Legacy media companies enter dark times as failures mount and Netflix rises again

Companies
and
industries
have
ups
and
downs.
The
legacy
media
industry
is
in
a
valley.

The
first
half
of
2023
has
been
a
colossal
disappointment
for
media
executives
who
wanted
this
year
to
be
a
rebound
from
a
terrible
2022,
when
a
slowdown
in
streaming
subscribers
cut
valuations
for


Netflix,


Disney,


Warner
Bros.
Discovery
and


Paramount
Global
roughly
in
half.

Instead,
investors
have
once
again
become
excited
by
Netflix’s
future
prospects
as
it’s

cracked
down
on
password
sharing,
potentially
leading
to
tens
of
millions
of
new
signups.
Netflix
shares
have
surged
the
past
five
months,
outpacing
the
S&P
500.

Meanwhile,
the
legacy
players
can’t
get
out
of
their
own
way.

“When
it
rains
it
pours,”
said
LightShed
media
analyst
Rich
Greenfield.
“It
just
keeps
getting
worse.”

It’s
been
a
bumpy
ride
for
Disney
Chief
Executive
Officer
Bob
Iger

since
he
returned
to
lead
the
company
late
last
year.


Disney
recently
finished

laying
off
7,000
employees.
Chief
Financial
Officer
Christine
McCarthy

stepped
down
last
week.
The
company
is

pulling
programming
from
its
streaming
services
to
save
money.
Its
animation
business
is
in
a

major
rut,
with
its
latest
Pixar
movie,
“Elemental,”
recording
the

lowest
opening
weekend
gross
for
the
studio
since
the
original
“Toy
Story”
premiered
in
1995.
Shares
have
struggled
in
the
past
five
months.

Paramount
Global

cut
its
dividend
last
quarter
as
streaming
losses
peak
this
year
and
a
weak
advertising
market
exacerbates
a
terminally
ill
cable
network
business.
Wells
Fargo
released
an
analyst
note
Friday
saying
the
bull
case
and
the
bear
case
for
the
company
were
the
same:
selling
for
parts.
Warren
Buffett,
perhaps
the
most
acclaimed
investor
in
history,
told

CNBC
that
Paramount’s
streaming
offering
“fundamentally
is
not
that
good
of
a
business.”

NBCUniversal
has
weathered
the
storm
the
best,
shielded
by
its
parent
company,


Comcast,
which
gets
its
revenue
from
cable
and
wireless
assets.
It’s
also
taken
advantage
of
missteps
from
the
aforementioned.
MSNBC

became
the
No.
1
cable
news
network
this
month
for
the
first
time
in
120
weeks,
dethroning
Fox
News
for
a
week
amid
coverage
of
former
President
Donald
Trump’s
federal
indictment.
Universal’s
“The
Super
Mario
Bros.
Movie”
is

by
far
the
biggest
box
office
hit
of
the
year,
yet
shares
haven’t
moved
much.

All
of
this
is
happening
with
an
extended
Hollywood
writers’
strike
going
on
in
the
background
with
no
end
in
sight.
The
writers
know
the
longer
the
strike
lasts,
the
more
pain
will
be
inflicted
on
media
companies,
who
will
eventually
run
out
of
already-made
scripted
content.
Zaslav
recently

gave
a
commencement
address
to
Boston
University
and
was

drowned
out
by
boos
and
chants
of
“pay
your
writers.”

This
week
may
bring
even
more
bad
news.
Film
and
TV
actors

are
set
to
join
writers
on
strike
unless
they
reach
a
deal
with
Hollywood
studios
by
Friday.

The
beneficiary
of
Hollywood
work
shutdowns
will
likely
be
YouTube,
TikTok,
and
Netflix,
which
continues
to
churn
out
international
content
that
is
unaffected
by
the
strike,
said
Greenfield.

Legacy
media
may
get
a
small
reprieve
if
advertising
jumps
back
as
the
2024
U.S.
presidential
campaign
heats
up.
But
there’s
still
scant
evidence
investors
will
reward
media
companies
for
simply
cutting
costs.
There’s

currently
no
strong
growth
narrative
for
legacy
media,
and
consolidation
prospects
are
murky
as
regulators
block
media-adjacent
deals
such
as

Microsoft’s
acquisition
of
Activision
and
Penguin
Random
House’s
proposed
purchase
of
Simon
&
Schuster.

The
industry
just
wrapped
up
its
annual
advertising
gala
in
Cannes,
France.
Legacy
media
executives
still
spent
company
dollars
to
make
the
trip
to
hang
out
on
yachts
and
drink
rosé.
The

backdrop
was
as
beautiful
as
ever.

But
the
landscape
is
bleak.

Disclosure:
Comcast
owns
NBCUniversal,
which
is
the
parent
company
of
CNBC.

WATCH:
WPP
CEO
Mark
Read
on
the
state
of
the
advertising
market,
from
Cannes
Lions
2023