DIS Shareholders and Stock Info ONLY

[wabbott]

https://variety.com/2023/biz/news/w...r-talks-burning-questions-mtv-cnn-1235848303/

Dec 20, 2023 6:06pm PST
by Cynthia Littleton
The Burning Questions Swirling Around the Early Warner Bros. Discovery-Paramount Global Merger Talks

Here we go again?

Warner Bros. Discovery is flirting with the idea of acquiring Paramount Global. If a deal involving the Redstone empire comes to fruition, it would mark another transformative mega-merger for Hollywood legacy brands, following on the heels of Disney’s acquisition of 21st Century Fox in 2019, AT&T’s difficult marriage with Time Warner in 2018 and the subsequent Discovery-WarnerMedia tie-up that closed in April 2022.

Sources caution that conversations are in the earliest of early stages – following a lunch meeting this week between WB Discovery CEO David Zaslav and Paramount Global’s Bob Bakish. There’s no certainty that a deal will come to fruition, of course, especially as Paramount Global and its parent holding company National Amusements Inc. was already being pursued. But if WB Discovery and Paramount Global are determined to march down the aisle, the companies will have to overcome a host of obstacles, and possible regulatory and legal challenges. And that’s before the integration plans are executed.

Here’s a look at some burning questions raised by the prospect of WB Discovery buying Paramount Global.
Why does WB Discovery want Paramount Global?

To quote Sumner Redstone, content is king. Paramount Global has a lot of aging linear assets that are struggling to adapt to a new media landscape – that’s one reason “Ridiculousness” runs nearly 24/7 on MTV these days. But Paramount does have vast vaults of movies, TV shows and other forms of content that can help bulk up WBD’s streaming platforms, and have remake/reboot/reimagining potential in the present IP-crazy marketplace.
Why is this happening now?

Blame Paramount Global’s stock price decline and David Ellison. Paramount Global became effectively in play last month when reports surfaced that Ellison’s Skydance Media was trying to gain control of Paramount by scooping up some or all of the preferred shares in the company owned by National Amusements Inc. (NAI). That’s the holding company controlled by Shari Redstone, daughter of the late media mogul Sumner Redstone who built up NAI and Viacom and also acquired Paramount and CBS. WB Discovery was forced to act sooner than it would have liked by the heat behind the Skydance discussions.
How much is Paramount Global worth?

According to Wall Street, as of Wednesday, Paramount Global was worth $10.3 billion. That’s less than half of the $30 billion valuation put on the company after its last big corporate transaction, when it re-merged with CBS in 2019. (The two companies were brought together by Sumner Redstone in 2000 but separated up again in 2006). Paramount Global’s stock has been below $20 since May, closing Wednesday at $15.50. WB Discovery shares have not climbed above $20 (closing Wednesday at $11.66) since it completed its acquisition of WarnerMedia from AT&T. Both companies are also burdened with debt taken on in the last decade that has become more expensive as interest rates rise.

The biggest hurdle for dealmakers may be putting a value on Paramount’s linear cable networks such as MTV, Nickelodeon, VH1, Comedy Central, Paramount Network, TV Land and more. Those channels were once the backbone of Viacom, but their value is shrinking every year as traditional cable subscribers exit for their own self-made menus of streamers. WB Discovery already has its own legacy linear cable networks to bolster (TNT, TBS, Cartoon Network, Discovery, TLC et al) so a merger of the two could see mini-mergers of channels and probably the sunset of some once-stalwart cable brands.
Would Warner Bros. And Paramount Pictures remain separate or would they be combined?

It’s way to soon too formally ask the question but it’s not too soon to start thinking about the situation. A likely scenario would seem to be keeping both imprints alive – the WB shield and the Paramount mountain-and-stars logo – but to combine as much administrative and infrastructure operations as possible.
Would CNN and CBS News become one?

Again, it’s probably too soon to ask that question but the answer seems evident if the larger merger came to fruition. CNN and CBS News have had numerous courtships on and off since the 1990s. The rationale that made sense then makes even more sense now. CBS News brings the prestige factor (“60 Minutes,” the Edward R. Murrow legacy et al) while CNN provides the kind of global distribution that CBS Newsies can only dream of now. If a deal happens, bank on CBS News and CNN linking arms as fast as possible.
Might another suitor come forward for Paramount Global?

Shari Redstone certainly hopes so. By many accounts, the Paramount Global chair hopes to sell the company as a unit and not broken up in pieces. The more companies that are vying for attention, the more she can drive a deal on her terms. Over the next few weeks, she’s about to find out what the market in 2024 will bear for the media conglomerate that her father started assembling in the 1980s.

 

[RivShore]

https://variety.com/2023/biz/news/w...r-talks-burning-questions-mtv-cnn-1235848303/

Dec 20, 2023 6:06pm PST
by Cynthia Littleton
The Burning Questions Swirling Around the Early Warner Bros. Discovery-Paramount Global Merger Talks

Here we go again?

Warner Bros. Discovery is flirting with the idea of acquiring Paramount Global. If a deal involving the Redstone empire comes to fruition, it would mark another transformative mega-merger for Hollywood legacy brands, following on the heels of Disney’s acquisition of 21st Century Fox in 2019, AT&T’s difficult marriage with Time Warner in 2018 and the subsequent Discovery-WarnerMedia tie-up that closed in April 2022.

Sources caution that conversations are in the earliest of early stages – following a lunch meeting this week between WB Discovery CEO David Zaslav and Paramount Global’s Bob Bakish. There’s no certainty that a deal will come to fruition, of course, especially as Paramount Global and its parent holding company National Amusements Inc. was already being pursued. But if WB Discovery and Paramount Global are determined to march down the aisle, the companies will have to overcome a host of obstacles, and possible regulatory and legal challenges. And that’s before the integration plans are executed.

Here’s a look at some burning questions raised by the prospect of WB Discovery buying Paramount Global.
Why does WB Discovery want Paramount Global?

To quote Sumner Redstone, content is king. Paramount Global has a lot of aging linear assets that are struggling to adapt to a new media landscape – that’s one reason “Ridiculousness” runs nearly 24/7 on MTV these days. But Paramount does have vast vaults of movies, TV shows and other forms of content that can help bulk up WBD’s streaming platforms, and have remake/reboot/reimagining potential in the present IP-crazy marketplace.
Why is this happening now?

Blame Paramount Global’s stock price decline and David Ellison. Paramount Global became effectively in play last month when reports surfaced that Ellison’s Skydance Media was trying to gain control of Paramount by scooping up some or all of the preferred shares in the company owned by National Amusements Inc. (NAI). That’s the holding company controlled by Shari Redstone, daughter of the late media mogul Sumner Redstone who built up NAI and Viacom and also acquired Paramount and CBS. WB Discovery was forced to act sooner than it would have liked by the heat behind the Skydance discussions.
How much is Paramount Global worth?

According to Wall Street, as of Wednesday, Paramount Global was worth $10.3 billion. That’s less than half of the $30 billion valuation put on the company after its last big corporate transaction, when it re-merged with CBS in 2019. (The two companies were brought together by Sumner Redstone in 2000 but separated up again in 2006). Paramount Global’s stock has been below $20 since May, closing Wednesday at $15.50. WB Discovery shares have not climbed above $20 (closing Wednesday at $11.66) since it completed its acquisition of WarnerMedia from AT&T. Both companies are also burdened with debt taken on in the last decade that has become more expensive as interest rates rise.

The biggest hurdle for dealmakers may be putting a value on Paramount’s linear cable networks such as MTV, Nickelodeon, VH1, Comedy Central, Paramount Network, TV Land and more. Those channels were once the backbone of Viacom, but their value is shrinking every year as traditional cable subscribers exit for their own self-made menus of streamers. WB Discovery already has its own legacy linear cable networks to bolster (TNT, TBS, Cartoon Network, Discovery, TLC et al) so a merger of the two could see mini-mergers of channels and probably the sunset of some once-stalwart cable brands.
Would Warner Bros. And Paramount Pictures remain separate or would they be combined?

It’s way to soon too formally ask the question but it’s not too soon to start thinking about the situation. A likely scenario would seem to be keeping both imprints alive – the WB shield and the Paramount mountain-and-stars logo – but to combine as much administrative and infrastructure operations as possible.
Would CNN and CBS News become one?

Again, it’s probably too soon to ask that question but the answer seems evident if the larger merger came to fruition. CNN and CBS News have had numerous courtships on and off since the 1990s. The rationale that made sense then makes even more sense now. CBS News brings the prestige factor (“60 Minutes,” the Edward R. Murrow legacy et al) while CNN provides the kind of global distribution that CBS Newsies can only dream of now. If a deal happens, bank on CBS News and CNN linking arms as fast as possible.
Might another suitor come forward for Paramount Global?

Shari Redstone certainly hopes so. By many accounts, the Paramount Global chair hopes to sell the company as a unit and not broken up in pieces. The more companies that are vying for attention, the more she can drive a deal on her terms. Over the next few weeks, she’s about to find out what the market in 2024 will bear for the media conglomerate that her father started assembling in the 1980s.

Not one mention on how this is good (or bad) for shareholders of either company. With all the complaining we do about DIS stock performance, try being a WBD shareholder

 

[wabbott]

Not one mention on how this is good (or bad) for shareholders of either company. With all the complaining we do about DIS stock performance, try being a WBD shareholder

Good point. You have to understand, though, to Hollywood (and by extension, the rag trade that covers it) money is an abstract concept, and the people who finance things are lesser mortals. You see, Hollywood types are artists, and therefore a higher life form than us mere money-grubbers.

Except of course when contract time comes around, their money isn't negotiable. Ours always is.

 

[wabbott]

https://deadline.com/2023/12/paramount-warner-bros-discovery-merger-talks-questions-1235679309/

‘Warnamount’ Merger Talk Confounds Investors And Industry: “Why Would Any Company Try To Catch A Falling Knife?”
By Anthony D'Alessandro, Jill Goldsmith, Dade Hayes, Dominic Patten
December 21, 2023 - 7:33am PST

https://www.yahoo.com/entertainment/breaking-down-pros-cons-potential-140000371.html

Breaking Down the Pros and Cons of a Potential Warner-Paramount Merger | Analysis
Lucas Manfredi
Thu, December 21, 2023 at 8:00 AM CST

 

[wabbott]

https://www.hollywoodreporter.com/b...n-help-disney-succession-bob-iger-1235767666/

Morgan Stanley CEO Says He Will Help With Disney’s Succession Plan When He Joins Its Board
James Gorman says he will join Disney's special succession committee when he joins the board next year.
by Alex Weprin - December 21, 2023 - 10:18am PST

The Walt Disney Co. is about to add someone who knows a thing or two about CEO succession to its board of directors.

James Gorman, who will step aside as CEO of Morgan Stanley at the end of this year after overseeing what is widely regarded as a carefully-planned succession process at the investment bank, will officially join Disney’s board in February.

And he says he intends to be involved in Disney’s succession planning, finding a suitable person to follow Bob Iger. In an exit interview with CNBC Thursday, Gorman said that he will be joining Disney’s special succession committee when he officially joins the board next year.

“This has been, the sorts of things I’ve done in this job is strategic transformation. Obviously [I’ve] dealt with shareholders at many levels, including activists. Succession talent building,” Gorman said. “So, some of the challenges that I have, I hope, you know, I can lend some of my experience on it. I don’t want to prejudge the succession process. That wouldn’t be fair to the team.”

Gorman says his own experience at Morgan Stanley will lend itself well to Disney’s succession dilemma.

“The challenge is to set up the conditions where the board has choices with talented candidates who are properly vetted for all the stresses these jobs have,” he said. “I’m not on the board, so I have no wisdom or insight into it, but I have an enormous amount of experience having run succession here with our board. And I think we landed the plane really well with three great candidates, and then one of whom became CEO and two stayed as co-presidents.”

Gorman famously and publicly elevated three leaders within Morgan Stanley: Ted Pick, Andy Saperstein and Dan Simkowitz, giving them additional responsibilities. After announcing earlier in the year that he intended to step down as CEO, the board selected Pick as his successor. However both Saperstein and Simkowitz are staying with the company, with expanded purviews themselves.

“In my first board meeting in January of 2010 I told the then-lead director Bob Kidder — we talked about succession right then,” Gorman said. “So, this is something that I’ve regarded as a key part of the job from the get-go.”

Now he intends to help Iger and the chairman of Disney’s board Mark Parker with a similar problem, all while dealing with a proxy fight led by Nelson Peltz and former Disney CFO Jay Rasulo.

“That’s all right,” Gorman said, when asked about the proxy fight. “You know, we have had a lot of battles in my life. That doesn’t bother me one little bit.”

For Iger, of course, succession has been a sore point. A number of former successors in waiting, including Rasulo, Kevin Mayer, and Tom Staggs, all departed the company. And the person he helped pick to follow him, Bob Chapek, lasted only two and a half years in the job.

Iger said last month that he has been conducting a succession “postmortem,” “just so that we as a company don’t do it again … What did we do wrong? And we discovered certain things that we could do better.”

He added that the succession discussions so far have been “robust.”

 

[RivShore]

And I think we landed the plane really well with three great candidates, and then one of whom became CEO and two stayed as co-presidents.”

Keeping that kind of talent would be a step in the right direction for the usually horrible Disney succession fiasco.

 

[wabbott]

https://www.nytimes.com/2023/12/21/business/media/shari-redstone-paramount-sale.html

Why Is Shari Redstone, Ruler of a Vast Media Kingdom, Weighing a Sale?
by Benjamin Mullin
She fought to keep control of her family’s media empire. Now she’s considering an exit as financial pressures mount.
Dec. 21, 2023 - Updated 4:39 p.m. EST

Paramount Pictures, the storied studio behind hits like “The Godfather” and “Raiders of the Lost Ark,” has had several owners over the last century: Its co-founder Adolph Zukor. The industrial conglomerate Gulf+Western. At one point, it was a stand-alone public company.

But for nearly three decades, Paramount’s fate has been controlled by the Redstone family, after its pugnacious patriarch, Sumner Redstone, won a bidding war for the studio in 1994.

That may be about to change. Shari Redstone, Mr. Redstone’s daughter, is weighing a sale of her family’s controlling interest in Paramount’s parent company just five years after she won a fight to retain control of her family’s media empire.

Suitors for both Ms. Redstone’s stake and the company she controls are already lining up, including Warner Bros. Discovery, the owner of HBO and the Warner Bros. movie studio, and Skydance, the movie studio that helps produce hit Paramount franchises like “Top Gun” and “Mission: Impossible.”

So far, the pursuit of Paramount has the makings of a drama fit for the silver screen. Here’s the story so far:

Who is Shari Redstone, and how did she get control of the company?​

Ms. Redstone, 69, presides over a vast media empire that includes Paramount Pictures, MTV, Nickelodeon and CBS. But her rise to the top was not simple.

For years, Ms. Redstone toiled away at National Amusements, the theater chain that doubles as a holding company for Paramount. A lawyer by training, she demonstrated an early aptitude for the media business but was overshadowed by her aging father, who refused to relinquish control even as his mental capacity waned.

As the family business began to falter, Ms. Redstone began to assert herself more. She thwarted an attempt by Philippe Dauman, one of her father’s lieutenants, to sell a stake in Paramount Pictures in 2016. One of her allies, Bob Bakish, became his permanent replacement as chief executive.

Two years later, she won another battle. Leslie Moonves, whose programming prowess earned him the nickname “the man with the golden gut,” led a revolt against Ms. Redstone, urging a Delaware court to strip her family of its company control. Ms. Redstone prevailed after Mr. Moonves was accused of sexual harassment and forced out of the company. (Mr. Moonves has denied allegations of nonconsensual sex.)

What Is Paramount, and what does it own?

In 2019, months after Mr. Moonves was forced out, the boards of CBS and Viacom — companies controlled by National Amusements — began exploring a merger. The deal, which Ms. Redstone championed, put the Paramount movie studio and Viacom’s bundle of cable channels, including MTV and Nickelodeon, under the same corporate umbrella as CBS and the book publisher Simon & Schuster.

After the merger, Ms. Redstone encouraged the combined company — eventually renamed Paramount — to use its heft to make an ambitious foray into the streaming wars, stocking its Paramount+ service with shows and movies from both Viacom and CBS. The company has bet big on building a healthy and profitable streaming business before its traditional TV networks, which are lucrative but in terminal decline, fade out.

Why is she under financial pressure?​

Paramount was once so mighty that people in Hollywood referred to it by the nickname “the Mountain,” a reference to its logo of a snow-capped peak encircled by stars.

But these days, the company is more of a melting iceberg.

Paramount’s portfolio of cable networks has been battered by the same cord-cutting and advertiser weakness that have afflicted its industry peers and is facing analyst-estimated subscriber losses of nearly 25 percent over the next two years. Wall Street is unconvinced that Paramount’s money-losing streaming business will ever be able to compete with the likes of Netflix. Paramount+ has a 6 percent share of the revenue market, while Netflix has 47 percent and Disney’s streaming services have a combined 23 percent.

Paramount’s movie studio has done its best to revive aging franchises like “Teenage Mutant Ninja Turtles” and keep “Mission: Impossible” running, but it ranks last among Hollywood’s five legacy film companies in domestic market share and posted an operating loss of $143 million for the first nine months of this year.

Despite those headwinds, Paramount has made some progress. The streaming service has 63 million subscribers globally, and the company’s Pluto TV free streaming service generates more than $1 billion in annual revenue, up from $70 million when it was acquired in 2019.

There are also financial pressures at National Amusements. Historically, the bulk of the holding company’s profits have come from dividends on the Paramount stock it owns, roughly 10 percent of that company. But financial pressures forced Paramount to sharply reduce its dividend, cutting into profits at National Amusements.

Now, National Amusements is incapable of generating cash, according to a May estimate from S&P Global Market Intelligence, and owes about $25 million in annual interest cash payments.

Why is Ms. Redstone willing to sell her controlling stake in the company? It may come down to the pressures facing both National Amusements and Paramount. As Rich Greenfield, an analyst at LightShed Partners, put it in a recent client note, “Paramount has a bleak future ahead.”

What are her options?​

National Amusements’ 10 percent stake in Paramount — a piece worth more than $1 billion at today’s prices — is still a prize for any deep-pocketed investor who wants control of some of the most prestigious media assets in the United States. Ms. Redstone could sell National Amusements’ stake in Paramount, or promote a deal to sell the entire company. Or she could elect not to sell, essentially betting that the company’s prospects will improve over time.
Ms. Redstone is being advised on her options by BDT & MSD Partners, a merchant bank founded by Byron Trott, a former Goldman Sachs partner who consults with some of America’s wealthiest and best-connected family business owners. So far, National Amusements has held talks with media companies including Skydance, Warner Bros. Discovery and Netflix and technology firms such as Amazon and Apple, according to four people with knowledge of the discussions.

Warner Bros. Discovery has also raised the topic of a merger with Paramount directly. David Zaslav, the chief executive of Warner Bros. Discovery, broached the topic over lunch on Tuesday with Mr. Bakish. Those discussions, which are in their early stages, are separate from Ms. Redstone’s discussions about a sale of her stake in National Amusements.

What could stand in her way?​

Paramount’s suitors and Ms. Redstone will have to solve a messy equation to reach a deal.

Any buyer of Ms. Redstone’s stake in National Amusements will most likely need to pay a bonus on the market value of her shares — commonly known as a “control premium” — for the rights to steer Paramount. For the owners of a privately held company like Skydance, that requires raising capital. For a publicly traded firm like Warner Bros. Discovery, that means convincing shareholders that the increased price is worth the additional investment.

Some of the suitors are also subject to the same financial pressures facing Paramount. Though it has paid down some of its debt, Warner Bros. Discovery is burdened with more than $40 billion in leverage, the price of its merger with AT&T’s WarnerMedia division. Warner Bros. Discovery also runs the risk of a tax penalty if it strikes a deal before the two-year anniversary of that merger in April, which could complicate deal making.

There are nonfinancial considerations, too. To make drastic changes, any buyer of National Amusements would have to work through the board of Paramount.

If Skydance’s bid to acquire National Amusements is successful, for example, the company will probably need to nominate its own slate of directors at Paramount, which could then contemplate moves like merging Skydance with Paramount Pictures, according to two people familiar the negotiations.

Brooks Barnes contributed reporting.

 

[wabbott]

https://www.msn.com/en-us/money/com...ner-s-ceo-wants-to-do-another-one/ar-AA1lRFSx

Big Media Deals Aren’t Living Up to the Hype. Warner’s CEO Wants to Do Another One.
By Joe Flint, Jessica Toonkel and Amol Sharma
Dec. 21, 2023 4:06 pm EST

Streaming is losing money. Box-office receipts are underwhelming. Cable networks are dying.

The entertainment industry is badly in need of a plot twist—and Warner Bros. Discovery boss David Zaslav is ready to supply one in the form of yet another blockbuster media merger.

Zaslav met this week with Paramount Global CEO Bob Bakish and discussed the possibility of a deal between the media giants. A merger would bring under one roof two storied Hollywood studios and TV networks including HBO, CNN, TNT, CBS, MTV and Comedy Central.

Warner, which has about $45 billion in debt, would likely make an all-stock offer if it does pursue a deal, with Paramount overseer Shari Redstone getting noncontrolling shares, according to a person familiar with the situation. It’s possible Zaslav won’t make an offer, and other suitors are also in the mix for Paramount.

The logic of a Warner-Paramount pairing: overlapping cable networks and studio operations would translate into billions in savings. And Warner’s Max streaming service would be supercharged with content, while rival service Paramount+ would likely be shuttered as a stand-alone offering, the person said—a positive in a cutthroat streaming market where too many companies are chasing the same customers.

Max would also gain access to the strong sports rights that CBS holds, including packages of NFL, college football and college basketball games.

If this story line sounds familiar, it’s because it’s a rerun played many times over the past decade. Giant mergers have been the response to virtually every big problem confronting the entertainment industry’s titans. But so far, the results from these big deals aren’t impressive.

“These things just extend the runway, but they don’t change the destiny of where they are going,” said Andre James, global head of media and entertainment at Bain & Co.

Disney’s $71 billion acquisition of Fox’s entertainment assets was supposed to give its streaming plans a jolt. Instead, Disney is discussing selling a stake in Fox’s once-promising India operation and the Disney+ service is laboring to get to profitability.

Paramount was formed through the merger of the two wings of the late Sumner Redstone’s media empire: CBS and Viacom. The companies on their own weren’t equipped to battle the industry’s behemoths. The bull case was that maybe—if all went well—the combined company would be stronger in streaming and look appealing to a buyer in the tech world. Maybe Apple. Maybe Amazon. That hasn’t come to pass, and the stock has lost more than half of its value since the combined company—later renamed Paramount Global—was formed.

Warner employees know this story as well as anyone, having already been through two megamergers since 2018—one with telecom giant AT&T and then another last year with Zaslav’s Discovery, the $43 billion deal that created Warner Bros. Discovery.

For the past 18 months, Zaslav has had his hands full trying to convince Wall Street about the merits of that last deal, even though some of the assumptions that underpinned it—including the idea that consumers would keep signing up to streaming services in droves—look shaky now. He has been working on trimming the resulting huge debt load. He’s also been cutting workers and shelving movie and TV projects, and has become a target of criticism from much of the creative community for focusing on costs and layoffs.

Warner executives say the moves Zaslav has made were necessary to adjust to a much tougher media landscape and that the company wouldn’t be in a position to expand or do deals if it hadn’t been as aggressive in its cost-cutting.

That “Zas”—as Zaslav is widely known in the industry—would already be turning his attention to the prospect of another big deal, while he’s still selling the last one, is telling. Like many of his industry peers, he thinks even more structural changes may be called for if entertainment companies are to secure growth and keep profits flowing, people close to Warner say.

Warner is still debating whether it needs to make a deal with Paramount or another media giant such as Comcast’s NBCUniversal to boost its streaming offering, the person familiar with the situation said.

The traditional TV business is shrinking faster than many media executives anticipated just a few years ago, as consumers cut the cord and advertisers move away from old media. Every media company that owns cable channels faces the prospect of having some dropped from the dial when their negotiations with cable systems come up.

Disney’s fight earlier this year with Charter was a harbinger: The final deal resulted in eight Disney channels being dropped. Paramount is staring at that same risk as negotiations for its channels come up with Comcast at the end of this month and with Charter next spring.

Warner would risk doubling down on that dying cable business by merging with Paramount, but Zaslav would likely explore selling off some cable networks to a private-equity buyer, a person familiar with his thinking said.

Streaming is supposed to be the solution to TV’s seemingly inexorable decline. But most big players are losing money. Warner’s streaming operations, which include Max and Discovery+ are modestly profitable. Paramount is expected to lose more than $1 billion this year on streaming, with losses narrowing thereafter.

Wall Street’s sentiment toward streaming has shifted. Last year, when Netflix saw its first subscriber decline in more than a decade, the shares of media companies across the board plummeted as investors raised questions about the sustainability of the streaming business model.

Grace Lee, co-head of the Americas media and entertainment practice at consulting firm AlixPartners, said it’s hard for a streamer to succeed—and become a utility for consumers—if it isn’t among the biggest three. “Netflix is number one, Disney is number two and you need a clear number three,” Lee said. This deal would pave the way for the combined Warner-Paramount to be a clear number three, she said.

The rate of customer defections among premium streaming services climbed to 6.3% in November, according to subscription analytics firm Antenna, from 5.1% a year earlier—a sign that right now consumers might have too many options and hop between services to catch their favorite programs.

The movie business also is structurally unsettled—though it’s unclear whether a merger would change the dynamics. While “Barbie” and “Oppenheimer” bolstered the summer box office and brought moviegoers back to theaters, ticket sales so far this year have failed to top 2019, the year before the pandemic. Some theaters have turned to alternative content and reruns of old films to fill fallow periods.

The domestic box office grossed $8.5 billion through Dec. 10, according to Comscore. That’s above the $6.9 billion generated last year, but below 2019’s mark of $10.4 billion.

If Warner does make an all-stock offer to Paramount, it could be tough to compete with any offer from Skydance Media, which would likely have a cash component. Skydance is a production company run by David Ellison, the son of Larry Ellison, the billionaire co-founder of Oracle.

Regulatory scrutiny could be intense for a Warner-Paramount deal, analysts said, given that it would combine two major Hollywood studios. It’s unlikely that Redstone, whose National Amusements holding company controls Paramount, would want to submit to a long regulatory review to do a deal with Warner, according to people close to Paramount.

Warner executives expect that a deal wouldn’t face a heavy review given the Warner-Discovery merger was cleared in less than a year and because media companies are struggling to keep up in streaming with the likes of Netflix and Amazon.

Many media observers and analysts are skeptical about the merits of a Warner-Paramount deal. If the goal is a partnership in streaming, there are other models to explore—a bundled offering of services at a discounted price, or a joint venture—before jumping into an all-out merger.

“We ultimately have a hard time seeing this deal come to fruition,” wrote TD Cowen analyst Doug Creutz, citing both the regulatory environment and the balance sheet of the two companies. A joint-venture that combines Max and Paramount+ “might be a more fruitful avenue of discussion,” he said.

Write to Joe Flint at Joe.Flint@wsj.com, Jessica Toonkel at jessica.toonkel@wsj.com and Amol Sharma at Amol.Sharma@wsj.com

 

[Elijah Abrams]

https://www.msn.com/en-us/money/com...ner-s-ceo-wants-to-do-another-one/ar-AA1lRFSx

Big Media Deals Aren’t Living Up to the Hype. Warner’s CEO Wants to Do Another One.
By Joe Flint, Jessica Toonkel and Amol Sharma
Dec. 21, 2023 4:06 pm EST

Streaming is losing money. Box-office receipts are underwhelming. Cable networks are dying.

The entertainment industry is badly in need of a plot twist—and Warner Bros. Discovery boss David Zaslav is ready to supply one in the form of yet another blockbuster media merger.

Zaslav met this week with Paramount Global CEO Bob Bakish and discussed the possibility of a deal between the media giants. A merger would bring under one roof two storied Hollywood studios and TV networks including HBO, CNN, TNT, CBS, MTV and Comedy Central.

Warner, which has about $45 billion in debt, would likely make an all-stock offer if it does pursue a deal, with Paramount overseer Shari Redstone getting noncontrolling shares, according to a person familiar with the situation. It’s possible Zaslav won’t make an offer, and other suitors are also in the mix for Paramount.

The logic of a Warner-Paramount pairing: overlapping cable networks and studio operations would translate into billions in savings. And Warner’s Max streaming service would be supercharged with content, while rival service Paramount+ would likely be shuttered as a stand-alone offering, the person said—a positive in a cutthroat streaming market where too many companies are chasing the same customers.

Max would also gain access to the strong sports rights that CBS holds, including packages of NFL, college football and college basketball games.

If this story line sounds familiar, it’s because it’s a rerun played many times over the past decade. Giant mergers have been the response to virtually every big problem confronting the entertainment industry’s titans. But so far, the results from these big deals aren’t impressive.

“These things just extend the runway, but they don’t change the destiny of where they are going,” said Andre James, global head of media and entertainment at Bain & Co.

Disney’s $71 billion acquisition of Fox’s entertainment assets was supposed to give its streaming plans a jolt. Instead, Disney is discussing selling a stake in Fox’s once-promising India operation and the Disney+ service is laboring to get to profitability.

Paramount was formed through the merger of the two wings of the late Sumner Redstone’s media empire: CBS and Viacom. The companies on their own weren’t equipped to battle the industry’s behemoths. The bull case was that maybe—if all went well—the combined company would be stronger in streaming and look appealing to a buyer in the tech world. Maybe Apple. Maybe Amazon. That hasn’t come to pass, and the stock has lost more than half of its value since the combined company—later renamed Paramount Global—was formed.

Warner employees know this story as well as anyone, having already been through two megamergers since 2018—one with telecom giant AT&T and then another last year with Zaslav’s Discovery, the $43 billion deal that created Warner Bros. Discovery.

For the past 18 months, Zaslav has had his hands full trying to convince Wall Street about the merits of that last deal, even though some of the assumptions that underpinned it—including the idea that consumers would keep signing up to streaming services in droves—look shaky now. He has been working on trimming the resulting huge debt load. He’s also been cutting workers and shelving movie and TV projects, and has become a target of criticism from much of the creative community for focusing on costs and layoffs.

Warner executives say the moves Zaslav has made were necessary to adjust to a much tougher media landscape and that the company wouldn’t be in a position to expand or do deals if it hadn’t been as aggressive in its cost-cutting.

That “Zas”—as Zaslav is widely known in the industry—would already be turning his attention to the prospect of another big deal, while he’s still selling the last one, is telling. Like many of his industry peers, he thinks even more structural changes may be called for if entertainment companies are to secure growth and keep profits flowing, people close to Warner say.

Warner is still debating whether it needs to make a deal with Paramount or another media giant such as Comcast’s NBCUniversal to boost its streaming offering, the person familiar with the situation said.

The traditional TV business is shrinking faster than many media executives anticipated just a few years ago, as consumers cut the cord and advertisers move away from old media. Every media company that owns cable channels faces the prospect of having some dropped from the dial when their negotiations with cable systems come up.

Disney’s fight earlier this year with Charter was a harbinger: The final deal resulted in eight Disney channels being dropped. Paramount is staring at that same risk as negotiations for its channels come up with Comcast at the end of this month and with Charter next spring.

Warner would risk doubling down on that dying cable business by merging with Paramount, but Zaslav would likely explore selling off some cable networks to a private-equity buyer, a person familiar with his thinking said.

Streaming is supposed to be the solution to TV’s seemingly inexorable decline. But most big players are losing money. Warner’s streaming operations, which include Max and Discovery+ are modestly profitable. Paramount is expected to lose more than $1 billion this year on streaming, with losses narrowing thereafter.

Wall Street’s sentiment toward streaming has shifted. Last year, when Netflix saw its first subscriber decline in more than a decade, the shares of media companies across the board plummeted as investors raised questions about the sustainability of the streaming business model.

Grace Lee, co-head of the Americas media and entertainment practice at consulting firm AlixPartners, said it’s hard for a streamer to succeed—and become a utility for consumers—if it isn’t among the biggest three. “Netflix is number one, Disney is number two and you need a clear number three,” Lee said. This deal would pave the way for the combined Warner-Paramount to be a clear number three, she said.

The rate of customer defections among premium streaming services climbed to 6.3% in November, according to subscription analytics firm Antenna, from 5.1% a year earlier—a sign that right now consumers might have too many options and hop between services to catch their favorite programs.

The movie business also is structurally unsettled—though it’s unclear whether a merger would change the dynamics. While “Barbie” and “Oppenheimer” bolstered the summer box office and brought moviegoers back to theaters, ticket sales so far this year have failed to top 2019, the year before the pandemic. Some theaters have turned to alternative content and reruns of old films to fill fallow periods.

The domestic box office grossed $8.5 billion through Dec. 10, according to Comscore. That’s above the $6.9 billion generated last year, but below 2019’s mark of $10.4 billion.

If Warner does make an all-stock offer to Paramount, it could be tough to compete with any offer from Skydance Media, which would likely have a cash component. Skydance is a production company run by David Ellison, the son of Larry Ellison, the billionaire co-founder of Oracle.

Regulatory scrutiny could be intense for a Warner-Paramount deal, analysts said, given that it would combine two major Hollywood studios. It’s unlikely that Redstone, whose National Amusements holding company controls Paramount, would want to submit to a long regulatory review to do a deal with Warner, according to people close to Paramount.

Warner executives expect that a deal wouldn’t face a heavy review given the Warner-Discovery merger was cleared in less than a year and because media companies are struggling to keep up in streaming with the likes of Netflix and Amazon.

Many media observers and analysts are skeptical about the merits of a Warner-Paramount deal. If the goal is a partnership in streaming, there are other models to explore—a bundled offering of services at a discounted price, or a joint venture—before jumping into an all-out merger.

“We ultimately have a hard time seeing this deal come to fruition,” wrote TD Cowen analyst Doug Creutz, citing both the regulatory environment and the balance sheet of the two companies. A joint-venture that combines Max and Paramount+ “might be a more fruitful avenue of discussion,” he said.

Write to Joe Flint at Joe.Flint@wsj.com, Jessica Toonkel at jessica.toonkel@wsj.com and Amol Sharma at Amol.Sharma@wsj.com

Yeah, I prefer a joint-venture streaming service (maybe throw in NBCUniversal in there as well) than a merger of two companies. I just feel like Zaslav is being too much of an ego to do one.

 

[wabbott]

Yeah, I prefer a joint-venture streaming service (maybe throw in NBCUniversal in there as well) than a merger of two companies. I just feel like Zaslav is being too much of an ego to do one.

Both companies - WBD and PARA - are up to their eyeballs in debt and don't have enough cash on hand to pay attention. It still concerns me where DIS is getting the money to pay for the rest of Hulu.

 

[wabbott]

https://puck.news/warners-paramount-and-the-allure-of-mutual-desperation/

Warners, Paramount, and the Allure of Mutual Desperation
Notes on Zaslav’s leaked meeting with Bakish, the deal chatter choreography, and the Comcast of it all.
by Matthew Belloni - 12/22/23

My report two weeks ago on Shari Redstone’s talks with David Ellison’s Skydance and RedBird Capital seems to have sparked a feeding frenzy on Paramount Global and its parent, National Amusements, Inc. One or both of these companies almost certainly will be sold/merged in 2024, but it’s probably not worth getting especially worked up (yet!) about the Warner Bros. Discovery talks, first reported yesterday by Axios. I confirmed that a long meeting did take place between WBD’s David Zaslav and Paramount’s Bob Bakish. But Bakish can put on a little top hat and hawk his assets like a sidewalk salesman to anyone and everyone, the only thing that matters here is whether a deal passes the Shari test.

Redstone controls nearly 80 percent of Paramount voting stock via NAI, and every indication is that she’s not gonna bless a deal that sends her to Siberia—or at least sends her to Siberia without the billions she believes the company is actually worth. And she believes it’s worth a lot more than the $10 billion market cap and $15 billion in debt. When Zaslav, his C.F.O. Gunnar Wiedenfels, and the bankers at Allen & Co. get under the Paramount hood, as is expected in the coming weeks, let’s see how much they think it’s all worth. Then the task will be for Bakish to sell Shari on this or another deal, all while Shari carries on her own talks for NAI. Shari and Bob can hopefully use all this bluster to lure other bidders, notably Brian Roberts at Comcast, who took a hard look at MGM before it ultimately sold to Amazon in 2021.

So far, Shari’s been willing to part with pieces of her father’s empire, hence the Simon & Schuster sale and the recent resumption of talks to offload BET to a management-led group including C.E.O. Scott Mills. (Which, predictably, prompted Byron Allen to scream, Remember me? What about selling to me?) But all of Paramount or National Amusements? That will require a great pitch to Shari, despite the worsening financials and the increasing danger of a debt-bomb death spiral. That’s why one Paramount observer I trust surmises that the news leak of the Zaz overture may be Bakish trying to engineer something for Paramount before Shari can sell National Amusements—something that Shari and her adviser Byron Trott can live with, but that also benefits Bakish. Remember, Paramount just changed its compensation structure to reward Bob and his team if there’s a change in control.

Why Now?​

Both Paramount and Warner Discovery stocks are down since the news broke, suggesting the market doesn’t believe there’s much to gain by smashing together two legacy film and TV studios, as well as linear networks HBO, CNN, and TNT with CBS and Nickelodeon, plus the streaming service Max with Paramount+ and Pluto TV. Synergies and cost efficiencies, yes. But it doesn’t solve the underlying problems plaguing the legacy studios: TV advertising likely won’t ever recover, and analysts expect cord-cutting to erase another 25 percent of cable subscribers in the next few years. Consolidation seems to be the only play these C.E.O.s have, or at least the only play they think they have. In addition to Zaslav, I’m told Bakish also sat down with Comcast’s Roberts after a recent media conference, and no wonder. No one wants to be the guy who throws in the towel, says Streaming is hard!, and retreats to the role of studio supplier for someone else’s business—even if that might be the most prudent path for a subscale player like Paramount.

I also believe Zaslav would like the Paramount assets, not because a merger means a potentially bigger paycheck, or even because it makes all that much financial sense, given the more than $40 billion in debt the company still carries and the April horizon to do a deal without major tax implications. (John Malone, his investor and longtime patron, has intimated from the beginning of the WarnerMedia-Discovery transaction that this might be the first of several roll-ups.) Zaz probably doesn’t want to just offload this thing to Comcast, even if regulators allowed it. Maybe he’d run the combined NBCUniversal/WBD, but maybe not. Maybe he’d be forced to take more long walks on the beach with Nick Pileggi in the Hamptons. The guy wants legacy and notoriety, and the ability to go toe-to-toe with Disney and Universal as the last of the legacy Hollywood studios fighting Big Tech. Selling WBD or merging it with Comcast might end that quest; being the aggressor for Paramount and scaling up extends the Zaz dream, as long as his shareholders are on board for the ride.

 

[wabbott]

https://deadline.com/2023/12/streaming-services-2024-outlook-questions-1235677689/

After The “Great Netflix Correction”, Streaming Looks To Find New Pragmatic Footing

By Dade Hayes, Katie Campione
December 22, 2023 - 7:06am PST


After last year’s Great Netflix Correction, the streaming sector in 2023 entered a decidedly more pragmatic phase.

As viewers continued to cut the pay-TV cord and increasingly look to streaming as their primary source of entertainment, subscriber levels stabilized and Netflix returned to its leadership perch after last year’s scare. Profitability for all players has become the new North Star. Top-line growth is always welcome, but Disney CEO Bob Iger spoke for many last February when he said the company had become “intoxicated” by the early gains by Disney+ and had therefore mismanaged its streaming business.

This year, the priority for many players (especially those outside of the fuzzy-math realm of Big Tech) became declaring that “peak losses” had been achieved and a path to success had been identified. One way for companies to relieve pressure on subscription revenue turned out to be as old as the living-room box itself: selling time to sponsors. Advertising-supported services, initially on the periphery of the business and seen as a somewhat down-market form of streaming, got a boost with Netflix and Disney rolling out ad tiers introduced at the end of 2022. Prime Video is set to join the ad ranks in 2024 and rumors persist about Apple TV+ possibly following suit, especially now that it has nearly doubled its monthly subscription price to $10 a month.


Bundling fever also gripped the streaming world, prompting ever-more-arch references to the cable bundle replicating itself via the internet. In-house bundles like those deployed by Disney and Paramount have been proven winners. The next chapter could see frenemies joining forces in the name of simplifying the experience for consumers while also reining in costs. “If we don’t do it to ourselves, I think it will be done to us,” Warner Bros. Discovery CEO David Zaslav said at a recent Wall Street conference. “It will be Amazon who does it, or Apple who does it, or Roku who does it. They’ve already started.”

Here is an overview (in alphabetical order) of the eight leading subscription streaming outlets in the U.S., with a look back at their 2023 highs and lows and a preview of what lies ahead in the new year:

Apple TV+​

2023 Highlight: More movie real estate. Despite already having several Oscars on its shelf, Apple’s presence in the movie business hit a new level this fall with the wide releases of Martin Scorsese’s Killers of the Flower Moon and Ridley Scott’s Napoleon via distribution deals with Paramount and Sony, respectively. In 2024, output will increase, with Matthew Vaughn’s Argylle joined by George Clooney-Brad Pitt feature Wolfs, the Scarlett Johansson-Channing Tatum teaming formerly called Project Artemis and other biggies. Although Killers and Napoleon lost money theatrically, that doesn’t make them misfires. Apple’s goals in backing original films are quite different from those of most rivals. The tech giant is playing a longer game, and marquee films help lure and keep subscribers.

2023 Lowlight: Inflation. The company in November announced its second price increase in a year for U.S. subscribers, with rates jumping to $9.99 a month from $6.99. That incremental income will help defray some of the Pitt- and DiCaprio-sized expenses it is incurring, but it will also cause some subscribers to bail. After launching in 2019 without a library of pre-existing titles (no Suits comfort-food here), Apple TV+ arguably left itself vulnerable to churn.

Challenge for 2024: Getting into a groove with film-release windows. While progress in the movie arena was the top 2023 highlight, the influx of high-end titles hasn’t yet redefined the Apple TV+ app experience. It wasn’t that long ago that the library-starved service was licensing catalog film favorites to line its virtual shelves. Now that it has new wares to exhibit, how will it do so and also avoid confusion with the other side of the house, Apple TV, where Apple Original Films are made available for rent and sale a few clicks from where subscribers can stream them for free.

Biggest question: With Ted Lasso all but certainly done after the third season finished last March, what show will step in to carry the mantle as the signature Apple TV+ title? Winning armloads of Emmys while also transfixing pandemic-weary viewers — the show will be a hard act to follow.

Disney+​

2023 Highlight: Stopping the bleeding. While Disney’s streaming business is still operating at a loss, the Mouse House deficits have been shrinking. In its fiscal fourth quarter, Disney reported $387 million in streaming losses, down from $1.4 billion in the same period in 2022.

2023 Lowlight: Cuts, cuts, cuts. Disney has remained committed to its 2024 profitability projections, but at what cost? Sweeping layoffs, executed in three waves, saw thousands of employees exit (many in streaming) as the company delivered $7.5 billion in overall corporate cost savings. But the company was also slapped with multiple lawsuits this
year over alleged sleight-of-hand accounting the company used to hide streaming losses.


Challenge for 2024: Finding freshness. So far, Disney has relied heavily on well-known IP like Marvel and Star Wars to bolster its streaming service — to the point that audiences are feeling fatigued. As the surprising run of Peter Jackson’s nearly 8-hour Beatles docuseries Get Back proved, the streamer would do well to lean into more original content, or draw from more dormant IP. This month’s arrival of an episodic take on Percy Jackson and the Olympians could provided a needed breath of fresh air.

Biggest question: How will the Disney+ one-app integration with Hulu, which comes out of beta next March, help bolster the service and retain subscribers?

Hulu​

2023 Highlight: Ownership clarity. Hulu charged full-speed ahead through the unknown in 2023, as Comcast and Disney sought to determine how to reconcile the former’s 33% stake. (Ultimately, an $8.5 billion check was written by Disney.) Despite being in a state of limbo, Hulu’s slate of critically acclaimed and award-nominated content only continues to grow, especially with the FX on Hulu banner, helping boost the streamer to 48 million subscribers in 2023.

2023 Lowlight: User unfriendliness. As Deadline pointed out last year, Hulu still suffers from an outdated user interface, which often makes it hard to navigate. While it’s overdue for a fresh coat of paint, that might not even be necessary given the uncertainty of the streamer’s entire existence heading into 2024

Challenge for 2024: Hulu boasts a robust library of original content including FX on Hulu titles. Balancing the user interface of the one-app to properly highlight these titles will be a challenge for the family-oriented Disney streaming service, as “adult” titles have long been relegated to Hulu in the U.S. .

Biggest question: With the combined Disney+ and Hulu one-app launching in March, how long will Hulu continue to exist as a stand-alone service?

Max​

2023 Highlight: The streamer ended the year on a high note with the successful launch of CNN Max, which seems to be attracting a younger crop of viewers with its suite of live news and analysis programs and original shows.

2023 Lowlight: Labor. This year’s dual strikes shone a light on growing tensions between creatives and studios as they seek to make their streaming divisions profitable, and Warner Bros Discovery took a particularly hard hit in the arena of public opinion as it axed more films for tax write-offs and canceled streaming originals like the Gossip Girl reboot. Removing the platinum HBO name from the streamer’s title also didn’t do it any favors.

Challenge for 2024: The Warner Bros. Discovery streaming service has been buoyed by HBO content since it launched. With the end of Succession and this year’s dual strikes delaying series like The Last of Us, The White Lotus and Euphoria from churning out new seasons, the service may suffer from lack of new prestige content in the coming year.

Biggest question: How will Warner Bros Discovery’s significant amount of debt continue to impact its streaming decisions?

Netflix​

2023 Highlight: Making strides with the twin corporate priorities heading into this year: advertising and paid password sharing. Netflix estimated in November that its subscriber base on the $7-a-month ad tier had reached 15 million. While that was triple the number from May of last year, it is still a small slice of its global base of 247 million subscribers. Backlash to the password crackdown was more muted than had been expected, even by the company’s own account.
2023 Lowlight: Squid Game: The Challenge may have already gotten a Season 2 renewal, but the competition-show spinoff’s mere existence confounded many. Wasn’t the scripted Squid Game intended as a pointed critique of the idea of desperate contestants jumping through endless hoops to win cash prizes?

Challenge for 2024: Showing ROI from video games. Two years into the effort, Netflix now has almost 90 games on mobile and is moving toward making more of them available on computers and connected-TVs. It has also licensed Grand Theft Auto and plans a new Sonic game next year, along with a host of synergistic titles leveraging the popularity of episodic titles like Too Hot to Handle, Squid Game and The Queen’s Gambit. But it’s crowded out there. Can Netflix break through or is this all a cash-siphoning distraction kind of like, well, DVDs?

Biggest question: Will this be the year Netflix finally shows its ability to build true franchises from its own roster of originals?

Paramount+​

2023 Highlight: Utilizing innovative partnerships to drive streaming growth, including Walmart+ and Delta Airlines in the U.S. Paramount Global CEO Bob Bakish, who rose through the ranks as an international exec, has also overseen a number of “hard-bundle” deals with distributors in key territories. Paramount keeps less of the profit (and sometimes the viewership data) from these deals, but they are a less-expensive way to acquire subscribers.

2023 Lowlight: A lack of buzzy original titles. Barely anything from the service cracked the Nielsen streaming Top 10 this year, aside from Taylor Sheridan fare and Star Trek: Strange New Worlds. The rebrand of the combined service, now called Paramount+ With Showtime (just like the linear channel), has also landed awkwardly in some corners.

Challenge for 2024: Proving to Wall Street that it has a path to profitability is Job 1, while 1A is trying to generate more compelling programming. On the latter, embracing live and linear in streaming may hold the key. P+ wouldn’t have to look far for that kind of cost-efficient boost and could more closely align with well-oiled corporate sibling Pluto TV.
Biggest question: What would a new corporate owner do with Paramount+? With Shari Redstone fielding offers for her family’s controlling stake in Paramount via National Amusements and Bakish and Warner Discovery CEO David Zaslav also having discussed a merger, the fate of streaming is uncertain heading into the new year. Some Wall Street voices have called for the streaming service to be shuttered in the name of cost savings, but those 63 million subscribers are likely worth something to somebody. A joint venture could also be an option.

Peacock​

2023 Highlight: Peacock has seen big gains in live streaming for sports, especially NFL, this year and finally had some breakout scripted originals including Poker Face and Mrs. Davis.

2023 Lowlight: While it saw subscriber growth this year (to 30 million, Comcast president Mike Cavanagh said this month), Peacock is still toward the back of the pack and also still booking losses.

Challenge for 2024: Although Peacock is filled with popular new-release films and series from NBCUniversal, the company will need to find a way to help its flagship service stand out as more than a synergy play in a sea of streaming originals.
Biggest question: The streamer is hosting an exclusive live NFL playoff game in January (with no commercials in the fourth quarter, in an interesting gambit). Premier League and WWE have been major tentpoles for viewers. How much will Peacock’s content strategy continue to lean into live sports?

Prime Video​

2023 Highlight: Thursday Night Football, in its second year as an Amazon exclusive, posted double-digit gains in viewership through most of the season. The games were higher-caliber (at least on paper) and the tech giant’s telecast overall seemed more sure of itself. Also, the suspicion that tech glitches could ruin the transition from linear TV has all but vanished, with the stream remaining stable despite broadband providers reporting that TNF eats up 25% of their total capacity on game nights.

2023 Lowlight: The news that advertising will run on Prime Video programming starting in early 2024 is certainly logical from a business standpoint. Consumers, though, will have a different experience than Netflix subscribers, who were offered an ad-supported tier as an alternative only if they wanted to trade down to a cheaper plan. On Prime, members will have to shell out $3 per month (on top of their $139 a year Prime membership, or $9 monthly Prime Video subscription) in order to not be shown ads.

Challenge for 2024: As in recent years, Prime Video will come into 2024 in need of refining its identity when it comes to original shows and films. It has racked up sizable viewership for series like Reacher or movies like Candy Cane Lane, but the current big-tent era has not yielded as many platform-defining titles that Prime Video had in the 2010s. Strategically, that may not be a bad thing. With companion outlets like Freevee, Twitch and Prime Channels enabling the Amazon video experience to emulate the e-commerce ideal of “the everything store,” there may be less urgency to find the next Squid Game or Mandalorian. But that fact can sometimes make Prime originals a little tricky to define.

Biggest question: How aggressive will the company be in trying to acquire more sports given the success of its NFL telecasts and its commitment to Major League Baseball and other top leagues? The NBA’s current rights deal with Disney and Warner Bros Discovery is set to expire after the 2024-25 season. Prime Video has often been mentioned as one of the likely suitors as the league looks to slice a piece of its growing pie for a tech partner.

 

[Elijah Abrams]

https://puck.news/warners-paramount-and-the-allure-of-mutual-desperation/

Warners, Paramount, and the Allure of Mutual Desperation
Notes on Zaslav’s leaked meeting with Bakish, the deal chatter choreography, and the Comcast of it all.
by Matthew Belloni - 12/22/23

My report two weeks ago on Shari Redstone’s talks with David Ellison’s Skydance and RedBird Capital seems to have sparked a feeding frenzy on Paramount Global and its parent, National Amusements, Inc. One or both of these companies almost certainly will be sold/merged in 2024, but it’s probably not worth getting especially worked up (yet!) about the Warner Bros. Discovery talks, first reported yesterday by Axios. I confirmed that a long meeting did take place between WBD’s David Zaslav and Paramount’s Bob Bakish. But Bakish can put on a little top hat and hawk his assets like a sidewalk salesman to anyone and everyone, the only thing that matters here is whether a deal passes the Shari test.

Redstone controls nearly 80 percent of Paramount voting stock via NAI, and every indication is that she’s not gonna bless a deal that sends her to Siberia—or at least sends her to Siberia without the billions she believes the company is actually worth. And she believes it’s worth a lot more than the $10 billion market cap and $15 billion in debt. When Zaslav, his C.F.O. Gunnar Wiedenfels, and the bankers at Allen & Co. get under the Paramount hood, as is expected in the coming weeks, let’s see how much they think it’s all worth. Then the task will be for Bakish to sell Shari on this or another deal, all while Shari carries on her own talks for NAI. Shari and Bob can hopefully use all this bluster to lure other bidders, notably Brian Roberts at Comcast, who took a hard look at MGM before it ultimately sold to Amazon in 2021.

So far, Shari’s been willing to part with pieces of her father’s empire, hence the Simon & Schuster sale and the recent resumption of talks to offload BET to a management-led group including C.E.O. Scott Mills. (Which, predictably, prompted Byron Allen to scream, Remember me? What about selling to me?) But all of Paramount or National Amusements? That will require a great pitch to Shari, despite the worsening financials and the increasing danger of a debt-bomb death spiral. That’s why one Paramount observer I trust surmises that the news leak of the Zaz overture may be Bakish trying to engineer something for Paramount before Shari can sell National Amusements—something that Shari and her adviser Byron Trott can live with, but that also benefits Bakish. Remember, Paramount just changed its compensation structure to reward Bob and his team if there’s a change in control.

Why Now?​

Both Paramount and Warner Discovery stocks are down since the news broke, suggesting the market doesn’t believe there’s much to gain by smashing together two legacy film and TV studios, as well as linear networks HBO, CNN, and TNT with CBS and Nickelodeon, plus the streaming service Max with Paramount+ and Pluto TV. Synergies and cost efficiencies, yes. But it doesn’t solve the underlying problems plaguing the legacy studios: TV advertising likely won’t ever recover, and analysts expect cord-cutting to erase another 25 percent of cable subscribers in the next few years. Consolidation seems to be the only play these C.E.O.s have, or at least the only play they think they have. In addition to Zaslav, I’m told Bakish also sat down with Comcast’s Roberts after a recent media conference, and no wonder. No one wants to be the guy who throws in the towel, says Streaming is hard!, and retreats to the role of studio supplier for someone else’s business—even if that might be the most prudent path for a subscale player like Paramount.

I also believe Zaslav would like the Paramount assets, not because a merger means a potentially bigger paycheck, or even because it makes all that much financial sense, given the more than $40 billion in debt the company still carries and the April horizon to do a deal without major tax implications. (John Malone, his investor and longtime patron, has intimated from the beginning of the WarnerMedia-Discovery transaction that this might be the first of several roll-ups.) Zaz probably doesn’t want to just offload this thing to Comcast, even if regulators allowed it. Maybe he’d run the combined NBCUniversal/WBD, but maybe not. Maybe he’d be forced to take more long walks on the beach with Nick Pileggi in the Hamptons. The guy wants legacy and notoriety, and the ability to go toe-to-toe with Disney and Universal as the last of the legacy Hollywood studios fighting Big Tech. Selling WBD or merging it with Comcast might end that quest; being the aggressor for Paramount and scaling up extends the Zaz dream, as long as his shareholders are on board for the ride.

Zaslav has a big ego and he must be stopped!

 

[wabbott]

Zaslav has a big ego and he must be stopped!

A big ego in Hollywood?!?! Say it ain't so, Joe! Say it ain't so!

 

[wabbott]

https://deadline.com/2023/12/box-of...st-kingdom-migration-color-purple-1235680766/

Christmas Box Office Slows Down: ‘Aquaman 2’ $38M-$39M, ‘Wonka’ $26M, ‘Migration’ $17M & More – Sunday Update
by Anthony D'Alessandro
Dec. 24, 2023 - 5:56 AM PST

24, 2023 5:56am

CHRISTMAS EVE SUNDAY AM: Moviegoing wasn’t solid yesterday due to the last minute-shopping rush, and it will take a further tumble today as many break for Christmas celebrations. This means most titles are coming in lower than expected. Don’t blame any massive winter storm for this year’s lackluster Christmas box office: There’s no FOMO with this crop of theatrical releases; everyone can wait a day or later in the week to see them. No one is going to fill left out at the dinner table having missed a second round of Jason Momoa’s waterboard stomach.

On average, today’s box office will drop -40% from Saturday. But on Christmas Day, all pics on average will jump +112%.

Warner Bros/DC’s Aquaman and the Lost Kingdom made an estimated $8.7M yesterday, -36% from Friday/previews putting its 3-day around $27.6M with a 4-day between $38M-$39M. Now, these are industry estimates, not Warner Bros.’, so it’s possibly by EOD tomorrow, the David Zaslav-run entertainment conglom calls the 4-day opening for this James Wan directed sequel at $40M.

The studio’s Wonka at $7.2M yesterday, was actually up from Friday by +11% which would yield a second weekend of $18M and $26M 4-day. Cume through EOD Monday looks to stand at $83.5M.

While families went to Wonka yesterday, they eased on Illumination/Universal’s Migration with $4.1M, -29% from Friday/previews for a 3-day of $12.3M and 4-day of $17M.

Sony’s Anyone But You posted $1.75M yesterday off -50% from Friday/previews for $6M 3-day and 4-day between $8M-$9M.

With $1.7M on Saturday, -32% from Friday/previews, A24’s highest CinemaScore movie ever, The Iron Claw, looks to meet its forecast from yesterday with $5.5M and $7.8M.

Moksha Movies and Pathyangira Cinemas’ gang war movie Salaar Part 1: Ceasefire made $1.05M yesterday for a 3-day of $5.6M and 4-day of $6.8M.

Again, these are all industry estimates as of this morning; not studio-reported.

 

[wabbott]

https://www.wsj.com/business/media/...etflix-thats-a-problem-for-streamers-86b132f8

Your Kid Prefers YouTube to Netflix. That’s a Problem for Streamers.
Major streaming services test releasing children’s content on YouTube and cut back on fare for kids
By Jessica Toonkel
Dec. 25, 2023 5:30 am ET

The first episode of ‘CoComelon Lane’ was released on YouTube a week before the series came to Netflix.

When Loren Levy’s son Simon was little, he loved watching “Thomas & Friends,” the British cartoon about a talking train. That changed when Simon turned 8 and began watching videos on YouTube.

“Now, all he wants to do is watch gamers and basketball clips and highlights on YouTube,” said the South Orange, N.J.-based human-resources consultant. She can’t persuade him to watch anything else.

The Levy family learned what has become clear across the media industry: When it comes to children’s entertainment preferences, YouTube trumps all.

Netflix’s share of U.S. streaming viewership by 2- to 11-year-olds fell to 21% in September from 25% two years earlier, according to Nielsen. Meanwhile, YouTube’s share jumped to 33% from 29.4% over the same period.

That reality is changing major streaming services’ approach to children’s entertainment, from what shows and movies they make to where they release them. Many are pulling back on investments in children’s content, and some streamers have started content for young viewers on such platforms as Google-owned YouTube and Roblox.

Entertainment companies recognize that youths are increasingly drawn to short-form content, not longer shows on streaming services, said Michael Hirsh, co-founder of WOW Unlimited Media, a Canadian animator.

“These viewers are watching on their iPads or on other platforms that have moved to shorter and shorter segments, and it’s a real issue for the streamers,” said Hirsh.

When Toronto-based Spin Master released its animated children’s film about a school where students learn to ride unicorns, it made its debut on Roblox in September and was released on Netflix about two months later. The studio also released half of “Unicorn Academy” on YouTube in October, and Netflix released the second half of the movie on its own YouTube channel at the same time.

It’s really about following the consumer,” said Jeremy Tucker, global chief marketing officer at Spin Master, the studio behind major children’s franchises including “PAW Patrol.”

To get the rights to one of the biggest preschool animated hits, “CoComelon,” the streamer agreed with the show’s creator, Moonbug, to let the show remain on YouTube, where it started and continues to air. While the streamer has long had children’s channels on YouTube, such as Netflix After School, it has been resistant to putting full episodes of children’s originals on the platform for fear of cannibalizing its audience, according to people familiar with the situation.

That has started to shift recently. Last month, Moonbug, with Netflix’s blessing, released the first episode of a CoComelon spinoff series, called “CoComelon Lane,” on YouTube a week before the series came to the streamer.

Sony, with Netflix’s permission, in recent weeks launched a YouTube channel of episodes and clips from its “The Creature Cases” preschool series on Netflix to help draw a bigger audience, according to a person familiar with the situation.

As recently as a few years ago, entertainment companies such as Netflix and Warner Bros. Discovery, then WarnerMedia, ramped up their animated divisions. They saw cartoons—and youth programming in general—as essential to keeping subscribers as families want to keep services with shows their children watch.

Research showed that families with children canceled their service at a lower rate than households without them, said Tom Ascheim, a veteran Disney children’s programming executive hired by Warner in 2020 to oversee a new division creating shows for children and young adults.

“Every piece of data showed that households with children watch more and were less likely to churn,” said Ascheim, who recently co-founded Pith & Pixie Dust, a consulting firm that works with companies on attracting younger audiences.

Warner executives found that if young children watched franchises like Batman, the longtime value of that household as a subscriber was three times as large as one that hadn’t watched them, said a person familiar with the situation. Children’s shows were also thought to attract global audiences because the story lines are often universal and animation is easy to dub in foreign languages.

Under Ascheim, Warner’s new kids and young adult division planned a host of new shows for its linear networks and for Max.

Then austerity set in. After Warner merged with Discovery in April 2022, it made cuts to its animated and children’s division as part of an effort to reduce costs and pay down debt.

Ascheim’s position was eliminated, and many of the cartoons planned for what is now Max were shelved or licensed to competitors. The company pulled episodes of “Sesame Street” from Max to save money and has said that while it will continue to offer some children’s programming, Max’s focus is more on adults and families.

Netflix has also slimmed down its slate of animated children’s originals, opting instead to rely more on third parties such as Skydance Animation, with which it just signed a multiyear deal to do animated films. Now, Netflix is focusing its youth programming resources on bigger swings, such as the animated film “Leo,” starring Adam Sandler, its biggest animated debut ever in terms of views.

The eight largest U.S. streamers, including Netflix, Warner’s Max and Amazon Prime Video, added 53 originals catering to children and families in the first half of the year, down from 135 for the first half of 2022, according to Ampere. That represents a decrease of 61%, compared with a 31% decrease in overall originals across these streamers for the same period.

Among the challenges streamers have confronted in making children’s content is kids’ tendency to seek out characters they know. It is hard to make new ideas break through.

“It is really difficult to build new franchises, especially in this fragmented streaming market,” said Jeff Grossman, head of programming for Paramount+, which features such franchises as Nickelodeon’s “SpongeBob SquarePants, “Teenage Mutant Ninja Turtles” and “PAW Patrol.” Children’s programming is consistently the most-watched content on Paramount+.

That is particularly true when these companies are going up against Disney, whose Disney+ streaming service is still core to families with young children, including such big hits as “Bluey,” major animated films and Mickey Mouse.

It takes time to create animated fare, which means entertainment companies have to approve multiple seasons if they want to keep their audience before they get too old to watch the show anymore.

That is what happened with Caleb Mogil, who at 3 years old couldn’t stop watching “Charlie’s Colorforms City,” an animated series on Netflix. In the show, Charlie, a boy made out of the Colorforms stickers, takes viewers on adventures with shapes and colors.

Caleb loved the first season, but the second season wasn’t released for 2½ years, said his father, Ben Mogil, who is managing director of Qualia Legacy Advisors and has worked with animation studios.

By that time, Caleb had already moved on to the animated version of the British comedy “Mr. Bean,” on Amazon Prime Video.

Write to Jessica Toonkel at jessica.toonkel@wsj.com

 

[Jrb1979]

https://www.wsj.com/business/media/...etflix-thats-a-problem-for-streamers-86b132f8

Your Kid Prefers YouTube to Netflix. That’s a Problem for Streamers.
Major streaming services test releasing children’s content on YouTube and cut back on fare for kids
By Jessica Toonkel
Dec. 25, 2023 5:30 am ET

The first episode of ‘CoComelon Lane’ was released on YouTube a week before the series came to Netflix.

When Loren Levy’s son Simon was little, he loved watching “Thomas & Friends,” the British cartoon about a talking train. That changed when Simon turned 8 and began watching videos on YouTube.

“Now, all he wants to do is watch gamers and basketball clips and highlights on YouTube,” said the South Orange, N.J.-based human-resources consultant. She can’t persuade him to watch anything else.

That's all my 4 year old watches.

 

[wabbott]

https://finance.yahoo.com/news/disney-reliance-sign-non-binding-054036854.html

Disney, Reliance sign non-binding agreement for India media operations merger - ET
Reuters
Sun, December 24, 2023 at 11:40 PM CST

BENGALURU (Reuters) - Reliance Industries, India's most valuable company, and Walt Disney signed a non-binding term sheet to merge their Indian media operations, the Economic Times reported on Monday, citing sources it did not name.

Under the merger Reliance would own 51% through a combination of shares and cash, with Disney holding the remaining 49%, giving more control to Indian billionaire Mukesh Ambani's Reliance group, the newspaper said.

The deal is likely to be completed by February, with Reliance aiming to finish the process by the end of January, subject to regulatory approvals, it said.

Reliance and Disney did not immediately respond to Reuters requests for comment.
Reuters reported two weeks ago that company executives were meeting in London to discuss the next stage of the media merger.

A merger would create one of India's biggest entertainment empires, competing with television interests such as Zee Entertainment and Sony, and streaming giants including Netflix and Amazon Prime.

Reliance runs many TV channels and the JioCinema streaming app through its media and entertainment unit Viacom18. Ambani has been locked in a fierce battle with Disney, offering free streaming of the Indian Premier League cricket tournament, whose digital rights were once with Disney in India.

This has sparked a user exodus from Disney's streaming app Hotstar in recent quarters. Since early this year, Disney has been exploring a sale or joint venture partnership for its India business, which includes many TV channels.The proposed deal would create a unit under Reliance's Viacom18 to take control of Star India through a stock swap, the Economic Times said. The parties are working on a plan to invest $1 billion to $1.5 billion in the business, it said, without specifying whether this was the total or the amount each would invest.

The board is expected to include an equal number of directors from Reliance and Disney, with at least two representatives each, the newspaper said. They are also in consideration of having at least two independent directors, but this might change in the coming weeks, the report said.

 

[wabbott]

https://www.hollywoodreporter.com/b...ix-executive-pay-change-hollywood-1235745460/

As Netflix Reworks Executive Pay, More Changes Could Be Ahead for Hollywood

The parade of CEO pay disclosures in regulatory filings in 2023 will be remembered for bad timing, ugly optics and symbolic shareholder votes.

by Georg Szalai
December 26, 2023 5:05am PST

Apple kicked off 2023 by unveiling that CEO Tim Cook had requested a pay cut following a drop in shareholder support for his compensation package. Then, on Dec. 8, Netflix disclosed changes to the streaming giant’s executive pay structure. The overhaul was seen as a reaction to a June vote — during the Writers Guild of America strike — when its shareholders symbolically rejected compensation packages for top execs.

Are other publicly-traded Hollywood giants up next to update their compensation policies in 2024?

Apple and Netflix could simply be seen as special cases, but critics on Wall Street and beyond have in the past urged companies to focus on shareholder friendliness. In November, AMC Theatres shareholders voted against the compensation packages proposed for its executive officers, including CEO Adam Aron, who was paid $23.7 million in 2022.

The parade of Hollywood CEO pay disclosures in regulatory filings in 2023 will be remembered for bad timing (those disclosures were made public right during the ramp up to the strikes) and ugly optics (huge paydays for executives during a labor standoff). On May 30, WGA leadership sent letters to both Netflix and Comcast to vote “no” on the companies “Say on Pay” proposal. “Shareholders should send a message to Comcast that if the company could afford to spend $130 million on executive compensation last year, it can afford to pay the estimated $34 million per year that writers are asking for in contract improvements,” WGA West president Meredith Stiehm wrote.

Those pay packages also were made after major layoffs in various parts of the sector from Disney, Paramount, Warner Bros. Discovery and many other media companies, leading to criticism from people in Hollywood and shareholders alike.

Disney traditionally unveils its latest executive pay towards the end of a year or start of the next, with Apple usually following in January, because their fiscal years end in the fall, but executive compensation season for most companies kicks into full swing in March and April.

That is when Netflix usually details its pay packages for the previous year, but it also usually previews its annual compensation targets late in the year. Its shareholders rejected the company’s 2022 pay packages by a 3-to-1 margin the non-binding “Say on Pay” vote. Netflix reacted in October by promising “substantial changes” to its CEO and executive pay packages. “We recognize we don’t have wide support for our executive compensation model of the last 20 years,” the company acknowledged, vowing to switch to a “more conventional model.”

While it touted its “pay for performance” focus, Netflix has in the past allowed execs to choose how much of their pay they receive in cash and how much in stock options. For top execs, institutional investors generally prefer a relatively low salary though, plus performance-based bonuses and stock options. That is known as ensuring that executives have real “skin in the game.”

So on Dec. 8, Netflix disclosed 2024 target compensation packages worth $40 million for co-CEOs Ted Sarandos and Greg Peters. But “to address shareholder concerns,” the cash salaries for both will amount to $3 million, with performance-based cash bonuses with a target of $6 million and restricted stock units and performance stock units worth $15.5 million each.

Meanwhile, Apple said in early in 2023 that Cook would see a more than 40 percent cut to his total compensation from $99.4 million to $49.0 million after an advisory “say on pay” vote only showed approval from 64 percent of voting shareholders, down from 95 percent for Apple’s fiscal year 2020.

The tech giant reduced the number of restricted stock units Cook would receive if he retires before 2026 and said that 75 percent of his vesting shares would be tied to Apple’s stock performance in 2023, up from 50 percent, strengthening the “pay for performance” proposition.

While Hollywood powerhouses don’t typically give top execs a choice between cash and options, the Netflix move and other pay trends across corporate America could well get analyzed across town as companies assess if any major or symbolic updates to compensation policies may be needed amid some low shareholder support for their exec pay.

“Companies that engage with their shareholders and address concerns are more likely to receive greater shareholder support for say-on-pay, while those who don’t will probably continue to get lower support,” corporate governance and compensation advisory firm ISS Corporate Solutions highlighted in a 2022 report. It calls less than 70 percent shareholder support in “say on pay” votes as “low support.”

Recent votes show such low support among shareholders of some Hollywood and tech giants. Warner Bros. Discovery, led by CEO David Zaslav, disclosed that just 51 percent of the shareholder votes cast in its non-binding 2023 “say on pay” vote approved its compensation packages, with Amazon reaching 68 percent. In comparison, Paramount Global and Fox received 96 percent approval in 2023, Comcast 92 percent, Disney 86 percent, and Alphabet 76 percent, per a Proxy Monitor tally.

One expert notes though that corporate America has moved towards more performance-based pay in recent years across sectors, including media and entertainment. “Over the last several years, the prevalence of performance-based equity has continually risen, while the opposite is occurring with time-based options,” says Courtney Yu, director of research at corporate leadership data firm Equilar. “Our research shows that 90.2 percent of the 500 largest U.S. public companies awarded performance-based equity to their CEOs in 2022, up from 82.1 percent in 2018. Meanwhile, 37.6 percent of companies granted time-based options in 2022, down from 50.4 percent in 2018.”

Yu adds, “Since 2011, when Say on Pay was first introduced, we’ve seen companies review and update their executive compensation plans in order to satisfy shareholders. While Say on Pay is advisory, and some companies have failed multiple times over the years, we’ve seen most companies move towards best practices, such as granting more in performance-based equity, which is what Netflix is planning to do.”

Most entertainment giants won’t have to face a shareholder Say on Pay vote until early next year.
Source: SEC.gov

The top executives who steered into layoffs and cost-cutting didn’t see big pay declines in most cases for 2022 compensation.

 

[fatmanatee]

Some chatter from THR about Illumination’s latest. Should be interesting to see what happens.

View attachment 814903

Update: 12.3 mil until Sunday, so the Christmas total might push it over 15. Since it was also mentioned here, Aquaman made 28 mil, would guess that it’s tracking for under 40 for the 4 day.