Received this email from a friend? Subscribe here.

Wednesday, July 19, 2023

TV and film production in Los Angeles plummets to levels not seen since the pandemic, Bob Iger finds himself in "damage control" mode, Joe Biden strikes success with a viral MTG campaign ad, Apple excites Wall Street with reported plans to jump into A.I. race, Microsoft and Activision postpone their merger deadline, and "Barbenheimer" looks to deliver the best box office weekend for theaters in years. But first, the A1.

THE A1

Netflix and Thrill

CNN Photo Illustration/MAXSHOT.PL/Shutterstock/AP

Hollywood is in a state of absolute agony, but Netflix had some reason to celebrate on Wednesday, with the streaming giant releasing a smash earnings report after implementing its long-anticipated plans to clamp down on password sharing. Here are some of the key highlights:

►Adds 5.9 million subs: Heading into the earnings report, investors were curious how much the company's crackdown on password sharing would boost subscriber growth. Well, now we know. And the numbers did not disappoint. Netflix added 5.9 million subscribers in the quarter — just one year after it had lost nearly a million subscribers. Expect Netflix, which now boasts 238 million global subscribers, to keep benefiting from this password sharing clampdown. The streamer boasted that "sign ups are already exceeding cancellations" and that it is implementing the password policy across the world now.

► BUT... Netflix did narrowly miss on revenue, with its stock 8%⬇️ in after hours trading as Wall Street remains concerned about streaming profits that are plaguing the industry at large. But, it's worth noting here that Netflix is still in its own league, having built a profitable streaming model while its legacy media competitors struggle to do so in an increasingly difficult environment.

► More free cash flow: Netflix, the first major media company to report earnings this quarter amid the chaos gripping Hollywood, upped its free cash flow $1.5 billion to approximately $5 billion for the year. The company cited "lower cash content spend" amid the writers' and actors' strikes that have brought content production to an absolute standstill.

► 'This strike is not an outcome that we wanted': During the earnings call, co-chief executive Ted Sarandos addressed the elephant in the room, saying he wanted to be "absolutely clear" that the dual strikes were "not the outcome" the streamer wanted. "We make deals all the time. We are constantly at the table negotiating with writers with directors with actors and producers with everyone across the industry," Sarandos said. "And we very much hoped to reach an agreement by now."

► Goodbye, $9.99 ad-free plan: Ahead of the earnings, Netflix axed its cheapest ad-free option in the U.S. and the U.K. The plan, offered at $9.99, is no longer available to new customers (those previously subscribed to the plan won't be impacted.) The decision to cut the bare bones plan appears aimed at pushing subscribers in that price tier toward the ad-supported model, which is priced at $6.99. The company has previously said the ad-supported model performed better on the "economics" than the $9.99 ad-free model.

——— BELOW THE FOLD ———

CNN Photo Illustration/Valerie Macon/AFP/Getty Images

Hollywood on Hold: Television and film production in Los Angeles plummeted in Q2 to levels not seen since the pandemic due to the writers' strike, according to a new report from FilmLA. "Before long, this sector's shutdown will be felt in every corner of the regional economy," FilmLA chief Paul Audley said in a statement. Winston Cho reported that the drop marks the sixth consecutive quarterly production drop. And with the addition of the actors' strike the studios are now facing, the state of affairs is only slated to get worse. Cho has more here.

HOLLYWOOD HELL

"How long will the guilds and their members be able to maintain a united front?" Brent Lang, Tatiana Siegel, and Matt Donnelly ask in their cover story into the chaos that has gripped Hollywood. (Variety)
Michael Hiltzik's point: "By the standards of their peers, Hollywood CEOs aren't all that overpaid. That's the problem." (LAT)
"The Hollywood strike can and must win – for all of us, not just writers and actors," contended Hamilton Nolan, noting its one of the first labor disputes grappling with the disruptive technology of A.I. (Guardian)
SAG-AFTRA president Fran Drescher ripped Bob Iger during a livestream with Bernie Sanders: "He stuck his foot in it so bad that you notice none of the other CEOs are opening their mouths." (THR)
The first part of Jon Chu's "Wicked" film was "only a few days away" from wrapping as SAG-AFTRA joined the WGA strikes. (The Wrap)
NBC will move up the final season of "Magnum, P.I." to Fall 2023 amid the ongoing strikes. (The Wrap)
Mandy Moore clarified her comments about the residuals actors are paid after saying she received, "very tiny, like 81 cent checks." (CNN)

THE BUSINESS

IN THE INDUSTRY

Confirming our reporting, Alexandria Steigrad reports that Bob Iger is in "damage control" mode after publicly stating Disney's linear television business "may not be core" to the company. (NY Post)
The Atlanta Journal-Constitution fired a top reporter after discovering "two elements" of an investigation into University of Georgia's football program did not meet its standards. (Online Athens)
Erik Wemple's question: "The disaster at hand surely justifies the dismissal of the reporter. But where were the editors? The story, as originally published, had a massive gap between what it alleged and what it documented. Isn't that at least partially the turf of editing staff?" (Twitter)
Deadline president Stacey Farish has exited the outlet after accusations of a hostile work environment, Jethro Nededog reports. (TheWrap)
Brian Steinberg points out that headlines about chaos at CNN have all but vanished: "Since the exit of former chief Chris Licht in June after a tenure marked by tumult and unwanted publicity, the gossip mill around the Warner Bros. Discovery-backed news outlet has ceased its once-dependable roar." (Variety)
"The Politico animal": Dylan Byers reports that "the return of John Harris to the top of POLITICO signals that the scrappiness and the ambitions of the old days may be back again." (Puck)
🔌 I spoke with Inside CNN about covering the media beat and how we put the "Reliable Sources" newsletter together each day. (Inside CNN)
iHeartMedia inked a deal with LinkedIn in a bid to beef up its podcast presence. (RadioWorld)
The Protect Reporters from Exploitive State Spying Act — which protects journalists from having to reveal their sources — cleared the House Judiciary Committee in a unanimous 23-0 vote. (Deadline)
Actor Noel Clarke sued The Guardian after the newspaper published eight articles detailing allegations of misconduct, which he denies, from 20 women who worked with him. (BBC)

MEDIA MOVES

The Ankler named Claire Atkinson a contributing editor. (The Ankler)
The NYT appointed Esther Bintliff as its U.K. editor. (NYT)
POLITICO hired Emily Ngo, Jeff Coltin, and Nick Reisman to author its New York Playbook. (POLITICO)

THE INFO WARS

CNN Photo Illustration/Saul Loeb/AFP/Getty Images

First in Reliable | Dark Brandon Downloads: The Biden campaign's trolling of Marjorie Taylor Greene in a campaign video has proven to be a viral hit. The campaign told me on Wednesday evening that with more than 49 million views across its social platforms, the spot is the second most engaged with video the campaign has posted since Inauguration Day. "A special thank you to MTG, an unexpected but effective spokeswoman for President Biden's record of delivering for the American people," Biden campaign spokesperson Kevin Munoz joked to me.

Bashing Barkley: In most circles, Charles Barkley is a celebrated figure, having had a storied career in the NBA and gained further fame as a sports commentator. But in right-wing media these days, Barkley has become something of a villain for his recent comments defending the LGBTQ community. Barkley, who will be hosting a CNN show with Gayle King later this fall, blasted those who have attacked the gay and transgender community. "If you're gay, God bless you. If you're transgender, God bless you," Barkley recently said at a bar in comments that have since gone viral on TikTok. "And if you have a problem with that, f**k you." Those candid comments have led to the NBA legend being assailed on Fox News, in talk radio, and on right-wing websites. Mark Levin said he can "go to hell," The Gateway Pundit called his speech "disgusting," and Jesse Watters wondered, "What happened to Sir Charles?" MMFA's Jack Wheatley has more here.

IN THE BATTLEFIELD

Hunter Biden mania: A House Oversight hearing in which two IRS whistleblowers testified was treated like Watergate by right-wing media on Wednesday. While most news outlets covered the hearing (here's CNN's story), it scored top billing from outlets such as Fox News, Breitbart, Newsmax, and others. In that universe, the story was sensationalized and used to advance the storyline — yet again — that President Biden is maliciously using the Department of Justice to target his political opponents while letting his allies skate.
Helen Lewis: "Before his stump speeches in his reelection campaign last year, Ron DeSantis liked to play a video montage that showed him being gratuitously rude to reporters at press conferences. ... Last night, though, Dunking Ron was replaced, briefly, by Conciliatory Ron." (Atlantic)
Jack Shafer: "Rather than use a rare interview with a mainstream news organization to showcase a new strategy or tweak his image and broaden his appeal to the centrist CNN audience, DeSantis remained true to his own self." (POLITICO)
Erick Erickson points out that, among many conservatives, DeSantis performed well in the interview: "He needs to do more interviews outside of the conservative media space." (Erick Erickson)
An important story: "Right-wing radio host and Turning Point USA founder Charlie Kirk has spent years attempting to establish himself and his organization as pillars of the conservative movement while maintaining extensive ties to far-right extremists, including election deniers, white nationalists, and antisemitic conspiracy theorists," John Knefel and Jacina Hollins-Borges report. (MMFA)
Sean Hannity's town hall with Donald Trump drew 2.9 million viewers. (The Wrap)
"I feel free, free at last": Geraldo Rivera told Alisyn Camerota that he feels "liberated" after exiting Fox News. (Mediaite)

THE VALLEY

CNN Photo Illustration/Robert Galbraith/Reuters

The Apple of Their A.I.: Shares in Apple spiked at 12:03pm ET Wednesday, moments after Bloomberg published a report indicating the Silicon Valley titan is working on generative A.I. tools to challenge OpenAI and Google. The report, authored by Mark Gurman, said Apple has created a chatbot known internally as "Apple GPT" and that in recent months it has become a "major push" for the company "with several teams collaborating on the project." Apple, of course, declined to comment. Read the full report.

TOO MANY TABS

Microsoft and Activision said Wednesday that the companies had agreed to postpone their merger deadline by three months. The move allows both companies to overcome regulatory hurdles in the U.K. necessary to close the $69 billion deal. (CNN)
First in Reliable | Peter Kafka is set to take a close look at Twitter for the next season of Vox Media's acclaimed "Land of the Giants" podcast. The Twitter series will drop in October, to mark the one-year anniversary of Elon Musk's chaotic takeover of the platform. Meanwhile, on July 26, the narrative franchise will drop its new season focused on "the Tesla shock wave." More details on that here.
Twitter's "surge in harmful content" is a "barrier to advertiser return," Aisha Counts and Eari Nakano report. (Bloomberg)
After the Bloomberg report, Twitter chief executive Linda Yaccarino denied the social media platform is toxic, saying that "only a small amount of content requires enforcement." (The Wrap)
Social media's latest trend: Wholly A.I.-generated influencers. (Futurism)
The Department of Justice and Federal Trade Commission released a new draft of guidelines for corporate mergers that reflects worries about "platform companies." (CNN)

CURTAIN CALL

CNN Photo Illustration/Universal Pictures

Blockbusters at the Box Office: This weekend is shaping up to be one of the biggest at the box office in years. BoxOffice Pro on Wednesday projected "Barbie" to make a staggering $140-175 million and "Oppenheimer" to rake in $52-72 million. Meanwhile, BoxOffice Pro estimated that "Mission: Impossible" will add nearly $26 million to its domestic total, "Sound of Freedom" to add $21 million, and "Indiana Jones" to add $7.4 million. In sum, a monster weekend for theaters across the country.

► Driving some of the sales is the viral "Barbenheimer" trend: The National Association of Theatre Owners estimates that some 200K moviegoers will see both "Oppenheimer" and "Barbie" on the same day in the U.S.

► What they're saying: "If pre-sales and countless social media memes are any indication, Barbie and Oppenheimer are a true pop culture moment that cannot be stopped," BoxOffice Pro chief analyst Shawn Robbins told me. "For two wildly different films to be courting this level of success simultaneously is sweet summer music to the ears of theater owners, studios, and movie fans craving fresh content on the big screen."

OFF STAGE

The review embargo has been lifted on "Oppenheimer" — and the reviews are overwhelmingly positive. With 129 reviews in, the bio-epic is boasting a 93% score on Rotten Tomatoes. (Rotten Tomatoes)
Warner Bros.'s "Aquaman and the Lost Kingdom" is currently going through an unprecedented third round of reshoots. (THR)
The prosecution in Kevin Spacey's sexual assault trial in the U.K. alleged the actor used his status as a celebrity as an "opportunity grab." (AP)
The trailer for the second season of Amazon Prime's "Wheel of Time" has dropped. (YouTube)

Thank you for reading! This newsletter was edited by Jon Passantino and produced with the assistance of Liam Reilly. Have feedback? Send us an email here. We will see you back in your inbox tomorrow.