Hollywood Strikes Magnify Media Tumult: “It’s Existential That We Have This Solution”

America’s largest media conglomerates already had a lot to contend with heading into their next earnings roadblock: the tough ad market, the challenging metrics of broadcasting, and the slow, agonizing death of traditional television. Now, as the handsomely compensated faces of these companies roll their latest quarterly financial results to Wall Street, a far more dangerous film noir looms: the complete and indefinite shutdown of the scripted entertainment business.

“We have a lot of work to do,” Ted Sarandos He acknowledged the ongoing writers and actors’ strikes during last week’s Netflix earnings, a first at bat. There are a few complex issues. We are very committed to reaching an agreement as soon as possible.”

Netflix, of course, has a good story to tell. After a major subscriber stumble in 2022, it now looks like the company is back on track. brought in 5.9 million New subscribers from April through June, while cracking down on password sharing and offering a cheaper ad-supported tier, once an unthinkable prospect for the 16-year-old. Netflix also has an impressive inventory of popular content that includes plenty of strike-breaker reality and documentary fare. Plus, you don’t have to worry about TV ratings, box office numbers, and the like.

The same can’t be said for the other programming giants that will be reporting earnings over the next two weeks — Comcast on July 27, and Warner Bros. Inc. Discovery on August 3, Paramount Global on August 7, and Disney on August 9. “In some cases, the challenges are greater than I expected,” Bob Iger he told CNBC During an interview conducted July 13 at Allen & Company’s annual resort in Sun Valley, Idaho. The longtime Disney boss, who recently Re-upgraded to 2026He talked about “making sure our cost structure reflects the economic realities of the company” and “dealing with and what to do about companies that aren’t growing, especially linear businesses.” (This would include ABC, FX, and Nat Geo.) “We have to be open and objective about the future of those companies.” It was Iger’s next comment that made the news: “You may not be the essence of Disney.”

Whether it’s an inconsequential slip of the tongue or a glare launched in the direction of potential network TV shoppers, Iger’s note seems to capture the ominous cloud hanging over earnings season. Subsequent title to CNBC announce“The media industry is in turmoil, and that isn’t going to change anytime soon.”

The power outage in Hollywood only exacerbates these concerns. (As one trusted Hollywood source wrote to me this week: “Tensions continue to rise like heat on both coasts.” Depending on the duration of the dual strikes—Labor Day marks the end of the most optimistic schedule, which of course could last into the end of the year—it is unlikely The real impact is likely to be felt until the third or fourth quarter.The longer the strikes last, the greater the implications (the potential to encourage wire-cutting and bloating subscribers, for example), and the worse things will get for all parties involved, from studio executives to talent and consumers.

One senior industry figure told me: “If this continues this past summer, it will start to have a real impact on content streaming and what 2024 will look like in terms of being able to get content out on all platforms.” Another big shot says, “It’s time for the adults to get into the room, shut the door, and shut that door.”

In the short term, without making any expensive movies or shows, Wall Street can appreciate free cash flow. (Netflix told investors last week that it bumped its own forecast by at least $3.5 billion to $5 billion for 2023, thanks to production savings.) comes due.

“We know that traditional media companies are in dire need of growing cash flows thanks to hub-to-stream pressure, accelerated cord-cutting, and secular challenges to television advertising,” said a research note issued by Moffett-Nathanson Friday. “Strikes that halted production may benefit 2023 cash flow…but, as we have seen post-COVID, it is unlikely that any short-term gains will be sustained once production ramps back up.”