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clarker99
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The last 9 months worth of sub growth in N America is almost all down to the sharing restrictions. Before the restrictions, N. American subs had plateaued and even had a quarters of sub losses.
Jrb1979
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Basically what's old is new again. Basically cable is moving to streaming at the same cost once you have 3-4 different services.
Netflix adding WWE is a big deal. IMO live sports is the future and where the money is.
clarker99
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Yes. They knee-capped themselves with the original pricing strategy. They seriously devalued the Disney content catalog that the company and its vault strategy worked so hard to protect for all those years.
wabbott
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Sooner or later the individual teams in the NFL, et al, and the individual colleges/universities (LSU, Penn State, Auburn, etc) will stream their games on their own service. There will have to be a loose confederation that meets to actually schedule, but the rigid NFL/NCAA model won't survive.
In my opinion.
afan
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Won't happen any time soon. There's too much money in the college football tv contracts. The streaming would cost way too much to be able to make that money up. Those tv deals are also why there's so many bowl games and what dictate when games are on. Smaller schools that don't get tv coverage could do it but then they'd have the cost of producing the games.
Until ESPN, CBS etc stop paying these crazy contracts, there's no reason for any of it to change. Only way they stop is if they aren't making money off broadcasting the games and they are.
More likely to happen in baseball, hockey, soccer or basketball where they are shown on regional networks. MLB will be interesting to watch the next few years with the whole Bally/Amazon thing. But until MLB lifts the blackout restrictions it won't matter, the regional sports networks can't offer stand alone streaming. If that blackout wasn't in place I could see them at least offering it, especially with some of the changes Comcast has done moving regional sports to higher tiers. Mariners lost a ton of income due to this for the upcoming season.
wabbott
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I agree, it will take a while. But look at it this way, the NFL/NBA/etc team owners and the NCAA schools see all that money that is being paid to feed and water the league bureaucracies and deadhead payroll and say to themselves, "we could have that money instead of them." Nowadays, streaming isn't that hard to break in to, they will say.
Blackouts? If the NFL/NCAA no longer exist, who enforces that anymore?
Jrb1979
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https://thestreamable.com/news/whats-at-stake-in-nfl-sunday-ticket-6-billion-class-action-lawsuit
Indeed, the damages in the case could amount to as much as $6.1 billion, and that’s not even the most important consequence of a victory by the plaintiffs. Such a ruling could mean individual NFL teams would be free to make their own TV broadcasting and streaming agreements, instead of proceeding as one unified league as the NFL has done in making its broadcast deals in the past.
If that happens, NFL teams would more closely resemble NHL and NBA teams in how they distribute their broadcast rights. It could be a huge win for regional sports networks (RSNs) like those from Bally Sports, who might suddenly have access to the top television product in the United States from a ratings perspective. Many teams would likely create their own streaming services for in-market fans, and some of these could allow fans to watch live games no matter which linear channel the team appears on. Games could even disappear from current broadcast and streaming partners such as CBS, Fox, Paramount+, and Peacock as teams sort out new broadcasting arrangements for themselves.
Related video: Who Has the Most To Gain in NFL Playoffs? (Stadium)
Who Has the Most To Gain in NFL Playoffs?
The highly anticipated NFL playoffs have some pretty high stakes. "The Rally" team discusses.
well, is this guy gonna either be available or
actually gonna win a playoff game?
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Such a ruling could be a disaster for the NFL as a league, however. One of the biggest reasons the NFL became such an indispensable part of many Americans’ lives is because of its wide availability on free, over-the-air broadcast channels like CBS, Fox, NBC, and ABC. It offered a relatively simple answer to the question “Where can I watch my local team?”; fans who lived in the same area as an NFC squad would usually find its games on Fox on Sunday afternoons, and fans who lived in the market of an AFC team can typically flip on CBS to see that team’s game on a given Sunday.
If teams start selling their broadcast/streaming rights on their own, it would create a much more chaotic situation from a fan perspective that could even result in lower ratings. The question of where to find a team’s games on a particular day would be much harder to answer, and games might shift to cable channels, where some owners will no doubt be attracted by a promise of more revenues, just like MLB, NBA and NHL owners have been in the past.
fatmanatee
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Content has to be worth the resubscribing though
. It’s not something I had to deal with but a few years ago if I was sharing an account and was forced to join with my own it would be an easy decision to bail. Much less so now. They needed a library worth sticking around for to make this work. I’ll add that if I was forced with the same decision with D+/Hulu I’d have to think about it but I might be more inclined to bail, particularly with more services doing this.
Jrb1979
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That's the problem IMO that streaming faces and why I don't see it being highly profitable. I can them breaking even or making some profit. They will never reach the levels of cable. It costs too much to create new compelling content.Content has to be worth the resubscribing though
I’ll add that if I was forced with the same decision with D+/Hulu I’d have to think about it but I might be more inclined to bail, particularly with more services doing this.
wabbott
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The other component is that ANYONE can be a streaming broadcaster now. There's several orders of magnitude more content now. I spend much of my time watching YouTube vids that individuals create.
https://penpoin.com/ease-of-entry/
Ease of Entry: Meaning, Impacts, Determinants
Easy of entry refers to the level of difficulty a company has to enter into an industry or market. It is important because it affects the intensity of competition and profitability in the market. When new entrants enter, they bring in new capacity, increase supply, and lower market prices. As a result, market profitability decreases.
Jrb1979
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That works for YouTube and TikTok. As they don't pay for content. For D+, Netflix, and the rest it costs big bucks to create new content that people will watch.
wabbott
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https://variety.com/2024/biz/news/netflix-ending-basic-plan-cheapest-price-1235883751/
Jan 23, 2024 - 2:21pm PST
Netflix Expects to Fully Phase Out Cheapest No-Ads Plan
by Todd Spangler
It’s the beginning of the end for Netflix‘s lowest-cost plan that does not include advertising.
In reporting results for the fourth quarter of 2023, in which it added a better-than-expected 13.1 million net subscribers, Netflix touted its ad-supported plan as accounting for 40% of all Netflix sign-ups in markets where it has launched that, and said the number of subscribers on ad tiers grew almost 70% quarter-over-quarter. The company didn’t break out subscriber numbers but said it recently surpassed 23 million monthly active unique users on advertising tiers.
To drive more customers to the ad-supported plan, the company said it plans to retire the no-ads Basic plan in some of the countries where it has introduced the ad tier. That will start with Canada and the U.K. in the second quarter of 2024 and the company will be “taking it from there,” Netflix said in the Q4 shareholder letter.
On the Q4 earnings interview, co-CEO Greg Peters said the ad-supported tiers are designed to be a better overall value than the Basic plan. With the ad plan, customers “get a better plan than Basic, more streams, higher resolution with downloads. And of course, the real benefit is they get access to all these amazing stories at a lower effective price.”
Netflix still has “years of work ahead of us” before the advertising business becomes a material revenue contributor in the 12 markets where it has already launched, including the U.S., Peters said. “Our top ads priority… is scale,” he said, noting Netflix is continuing to work on improving ad targeting and ad relevance.
Peters, asked about Amazon’s decision to make ads in Prime Video the default setting (starting Jan. 29), said Netflix had at one point considered doing the same thing. But the company concluded that “given our long history of not having ads, we thought it was better for our members, rather than force them into a change and give them ads… to attract them to the ads plan for the ones that wanted it based on the benefits,” Peters said.
The move to fully phase out Netflix Basic comes after the company in 2023 stopped offering it to new subscribers in markets including the U.S., Canada and the U.K. Last fall, Netflix increased the price of the Basic plan from $9.99 to $11.99 per month in the U.S., and also hiked prices of the plan in the U.K. and France.
Netflix’s ad-supported plans currently are available in the U.S., U.K., Australia, Brazil, Canada, France, Germany, Italy, Japan, Korea, Mexico and Spain. The Netflix Basic With Ads tier launched in November 2022, priced in the U.S. at $6.99 per month — less than half the price of the Standard plan ($15.49 per month).
The company, as it has routinely said, noted that price increases are on the road map at some point in the future: “As we invest in and improve Netflix, we’ll occasionally ask our members to pay a little extra to reflect those improvements, which in turn helps drive the positive flywheel of additional investment to further improve and grow our service.”
Jan 23, 2024 - 2:21pm PST
Netflix Expects to Fully Phase Out Cheapest No-Ads Plan
by Todd Spangler
It’s the beginning of the end for Netflix‘s lowest-cost plan that does not include advertising.
In reporting results for the fourth quarter of 2023, in which it added a better-than-expected 13.1 million net subscribers, Netflix touted its ad-supported plan as accounting for 40% of all Netflix sign-ups in markets where it has launched that, and said the number of subscribers on ad tiers grew almost 70% quarter-over-quarter. The company didn’t break out subscriber numbers but said it recently surpassed 23 million monthly active unique users on advertising tiers.
To drive more customers to the ad-supported plan, the company said it plans to retire the no-ads Basic plan in some of the countries where it has introduced the ad tier. That will start with Canada and the U.K. in the second quarter of 2024 and the company will be “taking it from there,” Netflix said in the Q4 shareholder letter.
On the Q4 earnings interview, co-CEO Greg Peters said the ad-supported tiers are designed to be a better overall value than the Basic plan. With the ad plan, customers “get a better plan than Basic, more streams, higher resolution with downloads. And of course, the real benefit is they get access to all these amazing stories at a lower effective price.”
Netflix still has “years of work ahead of us” before the advertising business becomes a material revenue contributor in the 12 markets where it has already launched, including the U.S., Peters said. “Our top ads priority… is scale,” he said, noting Netflix is continuing to work on improving ad targeting and ad relevance.
Peters, asked about Amazon’s decision to make ads in Prime Video the default setting (starting Jan. 29), said Netflix had at one point considered doing the same thing. But the company concluded that “given our long history of not having ads, we thought it was better for our members, rather than force them into a change and give them ads… to attract them to the ads plan for the ones that wanted it based on the benefits,” Peters said.
The move to fully phase out Netflix Basic comes after the company in 2023 stopped offering it to new subscribers in markets including the U.S., Canada and the U.K. Last fall, Netflix increased the price of the Basic plan from $9.99 to $11.99 per month in the U.S., and also hiked prices of the plan in the U.K. and France.
Netflix’s ad-supported plans currently are available in the U.S., U.K., Australia, Brazil, Canada, France, Germany, Italy, Japan, Korea, Mexico and Spain. The Netflix Basic With Ads tier launched in November 2022, priced in the U.S. at $6.99 per month — less than half the price of the Standard plan ($15.49 per month).
The company, as it has routinely said, noted that price increases are on the road map at some point in the future: “As we invest in and improve Netflix, we’ll occasionally ask our members to pay a little extra to reflect those improvements, which in turn helps drive the positive flywheel of additional investment to further improve and grow our service.”
At one time, Peltz must have really had some confidence in the Disney turnaround happening a lot quicker - 40% of his fund was in DIS and the fund under performed peers greatly...
https://nypost.com/2024/01/23/busin...zs-hedge-fund-to-underperform-in-2023-source/
$3B Disney bet caused Nelson Peltz's hedge fund to underperform in 2023: source
Reuters
A $3 billion bet on Walt Disney by Nelson Peltz’s Trian Fund Management was largely responsible for the investment management firm’s underperformance last year compared to its activist hedge fund peers, according to financial details provided to Reuters by a Trian investor.
The previously unreported details illustrate the high financial stakes for Trian as it seeks to shake up Disney’s board in this year’s highest-profile proxy contest.
Trian’s fund returned 10% last year, according to the investor, half the 20% return on average that activist hedge funds scored based on data compiled by Hedge Fund Research.
Trian’s position in Disney, which accounted for roughly 40% of its total portfolio at the end of the third quarter, was a major contributor to the underperformance.
Disney’s shares ended 2023 up 4%, while the S&P 500 index rose 24%.
A Trian spokesperson declined to comment.
Trian amassed a Disney stake at the end of 2022 and threatened the company with a board challenge in January 2023, criticizing it over losses in its streaming business, poor corporate governance and its succession plan.
Peltz, Trian’s CEO, dropped the board fight in February 2023 after Disney announced an extensive restructuring program that included cost cuts and 7,000 layoffs.
“Now Disney plans to do everything we wanted them to do,” Peltz said at the time.
But as Disney’s shares languished for most of 2023, Trian changed its stance.
It increased its ownership fivefold to roughly 2% of the company and accused Disney CEO Bob Iger and the company’s board of failing to deliver on its promised turnaround.
Last month, Trian said it would nominate Peltz and former Disney chief financial officer Jay Rasulo to Disney’s board.
The entertainment giant has urged its shareholders to oppose the move, arguing Trian’s candidates would be disruptive to its board.
A shareholder vote on the nominations is expected to take place in the spring unless a compromise is reached.
ValueAct Capital, another activist hedge fund and Disney shareholder which, unlike Trian, has been supportive of Disney’s board, returned 39% last year, Reuters has reported. ValueAct bought its Disney shares later in 2023, long after Trian established its stake, when the stock was closer to its recent lows.
The value of Trian’s stake in fast-food chain Wendy’s, where Peltz sits on the board, dropped 15% in 2023.
To be sure, Trian also enjoyed wins last year. Its portfolio was lifted by double-digit gains in plumbing parts distributor Ferguson and asset manager Janus Henderson Group.
Trian said a year ago that companies in which it had invested had outperformed the S&P 500 in total returns by an average 9% annually while Peltz served on their boards. It has not provided a more up-to-date figure.
https://nypost.com/2024/01/23/busin...zs-hedge-fund-to-underperform-in-2023-source/
$3B Disney bet caused Nelson Peltz's hedge fund to underperform in 2023: source
Reuters
A $3 billion bet on Walt Disney by Nelson Peltz’s Trian Fund Management was largely responsible for the investment management firm’s underperformance last year compared to its activist hedge fund peers, according to financial details provided to Reuters by a Trian investor.
The previously unreported details illustrate the high financial stakes for Trian as it seeks to shake up Disney’s board in this year’s highest-profile proxy contest.
Trian’s fund returned 10% last year, according to the investor, half the 20% return on average that activist hedge funds scored based on data compiled by Hedge Fund Research.
Trian’s position in Disney, which accounted for roughly 40% of its total portfolio at the end of the third quarter, was a major contributor to the underperformance.
Disney’s shares ended 2023 up 4%, while the S&P 500 index rose 24%.
A Trian spokesperson declined to comment.
Trian amassed a Disney stake at the end of 2022 and threatened the company with a board challenge in January 2023, criticizing it over losses in its streaming business, poor corporate governance and its succession plan.
Peltz, Trian’s CEO, dropped the board fight in February 2023 after Disney announced an extensive restructuring program that included cost cuts and 7,000 layoffs.
“Now Disney plans to do everything we wanted them to do,” Peltz said at the time.
But as Disney’s shares languished for most of 2023, Trian changed its stance.
It increased its ownership fivefold to roughly 2% of the company and accused Disney CEO Bob Iger and the company’s board of failing to deliver on its promised turnaround.
Last month, Trian said it would nominate Peltz and former Disney chief financial officer Jay Rasulo to Disney’s board.
The entertainment giant has urged its shareholders to oppose the move, arguing Trian’s candidates would be disruptive to its board.
A shareholder vote on the nominations is expected to take place in the spring unless a compromise is reached.
ValueAct Capital, another activist hedge fund and Disney shareholder which, unlike Trian, has been supportive of Disney’s board, returned 39% last year, Reuters has reported. ValueAct bought its Disney shares later in 2023, long after Trian established its stake, when the stock was closer to its recent lows.
The value of Trian’s stake in fast-food chain Wendy’s, where Peltz sits on the board, dropped 15% in 2023.
To be sure, Trian also enjoyed wins last year. Its portfolio was lifted by double-digit gains in plumbing parts distributor Ferguson and asset manager Janus Henderson Group.
Trian said a year ago that companies in which it had invested had outperformed the S&P 500 in total returns by an average 9% annually while Peltz served on their boards. It has not provided a more up-to-date figure.
wabbott
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https://www.wsj.com/business/media/disney-iger-eisner-similarities-19c58496
The Disney Sequel Bob Iger Never Wanted
Two decades after replacing Eisner, CEO faces many of the same challenges
By Robbie Whelan
Updated Jan. 24, 2024 - 10:08 am EST
Disney’s embattled CEO was under fire from activist investors. Critics said he had botched succession planning.
A costly deal with Fox was weighing on Disney’s balance sheet, while the prospect of a corporate battle with rival Comcast loomed large. The movie studio’s Golden Age seemed to have faded into a series of flops.
The year was 2004. The CEO in question was Michael Eisner.
After more than a decade in which he had revived the fabled Disney brand and appeared untouchable, he lost momentum and his leadership descended into controversy and financial decline. He eventually stepped down following a shareholder rebellion.
Two decades later, the man who replaced him—Disney’s current chief, Bob Iger—is starring in a reboot of that drama, with plenty of familiar story lines. Iger, too, rebuilt the company, restored its lost glory and seemed unassailable—but now faces many of the same problems that plagued his predecessor. He is hoping to script a different ending.
Iger is a little over a year into his second stint as CEO, and his return to the House of Mouse isn’t going as planned. The decline of Disney’s long-lucrative TV business is quickening, and the supposed solution, streaming, has left Disney with billions of dollars in losses.
Iger has acknowledged that righting the ship has proved harder than expected, but he’s told employees that after months of “fixing” that included major job cuts and restructuring, he’s ready to build a new Disney. “I can tell you building is a lot more fun than fixing,” he said at a town hall meeting with employees in late November.
In many ways, Iger cuts a very different figure in the C-suite than his predecessor. Eisner came to the CEO job with a glittering resume as a creative executive—he came up with the idea for the sitcom “Happy Days” in an airport while waiting out a snowstorm and was closely involved in the making of “Raiders of the Lost Ark.” He had a management style contemporaries said could sometimes be chaotic.Iger, on the other hand, spent most of his early career as an ABC broadcasting executive focused on programming the network’s schedule. As CEO of Disney, he has been viewed as a savvy people manager and visionary dealmaker who placed smart bets to acquire Pixar, Star Wars parent Lucasfilm and Marvel Entertainment. He set the stage for talent to flourish, his supporters say.
Despite the stark differences between the men, Iger’s former colleagues, friends and competitors say privately that he is making many of the same mistakes and stumbling into some of the same traps that Eisner did many years ago.
With the stock trading around 10-year lows, Iger is facing his own activist battle with Nelson Peltz of Trian Fund Management. Disney is on the hook to pay billions to Comcast for full ownership of the streaming service Hulu, even as the company is still digesting its $71.3 billion acquisition of Fox assets—all eerie echoes of the past.
Perhaps the most stark comparison of then and now, say Iger’s critics, is the lack of clarity over succession. Many potential contenders left the company during Iger’s first stint as CEO, from 2006 to 2020. Bob Chapek, whom Iger championed as his replacement, was ousted in a boardroom coup in November 2022, resulting in Iger’s return. Eisner also had trouble leaving the stage, a fact that rankled Iger at the time.
“Iger has systematically eliminated any executive who could become a successor. To me it’s a real black mark on Iger’s record,” said Gary Wilson, an investor and former chief financial officer of Disney who spent 21 years on Disney’s board, up to and including the first hiring of Iger as CEO.
Comparisons between Iger and Eisner are inapt, said Bobby Kotick, a longtime friend of Iger’s who spent 33 years as CEO of videogame maker Activision Blizzard until stepping down at the end of 2023. While Eisner’s tenure came during an era of rapid media growth, Iger’s Disney is contending with unprecedented disruption from streaming and the emergence of tech rivals like Apple and Amazon who aren’t under the same pressure to generate financial returns, he said.
Eisner disputed the notion that he had mismanaged the succession process and praised Iger’s performance as Disney’s leader.“I brought Bob Iger in as president after five years of working with him. From 2000 on, it was clear to me and anyone else who was close enough to know what was needed that he should be the next CEO,” Eisner said in a statement. Every candidate that was considered “was compared to Bob and they all fell short.”
In response to a list of questions, Disney said that since Iger’s return as CEO in November of 2022, the company has made significant progress in improving cash flow, cutting costs, reducing streaming losses and restructuring the company “with an emphasis on returning focus to creativity.”A company spokesman rejected several key comparisons between Disney’s position today compared with two decades ago.
Iger returned for his second stint as CEO to a changed media business and impatient shareholders. He is under pressure to ensure Disney’s streaming business reaches profitability in the final quarter of its current fiscal year, after racking up more than $11 billion in losses in its first four years.
Disney’s acquisition of Fox entertainment assets for $71.3 billion was supposed to supercharge its streaming efforts, bringing in lucrative franchises like “Avatar” and “The Simpsons,” but the company has been slow to monetize much of the library of shows and characters it purchased, and is already selling off parts of key properties it got in the deal. That transaction also saddled Disney with more than $14 billion in Fox debt and a bigger portfolio of declining cable TV networks. (Iger negotiated the deal opposite Rupert Murdoch, who was then chairman of Fox and Wall Street Journal parent News Corp. Murdoch is now chairman emeritus of each company.)
“There are just no easy solutions today,” said Peter Murphy, former head of Disney’s strategic planning department, a kind of advisory board for the company set up by Eisner in the 1990s. “Disney wants to be a high-growth, tech-oriented company but they still have one foot firmly planted in the Old Hollywood, Old Broadcast, Old Cable world.”
Meanwhile, Disney’s movie studios, which form its creative engine, are sputtering. Fans are fed up with endless Marvel sequels, and live-action remakes of classic animated films have disappointed at the box office.“The Marvels,” Disney’s latest superhero foray, cost more than $270 million to produce, before marketing costs, and grossed $206 million worldwide, making it by a wide margin the worst-ever box office performance for a Marvel movie. Pixar, the pioneering computer-animation studio, failed to find a wide theatrical audience for recent movies including “Elemental” and “Lightyear.”
In November at the New York Times DealBook Summit, Iger said that Disney’s movies and shows had grown too political. “We have to entertain first,” he said. “It’s not about messages.”
Much of Iger’s second tenure as CEO has been spent exploring, but not executing on strategic plans. Iger flirted with the idea of offloading traditional TV assets, but recently tempered expectations of any such deal. ESPN has had talks with sports leagues about offering them stakes in the network in exchange for assets, such as the NFL’s subscription-streaming service and the NBA’s League Pass package. So far no deal has emerged.
For investor Nelson Peltz, Iger’s actions so far—from job cuts, to cost savings and strategic reviews—are inadequate.
Last week, Trian said in a securities filing that it has nominated Peltz and Jay Rasulo, a 30-year Disney veteran and former CFO, to Disney’s board, and called for changes including “Netflix-like” 15% to 20% profit margins for Disney’s streaming business as well as clarity on the returns for planned effort to launch a direct-to-consumer ESPN product. It is Peltz’s second proxy campaign against Disney in the space of about a year.
This time, Peltz has financial help from former Marvel Entertainment chairman Isaac “Ike” Perlmutter, who played a key role in Disney’s rise as a superhero movie juggernaut. It’s yet another parallel to the past, when the effort to oust Eisner—known as the “Save Disney” campaign—was backed by Roy E. Disney, the nephew of founder Walt Disney who was a larger-than-life figure in the animation business. Eisner had a tense relationship with Roy that worsened after the CEO engineered his departure from the Disney board in 2003.
Perlmutter’s job was terminated in March 2023, though he remained one of Disney’s largest individual shareholders and has entrusted that stake to Trian to back its campaign, which has been dubbed “Restore the Magic.”
A Disney spokesman rejected the parallels between the two men. “Roy Disney was a producer, had an office at Disney animation, and spent his life experiencing Disney and being involved with numerous creative projects at the company,” the spokesman said. “Comparing the two is preposterous.”
In early January, Disney’s board rejected adding Peltz and Rasulo as directors, saying in proxy materials that Peltz lacks experience in entertainment.
Disney said in its filing that Perlmutter and Rasulo have personal axes to grind that would make it difficult for them to work productively with Iger. Both Perlmutter and Iger have acknowledged that their relationship has been strained for years. Rasulo was passed over for the job of Iger’s second-in-command in 2015, prompting him to leave the company.As recently as a few years ago, Iger and Peltz would occasionally meet or share a meal together when Peltz was in Los Angeles or Iger was visiting New York, and the Disney CEO solicited the investor’s advice.In 2019, Iger asked Peltz to come to a board meeting at the company’s Burbank, Calif., headquarters to talk about the media industry. The Disney CEO wanted Peltz to advise on a variety of topics related to the media and consumer-products industries, including whether or not the company might be vulnerable to an activist attack.
Disney said that Peltz was selected to present to the board because of his expertise as an activist investor.That same year, Peltz tried to broker peace between Iger and Pelmutter after the CEO and the Marvel chief began feuding. Iger had stripped Perlmutter of his authority over Marvel’s movie studio in 2015 after Perlmutter clashed with Kevin Feige, Disney’s star producer of superhero movies.Four years later, Iger told Perlmutter he was going to lose control of Marvel’s television studio. At Perlmutter’s request, Peltz called Iger, arguing that the Marvel executive had delivered huge profits over the years. “Why take Babe Ruth out of the lineup?” Peltz asked Iger. Perlmutter remained in control of Marvel’s toy and videogame licensing business as well as comic-book publishing, but lost TV.Disney’s board agreed at its January meeting to support a slate that includes former Morgan Stanley CEO James Gorman and former Sky CEO Jeremy Darroch. Gorman is seen by Disney-watchers as particularly useful in succession planning, since he just shepherded Morgan Stanley through a similar process.
Perlmutter sees parallels between Disney’s governance today and the situation in the early 2000s, when Eisner’s critics noted that the board included the then-CEO’s personal lawyer, the architect who built his Aspen vacation home and the principal of his sons’ elementary school.
“Iger is a copy of Eisner. The entire board is his friends,” Perlmutter said in an interview. The board needs to be reworked so that it’s more independent, he said.
Every current Disney director except one was appointed during Iger’s first tenure as CEO or his time as executive chairman. Disney says that Iger wasn’t personally acquainted with any of the company’s current directors before they joined the board, with the exception of former U.S. Trade Representative Michael Froman.In the coming weeks, Trian is expected to identify board members it thinks should be replaced and provide more information about strategic changes it’s seeking.
Disney has been on the brink before.
When Eisner joined Disney in 1984 from Paramount, he breathed new life into a company that had atrophied since Walt Disney’s death nearly 20 years earlier.
He bolstered Disney’s bottom line with theme park price increases and hired talented studio leaders like Jeffrey Katzenberg, who churned out animated hits like “The Lion King” and “Aladdin.”
He also made some mistakes—and enemies. In 1995, he hired his friend Michael Ovitz, founder of the Creative Artists Agency, as president of Disney, telling the board the new hire would make a great successor. The men immediately clashed, and the relationship lasted just 16 months.
Shareholders and directors were enraged when Ovitz walked away with a golden parachute worth $138 million in cash and stock. Eisner earned a reputation for elevating and then undermining multiple potential successors.
Eisner began to come under greater scrutiny as Disney’s business fortunes turned in the second half of his two-decade tenure. The animation business languished, with early 2000s projects like “The Emperor’s New Groove” and “Home on the Range,” bombing with audiences. Disney’s board questioned the wisdom of the company’s $5.2 billion acquisition of the cable network Fox Family from Rupert Murdoch’s News Corp. when the channel later struggled to find an identity.
After that, the board grew more conservative about acquisitions. In 2003 and 2004, for example, Disney was in previously unreported talks to acquire videogame maker Activision Blizzard, discussions that fell apart, according to people familiar with the matter.
Investors grew restless, leading to the campaign against Eisner led by former board members Stanley Gold and Roy Disney. Eisner stepped down as chairman in 2004 after a disastrous shareholder vote, and relinquished the CEO title a year later.
When Iger took over as CEO in 2005, he focused on large acquisitions and franchises that expanded Disney’s reach across the globe. The results in Iger’s first stint were hard to argue with, including a string of $1 billion-plus box office hits and a stock performance that peers envied.
During his first stint as CEO, Iger positioned at least three executives—Rasulo, longtime business executive and former CFO Tom Staggs and former head of strategy Kevin Mayer—to succeed him, only to repeatedly extend his own contract, driving them to leave Disney.
Iger’s eventual handpicked successor, Chapek, became CEO in February 2020. Iger hung around for another 18 months as executive chairman, clashing repeatedly with Chapek. After he retired at the end of 2021, Iger told confidants that Chapek was doing a terrible job, the Journal previously reported.
When Iger agreed to return in November 2022, he said he was coming back for two years. By the following summer, the board extended his contract through 2026, when Iger says he’ll definitely step down. Senior Disney executives who are considered potential successors include Disney Entertainment executives Dana Walden and Alan Bergman and theme park and consumer products chief Josh D’Amaro.
Cable giant Comcast is a recurring character in Disney’s corporate drama. Back in 2004, Eisner faced a hostile takeover attempt mounted by Brian Roberts, the Comcast CEO. Disney ultimately resisted the attack, but it destabilized Eisner’s leadership and former Disney board members say it hastened his downfall as CEO.
Now, Iger must face off with Roberts—this time, not as a seller, but as a buyer of Comcast’s one-third stake in the streaming service Hulu, which is majority owned by Disney. The companies are in negotiations to determine the value of Comcast’s stake and up to now have been billions of dollars apart in their internal estimates, people close to the process say.
The final chapter of Iger’s Disney story is still being written. He may very well prevail in the activist battle, forge deals that fortify Disney’s streaming business and return some magic to moviemaking. Iger’s famed know-how in developing hit franchises out of Disney’s intellectual property will be put to the test.
“No one has done that, or knows how to do that, better than Bob,” Kotick said.
Write to Robbie Whelan at robbie.whelan@wsj.com
The Disney Sequel Bob Iger Never Wanted
Two decades after replacing Eisner, CEO faces many of the same challenges
By Robbie Whelan
Updated Jan. 24, 2024 - 10:08 am EST
Disney’s embattled CEO was under fire from activist investors. Critics said he had botched succession planning.
A costly deal with Fox was weighing on Disney’s balance sheet, while the prospect of a corporate battle with rival Comcast loomed large. The movie studio’s Golden Age seemed to have faded into a series of flops.
The year was 2004. The CEO in question was Michael Eisner.
After more than a decade in which he had revived the fabled Disney brand and appeared untouchable, he lost momentum and his leadership descended into controversy and financial decline. He eventually stepped down following a shareholder rebellion.
Two decades later, the man who replaced him—Disney’s current chief, Bob Iger—is starring in a reboot of that drama, with plenty of familiar story lines. Iger, too, rebuilt the company, restored its lost glory and seemed unassailable—but now faces many of the same problems that plagued his predecessor. He is hoping to script a different ending.
Iger is a little over a year into his second stint as CEO, and his return to the House of Mouse isn’t going as planned. The decline of Disney’s long-lucrative TV business is quickening, and the supposed solution, streaming, has left Disney with billions of dollars in losses.
Iger has acknowledged that righting the ship has proved harder than expected, but he’s told employees that after months of “fixing” that included major job cuts and restructuring, he’s ready to build a new Disney. “I can tell you building is a lot more fun than fixing,” he said at a town hall meeting with employees in late November.
In many ways, Iger cuts a very different figure in the C-suite than his predecessor. Eisner came to the CEO job with a glittering resume as a creative executive—he came up with the idea for the sitcom “Happy Days” in an airport while waiting out a snowstorm and was closely involved in the making of “Raiders of the Lost Ark.” He had a management style contemporaries said could sometimes be chaotic.Iger, on the other hand, spent most of his early career as an ABC broadcasting executive focused on programming the network’s schedule. As CEO of Disney, he has been viewed as a savvy people manager and visionary dealmaker who placed smart bets to acquire Pixar, Star Wars parent Lucasfilm and Marvel Entertainment. He set the stage for talent to flourish, his supporters say.
Despite the stark differences between the men, Iger’s former colleagues, friends and competitors say privately that he is making many of the same mistakes and stumbling into some of the same traps that Eisner did many years ago.
With the stock trading around 10-year lows, Iger is facing his own activist battle with Nelson Peltz of Trian Fund Management. Disney is on the hook to pay billions to Comcast for full ownership of the streaming service Hulu, even as the company is still digesting its $71.3 billion acquisition of Fox assets—all eerie echoes of the past.
Perhaps the most stark comparison of then and now, say Iger’s critics, is the lack of clarity over succession. Many potential contenders left the company during Iger’s first stint as CEO, from 2006 to 2020. Bob Chapek, whom Iger championed as his replacement, was ousted in a boardroom coup in November 2022, resulting in Iger’s return. Eisner also had trouble leaving the stage, a fact that rankled Iger at the time.
“Iger has systematically eliminated any executive who could become a successor. To me it’s a real black mark on Iger’s record,” said Gary Wilson, an investor and former chief financial officer of Disney who spent 21 years on Disney’s board, up to and including the first hiring of Iger as CEO.
Comparisons between Iger and Eisner are inapt, said Bobby Kotick, a longtime friend of Iger’s who spent 33 years as CEO of videogame maker Activision Blizzard until stepping down at the end of 2023. While Eisner’s tenure came during an era of rapid media growth, Iger’s Disney is contending with unprecedented disruption from streaming and the emergence of tech rivals like Apple and Amazon who aren’t under the same pressure to generate financial returns, he said.
Eisner disputed the notion that he had mismanaged the succession process and praised Iger’s performance as Disney’s leader.“I brought Bob Iger in as president after five years of working with him. From 2000 on, it was clear to me and anyone else who was close enough to know what was needed that he should be the next CEO,” Eisner said in a statement. Every candidate that was considered “was compared to Bob and they all fell short.”
In response to a list of questions, Disney said that since Iger’s return as CEO in November of 2022, the company has made significant progress in improving cash flow, cutting costs, reducing streaming losses and restructuring the company “with an emphasis on returning focus to creativity.”A company spokesman rejected several key comparisons between Disney’s position today compared with two decades ago.
Iger returned for his second stint as CEO to a changed media business and impatient shareholders. He is under pressure to ensure Disney’s streaming business reaches profitability in the final quarter of its current fiscal year, after racking up more than $11 billion in losses in its first four years.
Disney’s acquisition of Fox entertainment assets for $71.3 billion was supposed to supercharge its streaming efforts, bringing in lucrative franchises like “Avatar” and “The Simpsons,” but the company has been slow to monetize much of the library of shows and characters it purchased, and is already selling off parts of key properties it got in the deal. That transaction also saddled Disney with more than $14 billion in Fox debt and a bigger portfolio of declining cable TV networks. (Iger negotiated the deal opposite Rupert Murdoch, who was then chairman of Fox and Wall Street Journal parent News Corp. Murdoch is now chairman emeritus of each company.)
“There are just no easy solutions today,” said Peter Murphy, former head of Disney’s strategic planning department, a kind of advisory board for the company set up by Eisner in the 1990s. “Disney wants to be a high-growth, tech-oriented company but they still have one foot firmly planted in the Old Hollywood, Old Broadcast, Old Cable world.”
Meanwhile, Disney’s movie studios, which form its creative engine, are sputtering. Fans are fed up with endless Marvel sequels, and live-action remakes of classic animated films have disappointed at the box office.“The Marvels,” Disney’s latest superhero foray, cost more than $270 million to produce, before marketing costs, and grossed $206 million worldwide, making it by a wide margin the worst-ever box office performance for a Marvel movie. Pixar, the pioneering computer-animation studio, failed to find a wide theatrical audience for recent movies including “Elemental” and “Lightyear.”
In November at the New York Times DealBook Summit, Iger said that Disney’s movies and shows had grown too political. “We have to entertain first,” he said. “It’s not about messages.”
Much of Iger’s second tenure as CEO has been spent exploring, but not executing on strategic plans. Iger flirted with the idea of offloading traditional TV assets, but recently tempered expectations of any such deal. ESPN has had talks with sports leagues about offering them stakes in the network in exchange for assets, such as the NFL’s subscription-streaming service and the NBA’s League Pass package. So far no deal has emerged.
For investor Nelson Peltz, Iger’s actions so far—from job cuts, to cost savings and strategic reviews—are inadequate.
Last week, Trian said in a securities filing that it has nominated Peltz and Jay Rasulo, a 30-year Disney veteran and former CFO, to Disney’s board, and called for changes including “Netflix-like” 15% to 20% profit margins for Disney’s streaming business as well as clarity on the returns for planned effort to launch a direct-to-consumer ESPN product. It is Peltz’s second proxy campaign against Disney in the space of about a year.
This time, Peltz has financial help from former Marvel Entertainment chairman Isaac “Ike” Perlmutter, who played a key role in Disney’s rise as a superhero movie juggernaut. It’s yet another parallel to the past, when the effort to oust Eisner—known as the “Save Disney” campaign—was backed by Roy E. Disney, the nephew of founder Walt Disney who was a larger-than-life figure in the animation business. Eisner had a tense relationship with Roy that worsened after the CEO engineered his departure from the Disney board in 2003.
Perlmutter’s job was terminated in March 2023, though he remained one of Disney’s largest individual shareholders and has entrusted that stake to Trian to back its campaign, which has been dubbed “Restore the Magic.”
A Disney spokesman rejected the parallels between the two men. “Roy Disney was a producer, had an office at Disney animation, and spent his life experiencing Disney and being involved with numerous creative projects at the company,” the spokesman said. “Comparing the two is preposterous.”
In early January, Disney’s board rejected adding Peltz and Rasulo as directors, saying in proxy materials that Peltz lacks experience in entertainment.
Disney said in its filing that Perlmutter and Rasulo have personal axes to grind that would make it difficult for them to work productively with Iger. Both Perlmutter and Iger have acknowledged that their relationship has been strained for years. Rasulo was passed over for the job of Iger’s second-in-command in 2015, prompting him to leave the company.As recently as a few years ago, Iger and Peltz would occasionally meet or share a meal together when Peltz was in Los Angeles or Iger was visiting New York, and the Disney CEO solicited the investor’s advice.In 2019, Iger asked Peltz to come to a board meeting at the company’s Burbank, Calif., headquarters to talk about the media industry. The Disney CEO wanted Peltz to advise on a variety of topics related to the media and consumer-products industries, including whether or not the company might be vulnerable to an activist attack.
Disney said that Peltz was selected to present to the board because of his expertise as an activist investor.That same year, Peltz tried to broker peace between Iger and Pelmutter after the CEO and the Marvel chief began feuding. Iger had stripped Perlmutter of his authority over Marvel’s movie studio in 2015 after Perlmutter clashed with Kevin Feige, Disney’s star producer of superhero movies.Four years later, Iger told Perlmutter he was going to lose control of Marvel’s television studio. At Perlmutter’s request, Peltz called Iger, arguing that the Marvel executive had delivered huge profits over the years. “Why take Babe Ruth out of the lineup?” Peltz asked Iger. Perlmutter remained in control of Marvel’s toy and videogame licensing business as well as comic-book publishing, but lost TV.Disney’s board agreed at its January meeting to support a slate that includes former Morgan Stanley CEO James Gorman and former Sky CEO Jeremy Darroch. Gorman is seen by Disney-watchers as particularly useful in succession planning, since he just shepherded Morgan Stanley through a similar process.
Perlmutter sees parallels between Disney’s governance today and the situation in the early 2000s, when Eisner’s critics noted that the board included the then-CEO’s personal lawyer, the architect who built his Aspen vacation home and the principal of his sons’ elementary school.
“Iger is a copy of Eisner. The entire board is his friends,” Perlmutter said in an interview. The board needs to be reworked so that it’s more independent, he said.
Every current Disney director except one was appointed during Iger’s first tenure as CEO or his time as executive chairman. Disney says that Iger wasn’t personally acquainted with any of the company’s current directors before they joined the board, with the exception of former U.S. Trade Representative Michael Froman.In the coming weeks, Trian is expected to identify board members it thinks should be replaced and provide more information about strategic changes it’s seeking.
Disney has been on the brink before.
When Eisner joined Disney in 1984 from Paramount, he breathed new life into a company that had atrophied since Walt Disney’s death nearly 20 years earlier.
He bolstered Disney’s bottom line with theme park price increases and hired talented studio leaders like Jeffrey Katzenberg, who churned out animated hits like “The Lion King” and “Aladdin.”
He also made some mistakes—and enemies. In 1995, he hired his friend Michael Ovitz, founder of the Creative Artists Agency, as president of Disney, telling the board the new hire would make a great successor. The men immediately clashed, and the relationship lasted just 16 months.
Shareholders and directors were enraged when Ovitz walked away with a golden parachute worth $138 million in cash and stock. Eisner earned a reputation for elevating and then undermining multiple potential successors.
Eisner began to come under greater scrutiny as Disney’s business fortunes turned in the second half of his two-decade tenure. The animation business languished, with early 2000s projects like “The Emperor’s New Groove” and “Home on the Range,” bombing with audiences. Disney’s board questioned the wisdom of the company’s $5.2 billion acquisition of the cable network Fox Family from Rupert Murdoch’s News Corp. when the channel later struggled to find an identity.
After that, the board grew more conservative about acquisitions. In 2003 and 2004, for example, Disney was in previously unreported talks to acquire videogame maker Activision Blizzard, discussions that fell apart, according to people familiar with the matter.
Investors grew restless, leading to the campaign against Eisner led by former board members Stanley Gold and Roy Disney. Eisner stepped down as chairman in 2004 after a disastrous shareholder vote, and relinquished the CEO title a year later.
When Iger took over as CEO in 2005, he focused on large acquisitions and franchises that expanded Disney’s reach across the globe. The results in Iger’s first stint were hard to argue with, including a string of $1 billion-plus box office hits and a stock performance that peers envied.
During his first stint as CEO, Iger positioned at least three executives—Rasulo, longtime business executive and former CFO Tom Staggs and former head of strategy Kevin Mayer—to succeed him, only to repeatedly extend his own contract, driving them to leave Disney.
Iger’s eventual handpicked successor, Chapek, became CEO in February 2020. Iger hung around for another 18 months as executive chairman, clashing repeatedly with Chapek. After he retired at the end of 2021, Iger told confidants that Chapek was doing a terrible job, the Journal previously reported.
When Iger agreed to return in November 2022, he said he was coming back for two years. By the following summer, the board extended his contract through 2026, when Iger says he’ll definitely step down. Senior Disney executives who are considered potential successors include Disney Entertainment executives Dana Walden and Alan Bergman and theme park and consumer products chief Josh D’Amaro.
Cable giant Comcast is a recurring character in Disney’s corporate drama. Back in 2004, Eisner faced a hostile takeover attempt mounted by Brian Roberts, the Comcast CEO. Disney ultimately resisted the attack, but it destabilized Eisner’s leadership and former Disney board members say it hastened his downfall as CEO.
Now, Iger must face off with Roberts—this time, not as a seller, but as a buyer of Comcast’s one-third stake in the streaming service Hulu, which is majority owned by Disney. The companies are in negotiations to determine the value of Comcast’s stake and up to now have been billions of dollars apart in their internal estimates, people close to the process say.
The final chapter of Iger’s Disney story is still being written. He may very well prevail in the activist battle, forge deals that fortify Disney’s streaming business and return some magic to moviemaking. Iger’s famed know-how in developing hit franchises out of Disney’s intellectual property will be put to the test.
“No one has done that, or knows how to do that, better than Bob,” Kotick said.
Write to Robbie Whelan at robbie.whelan@wsj.com
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Comcast tops revenue and profit estimates despite broadband subscriber losses, raises dividend by 7%
Published Thu, Jan 25 2024 - 6:30 AM EST - Updated Moments Ago
Alex Sherman@sherman4949
Key Points
Here’s how Comcast performed, compared with estimates from analysts surveyed by LSEG, formerly known as Refinitiv.
For the quarter ended Dec. 31, net income rose 7.8% to $3.26 billion, or 81 cents a share, compared to $3.02 billion, or 70 cents a share, a year earlier. Revenue increased 2.3% compared with the prior-year period. Adjusted earnings before interest, taxes, depreciation and amortization (EBITDA) was flat year-over-year at about $8 billion.
“For the third consecutive year, we generated the highest revenue, adjusted EBITDA and adjusted EPS in our company’s history,” Comcast Chief Executive Officer Brian Roberts said in a statement. “We also reported the highest adjusted EBITDA on record at Theme Parks; were the #1 studio in worldwide box office for the first time since 2015; and maintained Peacock’s position as the fastest growing streamer in the U.S.”
Comcast increased its dividend by 8 cents, or 7%, to $1.24 per share on an annualized basis for 2024. It’s the 16th consecutive year the company has raised its dividend. Comcast also approved a new share repurchase program authorization with no expiration date for $15 billion, effective as of Friday.
Free cash flow in the fourth quarter was $1.7 billion and $13 billion for the year.
Comcast lost 34,000 domestic broadband subscribers — less than the average analyst estimate of about 62,000 as compiled by StreetAccount. Despite the losses, domestic broadband revenue rose 3.7% to $6.4 billion. Average revenue per user jumped 3.9% as customers connected more devices and spent more for higher Internet speeds.
Comcast added 310,000 wireless subscribers, trailing the average analyst of about 342,000 gained. The company lost 389,000 video subscribers -- a narrower loss than the average analyst estimate of nearly 458,000.
Theme parks adjusted EBITDA rose 11.6% to $872 million, which trailed analyst estimates of roughly $897 million. The figure still broke a quarterly record for Comcast.
NBCUniversal results
NBCUniversal’s flagship streaming service Peacock added 3 million subscribers as revenue increased 51% to $1.03 billion, marking the first time Peacock has topped $1 billion or more in a quarter. Peacock lost an adjusted $825 million in the quarter, narrowing its loss from $978 million in the same period a year prior. Peacock ended the quarter with 31 million subscribers.
Overall media revenue increased 3.1% to nearly $7 billion, but adjusted EBITDA fell 50% to $108 million due to increased sports programming costs and higher programming costs at Peacock. The increase in sports costs reflected higher media rights for NFL programming, the Premier League and the Big 10.
Domestic advertising revenue decreased 6.9% year over year to $2.64 billion, although sales would have increased 2.7% in the quarter with the exclusion of last year’s World Cup advertising.
Theatrical revenue rose 59% in the quarter based largely on the performance of four films: “Five Nights at Freddy’s,” “Trolls Band Together,” “The Exorcist: Believer” and “Migration.” Universal ranked first in global box office in 2023 for the first time since 2015 and produced three of the top five movies: “The Super Mario Bros. Movie,” “Oppenheimer,” and “Fast X.”
Disclosure: Comcast owns NBCUniversal, the parent company of CNBC.
Comcast tops revenue and profit estimates despite broadband subscriber losses, raises dividend by 7%
Published Thu, Jan 25 2024 - 6:30 AM EST - Updated Moments Ago
Alex Sherman@sherman4949
Key Points
- Comcast revenue rose 2.3% to $31.25 billion in the fourth quarter.
- Net income rose 7.8% to $3.26 billion, or 81 cents a share.
- Peacock added 3 million subscribers in the quarter, bringing the streaming service to 31 million overall.
- Comcast increased its dividend by 8 cents, or 7%, to $1.24 per share
Here’s how Comcast performed, compared with estimates from analysts surveyed by LSEG, formerly known as Refinitiv.
- Earnings per share: 84 cents adjusted vs. 79 cents expected
- Revenue: $31.25 billion vs. $30.51 billion expected
For the quarter ended Dec. 31, net income rose 7.8% to $3.26 billion, or 81 cents a share, compared to $3.02 billion, or 70 cents a share, a year earlier. Revenue increased 2.3% compared with the prior-year period. Adjusted earnings before interest, taxes, depreciation and amortization (EBITDA) was flat year-over-year at about $8 billion.
“For the third consecutive year, we generated the highest revenue, adjusted EBITDA and adjusted EPS in our company’s history,” Comcast Chief Executive Officer Brian Roberts said in a statement. “We also reported the highest adjusted EBITDA on record at Theme Parks; were the #1 studio in worldwide box office for the first time since 2015; and maintained Peacock’s position as the fastest growing streamer in the U.S.”
Comcast increased its dividend by 8 cents, or 7%, to $1.24 per share on an annualized basis for 2024. It’s the 16th consecutive year the company has raised its dividend. Comcast also approved a new share repurchase program authorization with no expiration date for $15 billion, effective as of Friday.
Free cash flow in the fourth quarter was $1.7 billion and $13 billion for the year.
Comcast lost 34,000 domestic broadband subscribers — less than the average analyst estimate of about 62,000 as compiled by StreetAccount. Despite the losses, domestic broadband revenue rose 3.7% to $6.4 billion. Average revenue per user jumped 3.9% as customers connected more devices and spent more for higher Internet speeds.
Comcast added 310,000 wireless subscribers, trailing the average analyst of about 342,000 gained. The company lost 389,000 video subscribers -- a narrower loss than the average analyst estimate of nearly 458,000.
Theme parks adjusted EBITDA rose 11.6% to $872 million, which trailed analyst estimates of roughly $897 million. The figure still broke a quarterly record for Comcast.
NBCUniversal results
NBCUniversal’s flagship streaming service Peacock added 3 million subscribers as revenue increased 51% to $1.03 billion, marking the first time Peacock has topped $1 billion or more in a quarter. Peacock lost an adjusted $825 million in the quarter, narrowing its loss from $978 million in the same period a year prior. Peacock ended the quarter with 31 million subscribers.
Overall media revenue increased 3.1% to nearly $7 billion, but adjusted EBITDA fell 50% to $108 million due to increased sports programming costs and higher programming costs at Peacock. The increase in sports costs reflected higher media rights for NFL programming, the Premier League and the Big 10.
Domestic advertising revenue decreased 6.9% year over year to $2.64 billion, although sales would have increased 2.7% in the quarter with the exclusion of last year’s World Cup advertising.
Theatrical revenue rose 59% in the quarter based largely on the performance of four films: “Five Nights at Freddy’s,” “Trolls Band Together,” “The Exorcist: Believer” and “Migration.” Universal ranked first in global box office in 2023 for the first time since 2015 and produced three of the top five movies: “The Super Mario Bros. Movie,” “Oppenheimer,” and “Fast X.”
Disclosure: Comcast owns NBCUniversal, the parent company of CNBC.
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David Ellison’s Skydance Media explores acquiring all of Paramount Global, sources say
Published Wed, Jan 24 2024 - 8:33 PM EST - Updated Wed, Jan 24 2024 - 9:01 PM EST
Alex Sherman@sherman4949
Key Points
Skydance, the film and TV studio run by Ellison, has exchanged preliminary information with Paramount, said the people, who asked not to be named because the deal talks are private. Full due diligence hasn’t started, the people said.
Skydance has been working with private equity firms RedBird Capital Partners and KKR & Co. on a deal to buy National Amusements, the holding company owned by Shari Redstone. It controls 77% of Paramount’s voting stock.
But that deal is contingent on merging Skydance with Paramount, and the likely structure for a merger would be a complete take private of the larger media company, said the people.
Redstone is considering selling as the media landscape shifts away from traditional TV toward streaming. While Paramount Global has run a profitable business for decades, it is smaller than Netflix, Google’s YouTube, Apple, Amazon, and other larger streamers that have bigger balance sheets to afford sports and entertainment content.
No acquisition is assured, and talks could fall apart.
It is unclear if Redstone would demand a different premium for selling National Amusements than the remaining shareholders of Paramount Global would obtain.
Skydance would need additional capital to acquire Paramount, which has a market capitalization of $8.2 billion and about $15 billion of debt. Some of that funding could come from Skydance’s private equity partners and Larry Ellison, the billionaire co-founder of Oracle and David Ellison’s father. Skydance hasn’t reached out for outside financing yet, as it hasn’t decided if it wants to move forward with a deal, said the people.
Skydance isn’t interested in a deal where it would only acquire National Amusements but not all of Paramount, said the people. While such a deal would give Skydance control of Paramount, it wouldn’t solve Paramount’s problems as a publicly traded company, which include running the growing but money-losing Paramount+ streaming service, and operating declining linear cable assets such as MTV, VH1, Comedy Central and Nickelodeon.
Spokespeople for RedBird, Skydance, Paramount Global and National Amusements declined to comment.
Warner Bros. Discovery has also had preliminary discussions about acquiring Paramount Global, according to people familiar with the matter. If Redstone sells to Skydance, one motivating factor would be her fear that Warner Bros. Discovery would prefer to merge with Comcast’s NBCUniversal, one of the people said.
Puck first reported Skydance’s interest in acquiring National Amusements. The Wall Street Journal reported last week that Skydance was interested in a two-part deal that would include merging Skydance and National Amusements. Bloomberg first reported on the initial exchange of company information.
Disclosure: Comcast NBCUniversal is the parent company of CNBC.
David Ellison’s Skydance Media explores acquiring all of Paramount Global, sources say
Published Wed, Jan 24 2024 - 8:33 PM EST - Updated Wed, Jan 24 2024 - 9:01 PM EST
Alex Sherman@sherman4949
Key Points
- Skydance Media is interested in leading a deal to take all of Paramount Global private, according to people familiar with the matter.
- Skydance hasn’t reached out for additional outside financing and may not pursue a deal, the people said.
- Any deal for Paramount Global would conditionally require approval from Shari Redstone, whose National Amusements owns 77% of Paramount’s voting shares.
Skydance, the film and TV studio run by Ellison, has exchanged preliminary information with Paramount, said the people, who asked not to be named because the deal talks are private. Full due diligence hasn’t started, the people said.
Skydance has been working with private equity firms RedBird Capital Partners and KKR & Co. on a deal to buy National Amusements, the holding company owned by Shari Redstone. It controls 77% of Paramount’s voting stock.
But that deal is contingent on merging Skydance with Paramount, and the likely structure for a merger would be a complete take private of the larger media company, said the people.
Redstone is considering selling as the media landscape shifts away from traditional TV toward streaming. While Paramount Global has run a profitable business for decades, it is smaller than Netflix, Google’s YouTube, Apple, Amazon, and other larger streamers that have bigger balance sheets to afford sports and entertainment content.
No acquisition is assured, and talks could fall apart.
It is unclear if Redstone would demand a different premium for selling National Amusements than the remaining shareholders of Paramount Global would obtain.
Skydance would need additional capital to acquire Paramount, which has a market capitalization of $8.2 billion and about $15 billion of debt. Some of that funding could come from Skydance’s private equity partners and Larry Ellison, the billionaire co-founder of Oracle and David Ellison’s father. Skydance hasn’t reached out for outside financing yet, as it hasn’t decided if it wants to move forward with a deal, said the people.
Skydance isn’t interested in a deal where it would only acquire National Amusements but not all of Paramount, said the people. While such a deal would give Skydance control of Paramount, it wouldn’t solve Paramount’s problems as a publicly traded company, which include running the growing but money-losing Paramount+ streaming service, and operating declining linear cable assets such as MTV, VH1, Comedy Central and Nickelodeon.
Spokespeople for RedBird, Skydance, Paramount Global and National Amusements declined to comment.
Warner Bros. Discovery has also had preliminary discussions about acquiring Paramount Global, according to people familiar with the matter. If Redstone sells to Skydance, one motivating factor would be her fear that Warner Bros. Discovery would prefer to merge with Comcast’s NBCUniversal, one of the people said.
Puck first reported Skydance’s interest in acquiring National Amusements. The Wall Street Journal reported last week that Skydance was interested in a two-part deal that would include merging Skydance and National Amusements. Bloomberg first reported on the initial exchange of company information.
Disclosure: Comcast NBCUniversal is the parent company of CNBC.
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Layoffs Coming At Paramount Global But No Details In Bob Bakish Memo On 2024 Strategy; CEO Acknowledges M&A Speculation
By Jill Goldsmith - Co-Business Editor
January 25, 2024 - 10:30am PST
Paramount Global CEO Bob Bakish said Thursday that the company will continue to reduce its global workforce “to operate as a leaner company and spend less.” But there were no further details in a memo to staff obtained by Deadline following a “Bob Live” town hall this morning.
The company has three main strategic goals going forward: maximizing content, driving streaming profitability, and “further unlocking the power of ONE PARAMOUNT.”
“As it has over the past few years, this does mean we will continue to reduce our workforce globally,” the memo read.
“These decisions are never easy, but are essential on our path to earnings growth.”
Deadline reported last weekend that cuts at Paramount were set to impact hundreds of employees across the company. The WSJ in December had pegged the layoffs at about 1,000, leading to a pretty brutal period of waiting for staffers which is ongoing. Deadline heard senior executives had been given reduction targets to hit to cut costs.
There’s been a wave of layoffs across media, entertainment and big tech over the past month. Microsoft said earlier today it’s cutting 1,900 jobs at its game division to reduce overlap after acquiring Activision Blizzard.
Bakish’s memo only touched briefly on M&A as speculation swirls around Paramount with interest, and a reported offer, from David Ellison’s Skydance to acquire Shari Redstone’s stake in National Amusements – her family holding company that controls Paramount Global. Apollo is also said to be interested.
“Amid all this change, it’s no surprise that Paramount remains a topic of speculation. We’re a storied public company in a closely followed industry. But I have always believed the best thing we can do is concentrate on what we can control — execution,” Bakish wrote. Asked by about deal chatter by a staffer directly during his live appearance, Bakish acknowledged rival companies were “kicking tires,” which he called “a testament to the great work” done by the Paramount Global team.” The CEO said the conglom will look at all options.
Bakish was also asked about layoffs during the Town Hall, according to someone on the video meet. He answered the employee by saying that, “In this business, we have to look at all costs,” without getting into specifics.
Below is the full memo.
Layoffs Coming At Paramount Global But No Details In Bob Bakish Memo On 2024 Strategy; CEO Acknowledges M&A Speculation
By Jill Goldsmith - Co-Business Editor
January 25, 2024 - 10:30am PST
Paramount Global CEO Bob Bakish said Thursday that the company will continue to reduce its global workforce “to operate as a leaner company and spend less.” But there were no further details in a memo to staff obtained by Deadline following a “Bob Live” town hall this morning.
The company has three main strategic goals going forward: maximizing content, driving streaming profitability, and “further unlocking the power of ONE PARAMOUNT.”
“As it has over the past few years, this does mean we will continue to reduce our workforce globally,” the memo read.
“These decisions are never easy, but are essential on our path to earnings growth.”
Deadline reported last weekend that cuts at Paramount were set to impact hundreds of employees across the company. The WSJ in December had pegged the layoffs at about 1,000, leading to a pretty brutal period of waiting for staffers which is ongoing. Deadline heard senior executives had been given reduction targets to hit to cut costs.
There’s been a wave of layoffs across media, entertainment and big tech over the past month. Microsoft said earlier today it’s cutting 1,900 jobs at its game division to reduce overlap after acquiring Activision Blizzard.
Bakish’s memo only touched briefly on M&A as speculation swirls around Paramount with interest, and a reported offer, from David Ellison’s Skydance to acquire Shari Redstone’s stake in National Amusements – her family holding company that controls Paramount Global. Apollo is also said to be interested.
“Amid all this change, it’s no surprise that Paramount remains a topic of speculation. We’re a storied public company in a closely followed industry. But I have always believed the best thing we can do is concentrate on what we can control — execution,” Bakish wrote. Asked by about deal chatter by a staffer directly during his live appearance, Bakish acknowledged rival companies were “kicking tires,” which he called “a testament to the great work” done by the Paramount Global team.” The CEO said the conglom will look at all options.
Bakish was also asked about layoffs during the Town Hall, according to someone on the video meet. He answered the employee by saying that, “In this business, we have to look at all costs,” without getting into specifics.
Below is the full memo.
wabbott
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https://www.yahoo.com/entertainment/why-bob-iger-won-t-140000039.html
The Wrap
Why Bob Iger Won’t Sell Disney’s Linear Assets | Exclusive
Alexei Barrionuevo
Fri, January 26, 2024 at 8:00 AM CST
Since returning to lead Disney after a very short retirement, Bob Iger has faced anemic stock prices, flagship brands adrift and the worsening pressure from streaming, problems advisers are telling him can be alleviated by selling off most of the entertainment giant’s linear TV assets. But for now, Iger is resisting that advice, TheWrap has learned.
In July, Iger brought back former longtime Disney executives Kevin Mayer and Tom Staggs to advise him on what to do with Disney’s linear assets, which include ABC, ESPN, National Geographic, FX and Freeform.
Their unvarnished advice was to unload them — not urgently, but soon, two people knowledgeable with the company’s operations told TheWrap. The advisors have echoed the analysis of Wall Street — these assets are steadily declining over time, even if they still currently throw off profit. Given consumers’ move to streaming, cable and broadcast television is headed for history.
Some six months later, Iger has yet to take any action.
“He just doesn’t want to sell them off,” one of the individuals said. “The non-linear sports networks should be gone, they provide nothing — nothing but earnings decline.”
Iger’s stance on the viability of linear TV has sloshed around since he took the reins of the company again in November of 2022. Two months earlier, when he was in between stints, the former ABC/Capital Cities president and COO agreed that traditional TV, including broadcast, cable and satellite, was “marching to a distinct precipice, and it’s going to be pushed off.”
Then in July, he said the TV networks “may not be core” to the business, while being clear that when it came to ESPN, “we want to stay in the sports business.” And this past November, he said “it is not the case” that Disney would sell the linear assets, with Disney Entertainment co-chair Dana Walden adding that the linear channels are “very deeply embedded” in its streaming strategy.
The Disney CEO’s recent reticence contrasts sharply with the message communicated by Disney’s main rival Netflix on Tuesday: Broadcast television cannot be saved through more consolidation. “We’re not interested in acquiring linear assets,” Netflix said in its letter to investors announcing its fourth-quarter 2023 earnings. “Nor do we believe that further M&A among traditional entertainment companies will materially change the competitive environment given all the consolidation that has already happened over the last decade.”
Like other major entertainment companies with legacy assets, the company is trying to work out the transition from linear to digital. But the need to set a strategy is more urgent for Iger, as Disney’s value has plunged in the past few years without seeing clear recovery.
Walt Disney Co.’s five-year market summary from Jan. 25, 2024.
Iger himself has pointed to a need to recharge Disney’s core creative franchises — Marvel, Star Wars and Pixar — which drive the global conglomerates’ flywheel of parks, merchandise, travel and content.
So why not shed linear? For one thing, these assets that are still profitable, even though declining. And Iger believes that the creative engine that drives linear television is critical to feeding a “rich flow of content” to the company’s streaming platforms, as the CEO told analysts in November.
In recent months, Iger has pointed to ESPN as having more potential, calling it a “core building opportunity” in November. Operating income for ESPN in 2023 fell by 2% to $2.8 billion from 2022, while revenues grew 2% to $16.4 billion.
But there may be more strategy to Iger’s thinking: The Disney CEO is worried that unloading the non-sports TV assets, which brought in $11.7 billion in revenues in 2023, or 13% of Disney’s total of $88.9 billion, could make the company too vulnerable to being acquired, another person familiar with Disney’s operations said. (Linear TV revenues fell 9% from 2022, while operating income plummeted by 21%.)
Facing the music
With Disney set to report its latest earnings on Feb. 7, Iger is facing a raft of challenges.
The company’s stock price, which closed at $94.86 on Thursday, is sluggish and trading at levels not seen for a decade. Its big-budget franchises, especially Marvel, are tired and creatively struggling. Disney is spending heavily to catch up on streaming. Activist investors are clamoring for board seats and for faster action to boost the stock price — and for a clear succession plan for Iger. Disney’s sprawling Experiences business, which brings in about 35% of overall revenues, had a disappointing summer, with lower-than-expected parks attendance. “And Pixar,” the knowledgeable person said, “is falling apart.”
Wall Street analysts and private equity executives have told TheWrap that Disney would be better off being acquired by a Big Tech company, most likely Apple. Or for a private equity firm – it could take multiple firms acting in unison — to attempt a history-making leveraged buyout of at least $200 billion.
Apple buying Disney “is the opportunity of a lifetime,” said Peter Csathy of Creative Media, a media, entertainment and tech advisory firm, who also writes for TheWrap. “If Disney is available, it could be one of those opportunities that breaks all the rules because it is such a unique asset.”
But tech companies, especially Apple, are unlikely to risk stoking the ire of regulators in Washington, D.C., who under President Biden have focused their sights on stemming potential monopolistic behavior, analysts told TheWrap.
To sell or not to sell
Iger is not seeking to sell all of Disney, the two people familiar with the company told TheWrap. And selling the company is not likely to solve all of Disney’s problems. “There is no silver bullet,” one knowledgeable person said. “It is going to be a slog to get back to $150 [per share].”
Analysts say that Disney, which currently has a market cap of $173.6 billion, could fetch upwards of $200 billion with a premium. That’s a price that only a company like Apple or Microsoft — the two largest companies in the world right now, each having passed $3 trillion in valuation — could afford. Up to now, Apple has been famously acquisition-shy: The largest deal it has ever done was the 2014 purchase of Beats Music and Beats Electronics for $3 billion.
Still, Disney and Apple have strong ties dating to when Iger, shortly after taking over as CEO in 2005, agreed to license a handful of TV programs to Apple for its iPod video player. Then Iger persuaded Apple CEO Steve Jobs to sell Pixar to Disney in 2006 for $7.4 billion. On the day the companies planned to announce the deal, Jobs confided to Iger that his pancreatic cancer had returned and offered to let Disney out of the deal, which Iger refused. The Apple co-founder served on Disney’s board until his death in 2011. Iger famously wrote in his own memoir, “The Ride of a Lifetime,” that had Jobs lived they would have combined their companies.
Even under CEO Tim Cook, the ties continue, albeit the companies have never been as close as during the Jobs-Iger years. Apple’s latest product, the Vision Pro, a $3,500 mixed-reality headset set to launch next month, will include 150 3D movies, including Disney titles like “Avengers: Endgame,” “Star Wars: The Force Awakens” and “Encanto.”
When asked directly by an analyst in November about whether Disney was open to being acquired by a technology company, Iger said he would not speculate, but noted that people making such predictions should “consider the global regulatory environment.” He added: “It’s not something that we obsess about.”
Most analysts TheWrap spoke to don’t see Apple or any other tech company being interested in acquiring Disney’s sprawling Experiences business, which includes theme parks, cruise ships and resorts. A more likely scenario would see Disney selling off its premium content, including its content library, film studios and maybe Hulu and ESPN — and then selling its TV networks and broadcast stations to a private equity firm or strategic consolidator like Nexstar.
“Disney would be worth more today in a breakup,” said Barton Crockett, an analyst at Rosenblatt Securities.
The parks, which include properties in the United States, Europe and Asia, could be spun off to trade as a separate company, and be granted licensing rights in perpetuity for Disney’s IP, Crockett said.
Csathy, for one, sees another option. He outlined a scenario to TheWrap where Candle Media, the private equity firm founded by Mayer and Staggs, which is backed by Blackstone, would buy Disney in its entirety and then take the company private, build its value and then put it back on the public market a few years later. “It’s the perfect storm because you have the right management team, they know the assets inside and out,” Csathy said.
But a private equity deal for Disney would be several times larger than the biggest P.E. deal ever closed in U.S. history — the $32 billion leveraged buyout of TXU energy in 2007 — and likely take multiple firms to pull off, analysts and the people knowledgeable about Disney’s operations told TheWrap.
“Is there theoretically enough firepower out there” one of the people knowledgeable about Disney’s operations said. “Sure. But I just don’t see it. That is a pretty large equity check and there are a whole bunch of people you would need to bring together.”
The Wrap
Why Bob Iger Won’t Sell Disney’s Linear Assets | Exclusive
Alexei Barrionuevo
Fri, January 26, 2024 at 8:00 AM CST
Since returning to lead Disney after a very short retirement, Bob Iger has faced anemic stock prices, flagship brands adrift and the worsening pressure from streaming, problems advisers are telling him can be alleviated by selling off most of the entertainment giant’s linear TV assets. But for now, Iger is resisting that advice, TheWrap has learned.
In July, Iger brought back former longtime Disney executives Kevin Mayer and Tom Staggs to advise him on what to do with Disney’s linear assets, which include ABC, ESPN, National Geographic, FX and Freeform.
Their unvarnished advice was to unload them — not urgently, but soon, two people knowledgeable with the company’s operations told TheWrap. The advisors have echoed the analysis of Wall Street — these assets are steadily declining over time, even if they still currently throw off profit. Given consumers’ move to streaming, cable and broadcast television is headed for history.
Some six months later, Iger has yet to take any action.
“He just doesn’t want to sell them off,” one of the individuals said. “The non-linear sports networks should be gone, they provide nothing — nothing but earnings decline.”
Iger’s stance on the viability of linear TV has sloshed around since he took the reins of the company again in November of 2022. Two months earlier, when he was in between stints, the former ABC/Capital Cities president and COO agreed that traditional TV, including broadcast, cable and satellite, was “marching to a distinct precipice, and it’s going to be pushed off.”
Then in July, he said the TV networks “may not be core” to the business, while being clear that when it came to ESPN, “we want to stay in the sports business.” And this past November, he said “it is not the case” that Disney would sell the linear assets, with Disney Entertainment co-chair Dana Walden adding that the linear channels are “very deeply embedded” in its streaming strategy.
The Disney CEO’s recent reticence contrasts sharply with the message communicated by Disney’s main rival Netflix on Tuesday: Broadcast television cannot be saved through more consolidation. “We’re not interested in acquiring linear assets,” Netflix said in its letter to investors announcing its fourth-quarter 2023 earnings. “Nor do we believe that further M&A among traditional entertainment companies will materially change the competitive environment given all the consolidation that has already happened over the last decade.”
Like other major entertainment companies with legacy assets, the company is trying to work out the transition from linear to digital. But the need to set a strategy is more urgent for Iger, as Disney’s value has plunged in the past few years without seeing clear recovery.
Walt Disney Co.’s five-year market summary from Jan. 25, 2024.
Iger himself has pointed to a need to recharge Disney’s core creative franchises — Marvel, Star Wars and Pixar — which drive the global conglomerates’ flywheel of parks, merchandise, travel and content.
So why not shed linear? For one thing, these assets that are still profitable, even though declining. And Iger believes that the creative engine that drives linear television is critical to feeding a “rich flow of content” to the company’s streaming platforms, as the CEO told analysts in November.
In recent months, Iger has pointed to ESPN as having more potential, calling it a “core building opportunity” in November. Operating income for ESPN in 2023 fell by 2% to $2.8 billion from 2022, while revenues grew 2% to $16.4 billion.
But there may be more strategy to Iger’s thinking: The Disney CEO is worried that unloading the non-sports TV assets, which brought in $11.7 billion in revenues in 2023, or 13% of Disney’s total of $88.9 billion, could make the company too vulnerable to being acquired, another person familiar with Disney’s operations said. (Linear TV revenues fell 9% from 2022, while operating income plummeted by 21%.)
Facing the music
With Disney set to report its latest earnings on Feb. 7, Iger is facing a raft of challenges.
The company’s stock price, which closed at $94.86 on Thursday, is sluggish and trading at levels not seen for a decade. Its big-budget franchises, especially Marvel, are tired and creatively struggling. Disney is spending heavily to catch up on streaming. Activist investors are clamoring for board seats and for faster action to boost the stock price — and for a clear succession plan for Iger. Disney’s sprawling Experiences business, which brings in about 35% of overall revenues, had a disappointing summer, with lower-than-expected parks attendance. “And Pixar,” the knowledgeable person said, “is falling apart.”
Wall Street analysts and private equity executives have told TheWrap that Disney would be better off being acquired by a Big Tech company, most likely Apple. Or for a private equity firm – it could take multiple firms acting in unison — to attempt a history-making leveraged buyout of at least $200 billion.
Apple buying Disney “is the opportunity of a lifetime,” said Peter Csathy of Creative Media, a media, entertainment and tech advisory firm, who also writes for TheWrap. “If Disney is available, it could be one of those opportunities that breaks all the rules because it is such a unique asset.”
But tech companies, especially Apple, are unlikely to risk stoking the ire of regulators in Washington, D.C., who under President Biden have focused their sights on stemming potential monopolistic behavior, analysts told TheWrap.
To sell or not to sell
Iger is not seeking to sell all of Disney, the two people familiar with the company told TheWrap. And selling the company is not likely to solve all of Disney’s problems. “There is no silver bullet,” one knowledgeable person said. “It is going to be a slog to get back to $150 [per share].”
Analysts say that Disney, which currently has a market cap of $173.6 billion, could fetch upwards of $200 billion with a premium. That’s a price that only a company like Apple or Microsoft — the two largest companies in the world right now, each having passed $3 trillion in valuation — could afford. Up to now, Apple has been famously acquisition-shy: The largest deal it has ever done was the 2014 purchase of Beats Music and Beats Electronics for $3 billion.
Still, Disney and Apple have strong ties dating to when Iger, shortly after taking over as CEO in 2005, agreed to license a handful of TV programs to Apple for its iPod video player. Then Iger persuaded Apple CEO Steve Jobs to sell Pixar to Disney in 2006 for $7.4 billion. On the day the companies planned to announce the deal, Jobs confided to Iger that his pancreatic cancer had returned and offered to let Disney out of the deal, which Iger refused. The Apple co-founder served on Disney’s board until his death in 2011. Iger famously wrote in his own memoir, “The Ride of a Lifetime,” that had Jobs lived they would have combined their companies.
Even under CEO Tim Cook, the ties continue, albeit the companies have never been as close as during the Jobs-Iger years. Apple’s latest product, the Vision Pro, a $3,500 mixed-reality headset set to launch next month, will include 150 3D movies, including Disney titles like “Avengers: Endgame,” “Star Wars: The Force Awakens” and “Encanto.”
When asked directly by an analyst in November about whether Disney was open to being acquired by a technology company, Iger said he would not speculate, but noted that people making such predictions should “consider the global regulatory environment.” He added: “It’s not something that we obsess about.”
Most analysts TheWrap spoke to don’t see Apple or any other tech company being interested in acquiring Disney’s sprawling Experiences business, which includes theme parks, cruise ships and resorts. A more likely scenario would see Disney selling off its premium content, including its content library, film studios and maybe Hulu and ESPN — and then selling its TV networks and broadcast stations to a private equity firm or strategic consolidator like Nexstar.
“Disney would be worth more today in a breakup,” said Barton Crockett, an analyst at Rosenblatt Securities.
The parks, which include properties in the United States, Europe and Asia, could be spun off to trade as a separate company, and be granted licensing rights in perpetuity for Disney’s IP, Crockett said.
Csathy, for one, sees another option. He outlined a scenario to TheWrap where Candle Media, the private equity firm founded by Mayer and Staggs, which is backed by Blackstone, would buy Disney in its entirety and then take the company private, build its value and then put it back on the public market a few years later. “It’s the perfect storm because you have the right management team, they know the assets inside and out,” Csathy said.
But a private equity deal for Disney would be several times larger than the biggest P.E. deal ever closed in U.S. history — the $32 billion leveraged buyout of TXU energy in 2007 — and likely take multiple firms to pull off, analysts and the people knowledgeable about Disney’s operations told TheWrap.
“Is there theoretically enough firepower out there” one of the people knowledgeable about Disney’s operations said. “Sure. But I just don’t see it. That is a pretty large equity check and there are a whole bunch of people you would need to bring together.”
wabbott
DIS Veteran
- Joined
- Aug 4, 2021
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https://www.yahoo.com/entertainment/5-reasons-brutal-wave-media-141500869.html
The Wrap
5 Reasons for a Brutal Wave of Media Layoffs
Sharon Knolle
Fri, January 26, 2024 at 8:15 AM CST
The new year began with a bloodbath for media outlets, as the Los Angeles Times, Forbes, Sports Illustrated, Pitchfork, Forbes, NBC News, Time Magazine and Business Insider all cut editorial staffers in shocking numbers in less than a month.
The layoffs this week alone have ranged from the 3% announced on Thursday by Forbes and 8% at Business Insider to a staggering 120 positions — more than a 20% of the newsroom — axed at the LA Times between Tuesday and Wednesday. That move, following a historic walkout by the LA Times Guild, saw the publication showing the door to award-winning writers and photographers.
Over 400 Condé Nast staffers engaged in a similar demonstration on Tuesday in response to the cuts there.
So why all these layoffs at once? TheWrap took a look at several factors that led to the massive dismissals, including bitter clashes between owners and news guilds and the bleak state of media advertising.
Hot labor summer is over
After the Writers Guild of America and Screen Actors Guild successfully secured new contracts during 2023’s “hot labor summer,” many workers were inspired to launch their own movements for change — including those in the news guilds, which saw historic walks out and work stoppages. Unfortunately, those efforts may have only sped up the layoff process.
The LA Times’ one-day work stoppage on Jan. 19 infuriated billionaire owner Patrick Soon-Shiong, who said the action “did not help” already tense negotiations and cut short attempts to gain employee buyouts in order to avoid layoffs.
When the boom was lowered on Tuesday, more than 115 people had been laid off, with reports of even more pink slips being issued that evening. A whopping 82% of the laid off staffers — 94 total — were guild members.
Meanwhile, former Sports Illustrated writer Jessica Smetana, who helped form the outlet’s union in 2020, tore into her employer’s decision to eliminate the entire SI editorial team on Tuesday, calling it “calculated union-busting.”
The Hollywood laborer-studio power dynamic may have worked in favor of actors and screenwriters last year, but editorial staffers are increasingly seen by upper management as eminently replaceable in 2024.
“Journalists are striking across the country in response to runaway greed at news organizations that have enough money to fund journalism,” Jon Schleuss, president of the NewsGuild-CWA, told TheWrap.
“We don’t see executives cutting their extravagant salaries or news companies slowing down dividend payouts,” he said. “The news-owner greed is destroying our democracy, which depends on trustworthy news produced by hard-working journalists.”
But in some cases, newspapers owners are just tired of losing money. Soon-Shiong said he has lost $30-40 million annually since buying the LA Times in 2018.
Some outlets that had organized work stoppages, like New York Daily News, were a reaction to sweeping layoffs that had already been announced. Journalists from six newsrooms have held strikes in the last seven days, including from the LA Times, Pittsburgh Post-Gazette, Condé Nast, San Antonio Report, New York Daily News and Forbes, Schleuss said in a tweet in X on Thursday.
Shrinking job opportunities in journalism
“In many ways, we’re simply seeing a continuation of long-term trends of print news media losing significant money, which translates to mass layoffs of news workers,” Victor Pickard, a professor of media policy and political economy at the University of Pennsylvania’s Annenberg School for Communication told TheWrap.
In 2023, broadcast, print and digital outlets collectively cut 2,681 journalism jobs, up 48% from 2022 and 77% from 2021.
“But these particular cuts — especially those at the LA Times and at The Washington Post — stand out not only because they are so severe, but also because they call into question the ‘benevolent billionaire’ model for saving journalism,” Pickard added.
“It’s just harder and harder for news organizations to be profitable,” Laura Castaneda, associate dean at USC’s Annenberg School for Communication and Journalism, told TheWrap. “People will tell me, ‘I just saw ProPublica say they have six openings.’ That’s great, but the LA Times just laid off more than 100 people. So yeah, six is kind of a drop in the bucket.”
Outlets are no longer afraid to make deep cuts
Making cuts during the height of the COVID-19 pandemic would have been bad optics, but the layoffs simply couldn’t wait any longer, according to Soon-Shiong.
“It is indeed difficult to reflect upon the recent tumultuous years, during which our business faced significant challenges, including losses that surpassed $100 million in operational and capital expenses,” he was quoted as saying in The Times.
“Despite these difficulties, we made a deliberate decision to abstain from implementing layoffs within our newsroom during the COVID pandemic, maintaining the newsroom headcount throughout until the last several months, despite the losses.”
At Business Insider, staffers tied the timing of the layoffs to the end of a June 2023 moratorium to suspend cuts for the rest of the year.
Thursday’s news that 8% of Business Insider staffers would be eliminated came “not even a month after our layoff moratorium expired,” Insider Union unit chair and senior copy editor Emma LeCault said in a statement. “It’s clear that management has been eager to lay more of us off.”
Advertising revenue is down and video platforms aren’t paying off
A significant factor driving media executives to trim their workforces is declining advertising revenue.
U.S. newspaper publishers are expected to lose $2.4 billion in advertising investment between 2021 and 2026, mostly related to less print advertising, according to a 2022 report from the consulting firm PwC.
Print advertising that fell to $7 billion in 2021 will drop to $4.9 billion by 2026, the consultancy said, with digital advertising growth only expected to increase by 1% in that same period — which is not enough to recoup overall lost ad revenue.
Print advertising has been diminished by digital opportunities, while tech companies like Alphabet and Meta have gobbled up the lion’s share of digital ad dollars.
Of course, newspapers and magazines cannot live on subscribers alone. Gannett’s digital subscriptions grew 17% from 2022 to 2023, but advertising and marketing revenue was down nearly 8% for the same time period, Digiday reported last summer.
With continued weakness in the advertising market projected for 2024, decision makers are likely preparing for a financially difficult year by shaving costs at the start of the calendar year.
In November, Axios reported that publishers were not seeing the same ad gains as Big Tech. “Recent earnings reports from digital media companies show how weak the ad market has been for them,” the outlet said, citing a 35% decrease at BuzzFeed and decline of 12% at IAC’s Dotdash Meredith, which publishes several titles including People and Entertainment Weekly.
At the same time, media outlets have put social media-friendly and Gen Z-targeted video teams on the chopping block within the last year after they failed to become cash cows. The LA Times bid farewell to several senior editors, photographers and members of its video unit on Tuesday, while Yahoo and Condé Nast also shuttered their video teams over the past year. As Condé Nast CEO Roger Lynch noted in November, “these new video formats haven’t found monetization models yet.”
Longstanding economic uncertainty
Broader economic headwinds are also affecting the media industry. Inflation levels are still coming down from record highs that reduced consumers’ discretionary spending. And geopolitical tensions — with wars raging in two regions vital to the world’s supply of food and energy — are creating uncertainties in the global economy.
Although the U.S. economy did not slip into recession in 2023 — contrary to most analysts’ expectations — the likelihood of one in 2024 is still about 30%, compared with 15% in normal years, The Guardian noted at the top of this year.
And economic growth continues to be sluggish. “The global economy is set to rack up a sorry record by the end of 2024 — the slowest half-decade of GDP growth in 30 years,” the World Bank’s January 2024 Global Economic Prospects report stated.
The Wrap
5 Reasons for a Brutal Wave of Media Layoffs
Sharon Knolle
Fri, January 26, 2024 at 8:15 AM CST
The new year began with a bloodbath for media outlets, as the Los Angeles Times, Forbes, Sports Illustrated, Pitchfork, Forbes, NBC News, Time Magazine and Business Insider all cut editorial staffers in shocking numbers in less than a month.
The layoffs this week alone have ranged from the 3% announced on Thursday by Forbes and 8% at Business Insider to a staggering 120 positions — more than a 20% of the newsroom — axed at the LA Times between Tuesday and Wednesday. That move, following a historic walkout by the LA Times Guild, saw the publication showing the door to award-winning writers and photographers.
Over 400 Condé Nast staffers engaged in a similar demonstration on Tuesday in response to the cuts there.
So why all these layoffs at once? TheWrap took a look at several factors that led to the massive dismissals, including bitter clashes between owners and news guilds and the bleak state of media advertising.
Hot labor summer is over
After the Writers Guild of America and Screen Actors Guild successfully secured new contracts during 2023’s “hot labor summer,” many workers were inspired to launch their own movements for change — including those in the news guilds, which saw historic walks out and work stoppages. Unfortunately, those efforts may have only sped up the layoff process.
The LA Times’ one-day work stoppage on Jan. 19 infuriated billionaire owner Patrick Soon-Shiong, who said the action “did not help” already tense negotiations and cut short attempts to gain employee buyouts in order to avoid layoffs.
When the boom was lowered on Tuesday, more than 115 people had been laid off, with reports of even more pink slips being issued that evening. A whopping 82% of the laid off staffers — 94 total — were guild members.
Meanwhile, former Sports Illustrated writer Jessica Smetana, who helped form the outlet’s union in 2020, tore into her employer’s decision to eliminate the entire SI editorial team on Tuesday, calling it “calculated union-busting.”
The Hollywood laborer-studio power dynamic may have worked in favor of actors and screenwriters last year, but editorial staffers are increasingly seen by upper management as eminently replaceable in 2024.
“Journalists are striking across the country in response to runaway greed at news organizations that have enough money to fund journalism,” Jon Schleuss, president of the NewsGuild-CWA, told TheWrap.
“We don’t see executives cutting their extravagant salaries or news companies slowing down dividend payouts,” he said. “The news-owner greed is destroying our democracy, which depends on trustworthy news produced by hard-working journalists.”
But in some cases, newspapers owners are just tired of losing money. Soon-Shiong said he has lost $30-40 million annually since buying the LA Times in 2018.
Some outlets that had organized work stoppages, like New York Daily News, were a reaction to sweeping layoffs that had already been announced. Journalists from six newsrooms have held strikes in the last seven days, including from the LA Times, Pittsburgh Post-Gazette, Condé Nast, San Antonio Report, New York Daily News and Forbes, Schleuss said in a tweet in X on Thursday.
Shrinking job opportunities in journalism
“In many ways, we’re simply seeing a continuation of long-term trends of print news media losing significant money, which translates to mass layoffs of news workers,” Victor Pickard, a professor of media policy and political economy at the University of Pennsylvania’s Annenberg School for Communication told TheWrap.
In 2023, broadcast, print and digital outlets collectively cut 2,681 journalism jobs, up 48% from 2022 and 77% from 2021.
“But these particular cuts — especially those at the LA Times and at The Washington Post — stand out not only because they are so severe, but also because they call into question the ‘benevolent billionaire’ model for saving journalism,” Pickard added.
“It’s just harder and harder for news organizations to be profitable,” Laura Castaneda, associate dean at USC’s Annenberg School for Communication and Journalism, told TheWrap. “People will tell me, ‘I just saw ProPublica say they have six openings.’ That’s great, but the LA Times just laid off more than 100 people. So yeah, six is kind of a drop in the bucket.”
Outlets are no longer afraid to make deep cuts
Making cuts during the height of the COVID-19 pandemic would have been bad optics, but the layoffs simply couldn’t wait any longer, according to Soon-Shiong.
“It is indeed difficult to reflect upon the recent tumultuous years, during which our business faced significant challenges, including losses that surpassed $100 million in operational and capital expenses,” he was quoted as saying in The Times.
“Despite these difficulties, we made a deliberate decision to abstain from implementing layoffs within our newsroom during the COVID pandemic, maintaining the newsroom headcount throughout until the last several months, despite the losses.”
At Business Insider, staffers tied the timing of the layoffs to the end of a June 2023 moratorium to suspend cuts for the rest of the year.
Thursday’s news that 8% of Business Insider staffers would be eliminated came “not even a month after our layoff moratorium expired,” Insider Union unit chair and senior copy editor Emma LeCault said in a statement. “It’s clear that management has been eager to lay more of us off.”
Advertising revenue is down and video platforms aren’t paying off
A significant factor driving media executives to trim their workforces is declining advertising revenue.
U.S. newspaper publishers are expected to lose $2.4 billion in advertising investment between 2021 and 2026, mostly related to less print advertising, according to a 2022 report from the consulting firm PwC.
Print advertising that fell to $7 billion in 2021 will drop to $4.9 billion by 2026, the consultancy said, with digital advertising growth only expected to increase by 1% in that same period — which is not enough to recoup overall lost ad revenue.
Print advertising has been diminished by digital opportunities, while tech companies like Alphabet and Meta have gobbled up the lion’s share of digital ad dollars.
Of course, newspapers and magazines cannot live on subscribers alone. Gannett’s digital subscriptions grew 17% from 2022 to 2023, but advertising and marketing revenue was down nearly 8% for the same time period, Digiday reported last summer.
With continued weakness in the advertising market projected for 2024, decision makers are likely preparing for a financially difficult year by shaving costs at the start of the calendar year.
In November, Axios reported that publishers were not seeing the same ad gains as Big Tech. “Recent earnings reports from digital media companies show how weak the ad market has been for them,” the outlet said, citing a 35% decrease at BuzzFeed and decline of 12% at IAC’s Dotdash Meredith, which publishes several titles including People and Entertainment Weekly.
At the same time, media outlets have put social media-friendly and Gen Z-targeted video teams on the chopping block within the last year after they failed to become cash cows. The LA Times bid farewell to several senior editors, photographers and members of its video unit on Tuesday, while Yahoo and Condé Nast also shuttered their video teams over the past year. As Condé Nast CEO Roger Lynch noted in November, “these new video formats haven’t found monetization models yet.”
Longstanding economic uncertainty
Broader economic headwinds are also affecting the media industry. Inflation levels are still coming down from record highs that reduced consumers’ discretionary spending. And geopolitical tensions — with wars raging in two regions vital to the world’s supply of food and energy — are creating uncertainties in the global economy.
Although the U.S. economy did not slip into recession in 2023 — contrary to most analysts’ expectations — the likelihood of one in 2024 is still about 30%, compared with 15% in normal years, The Guardian noted at the top of this year.
And economic growth continues to be sluggish. “The global economy is set to rack up a sorry record by the end of 2024 — the slowest half-decade of GDP growth in 30 years,” the World Bank’s January 2024 Global Economic Prospects report stated.
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