Late last week, Warner Bros Discovery filed their S-4 proxy statement tied to the pending merger of WarnerMedia and Discovery (link). We have the following seven observations/reactions to reading the document: 1) Relative Ownership Compromise: At the start of the negotiation between AT&T and Discovery, AT&T management wanted to own 75% of the combined business compared to Discovery at 25%, while Discovery management believed a 65%/35% split was equitable (with somewhere between $40-$42 billion of incremental debt). When the transaction … Continue reading Seven Reactions to Warner Bros Discovery Proxy and Will WBD Play to Win?
Hollywood talent cares about two things: making money and becoming famous. And of course, those are very intertwined over the long haul. When Netflix beat out HBO for House of Cards by guaranteeing two seasons upfront, it was easy for Hollywood to dismiss Netflix as simply overpaying talent for an individual piece of content. 8 1/2 years later, with massive global subscriber scale (over 213 million subscribers) and global ARPU now up to $11.73/month, Netflix is spending over $12 billion … Continue reading Netflix Unleashes Sonic Boom on the Film Industry: Money & Fame (Viewership)
The word metaverse is perhaps the most overused and misused term in 2021. As we exit Q3 earnings, the number of companies with plans to “build a metaverse” is mind boggling – even if their definitions or interpretations of the metaverse have little to no attributes of that always on, 3D interactive space with a functioning economy, where the whole world can gather at once with their chosen identity. In reality, there is one public company that has truly delivered the … Continue reading Seven Questions for Roblox’s Analyst Day, as We Assess Coming Metaverse Competition
Disney is set to report fiscal Q4 September 2021 earnings after the close this evening. These are the seven key questions and issues we are thinking about heading into earnings. 1) Do You Have a Hulu Strategy? Hulu has numerous challenges. Linear TV is dying, which has been the lifeblood of Hulu since its inception. Hulu viewership per subscriber is collapsing as we detailed in our streaming time spent post (link). NBC is set to shift an increasing amount of … Continue reading Seven Topics Bob Chapek Must Address on Tonight’s Disney Fiscal Q4 2021 Earnings Call
We are meaningfully raising our subscriber, revenue and EBITDA loss forecasts on FUBO (as shown in the chart embedded to the right) as they try to spin investors on the value of acquiring profitless subscribers that other MVPDs/vMVPDs did not want. To make matters even worse, FUBO has taken advantage of retail investors to raise substantial capital this year not only to finance its money losing vMVPD biz, but now to pour down the black hole of a sub-scale sports … Continue reading Fubo Can Overspend to Add Subs, but Cannot Spin its Way into a Viable Business
As cable (video) companies have transformed themselves into connectivity (broadband) companies, it is not surprising to see Comcast investors worried about the slowdown in broadband subscriber net additions (Comcast has lowered expectations twice in the past two months and Charter once). While it remains to be seen how much of the broadband slowdown is COVID pull-forward vs. competition, we see two other important questions that Comcast investors should be thinking about coming out of Q3 2021 earnings: 1) Peacock Investment … Continue reading Is Peacock Playing to Win and Why is Comcast Still So Focused on Video Biz?
It had been thought that being a major “platform” was the king position on the Internet. And, of course some of the Internet’s largest platforms are the biggest companies in the world – with millions of businesses built on top of them. Certainly the power of the social platforms was highlighted when these platforms even “trumped” the President of the United States. However, it has become clear that the power of even the largest social networks and communications platforms are … Continue reading The Facebook: Operating System Control Trumps the Most Powerful Platforms
Here are the eight key questions investors should be asking management on tonight’s Netflix Q3 2021 earnings interview (our Q2 2021 questions can be found here). 1. UGC vs. Professional Video Game Content. Translating Netflix show and movie IP to interactive is an important part of your games strategy. In the case of Roblox, it is happening for you, with many of the most engaged games a take on Squid Game. How do you view the success of Squid Game variations … Continue reading 8 Questions for Netflix’s Q3 2021 Earnings Interview Tonight
In our June 2021 post, New SVOD Entrants All Making Critical Mistake: Optimizing for Wrong Outcome(s), we stated: Bottom Line: tech companies are using content and programming to capture even more time spent per day driving addiction to their platforms, whereas legacy media companies are all now trying to become tech companies but they are failing to recognize the most important element of “winning” tech companies, which is controlling as much time spent per user per day as possible. Recent … Continue reading Netflix and YouTube Growing CTV Time Spent, as Disney, Hulu and Amazon Flatten, Losing Share to New Entrants
We have long believed the regional sports network (RSN) business model was not sustainable. RSNs’ cost structures are tied to team licensing agreements that escalate annually. At the same time, RSN distribution is dwindling due to cord-cutting and exacerbated by MVPD/vMVPD carriage drops. MVPD/vMVPD’s are demanding that RSNs agree to be tiered, similar to premium cable networks (think HBO or Showtime) or they will permanently drop RSNs. DISH has proven that dropping RSNs that refuse to be tiered is a … Continue reading Sinclair’s RSN Future Will Not Be Streamed #GameOver