OK, I'll bite - squawk about what exactly?
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wabbott
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Anything, however minute, that might reflect unfavorably on the company and its CEO.
Elijah Abrams
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Hugh Johnston is already the current Disney CFO as of December 4th of this year.
Elijah Abrams
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wabbott
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Didn't post this yesterday, what with all the other breaking news. But it deals with the streaming wars, so it's timely.
https://www.yahoo.com/entertainment/netflix-rules-over-international-content-140000396.html
Netflix Rules Over International Content in Hollywood, and It’s Only Getting Bigger
bu Lucas Manfredi
Thu, December 14, 2023 at 8:00 AM CST
In 2015, a crime drama about the rise of international drug cartels, filmed in Colombia in both English and Spanish and starring Brazilian actor Wagner Moura as Pablo Escobar, seemed like a risky play for Netflix, which had only started producing original content four years earlier.
But despite the bilingual dialogue — and a mishmash of local accents that were ridiculed by Colombians — “Narcos,” with an estimated budget of $25 million, turned into a critical hit and became a cornerstone in an emerging global strategy that has made Netflix the undisputed leader overseas, both in original productions and subscribers.
While its rivals, including Disney and Warner Bros. Discovery, have taken a more deliberate road to international expansion, Netflix made early and expensive bets on overseas co-productions, and established a global foothold by launching in dozens of markets — even ones where it was difficult to break even because of lower pricing for the service.
Today, thanks largely to its sweeping international bet, Netflix is not only the most profitable streamer, but also the market leader in total subscribers, with 247.15 million as of the third quarter 2023 — more than 70% of which are outside the United States. From January to June of 2023 alone, non-English language titles accounted for 30% of viewing, according to a viewership transparency report released on Tuesday.
“Without international, you can’t win this game,” Oppenheimer & Co. managing director and senior internet analyst Jason Helfstein told TheWrap. “If you want to have the most and the best content, you need to be able to monetize globally. It’s expensive to have more content unless you have a global scale.”
Before Netflix, television shows primarily found success within their own geographical bubbles. Occasional hits would trickle over from time to time — such as the UK hit “Doctor Who” in the U.S. and the NBC juggernaut “Friends” globally — but by and large, non-English language shows struggled to find an audience in the U.S.
That changed with “Narcos,” the first show where American audiences “started reading subtitles,” series director Andrés Baiz, who also directed episodes of “Narcos: Mexico,” told TheWrap. “People started just seeing shows not as being American or Colombian. It’s for the world.”
The steamer’s first exclusive international acquisition was the Norwegian drama “Lilyhammer” in 2012. And its biggest overseas hit remains the South Korean series “Squid Game,” which secured a self-reported 2.2 billion hours viewed in its first season. (The next-highest original is “Wednesday,” which has over 1.7 billion hours viewed.)
Netflix is leaning into its international advantage. The streamer, which is pulling in about 60% of its total revenues from overseas — a figure that is likely to grow over time, the company has told shareholders — plans to spend $17 billion on content in 2024, which will include more international spending, co-CEO Ted Sarandos revealed during the UBS Global Media and Communications Conference earlier this month.
The current king of global
Nearly every major network and streamer has experimented with international co-productions in recent years. CBS aired the U.K. version of “Ghosts.” HBO collaborated with Italy’s RAI and TIMvision for the Italian language “My Brilliant Friend.” And the CW has heavily invested in Canadian co-productions as of late, including “Son of a Critch” and the upcoming “Wild Cards.”
But Netflix, which is available in more than 90 countries — excluding China, Crimea, North Korea, Russia and Syria — is currently involved in projects in over 50 countries and languages. Overall, the streamer has produced or co-produced 722 international series filmed in a non-English language, by TheWrap’s count, including scripted, unscripted, docuseries and specials.
Of Netflix’s 247 million subscribers, less than one third, or 77 million, are based in the U.S. and Canada. Nearly 84 million are in Europe, the Middle East and Africa region; nearly 44 million are in Latin America; and 42 million are in Asia Pacific. (By comparison, 107.3 million of the 150.2 million total Disney+ subscribers, or 71%, are based outside the U.S. and Canada and 42.5 million of Warner Bros. Discovery’s 95.1 million subscribers, or 45%, are international.)
Netflix Co-CEO Ted Sarandos said the company’s international success has stemmed from giving decision-making power to overseas executives, rather than dictating from its global headquarters in Southern California.
“[It’s] having people on the ground running those businesses that understand the local culture, the local ecosystem, the local payment methods — all those things that really do vary country-to-country,” Sarandos said during the UBS conference. “And we’ve been able to build on that scale by investing in that international presence.”
Expanding overseas
While “Narcos” proved to be a global hit, the first bold step in Netflix’s international expansion occurred in 2010 when the company launched the service in Canada.
At the time, Netflix had 16.9 million subscribers. Within a year, Netflix moved into 43 countries and territories in Latin America, starting with Brazil and then Argentina, Uruguay, Paraguay, Chile, Mexico and Colombia, and the Caribbean — marking the first time the company would be available in a language other than English — and grew to 21.4 million subscribers.
By 2013, the streamer had 27 million subscribers in the U.S. and more than 6 million subscribers in other countries, after it launched in the United Kingdom, Ireland and the Nordic countries.
In 2012, Netflix released “Lilyhammer,” a dramedy series starring “The Sopranos” actor Steven Van Zandt and filmed in English and Norwegian, which first aired on NRK1 in Norway.
Netflix doled out around $24-$25 million for the streaming rights to the first two eight-episode seasons in the U.S., Canada and Latin America, as well as second window licenses in the Nordics, the U.K. and Ireland, an insider familiar with the deal told TheWrap. Netflix renewed the show and spent another $12 million, or $1.5 million per episode, for a third and final season.
“Lilyhammer” executive producer Lasse Hallberg told TheWrap that he and Van Zandt were drawn to Netflix because it was a new platform that was already starting to create buzz overseas. That collaboration would go on to be a “dream come true,” he said.
At first, it opened doors for Hallberg, Van Zandt and “Lilyhammer” creators Anna Bjørnstad and Eilif Skodvin. On a grander scale, Hallberg said it blazed a trail for other local directors, writers and actors and foreign language content across the globe to become more internationally accessible.
“It was so easy to work with them at the time,” Hallberg said. The show “really marketed Netflix in Norway and the Nordic region and made them become the biggest streamer immediately there.”
Hallberg has since teamed up with Netflix on “Gangs of Oslo,” which was released on the platform this January.
“A good drama is a good drama if they’re speaking South Korean, Spanish or German,” Hallberg said. “Good stories travel and educate the audience, and Netflix helped them out.”
After establishing itself in the U.K. and Latin America, the streamer pushed further across Europe. Between 2013 and 2015, Netflix launched in The Netherlands, Austria, Belgium, France, Germany, Italy, Spain, Luxembourg and Switzerland, setting up a European headquarters in Amsterdam and an office in the U.K. It also entered Japan, Cuba, Australia and New Zealand. Most of these territory expansions brought with them plans for new localized original content.
But it was 2015 that marked the shift that would later define the company. Prior to then, Netflix had only licensed international co-productions. That changed with “Club de Cuervos” (Club of Crows), Netflix’s first non-English original series filmed in Mexico. That was followed weeks later by the debut of “Narcos,” an American co-production with Gaumont International Television that blended both English and Spanish as the story called for it.
At a time when it was rare for any streaming show to receive awards attention, “Narcos” scored nominations for two Golden Globes and three Emmys in its first season. That success helped stem concerns about American audiences being thrown by its subtitles. “It became organic,” Baiz said.
“The trust and the creative freedom I get, the way that they present notes, the way they speak to the creative team, it’s never imposing,” added Baiz, who recently worked closely with Netflix on the upcoming crime drama “Griselda,” starring Sofia Vergara. “I feel at home there.”
As its content became more global, so did the company. By the end of 2016, Netflix was available in more than 190 countries and 21 languages around the world with 93.8 million members globally. That year, it premiered “The Crown,” its first-ever original drama series from the United Kingdom (Netflix spent a reported $130 million on the show’s first two seasons); “Marseille,” its first original French series; and “3%,” its first original Brazilian series. The Emmy and Golden Globe-winning “The Crown” would go on to become one of the streamer’s biggest shows to date.
By the end of 2017, Netflix had hit another major milestone: For the first time in the streamer’s history, more than half of its subscribers were based outside of the U.S. The company reported a total of 117.58 million subscribers, including 62.83 million international subscribers.
Over the next two years, Netflix would release its first originals across several languages, including the German series “Dark,” the Italian series Suburra,” and the Spanish series “Cable Girls” and “Elite.”
Dario Madrona, the co-creator of “Elite,” told TheWrap that working with Netflix has allowed him to work and travel all over the world and for co-creator Carlos Montero to start his own production company. First released in 2018, the critically acclaimed teen drama about a fictional elite high school, which is set to end after its eighth and final season, remains one of Netflix’s most-watched non-English series in the United States. Season 3 is currently the 10th most-watched non-English season on Netflix ever with over 50 million views.
“Back in the day, there hadn’t been any worldwide streaming hits yet that weren’t from the U.S.,” Madrona said. “We remember someone at Netflix telling us that workers at their [Los Angeles] HQ were passing around our screeners, talking about it around the water cooler, hooked on the show.”
Awards payoffs and production expansion
While it’s difficult to determine the success of Netflix shows and movies released prior to 2020 —the year the streamer first unveiled its Top 10 list — by 2018 evidence that the globalized strategy was working started to emerge on the awards front.
That year Netflix received an Academy Award nomination for Best International Film for the Hungarian film “On Body and Soul.” The following year Alfonso Cuarón’s “Roma” became an awards juggernaut, winning the Oscar for Best International Feature Film as well as Best Directing and Best Cinematography.
Netflix’s production started to match its globalized subscriber base and content. In 2019, the company opened production hubs in Madrid, New York, Toronto and the U.K.’s Shepperton Studios.
The next year it expanded its Paris office, as well as offices in Copenhagen, Rome and Stockholm, and Istanbul in 2021. As the COVID-19 pandemic ravaged the globe with lockdowns, Netflix was still making international history, launching its first Norwegian original series (“Ragnarok”), its first South African original series (“Queen Sono”) and its first Tamil original film (“Paava Kadhaigal”).
A “Squid Game”
In 2021, Netflix scored two major non-English hits: the French series “Lupin” and Korean series “Squid Game,” which remains Netflix’s most-watched original series of all time. Its popularity inspired a reality show spinoff, “Squid Game: The Challenge,” which has been viewed over 11.4 million times since its debut in late November. Wins like those have given the company the confidence to stay the international course.
In the first half of 2022, Netflix’s revenue growth began to slow as it suffered two consecutive quarters of subscriber declines, which it attributed to connected TV adoption, account sharing, competition and macroeconomic factors such as sluggish economic growth and the impacts of the war in Ukraine. Its subscriber troubles proved short-lived as the company began to bounce back in the second half of the year, climbing to 230.75 million paid subscribers.
The Europe, Middle East and Africa regions became the company’s largest growth areas with 76.73 million paid subscribers as of the fourth quarter of 2022, compared to 74.3 million paid subscribers in the U.S and Canada, 41.7 million paid subscribers in Latin America and 38 million in Asia-Pacific.
The pros and cons of going international
Netflix’s gamble on globalization has “mostly worked in their favor,” Wedbush Securities analyst Michael Pachter told TheWrap.
By operating outside the U.S. the streamer has been able to lower its overall production costs, expose its existing catalog to new countries and create workarounds for recent production disruptions caused by the Hollywood strikes. But offering the platform across the world has meant Netflix has had to price the service at lower levels in less-wealthy countries, hurting its average pricing. The streamer has mitigated that challenge by only providing lower-priced and catalog content in certain countries.
“International subscribers outside of high GDP areas [such as] Western Europe, Japan, Korea and Australia are generally unprofitable and require adept management to get them close to break even,” Pachter added.
And competing successfully in major markets around the world is an expensive endeavor — a risk that doesn’t always pay off. Netflix will have spent around $13 billion on content in 2023 and $17 billion in 2024. Though the company does not break out its content spend figures by region or country, it has previously pledged to invest $2.5 billion in South Korea through 2027, including for production and training initiatives and programs for local crew. It’s also on pace to invest nearly $6 billion in the United Kingdom by the end of 2023 and will spend $1 billion reais (about $200 million) on Brazilian content through 2024.
“To date, Netflix has walked the tightrope of keeping content costs in check relative to the average revenue generated per subscription,” S&P Global analyst Seth Shafer told TheWrap.
While Netflix’s competitors have struggled to catch up, Disney, Paramount and WBD also avoided some of the heavy upfront costs Netflix endured in its global expansion by being more deliberate about international markets they expand into, and by relying on distribution pacts with pay TV and telecommunications operators, Shafer said.
The future of Netflix international
Despite the challenges, the streamer has no plans to pull back on global content anytime soon. Sarandos revealed at the UBS conference that Netflix would start focusing more on local language unscripted programming initiatives, citing recent successes such as the British docuseries “Beckham” and South Korean reality show “Physical: 100.”
To bolster subscriber growth, Netflix embarked on a password-sharing crackdown for an estimated 100 million households globally, including 30 million in the United States and Canada. The company has rolled out the initiative in every region it operates in, executives disclosed during Netflix’s third quarter earnings call.
The streamer also launched a new $6.99 per month ad-supported tier, which has surpassed 15 million monthly active users globally as of the offering’s one-year anniversary on Nov. 1. Sarandos said he’s been “completely satisfied” with the ad-tier rollout, noting that it has purposely been slower to account for county-to-country nuances and regulations.
He touted Netflix’s ability to maintain “enviable” average revenue per user (ARPU), even in challenging markets in the Latin America and Asia-Pacific regions, as a key driver behind its sustained profitability and growing free cash flow. But continuing to maintain profitable ARPU levels, particularly in higher growth APAC markets, remains a bigger challenge for Netflix moving forward, Shafer said, which may hinge on the success of its password-sharing crackdown and the continued rollout of the ad tier.
Looking ahead, Pachter expects Netflix to slowly raise prices while continuing to focus on “low cost and highly leverageable foreign-produced content.” The streamer boosted prices in the U.K. and France in October and announced plans during its third quarter earnings call to phase out its ad-free basic plan in Germany, Spain, Japan, Mexico, Australia and Brazil.
“Netflix will ultimately be profitable everywhere,” he said.
https://www.yahoo.com/entertainment/netflix-rules-over-international-content-140000396.html
Netflix Rules Over International Content in Hollywood, and It’s Only Getting Bigger
bu Lucas Manfredi
Thu, December 14, 2023 at 8:00 AM CST
In 2015, a crime drama about the rise of international drug cartels, filmed in Colombia in both English and Spanish and starring Brazilian actor Wagner Moura as Pablo Escobar, seemed like a risky play for Netflix, which had only started producing original content four years earlier.
But despite the bilingual dialogue — and a mishmash of local accents that were ridiculed by Colombians — “Narcos,” with an estimated budget of $25 million, turned into a critical hit and became a cornerstone in an emerging global strategy that has made Netflix the undisputed leader overseas, both in original productions and subscribers.
While its rivals, including Disney and Warner Bros. Discovery, have taken a more deliberate road to international expansion, Netflix made early and expensive bets on overseas co-productions, and established a global foothold by launching in dozens of markets — even ones where it was difficult to break even because of lower pricing for the service.
Today, thanks largely to its sweeping international bet, Netflix is not only the most profitable streamer, but also the market leader in total subscribers, with 247.15 million as of the third quarter 2023 — more than 70% of which are outside the United States. From January to June of 2023 alone, non-English language titles accounted for 30% of viewing, according to a viewership transparency report released on Tuesday.
“Without international, you can’t win this game,” Oppenheimer & Co. managing director and senior internet analyst Jason Helfstein told TheWrap. “If you want to have the most and the best content, you need to be able to monetize globally. It’s expensive to have more content unless you have a global scale.”
Before Netflix, television shows primarily found success within their own geographical bubbles. Occasional hits would trickle over from time to time — such as the UK hit “Doctor Who” in the U.S. and the NBC juggernaut “Friends” globally — but by and large, non-English language shows struggled to find an audience in the U.S.
That changed with “Narcos,” the first show where American audiences “started reading subtitles,” series director Andrés Baiz, who also directed episodes of “Narcos: Mexico,” told TheWrap. “People started just seeing shows not as being American or Colombian. It’s for the world.”
The steamer’s first exclusive international acquisition was the Norwegian drama “Lilyhammer” in 2012. And its biggest overseas hit remains the South Korean series “Squid Game,” which secured a self-reported 2.2 billion hours viewed in its first season. (The next-highest original is “Wednesday,” which has over 1.7 billion hours viewed.)
Netflix is leaning into its international advantage. The streamer, which is pulling in about 60% of its total revenues from overseas — a figure that is likely to grow over time, the company has told shareholders — plans to spend $17 billion on content in 2024, which will include more international spending, co-CEO Ted Sarandos revealed during the UBS Global Media and Communications Conference earlier this month.
The current king of global
Nearly every major network and streamer has experimented with international co-productions in recent years. CBS aired the U.K. version of “Ghosts.” HBO collaborated with Italy’s RAI and TIMvision for the Italian language “My Brilliant Friend.” And the CW has heavily invested in Canadian co-productions as of late, including “Son of a Critch” and the upcoming “Wild Cards.”
But Netflix, which is available in more than 90 countries — excluding China, Crimea, North Korea, Russia and Syria — is currently involved in projects in over 50 countries and languages. Overall, the streamer has produced or co-produced 722 international series filmed in a non-English language, by TheWrap’s count, including scripted, unscripted, docuseries and specials.
Of Netflix’s 247 million subscribers, less than one third, or 77 million, are based in the U.S. and Canada. Nearly 84 million are in Europe, the Middle East and Africa region; nearly 44 million are in Latin America; and 42 million are in Asia Pacific. (By comparison, 107.3 million of the 150.2 million total Disney+ subscribers, or 71%, are based outside the U.S. and Canada and 42.5 million of Warner Bros. Discovery’s 95.1 million subscribers, or 45%, are international.)
Netflix Co-CEO Ted Sarandos said the company’s international success has stemmed from giving decision-making power to overseas executives, rather than dictating from its global headquarters in Southern California.
“[It’s] having people on the ground running those businesses that understand the local culture, the local ecosystem, the local payment methods — all those things that really do vary country-to-country,” Sarandos said during the UBS conference. “And we’ve been able to build on that scale by investing in that international presence.”
Expanding overseas
While “Narcos” proved to be a global hit, the first bold step in Netflix’s international expansion occurred in 2010 when the company launched the service in Canada.
At the time, Netflix had 16.9 million subscribers. Within a year, Netflix moved into 43 countries and territories in Latin America, starting with Brazil and then Argentina, Uruguay, Paraguay, Chile, Mexico and Colombia, and the Caribbean — marking the first time the company would be available in a language other than English — and grew to 21.4 million subscribers.
By 2013, the streamer had 27 million subscribers in the U.S. and more than 6 million subscribers in other countries, after it launched in the United Kingdom, Ireland and the Nordic countries.
In 2012, Netflix released “Lilyhammer,” a dramedy series starring “The Sopranos” actor Steven Van Zandt and filmed in English and Norwegian, which first aired on NRK1 in Norway.
Netflix doled out around $24-$25 million for the streaming rights to the first two eight-episode seasons in the U.S., Canada and Latin America, as well as second window licenses in the Nordics, the U.K. and Ireland, an insider familiar with the deal told TheWrap. Netflix renewed the show and spent another $12 million, or $1.5 million per episode, for a third and final season.
“Lilyhammer” executive producer Lasse Hallberg told TheWrap that he and Van Zandt were drawn to Netflix because it was a new platform that was already starting to create buzz overseas. That collaboration would go on to be a “dream come true,” he said.
At first, it opened doors for Hallberg, Van Zandt and “Lilyhammer” creators Anna Bjørnstad and Eilif Skodvin. On a grander scale, Hallberg said it blazed a trail for other local directors, writers and actors and foreign language content across the globe to become more internationally accessible.
“It was so easy to work with them at the time,” Hallberg said. The show “really marketed Netflix in Norway and the Nordic region and made them become the biggest streamer immediately there.”
Hallberg has since teamed up with Netflix on “Gangs of Oslo,” which was released on the platform this January.
“A good drama is a good drama if they’re speaking South Korean, Spanish or German,” Hallberg said. “Good stories travel and educate the audience, and Netflix helped them out.”
After establishing itself in the U.K. and Latin America, the streamer pushed further across Europe. Between 2013 and 2015, Netflix launched in The Netherlands, Austria, Belgium, France, Germany, Italy, Spain, Luxembourg and Switzerland, setting up a European headquarters in Amsterdam and an office in the U.K. It also entered Japan, Cuba, Australia and New Zealand. Most of these territory expansions brought with them plans for new localized original content.
But it was 2015 that marked the shift that would later define the company. Prior to then, Netflix had only licensed international co-productions. That changed with “Club de Cuervos” (Club of Crows), Netflix’s first non-English original series filmed in Mexico. That was followed weeks later by the debut of “Narcos,” an American co-production with Gaumont International Television that blended both English and Spanish as the story called for it.
At a time when it was rare for any streaming show to receive awards attention, “Narcos” scored nominations for two Golden Globes and three Emmys in its first season. That success helped stem concerns about American audiences being thrown by its subtitles. “It became organic,” Baiz said.
“The trust and the creative freedom I get, the way that they present notes, the way they speak to the creative team, it’s never imposing,” added Baiz, who recently worked closely with Netflix on the upcoming crime drama “Griselda,” starring Sofia Vergara. “I feel at home there.”
As its content became more global, so did the company. By the end of 2016, Netflix was available in more than 190 countries and 21 languages around the world with 93.8 million members globally. That year, it premiered “The Crown,” its first-ever original drama series from the United Kingdom (Netflix spent a reported $130 million on the show’s first two seasons); “Marseille,” its first original French series; and “3%,” its first original Brazilian series. The Emmy and Golden Globe-winning “The Crown” would go on to become one of the streamer’s biggest shows to date.
By the end of 2017, Netflix had hit another major milestone: For the first time in the streamer’s history, more than half of its subscribers were based outside of the U.S. The company reported a total of 117.58 million subscribers, including 62.83 million international subscribers.
Over the next two years, Netflix would release its first originals across several languages, including the German series “Dark,” the Italian series Suburra,” and the Spanish series “Cable Girls” and “Elite.”
Dario Madrona, the co-creator of “Elite,” told TheWrap that working with Netflix has allowed him to work and travel all over the world and for co-creator Carlos Montero to start his own production company. First released in 2018, the critically acclaimed teen drama about a fictional elite high school, which is set to end after its eighth and final season, remains one of Netflix’s most-watched non-English series in the United States. Season 3 is currently the 10th most-watched non-English season on Netflix ever with over 50 million views.
“Back in the day, there hadn’t been any worldwide streaming hits yet that weren’t from the U.S.,” Madrona said. “We remember someone at Netflix telling us that workers at their [Los Angeles] HQ were passing around our screeners, talking about it around the water cooler, hooked on the show.”
Awards payoffs and production expansion
While it’s difficult to determine the success of Netflix shows and movies released prior to 2020 —the year the streamer first unveiled its Top 10 list — by 2018 evidence that the globalized strategy was working started to emerge on the awards front.
That year Netflix received an Academy Award nomination for Best International Film for the Hungarian film “On Body and Soul.” The following year Alfonso Cuarón’s “Roma” became an awards juggernaut, winning the Oscar for Best International Feature Film as well as Best Directing and Best Cinematography.
Netflix’s production started to match its globalized subscriber base and content. In 2019, the company opened production hubs in Madrid, New York, Toronto and the U.K.’s Shepperton Studios.
The next year it expanded its Paris office, as well as offices in Copenhagen, Rome and Stockholm, and Istanbul in 2021. As the COVID-19 pandemic ravaged the globe with lockdowns, Netflix was still making international history, launching its first Norwegian original series (“Ragnarok”), its first South African original series (“Queen Sono”) and its first Tamil original film (“Paava Kadhaigal”).
A “Squid Game”
In 2021, Netflix scored two major non-English hits: the French series “Lupin” and Korean series “Squid Game,” which remains Netflix’s most-watched original series of all time. Its popularity inspired a reality show spinoff, “Squid Game: The Challenge,” which has been viewed over 11.4 million times since its debut in late November. Wins like those have given the company the confidence to stay the international course.
In the first half of 2022, Netflix’s revenue growth began to slow as it suffered two consecutive quarters of subscriber declines, which it attributed to connected TV adoption, account sharing, competition and macroeconomic factors such as sluggish economic growth and the impacts of the war in Ukraine. Its subscriber troubles proved short-lived as the company began to bounce back in the second half of the year, climbing to 230.75 million paid subscribers.
The Europe, Middle East and Africa regions became the company’s largest growth areas with 76.73 million paid subscribers as of the fourth quarter of 2022, compared to 74.3 million paid subscribers in the U.S and Canada, 41.7 million paid subscribers in Latin America and 38 million in Asia-Pacific.
The pros and cons of going international
Netflix’s gamble on globalization has “mostly worked in their favor,” Wedbush Securities analyst Michael Pachter told TheWrap.
By operating outside the U.S. the streamer has been able to lower its overall production costs, expose its existing catalog to new countries and create workarounds for recent production disruptions caused by the Hollywood strikes. But offering the platform across the world has meant Netflix has had to price the service at lower levels in less-wealthy countries, hurting its average pricing. The streamer has mitigated that challenge by only providing lower-priced and catalog content in certain countries.
“International subscribers outside of high GDP areas [such as] Western Europe, Japan, Korea and Australia are generally unprofitable and require adept management to get them close to break even,” Pachter added.
And competing successfully in major markets around the world is an expensive endeavor — a risk that doesn’t always pay off. Netflix will have spent around $13 billion on content in 2023 and $17 billion in 2024. Though the company does not break out its content spend figures by region or country, it has previously pledged to invest $2.5 billion in South Korea through 2027, including for production and training initiatives and programs for local crew. It’s also on pace to invest nearly $6 billion in the United Kingdom by the end of 2023 and will spend $1 billion reais (about $200 million) on Brazilian content through 2024.
“To date, Netflix has walked the tightrope of keeping content costs in check relative to the average revenue generated per subscription,” S&P Global analyst Seth Shafer told TheWrap.
While Netflix’s competitors have struggled to catch up, Disney, Paramount and WBD also avoided some of the heavy upfront costs Netflix endured in its global expansion by being more deliberate about international markets they expand into, and by relying on distribution pacts with pay TV and telecommunications operators, Shafer said.
The future of Netflix international
Despite the challenges, the streamer has no plans to pull back on global content anytime soon. Sarandos revealed at the UBS conference that Netflix would start focusing more on local language unscripted programming initiatives, citing recent successes such as the British docuseries “Beckham” and South Korean reality show “Physical: 100.”
To bolster subscriber growth, Netflix embarked on a password-sharing crackdown for an estimated 100 million households globally, including 30 million in the United States and Canada. The company has rolled out the initiative in every region it operates in, executives disclosed during Netflix’s third quarter earnings call.
The streamer also launched a new $6.99 per month ad-supported tier, which has surpassed 15 million monthly active users globally as of the offering’s one-year anniversary on Nov. 1. Sarandos said he’s been “completely satisfied” with the ad-tier rollout, noting that it has purposely been slower to account for county-to-country nuances and regulations.
He touted Netflix’s ability to maintain “enviable” average revenue per user (ARPU), even in challenging markets in the Latin America and Asia-Pacific regions, as a key driver behind its sustained profitability and growing free cash flow. But continuing to maintain profitable ARPU levels, particularly in higher growth APAC markets, remains a bigger challenge for Netflix moving forward, Shafer said, which may hinge on the success of its password-sharing crackdown and the continued rollout of the ad tier.
Looking ahead, Pachter expects Netflix to slowly raise prices while continuing to focus on “low cost and highly leverageable foreign-produced content.” The streamer boosted prices in the U.K. and France in October and announced plans during its third quarter earnings call to phase out its ad-free basic plan in Germany, Spain, Japan, Mexico, Australia and Brazil.
“Netflix will ultimately be profitable everywhere,” he said.
clarker99
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Disney+'s Hulu Merger Delivering 'Better Than Expected Metrics' for Advertisers
https://apple.news/AFqh9DaguR8CEt0tYzDkYBw
Dec 14, 2023 | 12:17 PM
Only days in, Disney+’s Hulu integration is already seeing success.
On Dec. 6, Disney officially rolled out its Hulu on Disney+ beta launch to bundle subscribers, bringing a Hulu hub to Disney+ and giving users access to thousands of movies and shows from the Hulu library without having to leave the app. The beta version provides a more limited experience, with the full Hulu integration coming in March, but Disney is already seeing promising results, according to global advertising president Rita Ferro.
“Just in the initial few days, we’re seeing better than expected metrics [for advertisers] across the board,” Ferro told Adweek. “For the bundle subscriber, for people who are customers of both Hulu and Disney+ with ads, it is a great opportunity to not have to go in and out—to be able to continue to consume that content within one app.”
Recently, the company revealed that 50% of new Disney+ subscribers choose the ad tier, and from March to September 2023, the service has seen a 35% increase in engagement.
Disney Officially Set to Purchase Comcast’s Remaining Hulu Stake
Ferro told Adweek she’s looking forward to the impact when the full version of the Hulu and Disney+ integration comes in March, and the company has “big plans” for its content expansion strategy and how it thinks about programming the apps.
Marketers can still buy inventory on Hulu or Disney+ alone, but Ferro noted that clients looking to buy audiences across Hulu and Disney+ can do it all in one place with the new offering.
“If you’re on the app today, literally everyone has said, ‘Oh my God! It’s so much easier because I can just go into there, watch what I was watching and have a much more leanback experience,'” Ferro said.
Disney+’s Hulu integration is the latest example of bundling and consolidating within the TV industry, with Paramount also recently announcing its upcoming rebrand of its Showtime linear network to include its Paramount+ offering. Industry experts recently told Adweek they expect more streamer and linear consolidation coming in 2024.
Adding ad support
In addition to added Hulu content, Ferro noted that the Disney+ ad tier has made several changes since the company rolled it out a year ago, with advanced audience targeting; programmatic expansion across 30 DSPs (demand side platforms); more diversified ad formats, including midrolls, :15s and :90s; and enhanced measurement, which includes working with ad verification and delivery companies such as DoubleVerify and Moat.
According to Ferro, ad innovation will continue to be top of mind for the company as it heads into 2024. And with Disney rolling out its ad tier in nine markets in Europe and Canada in early November, bringing capabilities internationally will be a priority.
“We launched Disney+’s ad tier a year ago with 100 advertisers. We have 1,000 advertisers globally today,” Ferro said. “And the growth of that business is going to be critically important for us as we think about what other territories around the world we’re going to be entering and the capabilities that we’ve rolled out in the U.S. that we want to make sure we roll out globally.”
https://apple.news/AFqh9DaguR8CEt0tYzDkYBw
Dec 14, 2023 | 12:17 PM
Only days in, Disney+’s Hulu integration is already seeing success.
On Dec. 6, Disney officially rolled out its Hulu on Disney+ beta launch to bundle subscribers, bringing a Hulu hub to Disney+ and giving users access to thousands of movies and shows from the Hulu library without having to leave the app. The beta version provides a more limited experience, with the full Hulu integration coming in March, but Disney is already seeing promising results, according to global advertising president Rita Ferro.
“Just in the initial few days, we’re seeing better than expected metrics [for advertisers] across the board,” Ferro told Adweek. “For the bundle subscriber, for people who are customers of both Hulu and Disney+ with ads, it is a great opportunity to not have to go in and out—to be able to continue to consume that content within one app.”
Recently, the company revealed that 50% of new Disney+ subscribers choose the ad tier, and from March to September 2023, the service has seen a 35% increase in engagement.
Disney Officially Set to Purchase Comcast’s Remaining Hulu Stake
Ferro told Adweek she’s looking forward to the impact when the full version of the Hulu and Disney+ integration comes in March, and the company has “big plans” for its content expansion strategy and how it thinks about programming the apps.
Marketers can still buy inventory on Hulu or Disney+ alone, but Ferro noted that clients looking to buy audiences across Hulu and Disney+ can do it all in one place with the new offering.
“If you’re on the app today, literally everyone has said, ‘Oh my God! It’s so much easier because I can just go into there, watch what I was watching and have a much more leanback experience,'” Ferro said.
Disney+’s Hulu integration is the latest example of bundling and consolidating within the TV industry, with Paramount also recently announcing its upcoming rebrand of its Showtime linear network to include its Paramount+ offering. Industry experts recently told Adweek they expect more streamer and linear consolidation coming in 2024.
Adding ad support
In addition to added Hulu content, Ferro noted that the Disney+ ad tier has made several changes since the company rolled it out a year ago, with advanced audience targeting; programmatic expansion across 30 DSPs (demand side platforms); more diversified ad formats, including midrolls, :15s and :90s; and enhanced measurement, which includes working with ad verification and delivery companies such as DoubleVerify and Moat.
According to Ferro, ad innovation will continue to be top of mind for the company as it heads into 2024. And with Disney rolling out its ad tier in nine markets in Europe and Canada in early November, bringing capabilities internationally will be a priority.
“We launched Disney+’s ad tier a year ago with 100 advertisers. We have 1,000 advertisers globally today,” Ferro said. “And the growth of that business is going to be critically important for us as we think about what other territories around the world we’re going to be entering and the capabilities that we’ve rolled out in the U.S. that we want to make sure we roll out globally.”
wabbott
DIS Veteran
- Joined
- Aug 4, 2021
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https://www.hollywoodreporter.com/b...will-shape-shari-redstones-legacy-1235756916/
“For Sale” Sign on Paramount Will Shape Shari Redstone’s Legacy
As the mogul entertains offers for relinquishing control of the historic studio, some suitors seem more interested in flipping assets.
December 15, 2023 - 5:05am PST
by Alex Weprin
The entertainment company that everyone in Hollywood is talking about is based in a nondescript three-story office building in the Boston suburb of Norwood, Massachusetts.
Nestled between an indoor ice-skating rink and a Home Depot distribution center is the headquarters of National Amusements, Inc., a movie theater operator with 22 cinemas in the U.S., almost all in the New York to Boston corridor.
But it’s not the movie theaters that have investment bankers, media moguls and opportunistic private equity firms salivating. National Amusements, the pride and joy of the media titan Sumner Redstone, and now controlled by his daughter Shari, serves as a holding company for the family’s most precious asset: voting control of Paramount Global, the owner of CBS, Paramount+, Paramount Pictures, Nickelodeon, and other media brands.
Paramount — or at least control of Paramount via National Amusements — now appears to be on the block, with Redstone reportedly working with banker Byron Trott to figure out next steps. Among those kicking the tires is another scion of a mogul, David Ellison and his Skydance, which is working with Gerry Cardinale’s RedBird on evaluating potential deals.
A precarious financial position for both Paramount and National Amusements could have played a role in the timing. The state of play at Paramount was laid out in stark terms Dec. 5, as a panel of credit analysts weighed in on what they are thinking about for 2024. Paramount, S&P Global analyst Naveen Sarma noted, now had a credit rating of BBB-, the “bottom end of what we would call investment grade.”
And National Amusements has faced issues of its own. The movie theater business, after all, has not had a good few years. In May, Trott’s BDT & MSD Partners took a $125 million preferred equity investment in National Amusements. In September, NAI sold additional shares and warrants and restructured some of its debt.
Skydance and RedBird are far from alone, should the Redstone stake in National Amusements or Paramount as a
whole hit the block. The company’s distress has also been top of mind for John Malone, the cable tycoon and Warner Bros. Discovery board member. “We are headed to a period of distress: The streaming, conversion or disruption; the fact that rates are now high; that a lot of maturities are approaching,” Malone told investors in his Liberty Media at the company’s shareholder meeting Nov. 9. “There will be opportunities presented by distress, and companies that have got dry powder or some kind of currency…will find synergistic consolidation opportunities in that distress.”
Malone, as a mentor to WBD CEO David Zaslav and a board member of the company, knows a thing or two about synergistic consolidation opportunities. “Ultimately, in a difficult environment, it’s going to give us optionality, because we’re surrounded by a lot of companies that don’t have the geographic diversity that we have, aren’t generating real free cash flow, have debt that is presenting issues,” Zaslav said on an earnings call, adding that there are “excess players” in the marketplace. “So this will give us a chance not only to fight, to grow in the next year, but to have the kind of balance sheet…that we could be really opportunistic over the next twelve to 24 months.”
Media insiders have been buzzing that the “opportunities” seen by Malone and Zaslav involve Paramount, or at least some of the company’s assets.
Comcast, likewise, could very well take a look, though president Mike Cavanagh said the company has a “very high bar” for M&A at a recent UBS conference, pouring cold water on any imminent deal. But it’s worth noting that the cash Disney is paying Comcast for its stake in Hulu will likely be worth about as much, if not more, than Paramount’s current $10 billion market cap.
The big question is whether Paramount sells as a whole, or whether the company (or a new controlling shareholder at National Amusements) parses it out and sells pieces.
At least one influential Paramount investor thinks the company should consider splitting up its assets. “Paramount…observed early this year…company should keep CBS network…spin O&Os (owned and operated tv stations),” shared money manager Mario Gabelli on X (formerly Twitter). Gabelli’s funds are the second largest shareholders in Paramount’s voting stock, after National Amusements.
If the company were to split up its holdings, its options would grow. Private equity firms like Apollo and TPG have long explored media holdings, and businesses like Paramount’s linear TV businesses (like cable channels and, yes, its local TV stations) could be appealing given their strong cash flows (even if they are in secular decline).
BET, which was on the market earlier in the year, could find itself there again, with bidders like Tyler Perry and Byron Allen likely to take another look.
The Paramount studio is the crown jewel of most appeal to Skydance and tech companies like Netflix, Apple or Amazon, all of which would benefit from its library, its intellectual property, and production prowess. Likewise, the Paramount lot in Los Angeles has been coveted by Netflix, among others (the company has sold or is selling almost all its real estate in New York).
And in the event of a breakup, WBD would surely look at CBS and its news and sports divisions, which could tuck in nicely with its existing assets (CNN and CBS News previously had merger talks back in the early 2000s), and bring the NFL and a broadcast network to the company, something it currently lacks.
The future of Paramount – or the pieces of it – are shaping up to be among the biggest stories facing Hollywood in 2024. And once again changing consumer preferences are forcing its owner National Amusements to adapt.
Shari Redstone’s grandfather, Michael Redstone, opened his first drive-in movie theater in Massachusetts 75 years ago in 1948. Sumner Redstone closed it 30 years later as drive-ins fell out of favor. Just as Sumner shuttered the business that was the cornerstone of his father’s legacy, Shari may be poised to do the same thing.
“For Sale” Sign on Paramount Will Shape Shari Redstone’s Legacy
As the mogul entertains offers for relinquishing control of the historic studio, some suitors seem more interested in flipping assets.
December 15, 2023 - 5:05am PST
by Alex Weprin
The entertainment company that everyone in Hollywood is talking about is based in a nondescript three-story office building in the Boston suburb of Norwood, Massachusetts.
Nestled between an indoor ice-skating rink and a Home Depot distribution center is the headquarters of National Amusements, Inc., a movie theater operator with 22 cinemas in the U.S., almost all in the New York to Boston corridor.
But it’s not the movie theaters that have investment bankers, media moguls and opportunistic private equity firms salivating. National Amusements, the pride and joy of the media titan Sumner Redstone, and now controlled by his daughter Shari, serves as a holding company for the family’s most precious asset: voting control of Paramount Global, the owner of CBS, Paramount+, Paramount Pictures, Nickelodeon, and other media brands.
Paramount — or at least control of Paramount via National Amusements — now appears to be on the block, with Redstone reportedly working with banker Byron Trott to figure out next steps. Among those kicking the tires is another scion of a mogul, David Ellison and his Skydance, which is working with Gerry Cardinale’s RedBird on evaluating potential deals.
A precarious financial position for both Paramount and National Amusements could have played a role in the timing. The state of play at Paramount was laid out in stark terms Dec. 5, as a panel of credit analysts weighed in on what they are thinking about for 2024. Paramount, S&P Global analyst Naveen Sarma noted, now had a credit rating of BBB-, the “bottom end of what we would call investment grade.”
And National Amusements has faced issues of its own. The movie theater business, after all, has not had a good few years. In May, Trott’s BDT & MSD Partners took a $125 million preferred equity investment in National Amusements. In September, NAI sold additional shares and warrants and restructured some of its debt.
Skydance and RedBird are far from alone, should the Redstone stake in National Amusements or Paramount as a
whole hit the block. The company’s distress has also been top of mind for John Malone, the cable tycoon and Warner Bros. Discovery board member. “We are headed to a period of distress: The streaming, conversion or disruption; the fact that rates are now high; that a lot of maturities are approaching,” Malone told investors in his Liberty Media at the company’s shareholder meeting Nov. 9. “There will be opportunities presented by distress, and companies that have got dry powder or some kind of currency…will find synergistic consolidation opportunities in that distress.”
Malone, as a mentor to WBD CEO David Zaslav and a board member of the company, knows a thing or two about synergistic consolidation opportunities. “Ultimately, in a difficult environment, it’s going to give us optionality, because we’re surrounded by a lot of companies that don’t have the geographic diversity that we have, aren’t generating real free cash flow, have debt that is presenting issues,” Zaslav said on an earnings call, adding that there are “excess players” in the marketplace. “So this will give us a chance not only to fight, to grow in the next year, but to have the kind of balance sheet…that we could be really opportunistic over the next twelve to 24 months.”
Media insiders have been buzzing that the “opportunities” seen by Malone and Zaslav involve Paramount, or at least some of the company’s assets.
Comcast, likewise, could very well take a look, though president Mike Cavanagh said the company has a “very high bar” for M&A at a recent UBS conference, pouring cold water on any imminent deal. But it’s worth noting that the cash Disney is paying Comcast for its stake in Hulu will likely be worth about as much, if not more, than Paramount’s current $10 billion market cap.
The big question is whether Paramount sells as a whole, or whether the company (or a new controlling shareholder at National Amusements) parses it out and sells pieces.
At least one influential Paramount investor thinks the company should consider splitting up its assets. “Paramount…observed early this year…company should keep CBS network…spin O&Os (owned and operated tv stations),” shared money manager Mario Gabelli on X (formerly Twitter). Gabelli’s funds are the second largest shareholders in Paramount’s voting stock, after National Amusements.
If the company were to split up its holdings, its options would grow. Private equity firms like Apollo and TPG have long explored media holdings, and businesses like Paramount’s linear TV businesses (like cable channels and, yes, its local TV stations) could be appealing given their strong cash flows (even if they are in secular decline).
BET, which was on the market earlier in the year, could find itself there again, with bidders like Tyler Perry and Byron Allen likely to take another look.
The Paramount studio is the crown jewel of most appeal to Skydance and tech companies like Netflix, Apple or Amazon, all of which would benefit from its library, its intellectual property, and production prowess. Likewise, the Paramount lot in Los Angeles has been coveted by Netflix, among others (the company has sold or is selling almost all its real estate in New York).
And in the event of a breakup, WBD would surely look at CBS and its news and sports divisions, which could tuck in nicely with its existing assets (CNN and CBS News previously had merger talks back in the early 2000s), and bring the NFL and a broadcast network to the company, something it currently lacks.
The future of Paramount – or the pieces of it – are shaping up to be among the biggest stories facing Hollywood in 2024. And once again changing consumer preferences are forcing its owner National Amusements to adapt.
Shari Redstone’s grandfather, Michael Redstone, opened his first drive-in movie theater in Massachusetts 75 years ago in 1948. Sumner Redstone closed it 30 years later as drive-ins fell out of favor. Just as Sumner shuttered the business that was the cornerstone of his father’s legacy, Shari may be poised to do the same thing.
Elijah Abrams
DIS Veteran
- Joined
- Feb 6, 2020
- Messages
- 610
Malone needs to back off from Paramount. If WBD buys it, or parts of it, they will ruin it like Warner Bros.!
Also, that Mario investor in the article is being a clown!
wabbott
DIS Veteran
- Joined
- Aug 4, 2021
- Messages
- 6,449
https://deadline.com/2023/12/paramount-merger-acquistition-plans-shari-redstone-1235668464/
Paramount’s M&A Conundrum: How To Take Apart A Puzzle That Took Decades To Complete
By Dade Hayes, Jill Goldsmith
December 15, 2023 - 1:41pm PST
As 2023 began, Covid was waning, Top Gun: Maverick was a billion-dollar Oscar Best Picture nominee, and Shari Redstone’s place in the media firmament felt secure after a years-long quest to reunite CBS and Viacom.
At year’s end, the narrative has dramatically changed.
Paramount Global, which Redstone leads as chair and CEO of its controlling shareholder, National Amusements, has hit a prolonged rough patch, and speculation is rampant about its future as a stand-alone company. Film and TV production has been hampered by the WGA and SAG-AFTRA strikes, the company’s streaming operation is bleeding cash, and an advertising slowdown is squeezing cable networks already jeopardized by cord-cutting. What’s more, old questions are resurfacing about whether the company has enough scale to compete, with those doubts reflected in the company’s lagging stock price. As of Friday’s close, the share price of $16.27 gave Paramount a market value of about $10.2 billion.
As Deadline reported last week, David Ellison’s Skydance has entered the mix of parties interested in snapping up all or part of the company, likely via a potential transaction with National Amusements. Firms like Skydance or RedBird could potentially do what private money does: try to optimize returns on Paramount’s legacy assets, which include CBS, 28 local TV stations, two-dozen-plus cable networks and the 111-year-old movie studio. With the dealmaking climate expected to improve in 2024 and Paramount needing to pay down debt and meet steep expenses, more than a dozen observers Deadline spoke with both inside and outside of the company expect something to give soon.
“It’s the worst-kept secret in Hollywood and on Wall Street that Paramount is in financial straits and consolidation is inevitable,” media analyst Alan Gould of Loop Capital said in an interview.
The kickoff to the latest wave of chatter about Paramount came in mid-November, when the company unveiled change-in-control severance protection plans (aka golden parachutes) for CEO Bob Bakish and top executives in the event that the company were to change hands. Some of its peers already have those in place, but Paramount previously did not.
At a Wall Street conference last week, S&P’s top media analyst painted a dire picture of Paramount’s finances. It’s teetering on the lowest rung of investment grade after a downgrade. If it tips over, it will have a tougher time raising cash. That makes a deal attractive.
“Shari wants to sell,” says one insider. The film studio, practically left for dead a decade ago, has rebounded strongly and is seen as the main draw for Ellison and other suitors. Redstone’s family history, though, could make it the trickiest piece in the puzzle. “The studio could be sold in 15 minutes and I wouldn’t be surprised if it’s sold in two years,” the insider added.
In a bid to conserve cash, the parent company slashed its shareholder dividend (to 5 cents from 24 cents). That means greatly reduced payouts to NAI, which holds 77% of Paramount shares. Already last spring, NAI announced a strategic investment from merchant bank BDT Capital.
NAI’s assets include the National Amusements theater chain, with about 800 locations, and about $200 million in debt, Gould estimates. On the occasion of the BDT investment, Redstone affirmed that NAI “has conviction in Paramount’s strategy and execution, and we remain committed to supporting Paramount as it takes the necessary steps to build on its success and capitalize on the strategic opportunities in our industry.”
The big question now: Is that still the case?
Reps from NAI, Paramount and Skydance all declined to comment.
Breaking Up Is Hard To Do
Paramount is the smallest of the major Hollywood studios. Linear television is in secular decline and CBS and cable networks are highly dependent on advertising. In recent years, the company has unloaded assets including Black Rock, the longtime CBS headquarters in Manhattan; the Radford lot in Studio City; Television City in LA; and book publisher Simon & Schuster. (It tried to sell BET but didn’t like the offers. It also rejected bids for Showtime.) The stock perked up on word of Skydance’s interest, but earlier this year it fell to a multi-year low below $11. Consensus is it should be sold.
To whom it would be sold — and if and how — depends on Redstone. Her father, Sumner Redstone, built a global business out of a Boston theater chain launched by his own father, Michael. Shari and Sumner had their share of conflict and the elder Redstone, who died in 2020, publicly insulted his daughter over the years. Unscripted, a book published in February of this year about the family and its media empire (by James Stewart and Rachel Abrams of the New York Times), detailed their dysfunctional relationship and eventual reconciliation or sorts in his last years. Selling something that took decades to build is not a casual decision, but it also won’t be ideal to wait too much longer, with all of traditional media losing steam.
“She may need to make some decisions out of necessity, not convenience,” one fund manager said.
Ellison — whose billionaire father Larry Ellison, the founder of Oracle, is Skydance’s biggest shareholder — “wants a studio,” said one Hollywood dealmaker. Adds a rival studio chief, “It’s no surprise that David Ellison is interested in a stake in Paramount; he always wanted to be studio boss.”
Of all of the majors, Paramount is the only one that’s affordable for a company of Skydance’s size, especially if it goes through NAI, which Gould called a “clever way to get control of Paramount.” It’s certainly less risky than buying a company “with an enterprise value of about $23 billion if you are only interested in the $7 billion studio.”
As one Wall Streeter sees it, “You mitigate the risk by buying NAI. You are paying less.”
Here’s the catch: an NAI transaction may not the best thing for Paramount’s public shareholders. Gould in fact has downgraded the company to “sell,” saying he doesn’t see “any upside for the public shareholders of Paramount.” In other words, Shari or the Redstone family “would get a premium” for their stake, while others would not.
Illustrating the conundrum that is Paramount right now, Citi’s Jason Bazinet has a “buy” on the company. He said the downside in Ellison buying NAI instead of Paramount directly is “tax leakage.”
“If Paramount was going to sell the entire company, they might do that with equity. So there would be no check back to the IRS,” he said. But if Ellison buys NAI, then sells CBS for cash, for instance, “he’d have to pay capital gains tax [so] there is less value for shareholders.”
What happens if Ellison can’t sell the linear TV assets and just ends up running all of Paramount? “Could they make better decisions and operate it better?” wonders one fund manager.
Others say Ellison wouldn’t do a deal unless he was sure he’d only end up with the studio.
Unloading the TV assets would be a complicated process, especially because they continue to generate considerable free cash flow in decline. Securing distribution, however, is a more complicated task than ever for network owners. Paramount faces major carriage renewal deadlines with Comcast and Charter, the two largest U.S. cable operators, over the next several months. Comcast and ViacomCBS signed a renewal in 2022, but insiders have confirmed the companies are facing another one at the end of this month.
Charter, for its part, has drawn a clear line in the sand with programmers. It recently squared off with Disney and after a 10-day blackout of ABC, ESPN and other networks, a renewal was reached that will have broad implications for the industry. In exchange for promoting and bundling streaming services like Disney+, long-established networks like Freeform and FXX were permanently dropped, a major disruption to the traditional dual revenue stream of pay-TV.
“Anyone interested in buying Paramount will have to reckon with the outcome of these two deals,” one high-level media executive told Deadline.
Linear TV is in something of a limbo state after defining many of the top media companies and filling their coffers for more than two decades. Disney recently reversed course after exploring a potential sale of local TV stations and linear TV networks, with CEO Bob Iger concluding that they remain valuable as promotional tools.
For a major cable brand like Nickelodeon, the stakes in the distribution negotiations are significant. Even in a diminished pay-TV landscape, the kids powerhouse collects about $1 billion in affiliate fees annually, sources estimate. As Nick brands like PAW Patrol have shown, there is also huge merchandise potential tied to various Paramount properties. Over the summer, Teenage Mutant Ninja Turtles cleared $1 billion in global retail — and that’s just for the year alone. This was all stemming from the $180.5 million global gross of Paramount’s animated Teenage Mutant Ninja Turtles: Mutant Mayhem. Paramount Consumer Products’ Turtles theatrical program was its most ambitious yet, counting north of 400 licensees for the film and 1,100 total for the franchise.
And yet, whither Paramount+, which lost $238 million last quarter? The streaming service, rebranded after the merger of the former CBS All Access and Showtime, has hit peak losses, but there’s no indication of when it’s expected to turn a profit. It could bundle more aggressively, in line with a growing industry trend. Paramount has recently explored a potential bundle with Apple TV+, done “hard bundles” internationally to drive adoption and even struck a pact with Delta Airlines. Overshadowed by the angst over the fate of Paramount+ has been the breakout success story of free, ad-supported streamer Pluto TV. Acquired for $340 million in 2019, Pluto now racks up billions in annual ad sales and spends a small fraction what its streaming siblings do on programming given it has stayed out of the originals race.
“What is the rush to buy Paramount now?” Lightshed Partners’ Rich Greenfield wrote in a recent blog post, saying it “undoubtedly will be sold.” But he believes this is a buyer’s market. “All signs point to legacy media worsening as we move into 2024 with executives finally realizing that linear TV advertising is never getting better.
One other scenario, a hook-up with a media rival like Warner Bros. Discovery or Comcast’s NBCUniversal, could face a storm of regulatory objections, not to mention skepticism about the strategy of piling declining legacy assets on top of other legacy assets. “Disney-Fox and WarnerMedia-Discovery made some sense at the time,” one dealmaker told Deadline, “but this is a very different market now.”
Comcast President Mike Cavanagh, who oversees NBCU, was asked about acquisitions at recent Wall Street conference. “The bar is really high,” he replied, “unless there is a strong, compelling reason to do it. Our job is always to look at things, but … I like the hand we have.”
Of course, execs are not likely to show their cards in public. And Comcast is now sitting on $8.6 billion from Disney in exchange for its one-third stake in Hulu.
WBD chief David Zaslav, who has been prone to talk about bulking up, was a bit more restrained at the New York Times DealBook Summit last month. “I think we have everything that we need,” he said, at least for the near future. WBD, whose stock has steadily sunk since the April 2022 close of the $43 billion WarnerMedia and Discovery merger, has been paying down its massive debt but still has a ways to go. The company also could be a target itself starting in April, due to an arcane clause in the merger set to expire two years after the close. “Every public company is technically for sale,” Zaslav said, with boards obligated to consider the best interests of shareholders. “But our perspective is, we are positioned for growth next year. To invest in more content. To position ourselves so we have options.”
Anthony D’Alessandro contributed to this report.
Paramount’s M&A Conundrum: How To Take Apart A Puzzle That Took Decades To Complete
By Dade Hayes, Jill Goldsmith
December 15, 2023 - 1:41pm PST
As 2023 began, Covid was waning, Top Gun: Maverick was a billion-dollar Oscar Best Picture nominee, and Shari Redstone’s place in the media firmament felt secure after a years-long quest to reunite CBS and Viacom.
At year’s end, the narrative has dramatically changed.
Paramount Global, which Redstone leads as chair and CEO of its controlling shareholder, National Amusements, has hit a prolonged rough patch, and speculation is rampant about its future as a stand-alone company. Film and TV production has been hampered by the WGA and SAG-AFTRA strikes, the company’s streaming operation is bleeding cash, and an advertising slowdown is squeezing cable networks already jeopardized by cord-cutting. What’s more, old questions are resurfacing about whether the company has enough scale to compete, with those doubts reflected in the company’s lagging stock price. As of Friday’s close, the share price of $16.27 gave Paramount a market value of about $10.2 billion.
As Deadline reported last week, David Ellison’s Skydance has entered the mix of parties interested in snapping up all or part of the company, likely via a potential transaction with National Amusements. Firms like Skydance or RedBird could potentially do what private money does: try to optimize returns on Paramount’s legacy assets, which include CBS, 28 local TV stations, two-dozen-plus cable networks and the 111-year-old movie studio. With the dealmaking climate expected to improve in 2024 and Paramount needing to pay down debt and meet steep expenses, more than a dozen observers Deadline spoke with both inside and outside of the company expect something to give soon.
“It’s the worst-kept secret in Hollywood and on Wall Street that Paramount is in financial straits and consolidation is inevitable,” media analyst Alan Gould of Loop Capital said in an interview.
“Shari Wants To Sell”
The kickoff to the latest wave of chatter about Paramount came in mid-November, when the company unveiled change-in-control severance protection plans (aka golden parachutes) for CEO Bob Bakish and top executives in the event that the company were to change hands. Some of its peers already have those in place, but Paramount previously did not.
At a Wall Street conference last week, S&P’s top media analyst painted a dire picture of Paramount’s finances. It’s teetering on the lowest rung of investment grade after a downgrade. If it tips over, it will have a tougher time raising cash. That makes a deal attractive.
“Shari wants to sell,” says one insider. The film studio, practically left for dead a decade ago, has rebounded strongly and is seen as the main draw for Ellison and other suitors. Redstone’s family history, though, could make it the trickiest piece in the puzzle. “The studio could be sold in 15 minutes and I wouldn’t be surprised if it’s sold in two years,” the insider added.
In a bid to conserve cash, the parent company slashed its shareholder dividend (to 5 cents from 24 cents). That means greatly reduced payouts to NAI, which holds 77% of Paramount shares. Already last spring, NAI announced a strategic investment from merchant bank BDT Capital.
NAI’s assets include the National Amusements theater chain, with about 800 locations, and about $200 million in debt, Gould estimates. On the occasion of the BDT investment, Redstone affirmed that NAI “has conviction in Paramount’s strategy and execution, and we remain committed to supporting Paramount as it takes the necessary steps to build on its success and capitalize on the strategic opportunities in our industry.”
The big question now: Is that still the case?
Reps from NAI, Paramount and Skydance all declined to comment.
Breaking Up Is Hard To Do
Paramount is the smallest of the major Hollywood studios. Linear television is in secular decline and CBS and cable networks are highly dependent on advertising. In recent years, the company has unloaded assets including Black Rock, the longtime CBS headquarters in Manhattan; the Radford lot in Studio City; Television City in LA; and book publisher Simon & Schuster. (It tried to sell BET but didn’t like the offers. It also rejected bids for Showtime.) The stock perked up on word of Skydance’s interest, but earlier this year it fell to a multi-year low below $11. Consensus is it should be sold.
To whom it would be sold — and if and how — depends on Redstone. Her father, Sumner Redstone, built a global business out of a Boston theater chain launched by his own father, Michael. Shari and Sumner had their share of conflict and the elder Redstone, who died in 2020, publicly insulted his daughter over the years. Unscripted, a book published in February of this year about the family and its media empire (by James Stewart and Rachel Abrams of the New York Times), detailed their dysfunctional relationship and eventual reconciliation or sorts in his last years. Selling something that took decades to build is not a casual decision, but it also won’t be ideal to wait too much longer, with all of traditional media losing steam.
“She may need to make some decisions out of necessity, not convenience,” one fund manager said.
Ellison — whose billionaire father Larry Ellison, the founder of Oracle, is Skydance’s biggest shareholder — “wants a studio,” said one Hollywood dealmaker. Adds a rival studio chief, “It’s no surprise that David Ellison is interested in a stake in Paramount; he always wanted to be studio boss.”
Of all of the majors, Paramount is the only one that’s affordable for a company of Skydance’s size, especially if it goes through NAI, which Gould called a “clever way to get control of Paramount.” It’s certainly less risky than buying a company “with an enterprise value of about $23 billion if you are only interested in the $7 billion studio.”
As one Wall Streeter sees it, “You mitigate the risk by buying NAI. You are paying less.”
Here’s the catch: an NAI transaction may not the best thing for Paramount’s public shareholders. Gould in fact has downgraded the company to “sell,” saying he doesn’t see “any upside for the public shareholders of Paramount.” In other words, Shari or the Redstone family “would get a premium” for their stake, while others would not.
Illustrating the conundrum that is Paramount right now, Citi’s Jason Bazinet has a “buy” on the company. He said the downside in Ellison buying NAI instead of Paramount directly is “tax leakage.”
“If Paramount was going to sell the entire company, they might do that with equity. So there would be no check back to the IRS,” he said. But if Ellison buys NAI, then sells CBS for cash, for instance, “he’d have to pay capital gains tax [so] there is less value for shareholders.”
What happens if Ellison can’t sell the linear TV assets and just ends up running all of Paramount? “Could they make better decisions and operate it better?” wonders one fund manager.
Others say Ellison wouldn’t do a deal unless he was sure he’d only end up with the studio.
Turn Off TV?
Unloading the TV assets would be a complicated process, especially because they continue to generate considerable free cash flow in decline. Securing distribution, however, is a more complicated task than ever for network owners. Paramount faces major carriage renewal deadlines with Comcast and Charter, the two largest U.S. cable operators, over the next several months. Comcast and ViacomCBS signed a renewal in 2022, but insiders have confirmed the companies are facing another one at the end of this month.
Charter, for its part, has drawn a clear line in the sand with programmers. It recently squared off with Disney and after a 10-day blackout of ABC, ESPN and other networks, a renewal was reached that will have broad implications for the industry. In exchange for promoting and bundling streaming services like Disney+, long-established networks like Freeform and FXX were permanently dropped, a major disruption to the traditional dual revenue stream of pay-TV.
“Anyone interested in buying Paramount will have to reckon with the outcome of these two deals,” one high-level media executive told Deadline.
Linear TV is in something of a limbo state after defining many of the top media companies and filling their coffers for more than two decades. Disney recently reversed course after exploring a potential sale of local TV stations and linear TV networks, with CEO Bob Iger concluding that they remain valuable as promotional tools.
For a major cable brand like Nickelodeon, the stakes in the distribution negotiations are significant. Even in a diminished pay-TV landscape, the kids powerhouse collects about $1 billion in affiliate fees annually, sources estimate. As Nick brands like PAW Patrol have shown, there is also huge merchandise potential tied to various Paramount properties. Over the summer, Teenage Mutant Ninja Turtles cleared $1 billion in global retail — and that’s just for the year alone. This was all stemming from the $180.5 million global gross of Paramount’s animated Teenage Mutant Ninja Turtles: Mutant Mayhem. Paramount Consumer Products’ Turtles theatrical program was its most ambitious yet, counting north of 400 licensees for the film and 1,100 total for the franchise.
And yet, whither Paramount+, which lost $238 million last quarter? The streaming service, rebranded after the merger of the former CBS All Access and Showtime, has hit peak losses, but there’s no indication of when it’s expected to turn a profit. It could bundle more aggressively, in line with a growing industry trend. Paramount has recently explored a potential bundle with Apple TV+, done “hard bundles” internationally to drive adoption and even struck a pact with Delta Airlines. Overshadowed by the angst over the fate of Paramount+ has been the breakout success story of free, ad-supported streamer Pluto TV. Acquired for $340 million in 2019, Pluto now racks up billions in annual ad sales and spends a small fraction what its streaming siblings do on programming given it has stayed out of the originals race.
While there are clear signs of change at the House of Redstone, not everyone on Wall Street sees a dealmaking frenzy in the near term.
“What is the rush to buy Paramount now?” Lightshed Partners’ Rich Greenfield wrote in a recent blog post, saying it “undoubtedly will be sold.” But he believes this is a buyer’s market. “All signs point to legacy media worsening as we move into 2024 with executives finally realizing that linear TV advertising is never getting better.
One other scenario, a hook-up with a media rival like Warner Bros. Discovery or Comcast’s NBCUniversal, could face a storm of regulatory objections, not to mention skepticism about the strategy of piling declining legacy assets on top of other legacy assets. “Disney-Fox and WarnerMedia-Discovery made some sense at the time,” one dealmaker told Deadline, “but this is a very different market now.”
Comcast President Mike Cavanagh, who oversees NBCU, was asked about acquisitions at recent Wall Street conference. “The bar is really high,” he replied, “unless there is a strong, compelling reason to do it. Our job is always to look at things, but … I like the hand we have.”
Of course, execs are not likely to show their cards in public. And Comcast is now sitting on $8.6 billion from Disney in exchange for its one-third stake in Hulu.
WBD chief David Zaslav, who has been prone to talk about bulking up, was a bit more restrained at the New York Times DealBook Summit last month. “I think we have everything that we need,” he said, at least for the near future. WBD, whose stock has steadily sunk since the April 2022 close of the $43 billion WarnerMedia and Discovery merger, has been paying down its massive debt but still has a ways to go. The company also could be a target itself starting in April, due to an arcane clause in the merger set to expire two years after the close. “Every public company is technically for sale,” Zaslav said, with boards obligated to consider the best interests of shareholders. “But our perspective is, we are positioned for growth next year. To invest in more content. To position ourselves so we have options.”
Anthony D’Alessandro contributed to this report.
wabbott
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https://www.yahoo.com/entertainment/tubi-driving-massive-surge-demand-220000966.html
Tubi Is Driving a Massive Surge in Demand for Free Streaming | Charts
Daniel Quinaud
Fri, December 15, 2023 at 4:00 PM CST
The streaming market is increasingly adopting strategies to boost revenue, including hiking prices, clamping down on password sharing and introducing advertisement-supported tiers. While these tactics are designed to bolster the financial health of the companies, they might not always be favorably received by the subscribers.
Against this backdrop, there’s a potential opening for an alternative platform model to make headway in the market. Enter FAST (Free Ad-Supported Streaming TV) platforms, characterized by their no-contract, password-free approach.
Demand data from Parrot Analytic reveals a notable surge in demand for the leading FAST platforms (Tubi, The Roku Channel, Freevee, and Pluto TV), which saw their combined TV catalog demand spike by 37.7% between the third quarters of 2022 and 2023. By comparison, the main SVOD (Subscription Video On Demand) platforms witnessed a 31.3% increase in the same period.
This uptick in FAST platform popularity is largely propelled by Fox’s Tubi, which reported a staggering 73.1% growth rate, outpacing other FAST and SVOD platforms. The other FAST platforms grew from 24.5% to 37.7% over 12 months.
Notably, this demand surge wasn’t solely due to an expanded show lineup. In most instances, apart from The Roku Channel, demand growth exceeded supply growth, indicating an increased average demand for existing shows. Pluto TV, for instance, experienced demand growth even as its TV catalog shrank.
As cord-cutting accelerates in the U.S., audiences may adopt FAST channels’ familiar linear-like interface as a no-cost entertainment substitute. However, it’s crucial to note that despite these impressive growth rates, FAST platforms still occupy a smaller market share than the SVOD group, both in overall demand and catalog size.
FAST and SVOD platforms distinguish themselves through their unique features and catalog compositions. FAST platforms, for example, typically have a smaller proportion of exclusive content. For instance, only 16.1% of Freevee’s TV catalog demand stems from exclusive series. This figure dips even lower for other platforms, with Pluto TV at 7.3%. By contrast, the main SVOD platforms boast an average exclusive demand share of 52.3%.
FAST platforms generally attract audiences for unscripted content and older scripted shows released on linear channels. On average, an exclusive show on a FAST platform was released 11 years ago and draws 1.5 times the demand of the average show as of November 2023. In contrast, exclusive shows on major SVOD platforms are typically newer and more sought-after, with an average release time of six years and a demand multiplier of 2.8.
Despite this, several highly popular exclusive shows on FAST platforms highlight their strengths. For example, Freevee boasts original shows like “Bosch: Legacy,” and licensed shows such as “Person Of Interest” and the original “Magnum, P.I.” Pluto TV focuses more on unscripted content, featuring shows like “Dr. Phil” and “Judge Judy.” The Roku Channel offers the comedy “2 Broke Girls” and select originals, while Tubi hosts all 26 seasons of the classic “Doctor Who” series.
Daniel Quinaud is a senior data analyst at Parrot Analytics, a WrapPRO partner. For more from Parrot Analytics, visit the Data and Analysis Hub.
Tubi Is Driving a Massive Surge in Demand for Free Streaming | Charts
Daniel Quinaud
Fri, December 15, 2023 at 4:00 PM CST
The streaming market is increasingly adopting strategies to boost revenue, including hiking prices, clamping down on password sharing and introducing advertisement-supported tiers. While these tactics are designed to bolster the financial health of the companies, they might not always be favorably received by the subscribers.
Against this backdrop, there’s a potential opening for an alternative platform model to make headway in the market. Enter FAST (Free Ad-Supported Streaming TV) platforms, characterized by their no-contract, password-free approach.
Demand data from Parrot Analytic reveals a notable surge in demand for the leading FAST platforms (Tubi, The Roku Channel, Freevee, and Pluto TV), which saw their combined TV catalog demand spike by 37.7% between the third quarters of 2022 and 2023. By comparison, the main SVOD (Subscription Video On Demand) platforms witnessed a 31.3% increase in the same period.
This uptick in FAST platform popularity is largely propelled by Fox’s Tubi, which reported a staggering 73.1% growth rate, outpacing other FAST and SVOD platforms. The other FAST platforms grew from 24.5% to 37.7% over 12 months.
Notably, this demand surge wasn’t solely due to an expanded show lineup. In most instances, apart from The Roku Channel, demand growth exceeded supply growth, indicating an increased average demand for existing shows. Pluto TV, for instance, experienced demand growth even as its TV catalog shrank.
As cord-cutting accelerates in the U.S., audiences may adopt FAST channels’ familiar linear-like interface as a no-cost entertainment substitute. However, it’s crucial to note that despite these impressive growth rates, FAST platforms still occupy a smaller market share than the SVOD group, both in overall demand and catalog size.
FAST and SVOD platforms distinguish themselves through their unique features and catalog compositions. FAST platforms, for example, typically have a smaller proportion of exclusive content. For instance, only 16.1% of Freevee’s TV catalog demand stems from exclusive series. This figure dips even lower for other platforms, with Pluto TV at 7.3%. By contrast, the main SVOD platforms boast an average exclusive demand share of 52.3%.
FAST platforms generally attract audiences for unscripted content and older scripted shows released on linear channels. On average, an exclusive show on a FAST platform was released 11 years ago and draws 1.5 times the demand of the average show as of November 2023. In contrast, exclusive shows on major SVOD platforms are typically newer and more sought-after, with an average release time of six years and a demand multiplier of 2.8.
Despite this, several highly popular exclusive shows on FAST platforms highlight their strengths. For example, Freevee boasts original shows like “Bosch: Legacy,” and licensed shows such as “Person Of Interest” and the original “Magnum, P.I.” Pluto TV focuses more on unscripted content, featuring shows like “Dr. Phil” and “Judge Judy.” The Roku Channel offers the comedy “2 Broke Girls” and select originals, while Tubi hosts all 26 seasons of the classic “Doctor Who” series.
Daniel Quinaud is a senior data analyst at Parrot Analytics, a WrapPRO partner. For more from Parrot Analytics, visit the Data and Analysis Hub.
Elijah Abrams
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Again, analysts are behind the notion to break up Paramount.
irlandaise
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2024 Global Box Office Projected To See 5% Downturn Versus 2023 – Analysts
Gower Street Analytics has come up with an early estimate for 2024 global box office, projecting a roughly 5% downturn versus 2023 to $31.5B (Gower currently is pegging 2023 at $33.4B). This marks the first post-pandemic decrease in the London-based firm’s annual forecast. Should the figure hold, it would put the year -20% against the average of the last three pre-pandemic years (2017-2019).The shift is largely owing to work stoppages amid the Hollywood writers’ and actors’ strikes which pushed some product out of next year, rather than theatrical ill health.
...
“Based on productions currently on our radar, we expect 2025 to be a very good year at the global box office and hopefully a positive trend-setter for the second half of this decade.”
...
The early part of 2024 is fairly barren at this point, with Dune: Part Two the first major release hitting in early March. Other key titles ahead next year include Ghostbusters: Frozen Empire, Godzilla x Kong: The New Empire, Furiosa: A Mad Max Saga, Inside Out 2, A Quiet Place: Day One, Despicable Me 4, Deadpool 3, Beetlejuice 2, Smile 2, Gladiator 2, Wicked, Mufasa: The Lion King and Sonic the Hedgehog 3, among others.
[I've boldfaced the ones I know to be from Disney. More of the story at the link below.]
https://deadline.com/2023/12/global-box-office-projection-2024-1235677385/
wabbott
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Ok. I'm about 75 pages into Unscripted: The Epic Battle for a Media Empire and the Redstone Family Legacy by James B. Stewart and Rachel Abrams.
So far, it looks like Shari Redstone may be just plain tired of the drama - her degenerate father Sumner, Hollywood, business, outsize egos, endless litigation - and just wants some peace and quiet in her remaining years.
Apparently, Shari is a relatively decent person and enjoys her extended family. I'm sure the financial future of PARA plays some part in her thinking.
I look forward to finishing the book in the next few days.
wabbott
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https://finance.yahoo.com/news/para...rgo-on-higher-deal-probability-144721932.html
Paramount stock upgraded by Wells Fargo on 'higher deal probability'
Alexandra Canal
·Senior Reporter
Wed, December 20, 2023 at 8:47 AM CST
Paramount Global (PARA) stock ticked higher in early trading on Wednesday, up about 2%, after Wells Fargo analyst Steve Cahall upgraded shares to Equal Weight from Underweight.
The analyst, who also upped his price target to $18 a share from the prior $12, cited "higher deal probability" after multiple outlets reported Shari Redstone could sell her family's controlling stake in the company.
Redstone currently serves as the non-executive chairwoman of Paramount Global and president of her family's holding company, National Amusements (NAI), which controls the company through its Class A shares.
Private investment firm RedBird Capital, along with Skydance Media CEO David Ellison, have been named as two potential buyers for the stake.
Acquiring National Amusements shares could allow RedBird and Skydance to take control of the company while avoiding a full purchase of it. The group could then offload undesirable assets from there or find a strategic partner.
"M&A headlines change our thesis around PARA given underlying asset potential," Cahall wrote in his note to clients. "We continue to believe that NAI might like to sell a controlling stake to a content operator that would protect the significance of Paramount Studios. i.e. willing buyer(s), willing seller."
Cahall added a future owner could potentially shut down Paramount+, which would allow the company to license its content — which includes NFL streaming rights, films, and original series like "Yellowstone" — to other streaming players.
Overall, the analyst estimated about $10 billion in post-tax proceeds for all divested assets.
Shari Redstone, president of National Amusements and non-executive chairwoman of Paramount Global, at the annual Allen & Company Sun Valley Conference July 10, 2018, in Sun Valley, Idaho. (Drew Angerer/Getty Images) (Drew Angerer via Getty Images)
Paramount has long been viewed as a potential acquisition target due to its small size relative to competitors. The company boasts a current market cap of just around $11 billion, compared to Disney's (DIS) $172 billion and Netflix's (NFLX) $217 billion.
The company recently committed to divesting non-core assets as it works to pare down debt and improve its balance sheet. Last quarter, it announced the sale of Simon & Schuster to investment firm KKR after the publishing giant's sale to Penguin Random House collapsed late last year. The $1.62 billion all-cash deal was completed in October.
Showtime and BET Media Group are two assets that have also recently been the subject of sale rumors.
"In early 2024 we expect additionally press reports as the situation unfolds," Cahall said. "Knock-on implications implied by the press include what happens with WBD/CMCSA (management has not commented). Media faces secular challenges, but those causes tend to have the effect of consolidation."
In addition to Paramount, Warner Bros. Discovery (WBD) and NBCUniversal (CMCSA) are two other names analysts think could be impacted by consolidation over the next year or so. Wall Street watchers have said it's possible two of those three players could merge.
Alexandra Canal is a Senior Reporter at Yahoo Finance. Follow her on Twitter @allie_canal, LinkedIn, and email her at alexandra.canal@yahoofinance.com.
Paramount stock upgraded by Wells Fargo on 'higher deal probability'
Alexandra Canal
·Senior Reporter
Wed, December 20, 2023 at 8:47 AM CST
Paramount Global (PARA) stock ticked higher in early trading on Wednesday, up about 2%, after Wells Fargo analyst Steve Cahall upgraded shares to Equal Weight from Underweight.
The analyst, who also upped his price target to $18 a share from the prior $12, cited "higher deal probability" after multiple outlets reported Shari Redstone could sell her family's controlling stake in the company.
Redstone currently serves as the non-executive chairwoman of Paramount Global and president of her family's holding company, National Amusements (NAI), which controls the company through its Class A shares.
Private investment firm RedBird Capital, along with Skydance Media CEO David Ellison, have been named as two potential buyers for the stake.
Acquiring National Amusements shares could allow RedBird and Skydance to take control of the company while avoiding a full purchase of it. The group could then offload undesirable assets from there or find a strategic partner.
"M&A headlines change our thesis around PARA given underlying asset potential," Cahall wrote in his note to clients. "We continue to believe that NAI might like to sell a controlling stake to a content operator that would protect the significance of Paramount Studios. i.e. willing buyer(s), willing seller."
Cahall added a future owner could potentially shut down Paramount+, which would allow the company to license its content — which includes NFL streaming rights, films, and original series like "Yellowstone" — to other streaming players.
Overall, the analyst estimated about $10 billion in post-tax proceeds for all divested assets.
Shari Redstone, president of National Amusements and non-executive chairwoman of Paramount Global, at the annual Allen & Company Sun Valley Conference July 10, 2018, in Sun Valley, Idaho. (Drew Angerer/Getty Images) (Drew Angerer via Getty Images)
Paramount has long been viewed as a potential acquisition target due to its small size relative to competitors. The company boasts a current market cap of just around $11 billion, compared to Disney's (DIS) $172 billion and Netflix's (NFLX) $217 billion.
The company recently committed to divesting non-core assets as it works to pare down debt and improve its balance sheet. Last quarter, it announced the sale of Simon & Schuster to investment firm KKR after the publishing giant's sale to Penguin Random House collapsed late last year. The $1.62 billion all-cash deal was completed in October.
Showtime and BET Media Group are two assets that have also recently been the subject of sale rumors.
"In early 2024 we expect additionally press reports as the situation unfolds," Cahall said. "Knock-on implications implied by the press include what happens with WBD/CMCSA (management has not commented). Media faces secular challenges, but those causes tend to have the effect of consolidation."
In addition to Paramount, Warner Bros. Discovery (WBD) and NBCUniversal (CMCSA) are two other names analysts think could be impacted by consolidation over the next year or so. Wall Street watchers have said it's possible two of those three players could merge.
Alexandra Canal is a Senior Reporter at Yahoo Finance. Follow her on Twitter @allie_canal, LinkedIn, and email her at alexandra.canal@yahoofinance.com.
wabbott
DIS Veteran
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- 6,449
https://variety.com/vip/exclusive-n...als-what-netflix-data-dump-doesnt-1235844376/
December 19, 2023 - 6:00am PST
Exclusive: Streaming Study Reveals What Netflix Data Dump Doesn’t
by Tyler Aquilina
Netflix’s new engagement report for the first half of 2023 has Hollywood and media observers abuzz at the trove of viewership data now available. The report features “hours viewed” metrics for a vast array of titles watched on the service, from blockbuster originals such as “Wednesday” to years-old licensed movies including “Shark Tale” (streamed for 38.7 million hours, incidentally).
Within that trove is data indicating just how well many of Netflix’s canceled series performed on the service. The second season of “Shadow and Bone,” for instance, which Netflix nixed in November, ranked 32nd among TV seasons and movies, with nearly 193 million hours viewed — far below top performers “The Night Agent” Season 1 (812M hours), “Ginny & Georgia” S2 (665M) and “You” S4 (440M).
Of course, Netflix’s own executives would be the first to tell you raw viewing time numbers alone do not paint a full picture of a series’ success.
“It’s all about whether a movie or TV show thrilled its audience and the size of that audience relative to the economics of the title. So we have amazingly successful titles that delight members with both higher and lower hours viewed,” VP of strategy and analysis Lauren Smith said during a press call announcing the report. “Success can come in all shapes and sizes.”
Translation: There are other data-based factors, not shared in this report, that contribute to Netflix’s evaluation of a show’s success. But data from analytics company PlumResearch, shared exclusively with Variety Intelligence Platform, helps to shine a brighter light on these metrics.
First among them is unique viewers, which is to say the number of people watching a title within a given timeframe. (This data is U.S. only, in contrast to Netflix’s global figures, but still helps to illuminate shows’ performance in the streamer’s biggest market.)
Among multiple high-profile series released within the last year-plus, “Wednesday” was the clear winner. The series received nearly 84 million unique U.S. viewers in its first 28 days of release, the time window by which Netflix has historically measured success.
In the glory days of network TV, of course, viewer totals were essentially the only metric used to measure a show’s success and would often determine whether a series lived or died. It would appear to still play a role in the streaming era; see the poor performance of “Shadow and Bone” S2 relative to even other canceled shows, such as “1899” and “Cowboy Bebop.”
Netflix has also recently begun to provide a rough semblance of this statistic by dividing titles’ total hours viewed by their runtimes, an estimation that is now enshrined in the Writers Guild and SAG-AFTRA contracts as the defining metric for streaming series’ success.
Yet it’s clear from PlumResearch’s data that Netflix’s analysis of success goes deeper than that. (All titles shown here “outperformed 90% of series released in their respective years in terms of unique viewers attracted,” according to Plum’s own analysis.)
One key example is the family sitcom “The Upshaws.” In its first 28 days of availability, the show’s third season received just 3.3 million unique U.S. viewers. But those viewers were highly engaged, with more than 75% completing the full season — a very large figure among even hit Netflix series. Blockbuster “Wednesday,” for instance, saw a 65% completion rate in its own first 28 days.
The completion rate metric is clearly a major part of what Netflix execs refer to when they speak of titles “thrilling” their audiences. As such, it also appears to play a large role in renewal decisions at the streamer. This is evinced by the fate of “The Upshaws”: Despite its low viewership numbers, the sitcom was renewed for a fourth season earlier this month.
Meanwhile, “1899” achieved relatively strong viewership; 19.6 million unique U.S. viewers in 28 days is nothing to sneeze at, and the series even spent more than two weeks among Netflix’s global top 10 TV seasons.
But its engagement metrics remained stubbornly low: By 90 days of release, its completion rate remained below 35%, and less than 65% of viewers watched more than one episode in a sitting, indicating low “bingeability.” The series was ultimately canceled, despite outcry from passionate fans.
New releases need to hook Netflix viewers fast given the quick pace of releases on the platform and its extensive catalog. If users don’t find a title engaging, they can swiftly move on to the next new thing or an old favorite. “Cowboy Bebop” was notably canceled less than a month after its premiere, highlighting the cutthroat nature of competition for eyeballs on Netflix.
By contrast, reality competition series “Squid Game: The Challenge” was recently renewed a mere two weeks following its premiere on the service. While there were likely other factors at play here — “The Challenge” is a valuable brand extension of one of the streamer’s most-watched series, after all — its strong engagement, achieved quickly, cannot be discounted as a key component of that decision.
In addition to topping Netflix’s global top 10 list for its first two weeks of release, “The Challenge” racked up a completion rate of over 50% in its first seven days (“Wednesday” did the same, notably) with 14.7 million unique U.S. viewers — more than “Cowboy Bebop” received in 90 days, per Plum’s data.
In short, a hit is often clearly a hit, but there is a complex stew of data-driven considerations that contribute to a series’ ultimate fate on Netflix. As the streamer rolls out extensive, but still limited, data to great fanfare, it’s worth emphasizing that this is only a partial pullback of the curtain.
December 19, 2023 - 6:00am PST
Exclusive: Streaming Study Reveals What Netflix Data Dump Doesn’t
by Tyler Aquilina
Netflix’s new engagement report for the first half of 2023 has Hollywood and media observers abuzz at the trove of viewership data now available. The report features “hours viewed” metrics for a vast array of titles watched on the service, from blockbuster originals such as “Wednesday” to years-old licensed movies including “Shark Tale” (streamed for 38.7 million hours, incidentally).
Within that trove is data indicating just how well many of Netflix’s canceled series performed on the service. The second season of “Shadow and Bone,” for instance, which Netflix nixed in November, ranked 32nd among TV seasons and movies, with nearly 193 million hours viewed — far below top performers “The Night Agent” Season 1 (812M hours), “Ginny & Georgia” S2 (665M) and “You” S4 (440M).
Of course, Netflix’s own executives would be the first to tell you raw viewing time numbers alone do not paint a full picture of a series’ success.
“It’s all about whether a movie or TV show thrilled its audience and the size of that audience relative to the economics of the title. So we have amazingly successful titles that delight members with both higher and lower hours viewed,” VP of strategy and analysis Lauren Smith said during a press call announcing the report. “Success can come in all shapes and sizes.”
Translation: There are other data-based factors, not shared in this report, that contribute to Netflix’s evaluation of a show’s success. But data from analytics company PlumResearch, shared exclusively with Variety Intelligence Platform, helps to shine a brighter light on these metrics.
First among them is unique viewers, which is to say the number of people watching a title within a given timeframe. (This data is U.S. only, in contrast to Netflix’s global figures, but still helps to illuminate shows’ performance in the streamer’s biggest market.)
Among multiple high-profile series released within the last year-plus, “Wednesday” was the clear winner. The series received nearly 84 million unique U.S. viewers in its first 28 days of release, the time window by which Netflix has historically measured success.
In the glory days of network TV, of course, viewer totals were essentially the only metric used to measure a show’s success and would often determine whether a series lived or died. It would appear to still play a role in the streaming era; see the poor performance of “Shadow and Bone” S2 relative to even other canceled shows, such as “1899” and “Cowboy Bebop.”
Netflix has also recently begun to provide a rough semblance of this statistic by dividing titles’ total hours viewed by their runtimes, an estimation that is now enshrined in the Writers Guild and SAG-AFTRA contracts as the defining metric for streaming series’ success.
Yet it’s clear from PlumResearch’s data that Netflix’s analysis of success goes deeper than that. (All titles shown here “outperformed 90% of series released in their respective years in terms of unique viewers attracted,” according to Plum’s own analysis.)
One key example is the family sitcom “The Upshaws.” In its first 28 days of availability, the show’s third season received just 3.3 million unique U.S. viewers. But those viewers were highly engaged, with more than 75% completing the full season — a very large figure among even hit Netflix series. Blockbuster “Wednesday,” for instance, saw a 65% completion rate in its own first 28 days.
The completion rate metric is clearly a major part of what Netflix execs refer to when they speak of titles “thrilling” their audiences. As such, it also appears to play a large role in renewal decisions at the streamer. This is evinced by the fate of “The Upshaws”: Despite its low viewership numbers, the sitcom was renewed for a fourth season earlier this month.
Meanwhile, “1899” achieved relatively strong viewership; 19.6 million unique U.S. viewers in 28 days is nothing to sneeze at, and the series even spent more than two weeks among Netflix’s global top 10 TV seasons.
But its engagement metrics remained stubbornly low: By 90 days of release, its completion rate remained below 35%, and less than 65% of viewers watched more than one episode in a sitting, indicating low “bingeability.” The series was ultimately canceled, despite outcry from passionate fans.
New releases need to hook Netflix viewers fast given the quick pace of releases on the platform and its extensive catalog. If users don’t find a title engaging, they can swiftly move on to the next new thing or an old favorite. “Cowboy Bebop” was notably canceled less than a month after its premiere, highlighting the cutthroat nature of competition for eyeballs on Netflix.
By contrast, reality competition series “Squid Game: The Challenge” was recently renewed a mere two weeks following its premiere on the service. While there were likely other factors at play here — “The Challenge” is a valuable brand extension of one of the streamer’s most-watched series, after all — its strong engagement, achieved quickly, cannot be discounted as a key component of that decision.
In addition to topping Netflix’s global top 10 list for its first two weeks of release, “The Challenge” racked up a completion rate of over 50% in its first seven days (“Wednesday” did the same, notably) with 14.7 million unique U.S. viewers — more than “Cowboy Bebop” received in 90 days, per Plum’s data.
In short, a hit is often clearly a hit, but there is a complex stew of data-driven considerations that contribute to a series’ ultimate fate on Netflix. As the streamer rolls out extensive, but still limited, data to great fanfare, it’s worth emphasizing that this is only a partial pullback of the curtain.
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Streaming Industry Could Turn Consistent Profit Within 18 Months, Research Firm Predicts
Lucas Manfredi
Wed, December 20, 2023 at 11:06 AM CST
Streaming continued to be a mostly unprofitable business model in 2023. But London-based research firm Ampere Analysis predicts that the industry could finally turn a corner within the next 18 months.
While some studios’ streaming operations have already started reporting small profits, Ampere’s study looks at the timelines for consistent profitability, taking into account income from subscription and advertising against content costs, staff and marketing costs, depreciation and amortization to predict the point that businesses reach consistently positive earnings before income and taxes (EBIT). The study excludes sports streaming operations.
Disney is likely to reach profitability as early as the first quarter of 2024, according to the firm — two quarters earlier than the entertainment giant itself has predicted. Following closely behind will be Warner Bros Discovery by the third quarter of 2024. Both Paramount and NBCUniversal are expected to achieve the goal by the first quarter of 2025.
Source: Ampere Analysis
By 2028, Ampere expects that the studios will earn between $1 billion and $2 billion EBIT per year from streaming based on their current market footprint alone. Additional geographic expansion would lead to even more upside.
Ampere says the shift will be primarily driven by studios’ cost-cutting efforts, particularly related to content and staff, and the move to embrace advertising. The latter has the opportunity to provide significantly more growth and profit than currently predicted by the models, Ampere notes, which are based on known existing operations.
“A confluence of factors as varied as the end of Covid-19 lockdowns, geopolitics and the cost-of-living crisis created the environment that forced the studios to reassess the return on investment of the streaming direct model. The cost rationalization of the last 12 months has now positioned the industry for genuine streaming profitability in relatively short order,” Ampere Analysis executive director Guy Bisson said in a statement.
“Passing that milestone will impact multiple windows within the entertainment value chain,” Bisson added. “It will enable a return to flexibility and experimentation and a realization that existing models are already in place to fully exploit studio output when streaming direct takes its rightful place as one window in the broader value chain.”
Profitability of the streaming direct model could also lead to an acceleration of free streaming, including free ad-supported streaming television (FAST) channels.
Disney, which narrowed losses in its streaming division by 70% year over year to $420 million in its fourth quarter of 2023, has said its streaming business is on track to reach profitability by September 2024.
Meanwhile, Warner Bros. Discovery turned a $111 million profit in its direct to consumer division during its third quarter of 2023 — a $745 million year-over-year improvement and its second profitable quarter in a row.
NBCUniversal’s Peacock, which narrowed its losses to $565 million in the third quarter of 2023, compared to 614 million a year ago, said it expects peak losses of $2.8 billion in 2023 down from previous guidance of peak losses of $3 billion, and “meaningful EBITDA improvement” in 2024.
Paramount Global, which saw its direct to consumer division’s losses narrow 31% year over year to $238 million in the third quarter of 2023, expects full-year streaming losses for 2023 to be lower than in 2022, with fourth quarter 2023 losses similar to the fourth quarter of 2022. The segment remains on track to drive “significant earnings improvement” in 2024.
The post Streaming Industry Could Turn Consistent Profit Within 18 Months, Research Firm Predicts appeared first on TheWrap.
Streaming Industry Could Turn Consistent Profit Within 18 Months, Research Firm Predicts
Lucas Manfredi
Wed, December 20, 2023 at 11:06 AM CST
Streaming continued to be a mostly unprofitable business model in 2023. But London-based research firm Ampere Analysis predicts that the industry could finally turn a corner within the next 18 months.
While some studios’ streaming operations have already started reporting small profits, Ampere’s study looks at the timelines for consistent profitability, taking into account income from subscription and advertising against content costs, staff and marketing costs, depreciation and amortization to predict the point that businesses reach consistently positive earnings before income and taxes (EBIT). The study excludes sports streaming operations.
Disney is likely to reach profitability as early as the first quarter of 2024, according to the firm — two quarters earlier than the entertainment giant itself has predicted. Following closely behind will be Warner Bros Discovery by the third quarter of 2024. Both Paramount and NBCUniversal are expected to achieve the goal by the first quarter of 2025.
Source: Ampere Analysis
By 2028, Ampere expects that the studios will earn between $1 billion and $2 billion EBIT per year from streaming based on their current market footprint alone. Additional geographic expansion would lead to even more upside.
Ampere says the shift will be primarily driven by studios’ cost-cutting efforts, particularly related to content and staff, and the move to embrace advertising. The latter has the opportunity to provide significantly more growth and profit than currently predicted by the models, Ampere notes, which are based on known existing operations.
“A confluence of factors as varied as the end of Covid-19 lockdowns, geopolitics and the cost-of-living crisis created the environment that forced the studios to reassess the return on investment of the streaming direct model. The cost rationalization of the last 12 months has now positioned the industry for genuine streaming profitability in relatively short order,” Ampere Analysis executive director Guy Bisson said in a statement.
“Passing that milestone will impact multiple windows within the entertainment value chain,” Bisson added. “It will enable a return to flexibility and experimentation and a realization that existing models are already in place to fully exploit studio output when streaming direct takes its rightful place as one window in the broader value chain.”
Profitability of the streaming direct model could also lead to an acceleration of free streaming, including free ad-supported streaming television (FAST) channels.
Disney, which narrowed losses in its streaming division by 70% year over year to $420 million in its fourth quarter of 2023, has said its streaming business is on track to reach profitability by September 2024.
Meanwhile, Warner Bros. Discovery turned a $111 million profit in its direct to consumer division during its third quarter of 2023 — a $745 million year-over-year improvement and its second profitable quarter in a row.
NBCUniversal’s Peacock, which narrowed its losses to $565 million in the third quarter of 2023, compared to 614 million a year ago, said it expects peak losses of $2.8 billion in 2023 down from previous guidance of peak losses of $3 billion, and “meaningful EBITDA improvement” in 2024.
Paramount Global, which saw its direct to consumer division’s losses narrow 31% year over year to $238 million in the third quarter of 2023, expects full-year streaming losses for 2023 to be lower than in 2022, with fourth quarter 2023 losses similar to the fourth quarter of 2022. The segment remains on track to drive “significant earnings improvement” in 2024.
The post Streaming Industry Could Turn Consistent Profit Within 18 Months, Research Firm Predicts appeared first on TheWrap.
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Big M&A and Bob Iger’s future: 13 media executives make their anonymous 2024 predictions
One executive targeted NBCUniversal as the most likely acquirer of Warner Bros. Discovery. This executive predicted Comcast CEO Brian Roberts would spin off NBCUniversal so that the new company would trade separately. But, Comcast (and Roberts) would keep a controlling stake of the ownership of the new entity.
A second executive suggested a more expansive scenario. Comcast will keep its theme parks business but sell the rest of the company in exchange for WBD common shares. Comcast will get a premium for the remainder of NBCUniversal in exchange for Roberts giving up his voting shares. Warner Bros. Discovery CEO David Zaslav runs the combined company, with NBCUniversal film chief Donna Langley staying on to run an expanded studio.
This executive predicted “fool me five times, shame on me.” Disney has many strategic problems that don’t have easy answers, such as figuring out how ESPN’s business fits in a direct-to-consumer world and how to wind down its legacy TV cable networks. Those problems demand a leader with a steady hand who understands the industry. Is there a better leader of Disney than Bob Iger? The Disney board has decided, over and over again, that there is not. Why would this time be any different?
One thing that may prevent Iger from extending his contract is if Nelson Peltz and Jay Rasulo get board seats. Last week, activist investor Peltz and former Disney Chief Financial Officer Rasulo criticizedDisney’s failed succession planning as part of a statement announcing their intentions to run for Disney’s board of directors when nominees are selected next year.
“In our view, Disney’s board has failed to fulfill its essential responsibilities – overseeing the development of an effective strategy, planning for orderly succession, aligning executive pay with performance, and ensuring accountability for operational execution,” Peltz said in the statement.
This executive predicted Peltz and Rasulo will win their campaign and both join the board. A second person guessed only Rasulo will get a spot — perhaps via a settlement before a vote.
If Iger does leave, he and the Disney board will need to name a successor. I reported in September that Iger plans to name a successor in early 2025 and give that person about 20 months to prepare for the role. If so, an announcement could come in late 2024. This executive predicted it will be Co-chairman of Disney Entertainment Dana Walden who gets the nod. Iger will again move to a chairman role when Walden takes over as CEO, just as he did with Bob Chapek in 2020.
A second person threw out a different name to key an eye on: Andrew Wilson, the CEO of Electronic Arts. This may seem out of left field, but here’s some inside baseball for you — the same executive to mention Wilson correctly predicted Iger would return as Disney CEO in 2022. Then last year, the person said Chris Licht wouldn’t last the year as CNN’s CEO and McCarthy would depart as Disney’s CFO. Three for three! So, maybe pay attention.
In February 2020, as Disney’s head of streaming, Kevin Mayer, was in the line of succession for CEO. But Mayer, seen here on Sept. 29, 2022, and colleagues were stunned when Iger announced Bob Chapek would replace Iger immediately.
Candle Media is co-run by two former Disney executives, Kevin Mayer and Tom Staggs. This person’s guess is Mayer will return to Disney in a senior operating role to position himself as Iger’s top successor candidate while Staggs would leave the company.
One of the most closely watched media stories of 2024 will be what the National Basketball Association decides to do with its media rights. I reported in October that the NBA ideally wants three mediapartners with different packages of games.
Disney and Warner Bros. Discovery are the incumbents. Both want to maintain carriage relationships with the NBA, though both companies have also stressed they will be financial disciplined. The league is also looking for a robust streaming option. This is where Applewould fit in. (For what it’s worth, a second executive said he didn’t think Apple would even make a bid for NBA rights and thought NBCUniversal’s Peacock might end up with them.)
At that time, the college football playoffs will expand from four teams to 12. That may sound enticing as a new live sports behemoth, but this executive guesses that potential bidders Amazon and Apple will balk at the price CFP wants for the games. ESPN is desperate for live rights as it prepares a direct-to-consumer service and will renew the package, this executive predicts.
Sticking with the sports theme, the regional sports network business may or may not be collapsing. Broadcast stations groups have been in talks with the NBA, NHL and MLB for much of the year about picking up local games if certain RSNs fail.
Poaching teams from Diamond Sports Group, which filed for bankruptcy earlier this year and carries the games of more than 40 professional sports teams, has been the primary target thus far for companies such as EW Scripps and Gray Television. Scripps now carries games from the NHL’s Las Vegas Golden Knights and Arizona Coyotes. Gray reached a deal to broadcast the NBA’s Phoenix Suns earlier this year.
The Wall Street Journal reported that Amazon in talks to invest in Diamond Sports Group to keep the company afloat while potentially using Prime Video as a landing home for streaming rights.
This executive said he believes the broadcast station groups will emerge as the primary winner of rights as leagues will push for the expanded reach of broadcast TV while cable subscribers dwindle.
But years into the streaming wars, this hasn’t happened. No one has emerged as the dominant aggregator. No bundle of many services exists. It’s complicated to get media companies on board to agree to what something like that would look like.
This executive said 2024 will be the year companies finally get serious about bundling, predicting Disney would agree to bundle its trio of streaming services (Disney+, Hulu and ESPN+) with Max and Netflix to offer a selection of streaming services — at a discount — that rivals cable TV.
A second executive noted that such a discount will probably need to be championed by an anchor distributor. This executive’s guess is that it will be Amazon. He also predicted Paramount Global’s Paramount+ and Warner Bros. Discovery’s Max will be a part of the first streaming bundle that Amazon offers.
Private equity firm RedBird Capital, founded by Gerry Cardinale, has been stockpiling executive talent, including two former NBCUniversal heads in Jeff Zucker and Jeff Shell, who begins work at the private equity firm in early 2024.
This executive made the bold call that RedBird won’t just acquire Shari Redstone’s National Amusements but all of Paramount Global, backed by a consortium of outside funding, including money from David Ellison and BDT Capital, the merchant bank run by Byron Trott that backed Redstone earlier this year.
Zucker could then run Paramount Global and do the dirty work of deciding what part of the company he wants to run and what to sell. Still, this executive said Zucker would keep most of the assets and attempt to prove the company was undervalued as a publicly traded entity.
This executive predicted CNN won’t be able to up its digital spending without cutting back on a declining linear TV business — and that will mean letting go of at least one of its big-name anchors to save cash.
The move will usher in a new era at CNN, where star anchors are no longer the focus of the company.
Former NBCUniversal advertising chief Linda Yaccarino joined X as its new CEO in 2023, but the fit at the company seems to make less and less sense by the day as advertisers flee.
Yaccarino suffered through an awkward interview with CNBC’s Julia Boorstin earlier this year when Boorstin asked her if she was a CEO “in name only” and was only at the company to do owner Elon Musk’s bidding.
This executive predicted Yaccarino would either lose patience or find her job increasingly pointless and leave the company in 2024.
For the first time in more than 15 years, not counting 2020′s pandemic shutdown, no movie will top $1 billion at the box office, this executive predicted. (This year, “Barbie” and “The Super Mario Bros. Movie” each easily cleared $1 billion, while “Oppenheimer” came in just shy at around $950 million.) Universal’s “Despicable Me 4″ has the best chance, this person said. But predicting only “Despicable Me 4” would top $1 billion isn’t as bold, and you only live once ... anonymously.
Executive 1: Comcast will spin off NBCUniversal and merge it with Warner Bros. Discovery
Warner Bros. Discovery is approaching the two-year anniversary of its 2022 merger, when Discovery combined with WarnerMedia. That deadline is important for Reverse Morris Trust tax reasons.Without getting into the boring details, the important part is Warner Bros. Discovery can do another significant deal two years after the close of Discovery and WarnerMedia.One executive targeted NBCUniversal as the most likely acquirer of Warner Bros. Discovery. This executive predicted Comcast CEO Brian Roberts would spin off NBCUniversal so that the new company would trade separately. But, Comcast (and Roberts) would keep a controlling stake of the ownership of the new entity.
A second executive suggested a more expansive scenario. Comcast will keep its theme parks business but sell the rest of the company in exchange for WBD common shares. Comcast will get a premium for the remainder of NBCUniversal in exchange for Roberts giving up his voting shares. Warner Bros. Discovery CEO David Zaslav runs the combined company, with NBCUniversal film chief Donna Langley staying on to run an expanded studio.
Executive 2: Bob Iger will, again, extend his contract as Disney CEO
Earlier this year, Disney CEO Bob Iger renewed his contract through 2026. Iger has said he actually plans to walk awayfrom Disney forever when his contract is done. Iger has extended his contract as CEO to avoid retirement on five different occasions. Of course, when Iger left at the end of 2021, he said the same thing.This executive predicted “fool me five times, shame on me.” Disney has many strategic problems that don’t have easy answers, such as figuring out how ESPN’s business fits in a direct-to-consumer world and how to wind down its legacy TV cable networks. Those problems demand a leader with a steady hand who understands the industry. Is there a better leader of Disney than Bob Iger? The Disney board has decided, over and over again, that there is not. Why would this time be any different?
Executive 3: Nelson Peltz and Jay Rasulo will win their campaign to join the Disney board
One thing that may prevent Iger from extending his contract is if Nelson Peltz and Jay Rasulo get board seats. Last week, activist investor Peltz and former Disney Chief Financial Officer Rasulo criticizedDisney’s failed succession planning as part of a statement announcing their intentions to run for Disney’s board of directors when nominees are selected next year.
“In our view, Disney’s board has failed to fulfill its essential responsibilities – overseeing the development of an effective strategy, planning for orderly succession, aligning executive pay with performance, and ensuring accountability for operational execution,” Peltz said in the statement.
This executive predicted Peltz and Rasulo will win their campaign and both join the board. A second person guessed only Rasulo will get a spot — perhaps via a settlement before a vote.
Executive 4: Iger will name Dana Walden his successor as Disney CEO
If Iger does leave, he and the Disney board will need to name a successor. I reported in September that Iger plans to name a successor in early 2025 and give that person about 20 months to prepare for the role. If so, an announcement could come in late 2024. This executive predicted it will be Co-chairman of Disney Entertainment Dana Walden who gets the nod. Iger will again move to a chairman role when Walden takes over as CEO, just as he did with Bob Chapek in 2020.
A second person threw out a different name to key an eye on: Andrew Wilson, the CEO of Electronic Arts. This may seem out of left field, but here’s some inside baseball for you — the same executive to mention Wilson correctly predicted Iger would return as Disney CEO in 2022. Then last year, the person said Chris Licht wouldn’t last the year as CNN’s CEO and McCarthy would depart as Disney’s CFO. Three for three! So, maybe pay attention.
Executive 5: Disney will buy Candle Media and Kevin Mayer will position himself as a leading internal candidate to take over for Iger
One last Disney succession prediction! This person predicted Disney would acquire the privately held Candle Media to acquire Moonbug Entertainment, the owner of CoComelon. Disney would then attempt to sell the remainder of Candle Media’s assets at firesale prices, the executive predicted.
In February 2020, as Disney’s head of streaming, Kevin Mayer, was in the line of succession for CEO. But Mayer, seen here on Sept. 29, 2022, and colleagues were stunned when Iger announced Bob Chapek would replace Iger immediately.
Candle Media is co-run by two former Disney executives, Kevin Mayer and Tom Staggs. This person’s guess is Mayer will return to Disney in a senior operating role to position himself as Iger’s top successor candidate while Staggs would leave the company.
Executive 6: NBA rights will go to Disney, Warner Bros. Discovery and Apple
One of the most closely watched media stories of 2024 will be what the National Basketball Association decides to do with its media rights. I reported in October that the NBA ideally wants three mediapartners with different packages of games.
Disney and Warner Bros. Discovery are the incumbents. Both want to maintain carriage relationships with the NBA, though both companies have also stressed they will be financial disciplined. The league is also looking for a robust streaming option. This is where Applewould fit in. (For what it’s worth, a second executive said he didn’t think Apple would even make a bid for NBA rights and thought NBCUniversal’s Peacock might end up with them.)
Executive 7: The College Football Playoff won’t get the rights fee increase it wants as ESPN will be the only significant bidder
Other than the NBA, the CFP may be the next most important rights deal to be renewed next year. The CFP’s current 12-year deal with ESPN expires after the 2025 playoff.At that time, the college football playoffs will expand from four teams to 12. That may sound enticing as a new live sports behemoth, but this executive guesses that potential bidders Amazon and Apple will balk at the price CFP wants for the games. ESPN is desperate for live rights as it prepares a direct-to-consumer service and will renew the package, this executive predicts.
Executive 8: Local broadcast stations take most local NBA, NHL and MLB sports rights away from regional sports networks
Sticking with the sports theme, the regional sports network business may or may not be collapsing. Broadcast stations groups have been in talks with the NBA, NHL and MLB for much of the year about picking up local games if certain RSNs fail.
Poaching teams from Diamond Sports Group, which filed for bankruptcy earlier this year and carries the games of more than 40 professional sports teams, has been the primary target thus far for companies such as EW Scripps and Gray Television. Scripps now carries games from the NHL’s Las Vegas Golden Knights and Arizona Coyotes. Gray reached a deal to broadcast the NBA’s Phoenix Suns earlier this year.
The Wall Street Journal reported that Amazon in talks to invest in Diamond Sports Group to keep the company afloat while potentially using Prime Video as a landing home for streaming rights.
This executive said he believes the broadcast station groups will emerge as the primary winner of rights as leagues will push for the expanded reach of broadcast TV while cable subscribers dwindle.
Executive 9: Warner Bros. Discovery’s Max, Netflix and Disney will offer the first significant streaming bundle
Media pundits on CNBC love to say that subscription streaming will eventually be bundled in something that kind of looks like (and is priced like) traditional cable TV.But years into the streaming wars, this hasn’t happened. No one has emerged as the dominant aggregator. No bundle of many services exists. It’s complicated to get media companies on board to agree to what something like that would look like.
This executive said 2024 will be the year companies finally get serious about bundling, predicting Disney would agree to bundle its trio of streaming services (Disney+, Hulu and ESPN+) with Max and Netflix to offer a selection of streaming services — at a discount — that rivals cable TV.
A second executive noted that such a discount will probably need to be championed by an anchor distributor. This executive’s guess is that it will be Amazon. He also predicted Paramount Global’s Paramount+ and Warner Bros. Discovery’s Max will be a part of the first streaming bundle that Amazon offers.
Executive 10: RedBird Capital will acquire Paramount Global and name Jeff Zucker CEO
Private equity firm RedBird Capital, founded by Gerry Cardinale, has been stockpiling executive talent, including two former NBCUniversal heads in Jeff Zucker and Jeff Shell, who begins work at the private equity firm in early 2024.
This executive made the bold call that RedBird won’t just acquire Shari Redstone’s National Amusements but all of Paramount Global, backed by a consortium of outside funding, including money from David Ellison and BDT Capital, the merchant bank run by Byron Trott that backed Redstone earlier this year.
Zucker could then run Paramount Global and do the dirty work of deciding what part of the company he wants to run and what to sell. Still, this executive said Zucker would keep most of the assets and attempt to prove the company was undervalued as a publicly traded entity.
Executive 11: CNN will let go of one of its top anchors as it redirects money to digital
No matter how great CNN makes its programming, the cable news giant probably can’t defeat the bigger secular forces of declining cable subscribers. That will mean less money coming in the door for new CEO Mark Thompson, who plans on investing more in digital.This executive predicted CNN won’t be able to up its digital spending without cutting back on a declining linear TV business — and that will mean letting go of at least one of its big-name anchors to save cash.
The move will usher in a new era at CNN, where star anchors are no longer the focus of the company.
Executive 12: Linda Yaccarino won’t last the year as CEO of X
Former NBCUniversal advertising chief Linda Yaccarino joined X as its new CEO in 2023, but the fit at the company seems to make less and less sense by the day as advertisers flee.
Yaccarino suffered through an awkward interview with CNBC’s Julia Boorstin earlier this year when Boorstin asked her if she was a CEO “in name only” and was only at the company to do owner Elon Musk’s bidding.
This executive predicted Yaccarino would either lose patience or find her job increasingly pointless and leave the company in 2024.
Executive 13: No movie will top $1 billion at the box office all year
For the first time in more than 15 years, not counting 2020′s pandemic shutdown, no movie will top $1 billion at the box office, this executive predicted. (This year, “Barbie” and “The Super Mario Bros. Movie” each easily cleared $1 billion, while “Oppenheimer” came in just shy at around $950 million.) Universal’s “Despicable Me 4″ has the best chance, this person said. But predicting only “Despicable Me 4” would top $1 billion isn’t as bold, and you only live once ... anonymously.
wabbott
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Warner Bros. Discovery in talks to merge with Paramount
by Sara Fischer
12/20/23
Warner Bros. Discovery CEO David Zaslav met with Paramount Global CEO Bob Bakish on Tuesday in New York City to discuss a possible merger, Axios has learned from multiple sources.
Why it matters: The combination would create a news and entertainment behemoth that would likely trigger further industry consolidation.
The bottom line: Talks between WBD and Paramount are still early, and may not ultimately result in a deal. But, given the acceleration of cord cutting the growing encroachment of Big Tech on media, neither company can remain on the sidelines for long.
Disclosure: The author of this story is a paid contributor to CNN.
Warner Bros. Discovery in talks to merge with Paramount
by Sara Fischer
12/20/23
Warner Bros. Discovery CEO David Zaslav met with Paramount Global CEO Bob Bakish on Tuesday in New York City to discuss a possible merger, Axios has learned from multiple sources.
Why it matters: The combination would create a news and entertainment behemoth that would likely trigger further industry consolidation.
- Zaslav also has spoken to Shari Redstone, who owns Paramount's parent company, about a deal.
- WBD's market value was around $29 billion as of Wednesday, while Paramount's was just over $10 billion, so any merger would not be of equals.
- The duo discussed ways their companies could complement one another. For example, each company's main streaming service — Paramount+ and Max — could merge to better rival Netflix and Disney+.
- It's unclear whether WBD would buy Paramount Global or its parent company, National Amusements Inc. (NAI), but a source familiar with the situation says that both options are on the table.
- WBD is said to have hired bankers to explore the deal.
- WBD could use its international distribution footprint to boost Paramount's franchises, while Paramount's children's programing assets could be essential to WBD's long-term streaming ambitions.
- CBS News could be combined with CNN to create a global news powerhouse. CBS' crime dramas, such as "NCIS" and "Criminal Minds," could be combined with Investigation Discovery and TruTV.
- CBS Sports' footprint could be combined with WBD's. For example, CBS and WBD's Turner Sports currently share TV rights for March Madness.
- The firm's stock jumped 12% earlier this month following a report from Puck that Skydance Media and RedBird Capital Partners were eyeing a potential deal to buy a majority stake in NAI.
- NAI reached a deal with creditors to restructure some of its debt earlier this year, and previously slimmed down by selling Simon & Schuster. It's also is talks to unload BET.
- When merging with Scripps in 2018 and then WarnerMedia in 2022, Zaslav kept his core strategic team in place while retaining new creative talent leaders from the companies he acquired.
- Executives are confident that the deal would receive regulatory approval, despite D.C.'s active antitrust climate. Notably, Warner Bros. Discovery doesn't own a broadcast network, which would clear an easier path than would a combination with a company like NBC owner Comcast.
- A tax provision used to merge WarnerMedia and Discovery expires next year, which would legally allow WBD to explore another deal.
- Zaslav told investors last month that the company's cost-cutting measures and debt reduction now put it in a position "to allocate more capital toward growth opportunities."
The bottom line: Talks between WBD and Paramount are still early, and may not ultimately result in a deal. But, given the acceleration of cord cutting the growing encroachment of Big Tech on media, neither company can remain on the sidelines for long.
Disclosure: The author of this story is a paid contributor to CNN.
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https://nypost.com/2023/12/20/media/paramount-in-talks-to-sell-bet-network-to-investor-group-report/
Paramount in talks to sell BET Network to investor group: report
By Reuters
Published Dec. 20, 2023, 1:39 p.m. EST
Paramount Global is in talks to sell its Black Entertainment Television network to a management-led investor group, Bloomberg News reported Wednesday, citing people familiar with the matter.
The potential buyers include BET chief executive officer Scott Mills and Chinh Chu, a former Blackstone executive who runs New York-based CC Capital Partners, the report said.
A price of a little under $2 billion has been discussed, according to the report.
Paramount and CC Capital declined to comment on the report.
Paramount had earlier this year mulled the sale of a majority stake in BET Media Group, which includes the BET cable network, BET Studios and VH1, drawing interest from the likes of Byron Allen, whose Allen Media Group’s assets include the Weather Channel, and Tyler Perry.
The company later dropped the sale process after failing to get satisfactory bids, according to the Bloomberg report.
Paramount had earlier this year mulled the sale of a majority stake in BET Media Group, which includes the BET cable network, BET Studios and VH1. SOPA Images/LightRocket via Getty Images
Chu, who also worked at Salomon Brothers, has helped create five blank-check companies during his time at CC Capital.
One of them merged with Getty Images last year to help take the stock photo company public in the US.
Paramount is controlled by the Shari Redstone-led media company that owns 77% of Paramount’s Class A voting shares.
The entertainment conglomerate formed BET Studios in 2021 through a partnership with “Black-ish” creator Kenya Barris, actress Rashida Jones and “S.W.A.T” co-creator Aaron Rahsaan Thomas.
Paramount in talks to sell BET Network to investor group: report
By Reuters
Published Dec. 20, 2023, 1:39 p.m. EST
Paramount Global is in talks to sell its Black Entertainment Television network to a management-led investor group, Bloomberg News reported Wednesday, citing people familiar with the matter.
The potential buyers include BET chief executive officer Scott Mills and Chinh Chu, a former Blackstone executive who runs New York-based CC Capital Partners, the report said.
A price of a little under $2 billion has been discussed, according to the report.
Paramount and CC Capital declined to comment on the report.
Paramount had earlier this year mulled the sale of a majority stake in BET Media Group, which includes the BET cable network, BET Studios and VH1, drawing interest from the likes of Byron Allen, whose Allen Media Group’s assets include the Weather Channel, and Tyler Perry.
The company later dropped the sale process after failing to get satisfactory bids, according to the Bloomberg report.
Paramount had earlier this year mulled the sale of a majority stake in BET Media Group, which includes the BET cable network, BET Studios and VH1. SOPA Images/LightRocket via Getty Images
Chu, who also worked at Salomon Brothers, has helped create five blank-check companies during his time at CC Capital.
One of them merged with Getty Images last year to help take the stock photo company public in the US.
Paramount is controlled by the Shari Redstone-led media company that owns 77% of Paramount’s Class A voting shares.
The entertainment conglomerate formed BET Studios in 2021 through a partnership with “Black-ish” creator Kenya Barris, actress Rashida Jones and “S.W.A.T” co-creator Aaron Rahsaan Thomas.
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https://variety.com/2023/tv/news/byron-allen-bet-acquisition-offer-paramount-1235847887/
Dec 20, 2023 1:44pm PST
Byron Allen Offers to Buy BET From Paramount Global for $3.5 Billion
by Todd Spangler
Media mogul Byron Allen has renewed his attempt to acquire BET Media Group from Paramount Global — extending a $3.5 billion offer.
On Tuesday, Allen, who is founder and CEO of Allen Media Group, emailed Paramount Global senior executives and board, offering $3.5 billion for BET Media Group, which includes the BET cable channel, VH1, BET Studios and streaming service BET+, sources familiar with the situation confirmed to Variety. That’s up from $2.7 billion that Allen had offered earlier in 2023.
Reps for Paramount Global and Allen Media Group declined to comment. Bloomberg first reported on Allen’s renewed offer for BET. Other potential buyers of BET Media Group include BET CEO Scott Mills, a 26-year veteran of the company, and Chinh Chu, a former executive at private-equity firm Blackstone executive who runs CC Capital Partners, who have discussed a price tag of under $2 billion, Bloomberg reported.
In the email to Paramount brass, Allen wrote, “You are pursuing an inside sale at a below-market price with management that will not yield the highest price for the stockholders. We believe it would be an egregious breach of fiduciary duty by the Paramount Global management team and board of directors if BET is sold for anything less than the highest price, particularly, in order to provide a sweetheart deal to an insider at the expense of public shareholders.”
Earlier this year, Paramount Global had been exploring the sale of a majority stake in BET Media Group, with bidders said to include Allen, Tyler Perry and Sean “Diddy” Combs. In August, Paramount called off the bidding process for BET because “a sale wouldn’t result in any meaningful deleveraging of its balance sheet,” the Wall Street Journal reported.
The renewed interest in a deal for BET comes amid talks between Warner Bros. Discovery and Paramount Global about a potential merger. Meanwhile, Shari Redstone, whose National Amusements owns a controlling stake in Paramount Global, has been in talks to sell her shares in NAI, according to multiple reports.
A deal for BET Media Group would dramatically expand Allen’s media empire. Allen Media Group, which encompasses Entertainment Studios (founded 30 years ago as CF Entertainment), owns 10 cable networks, including the Weather Channel, JusticeCentral.TV, Cars.TV and Pets.TV, a theatrical movie distribution company and a stable of 28 broadcast stations affiliated with the Big Four broadcast networks (ABC, CBS, Fox and NBC). Allen Media Group also produces, distributes, and sells advertising for 71 television shows, making it one of the largest independent producers/distributors of first-run syndicated TV programming for broadcast stations. The company has nearly 2,300 employees.
In September, Allen publicly announced a $10 billion offer for ABC, eight local TV stations as well as FX and National Geographic Channel, which are also Disney-owned properties. Disney CEO Bob Iger has since said the company’s linear networks are “not for sale.”
Founded by Robert L. Johnson in 1980, BET has been a major outlet for programming aimed at Black audiences since its inception. Johnson sold the cable channel to Viacom in 2001 for $3 billion.
Dec 20, 2023 1:44pm PST
Byron Allen Offers to Buy BET From Paramount Global for $3.5 Billion
by Todd Spangler
Media mogul Byron Allen has renewed his attempt to acquire BET Media Group from Paramount Global — extending a $3.5 billion offer.
On Tuesday, Allen, who is founder and CEO of Allen Media Group, emailed Paramount Global senior executives and board, offering $3.5 billion for BET Media Group, which includes the BET cable channel, VH1, BET Studios and streaming service BET+, sources familiar with the situation confirmed to Variety. That’s up from $2.7 billion that Allen had offered earlier in 2023.
Reps for Paramount Global and Allen Media Group declined to comment. Bloomberg first reported on Allen’s renewed offer for BET. Other potential buyers of BET Media Group include BET CEO Scott Mills, a 26-year veteran of the company, and Chinh Chu, a former executive at private-equity firm Blackstone executive who runs CC Capital Partners, who have discussed a price tag of under $2 billion, Bloomberg reported.
In the email to Paramount brass, Allen wrote, “You are pursuing an inside sale at a below-market price with management that will not yield the highest price for the stockholders. We believe it would be an egregious breach of fiduciary duty by the Paramount Global management team and board of directors if BET is sold for anything less than the highest price, particularly, in order to provide a sweetheart deal to an insider at the expense of public shareholders.”
Earlier this year, Paramount Global had been exploring the sale of a majority stake in BET Media Group, with bidders said to include Allen, Tyler Perry and Sean “Diddy” Combs. In August, Paramount called off the bidding process for BET because “a sale wouldn’t result in any meaningful deleveraging of its balance sheet,” the Wall Street Journal reported.
The renewed interest in a deal for BET comes amid talks between Warner Bros. Discovery and Paramount Global about a potential merger. Meanwhile, Shari Redstone, whose National Amusements owns a controlling stake in Paramount Global, has been in talks to sell her shares in NAI, according to multiple reports.
A deal for BET Media Group would dramatically expand Allen’s media empire. Allen Media Group, which encompasses Entertainment Studios (founded 30 years ago as CF Entertainment), owns 10 cable networks, including the Weather Channel, JusticeCentral.TV, Cars.TV and Pets.TV, a theatrical movie distribution company and a stable of 28 broadcast stations affiliated with the Big Four broadcast networks (ABC, CBS, Fox and NBC). Allen Media Group also produces, distributes, and sells advertising for 71 television shows, making it one of the largest independent producers/distributors of first-run syndicated TV programming for broadcast stations. The company has nearly 2,300 employees.
In September, Allen publicly announced a $10 billion offer for ABC, eight local TV stations as well as FX and National Geographic Channel, which are also Disney-owned properties. Disney CEO Bob Iger has since said the company’s linear networks are “not for sale.”
Founded by Robert L. Johnson in 1980, BET has been a major outlet for programming aimed at Black audiences since its inception. Johnson sold the cable channel to Viacom in 2001 for $3 billion.
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