by streaming rivals they are battling, a pool of money Peters called “a sweet spot we can speak to right now” as it builds the technology to compete with highly targeted online ad sellers.
“We wouldn’t spend all this effort, time and effort if we didn’t think it could be at least 10% of revenue,” Netfix chief financial officer Spencer Neumann said. “That’s a bar we’re shooting for to meet or beat over time. There are a lot of branded TV ad dollars we have set our sights on over time because we think we’re a great ecosystem...Our goal is to be a better-than-TV model.”
Netflix’s robust health stands in contrast to its rivals. On top of Disney’s Disney+ losses, its growth reversed in the most recent quarter as it moved to cut spending, helping to prompt a 9% drop in Disney shares. The Hulu service it co-owns with Comcast saw its operating profit (which Disney did not break out) drop in the quarter ending April 1, Disney said, and has also seen growth peter out. Paramount Global’s Paramount+ service lost $1.8 billion last year, but saw losses shrink in the first quarter. Comcast has said it expects to lose $3 billion on its Peacock streaming service this year.
Netflix’s fundamentals story is getting stronger not weaker, says Evercore ISI’s Mark Mahaney
Where Amazon, Apple stand in streaming
Profitability is harder to discern at Amazon’s Prime Video Service and Apple
’s Apple+ TV, whose parent companies report their results as part of larger divisions. Amazon reported spending $16.6 billion on producing movies, music and TV shows last year, virtually the same as Netflix’s $16.7 billion, while Apple spent about $7 billion.
Netflix closed the first quarter with 232.5 million subscribers, making them the only one to crack a threshold of 200 million that has proven to be a threshold for meaningful profitability, Pachter said.
At the same time, the media players have many other issues to fix in their old-media assets, Moody’s analyst Neil Begley said. Disney may be open to selling its ABC and ESPN divisions, which have lost viewers and revenue to cord-cutting and viewers spending more time on streaming platforms. Paramount slashed its quarterly dividend to a nickel from 25 cents in May after its traditional TV businesses, including the CBS Network and Nickelodeon, saw first-quarter revenue drop 8%.
“Netflix already ditched its legacy business,” renting DVDs through the mail, Begley said. “The others are trying to fix their cars while driving 50 mph. They’re under enormous pressure from Wall Street, from their boardrooms,” he added.
The problems in other businesses, and the lack of scale, both make it harder for the old-media rivals to add more costs, like bigger residuals for writers and actors, than it is for Netflix, Pachter said.
“Disney’s ability to continue propping up loss-leading businesses is part of this,” Lumley said. “People wonder if Paramount could become an acquisition target. Netflix does seem to be the top of the pack [because] they don’t have pressure from underperforming traditional businesses.”
That may mean all the studios, including Netflix, dial back on the number of shows they greenlight in order to pay artists better, Moody’s Begley said. The victims after the eventual settlement will be people who make marginal shows, Pachter said, with a barb at “the third season of Santa Clarita Diet,” a black comedy on Netflix about suburban cannibalism starring Drew Barrymore, as content consumers won’t miss.
And that leaves Netflix an opening to force deals that only it, among the streamers, can easily afford, Lumley and Pachter said, especially as customers begin to notice the absence of new content, first on traditional TV and later on streaming. The hardball tactic, if Netflix deploys it, would be to step in as the artists’ friend and prod rivals toward a deal only it can easily afford, Pachter added.
“Ted Sarandos shows up at every awards show and sits with actors,” Pachter said. “He wants to be seen as simpatico.”
Disclosure: Comcast is the parent company of NBCUniversal, which includes CNBC.
jade1
I spend half my money on WDW, and waste the rest.
- Joined
- Dec 30, 2001
We've always kept it, but I can see folks joining here and there.
We have really cut back on going to movies, and streaming has way over filled that gap.
Family of 5, so we consider the price a lot less, compared to everyone needing a movie ticket.
Some of these shows have multiple seasons of like 10 45 minute episodes. That's of lot of time compared to going to a movie you may not even end up liking.
Moliphino
DIS Veteran
- Joined
- Jun 29, 2016
I'm actually mad they didn't make a fourth season of Santa Clarita Diet after how it ended. One more reason I don't need Netflix.
I remember being so upset too that they never made a fourth season but I do understand their point. I honestly forgot about that show existed entirely and I think that speaks to so many originals that are released.
BrianL
Doom Buggy Driver
- Joined
- Jul 24, 2013
Yeah, apparently Netflix will greenlight just about anything, but they will also cancel it just as fast.
Last edited:
wabbott
DIS Veteran
- Joined
- Aug 4, 2021
Kinda the history of linear broadcast TV since the beginning. Many, many "good" shows that no one watched get canceled, right quick, while mediocre stuff stays on the air.
Reminds me of one of the most common advertising pitches ever devised, "New and Improved!"
BrianL
Doom Buggy Driver
- Joined
- Jul 24, 2013
Well, yeah, but with network TV you could kinda tell when a show was "in trouble." Sometimes they might even move a show to see if it does better in a different slot. With streaming, they just cut it, and it feels very sudden.
irlandaise
DIS Veteran
- Joined
- Sep 27, 2022
So after paragraphs and paragraphs about how Netflix is going to force a certain deal, the writer finally admits that all they can do is "prod" because they're only one company in the producers' association that's negotiating with the unions. Netflix can't "end" the strike any more than any other single production company can.
I was just thinking about "Santa Clarita Diet" last night while watching the new "Justified" series with Timothy Olyphant. It was a delightful show. It even had that television rarity of teenage characters who weren't obnoxious.
wabbott
DIS Veteran
- Joined
- Aug 4, 2021
I just had a thought here, and I may be completely off base, but here goes.
We all know how Hollywood loves sequels - that is if something works, keep doing it until it no longer does.
Well, linear TV has been a huge economic and societal force for more than 75 years. Pretty much after WW2 is when it started. And it made many, many billions of dollars - maybe trillions - spread out over a lot of people.
Is the plan of NFLX, DIS, WBD, etc to take streaming and try and replicate linear TV? It was sold to us as "new and improved," but will it wind up being the same old product that we've known for many years, except that we can select what we watch, instead of the programmer deciding what's shown?
Moliphino
DIS Veteran
- Joined
- Jun 29, 2016
It was so good! I love Drew Barrymore in pretty much anything, too.
Jwaire
DIS Veteran
- Joined
- Sep 17, 2020
I decided to re-read DisneyWar.
From DisneyWar:
Eisner also addressed the issue of succession should he be “hit by that truck.” “If I had to pick a new president today, I might pick Bob Iger. He is certainly steadier than Michael Ovitz by a thousand fold.” But then he cataloged Iger’s faults: “He will not get the company into trouble. He is a corporate executive. He is not an enlightened or brilliantly creative man, but with a strong board, he absolutely could do the job. He will want to keep the board out of his way just as he tries and succeeds in keeping out Tom Murphy and Dan Burke. I have found that stupid and weak. They could be great help to him, but he resents them for some reason.” Eisner then ticked off all the ways that the board would have to curb Iger’s authority, including “spending limits on movies and television shows and series.” It was hardly a vote of confidence.”
From DisneyWar:
Eisner also addressed the issue of succession should he be “hit by that truck.” “If I had to pick a new president today, I might pick Bob Iger. He is certainly steadier than Michael Ovitz by a thousand fold.” But then he cataloged Iger’s faults: “He will not get the company into trouble. He is a corporate executive. He is not an enlightened or brilliantly creative man, but with a strong board, he absolutely could do the job. He will want to keep the board out of his way just as he tries and succeeds in keeping out Tom Murphy and Dan Burke. I have found that stupid and weak. They could be great help to him, but he resents them for some reason.” Eisner then ticked off all the ways that the board would have to curb Iger’s authority, including “spending limits on movies and television shows and series.” It was hardly a vote of confidence.”
wabbott
DIS Veteran
- Joined
- Aug 4, 2021
https://finance.yahoo.com/news/disney-netflix-more-streaming-companies-173538633.html
How Disney, Netflix, and more streaming companies are fighting FTC's 'click to cancel' proposal
Lucia Moses
Thu, July 20, 2023 at 7:35 PM GMT+2·4 min read
Trade orgs for Netflix, Disney, and others oppose an FTC plan to make it easier for people to cancel subscriptions.
The "click to cancel" proposal comes as streamers and other businesses face rising cancellation rates.
Companies argue the regulation would impose heavy costs and infringe on their freedom of speech.
Now that we seem to be at peak subscription, media and entertainment giants are pushing back hard against the Federal Trade Commission's "click to cancel" proposal that would make it easier for people to cancel streaming, gaming, and other services.
But legacy Hollywood giants like Disney, together with tech interlopers including Netflix and other affected businesses, are putting up a resistance to the proposed regulations.
Companies of all stripes have angered consumers by making services all too easy to sign up for but often confoundingly difficult to cancel, with gyms and news outlets considered among the worst offenders. The FTC has gone after individual companies; it recently sued Amazon, alleging the etailer "tricked" people into signing up for Amazon Prime.
That followed the FTC's proposal in March for a regulation that's intended "to make it as easy for consumers to cancel their enrollment as it was to sign up." The policy would cover providers of both digital and physical subscriptions, from streamers and gym memberships to phone companies and cable TV distributors.
The new rule would require companies to offer a simple mechanism for users to cancel subscriptions the same way they signed up. For example, you wouldn't have to cancel a service in person or over the phone if you signed up for it online.
"I can't tell you how much time I've spent trying to cancel subscriptions I never wanted, let alone the cost!" one person wrote in a comment to the FTC.
The proposal comes at a precarious time for the entertainment industry. Hollywood distributors are counting on streaming to save them from the decline of the cable bundle. But the model depends on getting more subscribers to join and stay, and consumers have become trained to frequently cancel their subscriptions.
The average monthly churn rate across 10 subscription video streamers reached 5.8% in 2022, up from 3.2% in 2019, according to data analytics firm Antenna. In a Deloitte survey, 44% of respondents said they canceled a paid streaming service within the past six months, the highest level in the nearly five years Deloitte has been tracking churn.
Battling churn has thus become an industry priority. In rolling out its new streamer, Max, for example, Warner Bros. Discovery emphasized new features built into the app to keep people from canceling.
And entertainment trade orgs are fighting the FTC's proposal, submitting comments to the FTC ahead of its June 23 deadline for public comment.
The Internet & Television Association, which counts Disney, Paramount, and Warner Bros. Discovery as members, said in its public comment that the proposed reg is so vague, it would lead marketers to be excessive in their disclosures, leaving consumers "inundated" and "confused." The reg would even infringe on its members' freedom of speech, the association argued.
"The proposal would also severely curtail or, in some cases, even prohibit companies from communicating with their customers, in violation of the First Amendment," the association wrote.
Sirius XM wrote in its comments that one proposed requirement — that companies maintain records of phone calls with customers — would cost the company "several million" dollars a year to comply with.
The Entertainment Software Association, the video gaming trade organization, noted that the FTC's proposed disclosure requirements "would interfere with game play and customer enjoyment." The ESA wrote that "most consumers understand autorenewal offers and are knowing and willing participants in the marketplace" and that letting customers cancel immediately would prevent member companies from offering them alternative plans or discounts. The ESA was joined in its comments by the Digital Media Association and Motion Picture Association, whose members include Netflix, Sony Pictures Entertainment, and Universal Pictures.
The FTC will examine the feedback it's received through public comment before considering a final rule.
How Disney, Netflix, and more streaming companies are fighting FTC's 'click to cancel' proposal
Lucia Moses
Thu, July 20, 2023 at 7:35 PM GMT+2·4 min read
Trade orgs for Netflix, Disney, and others oppose an FTC plan to make it easier for people to cancel subscriptions.
The "click to cancel" proposal comes as streamers and other businesses face rising cancellation rates.
Companies argue the regulation would impose heavy costs and infringe on their freedom of speech.
Now that we seem to be at peak subscription, media and entertainment giants are pushing back hard against the Federal Trade Commission's "click to cancel" proposal that would make it easier for people to cancel streaming, gaming, and other services.
But legacy Hollywood giants like Disney, together with tech interlopers including Netflix and other affected businesses, are putting up a resistance to the proposed regulations.
Companies of all stripes have angered consumers by making services all too easy to sign up for but often confoundingly difficult to cancel, with gyms and news outlets considered among the worst offenders. The FTC has gone after individual companies; it recently sued Amazon, alleging the etailer "tricked" people into signing up for Amazon Prime.
That followed the FTC's proposal in March for a regulation that's intended "to make it as easy for consumers to cancel their enrollment as it was to sign up." The policy would cover providers of both digital and physical subscriptions, from streamers and gym memberships to phone companies and cable TV distributors.
The new rule would require companies to offer a simple mechanism for users to cancel subscriptions the same way they signed up. For example, you wouldn't have to cancel a service in person or over the phone if you signed up for it online.
"I can't tell you how much time I've spent trying to cancel subscriptions I never wanted, let alone the cost!" one person wrote in a comment to the FTC.
The proposal comes at a precarious time for the entertainment industry. Hollywood distributors are counting on streaming to save them from the decline of the cable bundle. But the model depends on getting more subscribers to join and stay, and consumers have become trained to frequently cancel their subscriptions.
The average monthly churn rate across 10 subscription video streamers reached 5.8% in 2022, up from 3.2% in 2019, according to data analytics firm Antenna. In a Deloitte survey, 44% of respondents said they canceled a paid streaming service within the past six months, the highest level in the nearly five years Deloitte has been tracking churn.
Battling churn has thus become an industry priority. In rolling out its new streamer, Max, for example, Warner Bros. Discovery emphasized new features built into the app to keep people from canceling.
And entertainment trade orgs are fighting the FTC's proposal, submitting comments to the FTC ahead of its June 23 deadline for public comment.
The Internet & Television Association, which counts Disney, Paramount, and Warner Bros. Discovery as members, said in its public comment that the proposed reg is so vague, it would lead marketers to be excessive in their disclosures, leaving consumers "inundated" and "confused." The reg would even infringe on its members' freedom of speech, the association argued.
"The proposal would also severely curtail or, in some cases, even prohibit companies from communicating with their customers, in violation of the First Amendment," the association wrote.
Sirius XM wrote in its comments that one proposed requirement — that companies maintain records of phone calls with customers — would cost the company "several million" dollars a year to comply with.
The Entertainment Software Association, the video gaming trade organization, noted that the FTC's proposed disclosure requirements "would interfere with game play and customer enjoyment." The ESA wrote that "most consumers understand autorenewal offers and are knowing and willing participants in the marketplace" and that letting customers cancel immediately would prevent member companies from offering them alternative plans or discounts. The ESA was joined in its comments by the Digital Media Association and Motion Picture Association, whose members include Netflix, Sony Pictures Entertainment, and Universal Pictures.
The FTC will examine the feedback it's received through public comment before considering a final rule.
wabbott
DIS Veteran
- Joined
- Aug 4, 2021
https://www.thewrap.com/bob-iger-disney-abc-cable-networks-sale/
Why Disney Wants to Sell ABC – and Who Would Buy It | Analysis
CEO Bob Iger’s comments have not only defined the fate of its linear TV assets, but set expectations for the company under his extended reign
Jose Alejandro Bastidas
July 20, 2023 @ 6:00 AM PDT
With his public comments that Disney’s linear television business is no longer at the company’s core, CEO Bob Iger signaled that the media conglomerate is ready to let go of distribution assets previously at the center of its mission. As streaming redefines the future of entertainment, Iger’s decision previews how the industry overall might have to shrink their television assets to make room for future growth.
It’s been a long time coming. The decline of the linear TV business model has been apparent for years. But even so, the idea that ABC, one of the Big Three broadcast networks — not to mention well-known cable brands like Disney Channel, National Geographic and FX — are no longer vital assets to Disney marks a step toward a bleak future for legacy television that perhaps the industry hasn’t wanted to actually say out loud.
“What will happen is that these businesses will be slashed to fractions of their current size,” a former Disney executive told TheWrap. “The broadcast networks are still the only way to reach 125 million to 130 million American homes… so they will always be there. But it’s just going to be a lot smaller, and that means fewer jobs and lower wages.”
A Disney spokesperson declined to comment for this story.
Analyst estimates vary widely in terms of how much Disney could collect from a sale, ranging from $8 billion to $23 billion, depending on which networks were included in a potential deal and how the value of each broadcast and cable channel was calculated. In his comments, Iger emphasized that ESPN was not among the assets on the chopping block, though he said he would seek strategic partners to help move the sports network into a fully direct-to-consumer business in the near future.
Wells Fargo stock analyst Steven Cahall, whose analysis of a potential sale also included the company’s Star India assets, wrote in a July 13 note that these assets are dragging down Disney’s bottom line. Divesting the linear networks could boost Disney’s stock price by up to $10, Cahall calculated. He added that Disney’s strong operating income from its theme parks division allows it to afford letting go of the TV business’ cash flow, an option other major media companies don’t have, given their current dependence on cable earnings.
Cahall also noted that money from the potential sale could help fund the cost of Disney’s payout for Comcast’s minority stake of Hulu, which is expected to happen sometime in 2024.
“Rome wasn’t built in a day and [Disney’s] problems won’t be solved in Iger’s first year,” Cahall wrote. “But [last week’s] interview does suggest action is underway.”
Three former network TV executives pointed to Sinclair Broadcast Group, Nexstar Media Group — which recently purchased The CW, and is in the process of revamping the network’s operations toward profitability — and private equity firm Apollo Global Management as potential buyers in separate conversations with TheWrap.
“Some of these folks who own a lot of television stations might think I’ll take a network now,” one of those individuals said. “And they’re committed to that business. They could run it efficiently.”
The person continued, “Private equity firms might look at this and go, ‘Well, look, these businesses are still meaningful and if we slashed the costs, we could run a profitable business for some period of time and turn it into something that’s not going to grow but at least it’ll be more profitable.”
Other companies flagged by the executives as potential buyers of the assets include broadcast and media company Tegna, Allen Media Broadcasting, Hearst and private equity firms TPG and Silver Lake.
What these potential new owners have in common is they would approach running the business from a cost-cutting perspective.
“None of these places are looking at this saying, ‘The future of this business is bright,’” the insider said. “Those days are over, and that’s what Bob is saying.”
A spokesperson for Sinclair Broadcast Group declined to comment on this story. Representatives for Nexstar and Apollo didn’t respond to TheWrap’s requests for comment.
Iger’s hints at Disney’s future
While questioning the CEO’s decision to blurt out such a major business shift in an interview pegged to the renewal of his contract through 2026, one former executive called the soundbite an example of Iger’s “famous honesty and bluntness” — and a message to Wall Street, potential buyers and employees that Disney is gearing up for major changes in the coming years.
The individual explained, “He’s signaling to Wall Street, ‘We’re realistic about our problems.’ He’s signaling to potential buyers, ‘Hey, you want to come buy a distressed asset? You can come buy our networks,’ and he’s signaling to the employees of the company, ‘Brace yourselves. There’s a rough landing ahead. It’s going to be tough. It’s going to be bumpy.’”
Since then, Iger addressed the future, among other topics, during an off-site meeting with the senior leaders of Disney’s television business hosted by Dana Walden on Tuesday. During which, he tried to ease fears sparked by the CNBC interview and reportedly emphasized the value of the Disney’s TV divisions, along with his commitment to ABC News with the intention of moving those efforts into the company’s streaming endeavors.
The individual said, “He’s not just standing there saying, ‘Hip hip hooray! I’m doing two more years as [CEO].’ He’s saying, in his way, very realistic and sober, ‘I’m doing this because there are very big challenges that Disney faces. This is going to be a very tough time in which we’re going to have to do some very tough things. This company that I just built for the last 15 years is now going to have to get smaller in order to continue to grow.’”
Lucas Manfredi and Sharon Waxman contributed to this story.
Why Disney Wants to Sell ABC – and Who Would Buy It | Analysis
CEO Bob Iger’s comments have not only defined the fate of its linear TV assets, but set expectations for the company under his extended reign
Jose Alejandro Bastidas
July 20, 2023 @ 6:00 AM PDT
With his public comments that Disney’s linear television business is no longer at the company’s core, CEO Bob Iger signaled that the media conglomerate is ready to let go of distribution assets previously at the center of its mission. As streaming redefines the future of entertainment, Iger’s decision previews how the industry overall might have to shrink their television assets to make room for future growth.
It’s been a long time coming. The decline of the linear TV business model has been apparent for years. But even so, the idea that ABC, one of the Big Three broadcast networks — not to mention well-known cable brands like Disney Channel, National Geographic and FX — are no longer vital assets to Disney marks a step toward a bleak future for legacy television that perhaps the industry hasn’t wanted to actually say out loud.
“What will happen is that these businesses will be slashed to fractions of their current size,” a former Disney executive told TheWrap. “The broadcast networks are still the only way to reach 125 million to 130 million American homes… so they will always be there. But it’s just going to be a lot smaller, and that means fewer jobs and lower wages.”
A Disney spokesperson declined to comment for this story.
Analyst estimates vary widely in terms of how much Disney could collect from a sale, ranging from $8 billion to $23 billion, depending on which networks were included in a potential deal and how the value of each broadcast and cable channel was calculated. In his comments, Iger emphasized that ESPN was not among the assets on the chopping block, though he said he would seek strategic partners to help move the sports network into a fully direct-to-consumer business in the near future.
Wells Fargo stock analyst Steven Cahall, whose analysis of a potential sale also included the company’s Star India assets, wrote in a July 13 note that these assets are dragging down Disney’s bottom line. Divesting the linear networks could boost Disney’s stock price by up to $10, Cahall calculated. He added that Disney’s strong operating income from its theme parks division allows it to afford letting go of the TV business’ cash flow, an option other major media companies don’t have, given their current dependence on cable earnings.
Cahall also noted that money from the potential sale could help fund the cost of Disney’s payout for Comcast’s minority stake of Hulu, which is expected to happen sometime in 2024.
“Rome wasn’t built in a day and [Disney’s] problems won’t be solved in Iger’s first year,” Cahall wrote. “But [last week’s] interview does suggest action is underway.”
Three former network TV executives pointed to Sinclair Broadcast Group, Nexstar Media Group — which recently purchased The CW, and is in the process of revamping the network’s operations toward profitability — and private equity firm Apollo Global Management as potential buyers in separate conversations with TheWrap.
“Some of these folks who own a lot of television stations might think I’ll take a network now,” one of those individuals said. “And they’re committed to that business. They could run it efficiently.”
The person continued, “Private equity firms might look at this and go, ‘Well, look, these businesses are still meaningful and if we slashed the costs, we could run a profitable business for some period of time and turn it into something that’s not going to grow but at least it’ll be more profitable.”
Other companies flagged by the executives as potential buyers of the assets include broadcast and media company Tegna, Allen Media Broadcasting, Hearst and private equity firms TPG and Silver Lake.
What these potential new owners have in common is they would approach running the business from a cost-cutting perspective.
“None of these places are looking at this saying, ‘The future of this business is bright,’” the insider said. “Those days are over, and that’s what Bob is saying.”
A spokesperson for Sinclair Broadcast Group declined to comment on this story. Representatives for Nexstar and Apollo didn’t respond to TheWrap’s requests for comment.
Iger’s hints at Disney’s future
While questioning the CEO’s decision to blurt out such a major business shift in an interview pegged to the renewal of his contract through 2026, one former executive called the soundbite an example of Iger’s “famous honesty and bluntness” — and a message to Wall Street, potential buyers and employees that Disney is gearing up for major changes in the coming years.
The individual explained, “He’s signaling to Wall Street, ‘We’re realistic about our problems.’ He’s signaling to potential buyers, ‘Hey, you want to come buy a distressed asset? You can come buy our networks,’ and he’s signaling to the employees of the company, ‘Brace yourselves. There’s a rough landing ahead. It’s going to be tough. It’s going to be bumpy.’”
Since then, Iger addressed the future, among other topics, during an off-site meeting with the senior leaders of Disney’s television business hosted by Dana Walden on Tuesday. During which, he tried to ease fears sparked by the CNBC interview and reportedly emphasized the value of the Disney’s TV divisions, along with his commitment to ABC News with the intention of moving those efforts into the company’s streaming endeavors.
The individual said, “He’s not just standing there saying, ‘Hip hip hooray! I’m doing two more years as [CEO].’ He’s saying, in his way, very realistic and sober, ‘I’m doing this because there are very big challenges that Disney faces. This is going to be a very tough time in which we’re going to have to do some very tough things. This company that I just built for the last 15 years is now going to have to get smaller in order to continue to grow.’”
Lucas Manfredi and Sharon Waxman contributed to this story.
He was singing like a canary when Iger first came back... I haven't seen him on CNBC talking much about Disney lately. Also, his new book I think is about the Redstones, so he has placed his commentary towards them these days.
wabbott
DIS Veteran
- Joined
- Aug 4, 2021
Sumner Redstone. A real-life Succession drama.
Unscripted: The Epic Battle for a Media Empire and the Redstone Family Legacy
“Redstone has found his Ishmael in James B. Stewart, who has ventured once more into the corporate depths and returned, he writes, with ‘an astonishing saga of sex, lies, and betrayal.’ His new book, Unscripted: The Epic Battle for a Media Empire and the Redstone Family Legacy, written with New York Times media reporter Rachel Abrams, joins his earlier probing work on the Walt Disney Co., insider trading, corporate lawyers and the posh netherworld of American business. Imagine a mash-up of King Lear and Weekend at Bernie’s, the 1989 movie comedy about two scamps who prop up a cadaver so they can enjoy a weekend at his beach house, with Redstone starring in both title roles.” —The Wall Street Journal
wabbott
DIS Veteran
- Joined
- Aug 4, 2021
https://www.wsj.com/articles/stream...ill-now-comes-the-pain-3afcbb68?siteid=yhoof2
Streaming Brought Hollywood to a Standstill. Now Comes the Pain.
Joint strike of actors and writers will hit legacy entertainment hard within months; Netflix has more runway
By Joe Flint and Amol Sharma
July 21, 2023 5:30 am EDT
LOS ANGELES—Hollywood’s biggest strike in 60 years is exposing fault lines between the industry’s giants, with traditional entertainment companies expected to take a near-term hit while streamers such as Netflix NFLX are better positioned for a long stalemate.
Though they hope for a quick resolution, entertainment executives say they are contemplating the prospect that the joint strike by actors and writers could drag on for months—even through the end of the year.
Warner Bros. Discovery WBD, Paramount Global and Walt Disney are among the traditional companies whose broadcast-TV and movie businesses could be massively disrupted within months. Netflix and Amazon.com might not feel the pinch until 2025 or beyond, entertainment executives and analysts said.
Over time, the industry’s solidarity may be tested. That said, for now the big media and tech companies are operating in lockstep. The writers went on strike in May and the actors joined them last week, pushing for higher pay and guardrails for the use of generative artificial-intelligence technology in the industry, among other issues.
In the broadcast realm, advertisers made spending commitments this spring, thinking network shows such as ABC’s “Abbott Elementary,” CBS’s “Young Sheldon” and NBC’s “Law & Order: SVU” would be in production this summer in time for the fall season. They aren’t, and instead the lineups will feature a lot of reruns, shows from streaming services, international programming and already-produced reality fare.
In the premium cable and streaming world, fans could be waiting a long time for some high-end favorites to return. Warner’s HBO is set through the middle of the next year with shows such as “The Gilded Age,” “True Detective” and “House of the Dragon.” But a work stoppage through year’s end could push the next installments of high-profile shows like “Euphoria” and “The White Lotus” into 2025.
A prolonged strike may even lead companies to rethink when they release finished shows and movies, if the stars aren’t available to help promote them.
At the heart of the fight between the companies and the two unions—the Screen Actors Guild and the Writers Guild of America—is the entertainment industry’s dramatic transformation over the past decade, with the fading of a lucrative system fueled by cable-TV subscriptions and rerun sales and the rise of a profit-challenged streaming industry in its place. Having made huge bets on content, traditional companies are collectively losing billions of dollars a year on streaming.
“All of this was caused by streaming overinvestment and various levels of delusion,” said Barry Diller, a veteran media mogul who was once a top executive at Paramount and Fox. “If you drive all the business models only towards streaming, the result of it is that all of the feeder mechanisms—broadcast, cable—disappear.” Diller is now chairman of media conglomerate IAC.
The unions want the new streaming world to carry on practices of the old guard, including big-enough royalty checks, or “residuals,” to help actors and writers from successful shows and movies navigate the fallow periods between jobs. Entertainment executives have offered increases but not enough for the strikers. A return to the old ways is impossible, they say.
Alan Ruck, who played overshadowed sibling Connor Roy in HBO’s “Succession,” said he’s frustrated to hear entertainment executives say old practices of paying residuals don’t fit the streaming world. “It doesn’t apply anymore, because it’s streaming. Why? Just because you said so?” said Ruck, who was protesting outside the Warner Bros. studio lot alongside a throng of others from SAG and WGA.
Privately, some entertainment executives say the pivot to streaming was the work of both sides. Many writers and actors welcomed big upfront paydays from the likes of Netflix in lieu of a potential payoff from reruns, the executives say. They enjoyed the flexibility of 10-episode seasons in streaming compared with the 22-episode network-TV grind. In short, they say, the talent wanted this new world order—until it wasn’t working out.
Advertisers made spending commitments this spring with the idea that shows such as ABC’s ‘Abbott Elementary’ would have new episodes in time for the fall season.
Entertainment companies will see savings from the production shutdowns, but spending likely will just be shifted to later, said Tim Nollen, an analyst at Macquarie. “That’s a short-term phenomenon, for however long the strike lasts,” he said.
Moody’s Investors Service estimates that new contracts with the writers and actors, combined with a pact already reached with directors, could collectively cost media companies an additional $450 million to $600 million a year over the three years of the agreements.
Cable-TV subscriptions have been in decline for years, but the strikes likely won’t speed cord-cutting, said Justin Moreau, a portfolio manager at investment firm AllianceBernstein. “People who are still subscribing to the pay-TV bundle today are not necessarily subscribing for prime-time entertainment,” he said. “They care about the sports programs.”
Some entertainment executives expressed frustration that the strike, in their view, will give Netflix an advantage. The longer it goes on, the more it will hurt the theatrical-movie business, where Netflix isn’t a player, they said. Netflix also has a stockpile of already-produced content from around the world that could help keep its shelves stocked.
“They are now the beneficiary of the final destruction of the old model,” Diller said.
Netflix said Wednesday that its content spending this year would be lower as a result of the strike and lead to stronger-than-expected free cash flow. The company reported a robust new-subscriber count of 5.9 million in the second quarter, thanks partly to its password-sharing crackdown, and $1.5 billion in profit. Revenue growth failed to impress Wall Street, though, and shares fell.
The strike will test the solidarity of writers and actors as well as the studios, given the vast differences in the earning power and job security among the union members. They range from A-list actors and premier TV showrunners to people living paycheck to paycheck, and those in between.
In the traditional TV world, a show’s biggest financial payoff came after the episode count reached about 100, around five seasons’ worth. That is when they generally went into “syndication,” with reruns on cable and local TV channels, and licensing deals for foreign markets.
Even network shows that didn’t reach that level of success provided economic security, union members say. That is in contrast to streaming, they say, where actors are paid while they are on a show but—because shows generally live on the platform forever and don’t go into reruns—earn less in residuals.
“The only reason I’m not broke now is because I’ve been dependent on the residuals from network TV, before streaming,” said Nelson Franklin, an actor who was in the picket line outside Netflix on Thursday. He said he has relied heavily on the 40 episodes he did on ABC’s “Black-ish,” a show that went into syndication. He said in a good year in traditional TV he could be in eight episodes, making upward of $7,000 apiece, plus residuals, while in streaming he figures he can make $8,000 a year for the same work.
Actress Stephanie Czajkowski said a single episode from her stint on CBS’s “Criminal Minds” in 2010 has generated more money for her in some years, via residuals, than the paychecks she gets from appearing on seven episodes of a streaming show.
One of SAG’s demands was that 2% of streaming revenue be paid to performers, with a formula developed to compensate them based on a show’s popularity. That was a nonstarter for the Alliance of Motion Picture and Television Producers, the coalition negotiating on behalf of major studios, streamers and networks.
That would be on top of the residuals that streamers already pay actors and writers, which are also likely to increase in a new deal, the alliance has said.
In broadcast TV, coping mechanisms are snapping into place. CBS plans to air reruns of “Yellowstone,” the Kevin Costner drama that airs on its sister channel Paramount Network. CBS also plans to air the British version of its hit comedy “Ghosts.” NBC has some original dramas in the cupboard it will haul out, including new episodes of “Magnum P.I.” and “Quantum Leap.”
Netflix isn’t the only streamer with a deep library. As of now, Warner’s Max has fresh content to get through the middle of next year. But some big projects stalled before they really got off the ground, including a blockbuster series in the works based on “Harry Potter.”
Entertainment executives say the strikes are a dangerous development for the movie industry, which was in the middle of a fragile recovery from the pandemic—consumers heading back to theaters, though in smaller numbers. For Warner Bros., the buzz of its coming release of “Barbie,” which looks poised for a major opening, will give way to uncertainty about holiday movies such as “The Color Purple,” while if the strike drags on past the summer future productions such as Universal’s disaster film “Twisters” and Paramount’s next “Mission: Impossible” movie could be delayed.
Jessica Toonkel and Sarah Krouse contributed to this article.
Streaming Brought Hollywood to a Standstill. Now Comes the Pain.
Joint strike of actors and writers will hit legacy entertainment hard within months; Netflix has more runway
By Joe Flint and Amol Sharma
July 21, 2023 5:30 am EDT
LOS ANGELES—Hollywood’s biggest strike in 60 years is exposing fault lines between the industry’s giants, with traditional entertainment companies expected to take a near-term hit while streamers such as Netflix NFLX are better positioned for a long stalemate.
Though they hope for a quick resolution, entertainment executives say they are contemplating the prospect that the joint strike by actors and writers could drag on for months—even through the end of the year.
Warner Bros. Discovery WBD, Paramount Global and Walt Disney are among the traditional companies whose broadcast-TV and movie businesses could be massively disrupted within months. Netflix and Amazon.com might not feel the pinch until 2025 or beyond, entertainment executives and analysts said.
Over time, the industry’s solidarity may be tested. That said, for now the big media and tech companies are operating in lockstep. The writers went on strike in May and the actors joined them last week, pushing for higher pay and guardrails for the use of generative artificial-intelligence technology in the industry, among other issues.
In the broadcast realm, advertisers made spending commitments this spring, thinking network shows such as ABC’s “Abbott Elementary,” CBS’s “Young Sheldon” and NBC’s “Law & Order: SVU” would be in production this summer in time for the fall season. They aren’t, and instead the lineups will feature a lot of reruns, shows from streaming services, international programming and already-produced reality fare.
In the premium cable and streaming world, fans could be waiting a long time for some high-end favorites to return. Warner’s HBO is set through the middle of the next year with shows such as “The Gilded Age,” “True Detective” and “House of the Dragon.” But a work stoppage through year’s end could push the next installments of high-profile shows like “Euphoria” and “The White Lotus” into 2025.
A prolonged strike may even lead companies to rethink when they release finished shows and movies, if the stars aren’t available to help promote them.
At the heart of the fight between the companies and the two unions—the Screen Actors Guild and the Writers Guild of America—is the entertainment industry’s dramatic transformation over the past decade, with the fading of a lucrative system fueled by cable-TV subscriptions and rerun sales and the rise of a profit-challenged streaming industry in its place. Having made huge bets on content, traditional companies are collectively losing billions of dollars a year on streaming.
“All of this was caused by streaming overinvestment and various levels of delusion,” said Barry Diller, a veteran media mogul who was once a top executive at Paramount and Fox. “If you drive all the business models only towards streaming, the result of it is that all of the feeder mechanisms—broadcast, cable—disappear.” Diller is now chairman of media conglomerate IAC.
The unions want the new streaming world to carry on practices of the old guard, including big-enough royalty checks, or “residuals,” to help actors and writers from successful shows and movies navigate the fallow periods between jobs. Entertainment executives have offered increases but not enough for the strikers. A return to the old ways is impossible, they say.
Alan Ruck, who played overshadowed sibling Connor Roy in HBO’s “Succession,” said he’s frustrated to hear entertainment executives say old practices of paying residuals don’t fit the streaming world. “It doesn’t apply anymore, because it’s streaming. Why? Just because you said so?” said Ruck, who was protesting outside the Warner Bros. studio lot alongside a throng of others from SAG and WGA.
Privately, some entertainment executives say the pivot to streaming was the work of both sides. Many writers and actors welcomed big upfront paydays from the likes of Netflix in lieu of a potential payoff from reruns, the executives say. They enjoyed the flexibility of 10-episode seasons in streaming compared with the 22-episode network-TV grind. In short, they say, the talent wanted this new world order—until it wasn’t working out.
Advertisers made spending commitments this spring with the idea that shows such as ABC’s ‘Abbott Elementary’ would have new episodes in time for the fall season.
Entertainment companies will see savings from the production shutdowns, but spending likely will just be shifted to later, said Tim Nollen, an analyst at Macquarie. “That’s a short-term phenomenon, for however long the strike lasts,” he said.
Moody’s Investors Service estimates that new contracts with the writers and actors, combined with a pact already reached with directors, could collectively cost media companies an additional $450 million to $600 million a year over the three years of the agreements.
Cable-TV subscriptions have been in decline for years, but the strikes likely won’t speed cord-cutting, said Justin Moreau, a portfolio manager at investment firm AllianceBernstein. “People who are still subscribing to the pay-TV bundle today are not necessarily subscribing for prime-time entertainment,” he said. “They care about the sports programs.”
Some entertainment executives expressed frustration that the strike, in their view, will give Netflix an advantage. The longer it goes on, the more it will hurt the theatrical-movie business, where Netflix isn’t a player, they said. Netflix also has a stockpile of already-produced content from around the world that could help keep its shelves stocked.
“They are now the beneficiary of the final destruction of the old model,” Diller said.
Netflix said Wednesday that its content spending this year would be lower as a result of the strike and lead to stronger-than-expected free cash flow. The company reported a robust new-subscriber count of 5.9 million in the second quarter, thanks partly to its password-sharing crackdown, and $1.5 billion in profit. Revenue growth failed to impress Wall Street, though, and shares fell.
The strike will test the solidarity of writers and actors as well as the studios, given the vast differences in the earning power and job security among the union members. They range from A-list actors and premier TV showrunners to people living paycheck to paycheck, and those in between.
In the traditional TV world, a show’s biggest financial payoff came after the episode count reached about 100, around five seasons’ worth. That is when they generally went into “syndication,” with reruns on cable and local TV channels, and licensing deals for foreign markets.
Even network shows that didn’t reach that level of success provided economic security, union members say. That is in contrast to streaming, they say, where actors are paid while they are on a show but—because shows generally live on the platform forever and don’t go into reruns—earn less in residuals.
“The only reason I’m not broke now is because I’ve been dependent on the residuals from network TV, before streaming,” said Nelson Franklin, an actor who was in the picket line outside Netflix on Thursday. He said he has relied heavily on the 40 episodes he did on ABC’s “Black-ish,” a show that went into syndication. He said in a good year in traditional TV he could be in eight episodes, making upward of $7,000 apiece, plus residuals, while in streaming he figures he can make $8,000 a year for the same work.
Actress Stephanie Czajkowski said a single episode from her stint on CBS’s “Criminal Minds” in 2010 has generated more money for her in some years, via residuals, than the paychecks she gets from appearing on seven episodes of a streaming show.
One of SAG’s demands was that 2% of streaming revenue be paid to performers, with a formula developed to compensate them based on a show’s popularity. That was a nonstarter for the Alliance of Motion Picture and Television Producers, the coalition negotiating on behalf of major studios, streamers and networks.
That would be on top of the residuals that streamers already pay actors and writers, which are also likely to increase in a new deal, the alliance has said.
In broadcast TV, coping mechanisms are snapping into place. CBS plans to air reruns of “Yellowstone,” the Kevin Costner drama that airs on its sister channel Paramount Network. CBS also plans to air the British version of its hit comedy “Ghosts.” NBC has some original dramas in the cupboard it will haul out, including new episodes of “Magnum P.I.” and “Quantum Leap.”
Netflix isn’t the only streamer with a deep library. As of now, Warner’s Max has fresh content to get through the middle of next year. But some big projects stalled before they really got off the ground, including a blockbuster series in the works based on “Harry Potter.”
Entertainment executives say the strikes are a dangerous development for the movie industry, which was in the middle of a fragile recovery from the pandemic—consumers heading back to theaters, though in smaller numbers. For Warner Bros., the buzz of its coming release of “Barbie,” which looks poised for a major opening, will give way to uncertainty about holiday movies such as “The Color Purple,” while if the strike drags on past the summer future productions such as Universal’s disaster film “Twisters” and Paramount’s next “Mission: Impossible” movie could be delayed.
Jessica Toonkel and Sarah Krouse contributed to this article.
wabbott
DIS Veteran
- Joined
- Aug 4, 2021
https://variety.com/2023/tv/news/are-disney-linear-tv-networks-for-sale-bob-iger-1235675418/
Jul 21, 2023 8:47am PDT
Will Bob Iger Sell Disney’s Linear TV Networks? Insiders, Analysts Debate
by Jennifer Maas
Here’s an example of just how chaotic things are in Hollywood these days: Disney CEO Bob Iger’s recent remarks that the company’s linear TV assets “may not be core” to its business were buried under the lede of his comments that SAG-AFTRA and the WGA are not being “realistic” in their contract negotiations last week.
But now that a small bit of the initial dual strike dust has settled, sources inside and outside of Disney are asking what reaction Iger was looking to provoke by announcing Disney’s intention to “open-minded and objective about the future of those businesses,” which include broadcast network ABC as well as cablers FX, Disney Channel, Nat Geo and Freeform, among others. (Not ESPN, which is run by Jimmy Pitaro under a separate segment of Disney’s business from its other TV and streaming assets.)
“Does he mean all of the linear business or just some of the cable networks? Does he mean ABC and the ABC stations? That part wasn’t clear,” Bank of America Securities media and entertainment analyst Jessica Reif Ehrlich told Variety. “I’m not sure exactly what he means, if it’s a complete disposal or some kind of different structure — but he was saying the obvious, meaning the business is incredibly challenged on a secular basis. But he’s maybe even more negative than I would have expected because radio has been around for 100-plus years, but it’s still around. And if you’ve listened to Bob’s remarks, it sounds like linear won’t be around. I think broadcast and cable will be around, in some form, for a long time. But it’s a challenging business and they’re fighting off sub losses daily.”
It should be noted that Iger’s comments come amid a summer primetime ratings win for ABC. Currently, the Disney-owned broadcaster is the top-rated network in both adults 18-49 (0.6) and average total viewers (3.2 million) based on Nielsen data from May 25-July 9. In comparison, NBC has a 0.4 rating and is averaging 2.94 million viewers, Fox is at a 0.3 and 1.6 million viewers, and CBS holds a 0.2 and 2.86 million viewers.
In an offsite meeting for Disney’s TV execs led by Disney Entertainment co-chairman Dana Walden on July 18 — one that had been planned since mid-June and was not scheduled in reaction to Iger’s headline-making interview with CNBC on July 12, the Disney CEO did address his remarks.
“He said that linear and news is very important for the company. He was very honest about that piece, and he said we just have to be mindful about the future business and that we’re going to endure,” a Disney insider said. “But it was one of the things that he talked about.”
“Off site aside, it was something that was immediately addressed by all of our leadership the day he said it,” the source added. “We were all like, we can’t keep our head in the sand about linear ratings. … He never said he was going to sell them — he said they may not be core to the business. But what he did say and has said over and over again, is the content is 100% core to our business. So we will continue making that content, and the way that the distribution might change, that’s something that we have to navigate every day.”
This source says Disney TV employees last reckoned with where their “best content” would be living when Disney+ launched in November 2019, and “we endured that.” “Now, we have to figure out what is the next iteration of that? And everybody is having honest conversations about what that looks like.”
But that still leaves many questions about how Disney is evaluating its existing assets. ABC’s eight owned-and-operated TV stations are beachfront real estate that include strong local news leaders in the nation’s top three TV markets: New York, Los Angeles and Chicago. TV stations still make a lot of money — albeit not as much as they once did — which makes them attractive to financial buyers. But it doesn’t make a lot of sense to sell the O&Os but keep the ABC network.
“Who is going to be in a position to buy ABC and the TV stations without piling more debt on their already debt-laden balance sheets?” a source at a TV station group said. “So it was maybe an unforced error by Iger. I’m not sure what his calculation was, maybe he knew what he was doing all along, if he’s trying to condition the marketplace and his own employees for an eventual change in the real world.”
Another source noted that, while Iger has been supportive of ABC throughout both his first and second tenures as CEO, from the moment that Apple struck its first programming deal in 2005 with Disney for “Desperate Housewives,” “Lost” and other shows as pioneers in the download-to-own model for the iPod, the tech giant has been rumored as a potential buyer of the Mouse House. Now that Iger is back (following the ousting of his brief successor CEO Bob Chapek) and trying to cut costs and increase profit wherever he can, a deal that unloads ABC and other linear assets gets several things off Iger’s streaming-and-parks-focused plate at once.
“Does [Iger] mean what he’s saying or is he just talking to Wall Street? What does Disney even look like without its linear business?” one agency partner said. “It could be he’s just trying to make them look like a good acquisition target. He promises to push off these certain assets and then that sets them up to get acquired by someone like Apple.”
With Disney’s next quarterly earnings set to be announced Aug. 9, Iger is likely to be pressed by Wall Street analysts to expand on his comments. He’ll surely be pushed for more detail on how he’s thinking about the linear assets as well as the overall state of Disney amid the ongoing SAG-AFTRA/WGA dual strike.
“It seems like maybe Bob has bit off a little more than he can chew and perhaps has too many quote-unquote children under his banner,” an exec at an ABC rival broadcaster said.
Jul 21, 2023 8:47am PDT
Will Bob Iger Sell Disney’s Linear TV Networks? Insiders, Analysts Debate
by Jennifer Maas
Here’s an example of just how chaotic things are in Hollywood these days: Disney CEO Bob Iger’s recent remarks that the company’s linear TV assets “may not be core” to its business were buried under the lede of his comments that SAG-AFTRA and the WGA are not being “realistic” in their contract negotiations last week.
But now that a small bit of the initial dual strike dust has settled, sources inside and outside of Disney are asking what reaction Iger was looking to provoke by announcing Disney’s intention to “open-minded and objective about the future of those businesses,” which include broadcast network ABC as well as cablers FX, Disney Channel, Nat Geo and Freeform, among others. (Not ESPN, which is run by Jimmy Pitaro under a separate segment of Disney’s business from its other TV and streaming assets.)
“Does he mean all of the linear business or just some of the cable networks? Does he mean ABC and the ABC stations? That part wasn’t clear,” Bank of America Securities media and entertainment analyst Jessica Reif Ehrlich told Variety. “I’m not sure exactly what he means, if it’s a complete disposal or some kind of different structure — but he was saying the obvious, meaning the business is incredibly challenged on a secular basis. But he’s maybe even more negative than I would have expected because radio has been around for 100-plus years, but it’s still around. And if you’ve listened to Bob’s remarks, it sounds like linear won’t be around. I think broadcast and cable will be around, in some form, for a long time. But it’s a challenging business and they’re fighting off sub losses daily.”
It should be noted that Iger’s comments come amid a summer primetime ratings win for ABC. Currently, the Disney-owned broadcaster is the top-rated network in both adults 18-49 (0.6) and average total viewers (3.2 million) based on Nielsen data from May 25-July 9. In comparison, NBC has a 0.4 rating and is averaging 2.94 million viewers, Fox is at a 0.3 and 1.6 million viewers, and CBS holds a 0.2 and 2.86 million viewers.
In an offsite meeting for Disney’s TV execs led by Disney Entertainment co-chairman Dana Walden on July 18 — one that had been planned since mid-June and was not scheduled in reaction to Iger’s headline-making interview with CNBC on July 12, the Disney CEO did address his remarks.
“He said that linear and news is very important for the company. He was very honest about that piece, and he said we just have to be mindful about the future business and that we’re going to endure,” a Disney insider said. “But it was one of the things that he talked about.”
“Off site aside, it was something that was immediately addressed by all of our leadership the day he said it,” the source added. “We were all like, we can’t keep our head in the sand about linear ratings. … He never said he was going to sell them — he said they may not be core to the business. But what he did say and has said over and over again, is the content is 100% core to our business. So we will continue making that content, and the way that the distribution might change, that’s something that we have to navigate every day.”
This source says Disney TV employees last reckoned with where their “best content” would be living when Disney+ launched in November 2019, and “we endured that.” “Now, we have to figure out what is the next iteration of that? And everybody is having honest conversations about what that looks like.”
But that still leaves many questions about how Disney is evaluating its existing assets. ABC’s eight owned-and-operated TV stations are beachfront real estate that include strong local news leaders in the nation’s top three TV markets: New York, Los Angeles and Chicago. TV stations still make a lot of money — albeit not as much as they once did — which makes them attractive to financial buyers. But it doesn’t make a lot of sense to sell the O&Os but keep the ABC network.
“Who is going to be in a position to buy ABC and the TV stations without piling more debt on their already debt-laden balance sheets?” a source at a TV station group said. “So it was maybe an unforced error by Iger. I’m not sure what his calculation was, maybe he knew what he was doing all along, if he’s trying to condition the marketplace and his own employees for an eventual change in the real world.”
Another source noted that, while Iger has been supportive of ABC throughout both his first and second tenures as CEO, from the moment that Apple struck its first programming deal in 2005 with Disney for “Desperate Housewives,” “Lost” and other shows as pioneers in the download-to-own model for the iPod, the tech giant has been rumored as a potential buyer of the Mouse House. Now that Iger is back (following the ousting of his brief successor CEO Bob Chapek) and trying to cut costs and increase profit wherever he can, a deal that unloads ABC and other linear assets gets several things off Iger’s streaming-and-parks-focused plate at once.
“Does [Iger] mean what he’s saying or is he just talking to Wall Street? What does Disney even look like without its linear business?” one agency partner said. “It could be he’s just trying to make them look like a good acquisition target. He promises to push off these certain assets and then that sets them up to get acquired by someone like Apple.”
With Disney’s next quarterly earnings set to be announced Aug. 9, Iger is likely to be pressed by Wall Street analysts to expand on his comments. He’ll surely be pushed for more detail on how he’s thinking about the linear assets as well as the overall state of Disney amid the ongoing SAG-AFTRA/WGA dual strike.
“It seems like maybe Bob has bit off a little more than he can chew and perhaps has too many quote-unquote children under his banner,” an exec at an ABC rival broadcaster said.
Jwaire
DIS Veteran
- Joined
- Sep 17, 2020
That's why you can't take these people seriously. It's all about short term gains and not the long term health of the company.
Parks was only up last few years because of revenge travel. We know they've had a soft summer.
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