The first six months of 2023 have proven to be a disappointing period for the legacy media industry. Despite hopes of a rebound from the setbacks of 2022, major companies such as Netflix, Inc., Disney, Warner Bros. Discovery, and Paramount Global have struggled to regain their footing. Streaming subscriber slowdowns led to significant drops in valuations for these companies, causing concerns among investors. However, one player seems to be defying the odds and catching the attention of investors once again – Netflix.
The video on-demand over-the-top streaming television service’s recent crackdown on password sharing has reignited excitement among investors, potentially leading to a surge in new accounts and signups. Netflix’s shares have outperformed the S&P 500 in the past five months, showcasing its resilience and ability to adapt. In contrast, the legacy players have been facing numerous challenges.
The Walt Disney Company, famous as Disney, has experienced a rocky ride and recently called in lay-offs. Warner Bros. Discovery has also faced its fair share of difficulties, including layoffs and internal errors. Even the highly anticipated superhero movie “The Flash” failed to meet expectations at the box office.
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Meanwhile, NBCUniversal has managed to weather the storm better than its counterparts, thanks to the support of its parent company, Comcast. MSNBC’s rise to become the No. 1 cable news network, coupled with Universal’s box office hit “The Super Mario Bros. Movie,” has provided some respite for the company.
However, the industry’s challenges extend beyond the struggles of individual companies. Hollywood is currently facing an extended writers’ strike, which threatens to disrupt the supply of scripted content.
This situation presents an opportunity for platforms like YouTube, TikTok, and Netflix, which continue to deliver content unaffected by the strike and the platforms are likely to benefit from the work shutdowns and attract more viewers. However, legacy media companies may see a temporary reprieve if advertising rebounds during the 2024 U.S. presidential campaign.
After eliminating thousands of jobs last year, Warner Bros. Discovery is now reducing staff again in an effort to increase free cash flow. CEO David Zaslav supported CNN CEO Chris Licht for a year before firing him last month as a result of a string of internal staff problems and external programming mistakes. HBO Max is now simply known as Max, and continues serving content for users.
Nevertheless, the overall outlook for the legacy media industry remains grim. While investors are hesitant to reward cost-cutting measures, consolidation prospects are also uncertain due to regulatory constraints. Deals like Microsoft’s acquisition of Activision and Penguin Random House’s proposed purchase of Simon & Schuster have faced regulatory obstacles.
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