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Wednesday, August 07, 2024

Disney achieves streaming profits, The NYT gains 300,000 digital subscribers, Democratic senators ask DOJ to probe Venu, Elon Musk trashes Kamala Harris, Instagram pivots to views as its primary metric, Taylor Swift cancels Vienna shows after a terror plot is foiled, "Interstellar" gets a December re-release date, "Deadpool & Wolverine" prepares to join $1 billion club, and more. But first, the A1.

THE A1

Warner in a Corner

CNN Photo Illustration/Arturo Holmes/WireImage/Getty Images

David Zaslav had a particularly tough day.

The Warner Bros. Discovery boss watched Wednesday afternoon as his company's already anemic stock price plummeted more than 10% in after-hours trading, hitting a dangerous new low of $6.90 after the company reported second quarter earnings.

The selloff occurred after WBD posted a $9.1 billion write down on its troubled network assets. It's a reflection of how quickly the traditional television business is deteriorating and imperiling companies such as WBD, which rely on linear channels for the bulk of their revenue. WBD owns some of the most recognizable cable channels, including CNN, HGTV, TNT, and TBS — all of which have seen worrisome audience decays as cord-cutting slices overall viewership and household reach.

For WBD, the rapid decline of the legacy business has been compounded in recent weeks by its very public breakup-turned-legal battle with the NBA — its partner of four decades — after the media giant attempted to use its matching rights to snag Amazon's newly acquired $1.8 billion per year package of games.

The one bright spot in the legacy television business has been live sports programming, which continues to draw high viewership even as cable cancelations mount. WBD, which is now suing the NBA over its divorce, acknowledged on Wednesday that the potential loss of games starting with the 2025-26 season will have a financial impact on the company.

"The goodwill impairment was triggered in response to the difference between market capitalization and book value, continued softness in the U.S. linear advertising market, and uncertainty related to affiliate and sports rights renewals, including the NBA," WBD said in its financial summary.

To be fair, WBD is not the only once-high flying legacy media behemoth struggling to find its footing in a shifting landscape upended by the Netflix revolution. Paramount Global, a one-time titan, has stumbled and found enormous difficulty reorienting its business around streaming. The Shari Redstone-led company, which struck a merger deal last month with David Ellison's Skydance, has lost 27% of its value this year.

Speaking candidly to investors on the company's earnings call Wednesday, Zaslav acknowledged the dire reality of the television business.

"It's fair to say that even two years ago, market valuations and prevailing conditions for legacy media companies were quite different than they are today," Zaslav said. "And this impairment acknowledges this."

Zaslav did talk up other parts of the WBD business, describing the company's Max streaming platform as "doing very, very well" with "tremendous upside." But even as he offered the warm sentiment, Zaslav conceded the cold reality of "tough conditions in the legacy business."

The hole WBD now finds itself in has led to enormous chatter that the company will be forced to sell off some of its assets. During Wednesday's earnings call, chief financial officer Gunnar Wiedenfels said management is "very well aware" of its "responsibility to have a view on whatever strategic options are out there."

"We're very clearly focused on evaluating beyond just running the operational business," Wiedenfels said. "So we've said before, you shouldn't be surprised to see us engaging in whatever M&A processes are going on out there. You shouldn't be surprised to see us engaging in partnership discussions."

That said, WBD has shown a reluctance to sell any of its major assets. And whether it can get out of the corner it finds itself in without taking such a step may prove to be difficult.

——— BELOW THE FOLD ———

CNN Photo Illustration/Kristina Bumphrey/Variety/Getty Images

Disney's Stream Dream: Disney has joined the small club of media companies that have managed to turn a profit on streaming. The Bob Iger-led Magic Kingdom reported Wednesday that it had managed to eke out a $47 million profit from its streaming unit, which houses Disney+, Hulu, and ESPN+, one quarter ahead of schedule. (For comparison, last year during the same quarter, Disney posted a loss of $512 million.) "We've made great progress," Chief Financial Officer Hugh Johnston told analysts. "We were losing $1 billion a quarter not that long ago." Overall, Disney posted a quarterly profit of $2.62 billion and revenue of $23.2 billion — both of which surpassed analyst expectations. But the good news for the company was overshadowed by the not-so-good news from its parks division, which saw profits slip 3.3%, offering up another worrisome indicator for the broader U.S. economy. The WSJ's Robbie Whelan has more here.

► Shares in Disney closed down a little more than 4% on Wednesday.

► Iger spoke about the "tremendous value" that NBA rights offer the company.

► Iger said that Disney will crack down "in earnest" on password sharing starting this fall.

► Meanwhile, Disney might have to pay NBCU another $5 billion for Hulu.

THE INDUSTRY

CNN Photo Illustration/Shannon Stapleton/Reuters

Times on the Rise: Shares in The New York Times Co. closed up more than 3% after the publisher reported strong Q2 earnings Wednesday. The NYT, which continues to be one of the few bright spots in the news media, said it had added 300,000 net digital-only subscribers, meaning the newspaper now has 10.2 million digital-only subscribers. Profits were up 13.6% year-over-year to $104.7 million. Chief executive Meredith Kopit Levien called it a "strong second quarter." Levien touted not only the outlet's news offerings, but also underscored that its "lifestyle products" mean it has "complimentary offerings in big spaces, each with multiple growth levers fueling multiple revenue streams." The NYT's Katie Robertson has more.

THE FOURTH ESTATE

Shares in IAC closed up nearly 7% after the company posted strong Q2 earnings, including a 24% rise in core profit. (Reuters)
How many debates will take place this fall? Zero, one, two? All the networks are jockeying for position. As one television executive put it to Brian Stelter, "The fall schedule is a blank piece of paper now." (Vanity Fair)
While we wait to learn more about a possible debate, President Joe Biden sat down with Robert Costa for his first interview since sharing he would not seek re-election. In the interview, which will air Sunday, Biden said he is "not confident at all" there will be a peaceful transfer of power if Donald Trump loses in November. (CBS News)
Bob Woodward's latest book, "War," will be published by Simon & Schuster on Oct. 15. (NYT)
"We're being censored right now": China censored a report CNN aired Wednesday night by correspondent Will Ripley about Tim Walz's policies pertaining to the country.
Speaking of CNN: The network launched a FAST channel focused on its original series portfolio, which touts shows such as "Parts Unknown" and "Chasing Life with Dr. Sanjay Gupta." (THR)
GB News now has 10,000 paying members and 100 million monthly page views, Charlotte Tobitt reported, citing internal tracking numbers. (Press Gazette)
NBC's "Dateline" is the subject of a big THR story in print. (Threads)

IN THE BIZ

In a letter, a handful of high-profile lawmakers, including Elizabeth Warren and Bernie Sanders, asked the Justice Department and FCC to probe Venu over antitrust concerns. (THR)
Not good! Sony Pictures Q1 profits fell 36% year-over-year to $73 million. (Deadline)
Another streamer price hike: Paramount+ will increase its prices on Aug. 20. (CBS News)
Roku is planning to launch its own FAST sports channel, which will feature MLB games. (THR)
Peter Kiefer takes a look at Telly, the intriguing new startup from Pluto TV cofounder Ilya Pozin, that offers people free 55-inch televisions. The catch? They have a second screen that broadcasts a non-stop feed of advertisements. (The Ankler)

MEDIA MOVES

CNBC Make It named Jessica Leibowitz senior director of video. (TBN)
The NYT named Ismaeel Naar a reporter. (NYT)
Bloomberg News has hired Newley Purnell to cover technology. (TBN)
Crain's New York Business hired Ethan Geringer-Sameth to cover health care. (TBN)

THE INFO WARS

CNN Photo Illustration/David Swanson/Reuters

Musk Crosses the X: Will U.K. lawmakers summon Elon Musk to testify before its parliament? It's a real possibility, Politico EU's Laurie Clarke reported on Wednesday. The erratic Donald Trump-supporting billionaire has spent the last few days stoking tension amid riots in the U.K., going as far as to say that "civil war is inevitable" and to direct attacks on prime minister Keir Starmer. Musk is "the one person who is accountable to no one," the U.K.'s technology minister, Peter Kyle, said in an interview published Wednesday, adding that he can have impact "not just on public discourse, but on actual facts on the ground." Per Clarke, lawmakers would like to probe Musk on the role social media has played amid the violence in the country. Clarke has more here.

IN THE BATTLEFIELD

Elon Musk continues to use his massive online platform to launch attacks on the Democratic ticket, declaring Wednesday that "Kamala is quite literally a communist." Imagine how loudly right-wing media figures would be complaining about bias if a Big Tech titan were assailing the GOP candidates!
Meanwhile, as Trisha Thadani reported, "A string of incidents raises questions about whether X is restricting accounts that oppose Musk's political views, or just mishandling a rush of political speech. (WaPo)
Over in right-wing talk, Charlie Kirk casually said Kamala Harris is "more ambitious than Lucifer." (MMFA)
It's worth remembering that the right-wing figures who make such comments have close ties to the leaders of the GOP. Case in point: J.D. Vance had a yearslong history texting far-right media figure Charles Johnson, per messages obtained and published Wednesday by Isaac Stanley-Becker and Beth Reinhard. (WaPo)

THE VALLEY

TOO MANY TABS

Meta raised $10.5 billion with its largest ever bond sale. (Bloomberg)
Instagram is making views the primary metric. (The Verge)
"OpenAI's brain drain isn't a great look for Sam Altman," argues Jordan Hart. (Business Insider)
Speaking of OpenAI: Winston Cho reports on how YouTube creators are stepping "into a legal battle" against the A.I. company with a class action lawsuit. (THR)

CURTAIN CALL

CNN Photo Illustration/Thomas Niedermueller/TAS24/Getty Images

Terror Targets Taylor: Taylor Swift on Wednesday canceled three shows in Vienna after authorities foiled plans for a terrorist attack, arresting two suspects who allegedly planned to carry it out. Swift was scheduled to bring her hit "Eras Tour" to the Austrian city Thursday, Friday, and Saturday. But upon learning of the terror plot, her concert promoter announced the pop star would no longer play the shows over security fears. "With confirmation from government officials of a planned terrorist attack at Ernst Happel Stadium, we have no choice but to cancel the three scheduled shows for everyone's safety," the concert promoter, Barracuda, said in a statement. CNN's Zahid Mahmood has more here.

PARIS 2024

In an age of fragmentation, the Olympics are showing how to glue all the shattered pieces back together, Brian Stelter writes. He spoke with NBC and Peacock executives about the summer games fever. (WIRED)
Dade Hayes goes inside NBC's remote Olympics production studio in Connecticut. (Deadline)
Netflix is working on three Olympics-focused documentaries that look at running, gymnastics, and basketball, respectively, as the streaming platform looks to beef up its sports content. (NYT)

OFF STAGE

"Deadpool & Wolverine" is set to join the $1 billion club this weekend as the film closes in on $900 million. (Deadline)
Mark your calendars: Christopher Nolan's space epic, "Interstellar," will soar back into theaters in December for its 10th anniversary. (Variety)
Steve Martin said he is aware "SNL" fans want him to play Tim Walz on the late-night comedy show. (THR)
Amazon Prime Video's new look is the product of customer feedback, VP of design Kim Keshmiri told Lucas Manfredi. (The Wrap)
Apple TV+ dropped the trailer for Alfonso Cuarón's "Disclaimer*," which stars Cate Blanchett and Sacha Baron Cohen. (YouTube)
Netflix released the trailer for "Adam Sandler: Love You," the comedian's latest special directed by Josh Safdie, out Aug. 27. (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. You can follow us on Instagram, Threads, and LinkedIn. We will see you back in your inbox tomorrow.

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