Wall Street is worried about the future of media.
"Is anything good happening?" analyst Rich Greenfield asked Friday afternoon. The bundle is falling apart. Streaming has slowed. Right now, name a good business.
It's a challenging time for most Wall Street experts, especially those like Greenfield who have been confident in their view of the future. The co- founder of LightShed Partners is a critic of traditional media firms resisting the transition to the internet.
The investors have agreed to buy shares in online media companies.
They have soured on the entertainment and media sector recently. In the first half of the year, shares in bothNetflix andSpotify have plummeted. The shareholders of once-invincible companies like Meta andAlphabet are suffering.
The entire S&P 500 is down for the year, but technology companies lost over $1 trillion in value in April. Amazon had its worst month in 20 years.
Media stocks have fallen because of doubts about streaming.
The data is provided by Bloomberg.
Analysts attribute the stock decline to a confluence of events, starting with apandemic that has altered human behavior.
People who were stuck at home used their free time to binge watch TV shows and shop online as a result of the Pandemic. That boosted the stocks to new heights. People are spending more time outside now that the world is opening back up.
The struggles of some internet companies have been celebrated by Hollywood. That enthusiasm is not correct. Good outcomes for older businesses like cable or movie theaters are not affected by their struggles. The head of the largest movie theater chain in the U.S. told my colleague Kelly Gilblom that the business won.
The old is out of favor at the same time as the new.
Restaurants, hotels and airlines are the primary beneficiaries of our desire to leave the house. Disney's share price is down 28% this year, but media companies that own theme parks should benefit. Live Nation is a concert promoter.
It's going to get worse before it gets better for most of these businesses. Many consumers are price-sensitive because of inflation. Michael Nathanson said that subscriber growth for video services is slowing at the same time that spending on production is ramping up. The illusion of better profit margins was created by the delayed production on many shows. Costs are going up again.
Russia's invasion of Ukraine and supply-chain issues have hurt the advertising market. The disruptions have slowed the delivery of new set-top boxes, as well as marketing buys from companies who can't ship the products they want to advertise. The forecast for advertising growth has been lowered by the company.
The economy seems to be on the verge of a recession. Corporate chiefs argue that consumer spending is still high and that a recession is premature.
It is difficult for companies, analysts and investors to predict the future.
It is safe to assume that people will still buy more goods using the internet. The amount of time people spend streaming audio and video is still rising despite the decline of streaming. Advertising is not reverting to billboards and radio.
It's hard to know if the financial results of so many firms are temporary or a sign that many of these businesses have entered a more mature phase. If it is growing at just a few months ago's rate, it is less appealing as an investment.
The era of peak content was ushered in by the rapid growth of online media. Every day there is more video, audio and media produced and released. We were spending more because of that surge in output. It feels like we could be entering a new phase.
Advertising sales were below what Wall Street had expected. Privacy changes are partly to blame. The product for short-form video isnibalizing views of other videos.
The shorts were created because of the competition from TikTok. New creators were finding it hard to find a large audience on the video sharing site. TikTok made it very easy to get famous. The shorts promised a blank slate. Video recommendations wouldn't be influenced by the old method.
You might think of it as a website for short-form video. Between 10 minutes and 20 minutes are the most popular times on the site. There are shorts that are seconds in length.
Many creators were able to find viewers on the video sharing site. Long-time creators found that shorts were more than just bringing in new viewers. They were suppressing the views of their longer videos. It's a problem since regular YouTube videos make more money than shorts.
The marketing division was part of a larger restructuring.
It is tempting to see this as a result of the company's poor financial results last week. The changes have been in the works for a while. When you cycle through three chief marketing officers in five years, it's hard to find a marketing strategy. This is the second time in three years that the marketing division has been restructured.
Tudum, a poorly named strategy for branded content that was doomed from the start, was worked on by many of the people who were laid off.
It all started with a memo. Disney Chief Executive Officer Bob Chapek put out a statement saying the company wouldn't take a position on a proposed law in Florida. Disney was hoping to sidestep the controversy. After just five months, Morrell is out of a job.
Here is Chris Palmeri talking about what went wrong.
Disney has become embroiled in one of its worst-ever public-relations crises, taking heat from critics on the left and right. Disney’s opposition to Florida legislation banning discussion of sexual orientation and gender identity in classrooms with kids third grade and younger prompted Governor Ron DeSantis and other Republicans to terminate a special municipal district the company has operated in Florida since the 1960s.
From my colleague Scott Moritz.
Big cable - Comcast Corp. and Charter Communications Inc. - have teamed up in a joint venture to battle Roku and Amazon Fire TV with their own box. Like the others, it will aggregate streaming services like Netflix and Peacock, so broadband customers can better manage their TV viewing choices.
Comcast is licensing its Xfinity Flex technology to the venture and Charter is paying $900 million to make it a team effort. While the streaming industry had a recent setback, it's nothing compared to cable TV's breathtaking freefall.
Comcast just lost a record half million subscribers in the first three months of this year. Charter is in the same boat. Together, cable's twisted pair need this online video service to help grab some of the pay-TV customers that were otherwise headed to the exits. The yet-to-be named JV launches next year.
I did a press tour to talk about the week.
You can hear me talking to Eric Newcomer and Matt Belloni.
Alta Fox is trying to replace three board members at a toymaker. The story was broken by Kelly Gilblom and Scott Deveau.
The letter escalates an ongoing battle between the largest U.S. toymaker and one of its biggest shareholders … Alta Fox has argued that Hasbro is undervalued due to the influence of members of the founding family.
There are more deals.
I love writing. I love his music. The Big Hit Show has stories about the making of works of art. You are going to get to the inside of Lamar's brain, based on interviews with just about everyone involved in the making of Lamar's "To Pimp a Butterfly".
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