Hollywood Will Collapse

All right, we spent some time last week. Yeah, I had a little fun with Fran Drescher and the sag strike and getting into all the nuances of the things that quite frankly, they don’t really know much about. You got big time media titan Barry Diller being interviewed and laying it out. Like we said, listen, there’s only so much money to go around and a devastating forecast for Hollywood. He was on CBS Face the Nation and he is the head of IAC and he was the CEO of Paramount and 20th Century Fox. And he weighed in on the state of the industry amid the SAG, APTRA and Writers Guild strikes. And he called it basically a perfect storm. You had COVID which sent people home to watch streaming television and killed theaters. You’ve had the results of huge investments in streaming. which have produced all of these losses for all of these companies that are now kind of retrenching. So at this moment, it’s kind of a perfect storm. And he say, we gotta have a settlement by September 1st or there could be catastrophic ramifications if the strikes continue on. Who cares about Hollywood, Diller said, referencing what he believes to be overriding public sentiment on the issue, who cares about it? But the truth is, this is a huge business, both domestically, and for world exporters, but these conditions will potentially produce an absolute collapse of an entire industry. Yeah, I mean, again, you think about all of the people that are involved in that business, everything from the people that supply catering for crying out loud, that are feeding the actors, and it is a very big business. Yeah, we talk about that when athletes go on strike, and what about the people that are collecting the tickets and the ushers and all of these other things? that are a part of this business. And there’s a lot that’s involved with this, but this entire industry as a whole is in major upheaval. And in my opinion, I don’t think the actors and actresses even understand it. They don’t, again, let’s be honest. They’ve been living high on the hog for a period of time. And because the business has changed, and again, unfortunately, the actors and actresses, their position is it’s Wall Street did it. Wall Street, big business, they are the ones that did it. No, no, they didn’t do it. Consumers did it. Consumers got sick and tired of spending so much money and prices come down. You can pick and choose what you want to watch. You don’t have to get cable and have to pay for 500 stations, 490 of them, you won’t even watch anymore. You don’t have to do that any longer, which again, good for the consumer might not be as good for, again, the actors and actresses, and they’re gonna have to adjust. I do get it, and I mentioned this last week on the podcast when it came to artificial intelligence, and I think that the rules should be very, very tough when it comes to that and not allowing these media conglomerates to use people’s likeness without their permission, just that simple. You have to be able to sign off on something like that. Um, Reuter’s piece here. Okay. Traditional TV is dying. Ad revenue is soft. Streaming isn’t profitable. It’s not. That’s the thing people don’t understand. I try to get that across to everyone out there when it, when it comes to streaming. Okay. I pay for a myriad of different streaming services and my Yahoo children all the time keep signing up for more. And I got to keep checking. Okay, but the reality is, my spoiled Yahoo children, they don’t like watching commercials either. So they get the most expensive one that’s out there. And I do it too. I don’t wanna watch commercials, wasting my time. So again, you pay for the streaming service, but you used to pay for cable, plus you had to watch the damn commercials unless you T-vote it and fast forward it. I remember that was an argument during the day when the cable companies put the DVRs. and everyone’s house saying, well, is anybody gonna just fast forward, tape the shows and fast forward past the commercials? Aren’t the advertisers gonna start to recognize that and say, hey, you know what? I don’t wanna advertise anymore. Yeah. Why do you think? Why do you think sports is such an important part of the equation nowadays? Who in God’s creation likes to watch a rewind of a sporting event? They don’t. It’s live programming and this is why, you know, again, these sports franchises, sports, you know, they’re worth so much. And these networks are willing to pay so much for them because people are tuned in live and they can run ads. Again, I made the example last week, I’ll make it again, in case you missed it. You are Mercedes-Benz. You’re Mercedes-Benz and you want to advertise your cars. Now you sell an expensive car. How do you advertise on a television show? Back in the day, you could say, hey, and my demographic is gonna be watching this show. I’m gonna buy advertisements on this show and the people are gonna watch it during the commercial break. No more commercial break, right? Well, you can pay less money for a streaming service with commercials, but do you think the person that can afford the Mercedes-Benz is going to actually watch the commercials. Now, see you lose that advertiser. Following a bit when I’m trying to get across here. Anyway, again, Netflix, Netflix has their new advertising model and they’ve also pushed to stop with the whole password sharing bit. And again, they haven’t really bought anything. They’ve got a ton of content that’s there and they seem to be, you know, continue to lead in their position. Bob Iger, Bob Iger, House of Mouse. Yes, he’s back and he interviewed, warning about Disney, warning about the quarter and they’re warning about TV. Again, he talked at length during some of the recent investor calls about how advertising is part of the plan to bring Disney Plus to profitability. Again, good luck with that. You got all of these other networks here, Paramount, Global, Comcast, Warner Brothers, all of them. And I’m a big believer you’re going to see massive amounts of consolidation. Massive amounts. They just can’t make money. Bob Iger told CNBC last week that the work stoppage couldn’t occur at a worse time, noting destructive forces on this business and all the challenges that they’re facing. Again, the longevity of this thing, it could get really, really ugly. Again, Netflix also has a lot of shows in the can already, ready to go. So again, they’re better positioned if the strike lasts for an extended period of time. Back to Iger to some degree, Bob Iger actually began his career in network TV. He said he’s got a very pessimistic view of traditional TV. They seen before he came back to Disney last November. And even though he thought it was bad, he said it was worse than he expected. Okay, Disney, what are they on? They’ve got ABC, they’ve got FX. And guess what? He wants to sell them. He wants to get rid of them. Paramount considering a sale of its stake in BET. Comcast, NBC Universal, what have they shut down? They shut down NBC Sports. They combine sports programming on other channels like USA networks. Again, all of these businesses are dwindling. They’re not growing. Okay. And what do we tell you here? If you’re not growing, you’re dying. Advertising pricing growth, which is long offset audience declines. Key source of concern, one of the firms that actually measures this, this could be the first non-recessionary year that advertising up-fronts don’t produce increases in TV pricing. Streamers introduction of cheaper ad-supported tiers will be a hot topic once again this quarter, especially after Netflix and Disney announced their platforms late last year. Again, you’re gonna get some advertisers, but you’re not gonna get the guys that like to spend the big bucks. This is why I’m a big believer that you’re gonna continue to see more mergers that are out there. Again, we… Good for some of the, the only good news for some of these companies right now is that LinaCon and the FTC continue to get shot down and what all these mergers that they continue to thwart. So the regulatory roadblocks drawbacks might be going by the wayside. But yeah, the business has changed. And again, some of the players and workers, the actors and actresses, they’re going to have to actually get with the program. and understand that the model is different. Now, it is what it is. Watchdog on wallstreet.com.