DIS Shareholders and Stock Info ONLY
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Jwaire
DIS Veteran
- Joined
- Sep 17, 2020
Sounds like his gagorder has expired because he appeared on the CNBC documentary about ESPN and voiced his concern about spinning off or splitting up ESPN and adopting another partner.
Also, Iger is extremely popular. He would be fool to blast him publicly right now. However, you know there's a book coming.
Robert Chapek: The con job of a lifetime.
Between him and Ovitz, it's probably a nice chunk of stock appreciation we lost.
wabbott
DIS Veteran
- Joined
- Aug 4, 2021
https://variety.com/2024/biz/news/paramount-global-redstone-skydance-charter-acquisition-1235962741/
Apr 5, 2024 - 8:46pm PDT
by Cynthia Littleton
Paramount Global’s Cable Carriage Talks With Charter Could Play Key Role in Skydance Transaction
Charter Communications is about to play a guest-star role in the corporate drama surrounding Paramount Global.
As if Shari Redstone’s media empire wasn’t under enough pressure, Paramount Global now is in the final few weeks of its most recent carriage agreement with Charter, the nation’s second largest cable operator behind Comcast. The two companies are in renewal discussions, the outcome of which will have significant influence on Paramount’s ability to deliver the free cash flow that media investors are expecting from the company that has lately posted big losses on streaming operations. The company warned investors in February that it expects to take a nearly $1 billion write-down in its Q1 earnings report to adjust for the diminished value of programming on its books (roughly $800 million) as well as in restructuring costs ($200 million). But CEO Bob Bakish has also vowed that Paramount+ will be profitable in the U.S. by the end of next year.
Paramount Global took a big step this week toward striking a complicated sale pact with David Ellison’s Skydance Media. The companies earlier this week agreed to an exclusive 30-day negotiating window on April 3.
On Friday, the Wall Street Journal reported the sides were moving toward a deal that would see Skydance acquire Redstone’s holding company National Amusements Inc., which holds her controlling interest in Paramount Global. Paramount Global would then acquire the enlarged Skydance Media in an all-stock deal that would value Skydance at $5 billion. Redstone would wind up with $2 billion from the Skydance-NAI transaction, which would buy out her preferred shares that amount to about 77% of voting shares and 10% of the economic value of Paramount Global shares, the Journal reported. The Journal and CNBC noted that while the broad strokes of the two-step transaction are outlined, there are still points to work out.
Given the swirl of speculation and financial maneuvering around the company, the Charter deal negotiations come at a rough time for team Paramount. Reps for Charter, Paramount Global and National Amusements declined to comment.
If Charter achieves a significant cut in fees and distribution for Paramount channels, it could trigger favored-nations clauses with other pay-TV providers that collectively paid the company $2 billion last year in carriage fees for CBS and Paramount cable channels. Paramount Global also faces carriage deal renegotiations with DirecTV later this year, according to industry sources.
The company’s cable stalwarts — MTV, VH1, Nickelodeon, BET, Comedy Central and CMT — are struggling like other traditional cable brands amid the industry’s transition to streaming. Charter itself is facing its own fundamental transition as its video subscribers steadily decline. The company’s priorities have turned to delivering business and consumer broadband services and serving as a gateway to a menu of streaming apps rather than paying increasingly higher fees to Hollywood’s programming giants to maintain channel access.
Charter is likely to push hard to cut the monthly subscriber fees it pays Paramount Global by trimming its monthly per-sub fee as well as cutting back distribution for low-performing channels. And it is likely to push for some kind of content pact with the Paramount+ streaming service that now carries most of the company’s most high-end productions — such as Taylor Sheridan’s drama series and “Star Trek” franchise shows. Charter set the tone last year with its 12-day blackout of Disney channels including ESPN and ABC. In the final deal, Charter dropped numerous low-profile Disney cable channels including Disney XD, Nat Geo Wild and FXM and gained distribution access to the Disney+ streaming service.
“The new Disney/Charter template could have a meaningful impact on the company should Charter choose to either drop Paramount’s long-tail cable networks and/or force Paramount+ to be bundled at a heavily discounted wholesale price to Charter subscribers,” Robert Fishman, analyst with MoffettNathanson Research, wrote in an April 4 research note.
The special committee of the Paramount Global board of directors late last month rejected a $27 billion offer for the entire company from private-equity giant Apollo Global Management. The board members opted to bet on taking 30 days to work it out with Ellison. Paramount and Skydance have worked together for 10-plus years as production partners on “Mission: Impossible” and “Transformers” franchise movies as well as 2022’s “Top Gun: Maverick.”
Even with the Charter deal pending, the board is betting on getting it done with Skydance. As noted by the Journal and CNBC, Ellison’s father, Oracle business software mogul Larry Ellison, is expected to help inject some capital and other resources into Paramount Global, which is shouldering more than $14 billion in long-term debt.
By multiple accounts, Paramount Global’s special committee “reached the point of no return” last month and decided that the time had come to figure out the best sale option for the company. If the Skydance Media scenario comes to pass, multiple sources confirm reports by the Journal that former NBCUniversal CEO Jeff Shell will take on a key operational role alongside David Ellison as CEO.
Apr 5, 2024 - 8:46pm PDT
by Cynthia Littleton
Paramount Global’s Cable Carriage Talks With Charter Could Play Key Role in Skydance Transaction
Charter Communications is about to play a guest-star role in the corporate drama surrounding Paramount Global.
As if Shari Redstone’s media empire wasn’t under enough pressure, Paramount Global now is in the final few weeks of its most recent carriage agreement with Charter, the nation’s second largest cable operator behind Comcast. The two companies are in renewal discussions, the outcome of which will have significant influence on Paramount’s ability to deliver the free cash flow that media investors are expecting from the company that has lately posted big losses on streaming operations. The company warned investors in February that it expects to take a nearly $1 billion write-down in its Q1 earnings report to adjust for the diminished value of programming on its books (roughly $800 million) as well as in restructuring costs ($200 million). But CEO Bob Bakish has also vowed that Paramount+ will be profitable in the U.S. by the end of next year.
Paramount Global took a big step this week toward striking a complicated sale pact with David Ellison’s Skydance Media. The companies earlier this week agreed to an exclusive 30-day negotiating window on April 3.
On Friday, the Wall Street Journal reported the sides were moving toward a deal that would see Skydance acquire Redstone’s holding company National Amusements Inc., which holds her controlling interest in Paramount Global. Paramount Global would then acquire the enlarged Skydance Media in an all-stock deal that would value Skydance at $5 billion. Redstone would wind up with $2 billion from the Skydance-NAI transaction, which would buy out her preferred shares that amount to about 77% of voting shares and 10% of the economic value of Paramount Global shares, the Journal reported. The Journal and CNBC noted that while the broad strokes of the two-step transaction are outlined, there are still points to work out.
Given the swirl of speculation and financial maneuvering around the company, the Charter deal negotiations come at a rough time for team Paramount. Reps for Charter, Paramount Global and National Amusements declined to comment.
If Charter achieves a significant cut in fees and distribution for Paramount channels, it could trigger favored-nations clauses with other pay-TV providers that collectively paid the company $2 billion last year in carriage fees for CBS and Paramount cable channels. Paramount Global also faces carriage deal renegotiations with DirecTV later this year, according to industry sources.
The company’s cable stalwarts — MTV, VH1, Nickelodeon, BET, Comedy Central and CMT — are struggling like other traditional cable brands amid the industry’s transition to streaming. Charter itself is facing its own fundamental transition as its video subscribers steadily decline. The company’s priorities have turned to delivering business and consumer broadband services and serving as a gateway to a menu of streaming apps rather than paying increasingly higher fees to Hollywood’s programming giants to maintain channel access.
Charter is likely to push hard to cut the monthly subscriber fees it pays Paramount Global by trimming its monthly per-sub fee as well as cutting back distribution for low-performing channels. And it is likely to push for some kind of content pact with the Paramount+ streaming service that now carries most of the company’s most high-end productions — such as Taylor Sheridan’s drama series and “Star Trek” franchise shows. Charter set the tone last year with its 12-day blackout of Disney channels including ESPN and ABC. In the final deal, Charter dropped numerous low-profile Disney cable channels including Disney XD, Nat Geo Wild and FXM and gained distribution access to the Disney+ streaming service.
“The new Disney/Charter template could have a meaningful impact on the company should Charter choose to either drop Paramount’s long-tail cable networks and/or force Paramount+ to be bundled at a heavily discounted wholesale price to Charter subscribers,” Robert Fishman, analyst with MoffettNathanson Research, wrote in an April 4 research note.
The special committee of the Paramount Global board of directors late last month rejected a $27 billion offer for the entire company from private-equity giant Apollo Global Management. The board members opted to bet on taking 30 days to work it out with Ellison. Paramount and Skydance have worked together for 10-plus years as production partners on “Mission: Impossible” and “Transformers” franchise movies as well as 2022’s “Top Gun: Maverick.”
Even with the Charter deal pending, the board is betting on getting it done with Skydance. As noted by the Journal and CNBC, Ellison’s father, Oracle business software mogul Larry Ellison, is expected to help inject some capital and other resources into Paramount Global, which is shouldering more than $14 billion in long-term debt.
By multiple accounts, Paramount Global’s special committee “reached the point of no return” last month and decided that the time had come to figure out the best sale option for the company. If the Skydance Media scenario comes to pass, multiple sources confirm reports by the Journal that former NBCUniversal CEO Jeff Shell will take on a key operational role alongside David Ellison as CEO.
wabbott
DIS Veteran
- Joined
- Aug 4, 2021
Here's a term you rarely hear anymore. It was often used back in the days of the Robber Barrons. I think it applicable to what is about to happen here.
https://www.investopedia.com/terms/w/wateredstock.asp
What Is Watered Stock?
Watered stock referred to shares of a company that were issued at a much greater value than the value implied by a company's underlying assets, usually as part of a scheme to defraud investors.
This term is believed to have originated from ranchers who would make their cattle drink large amounts of water before taking them to market. The weight of the consumed water would make the cattle deceptively heavier, enabling the ranchers to fetch higher prices for them.
BayTower2010
Earning My Ears
- Joined
- Jan 25, 2019
Bob Chapek legacy was cemented when WDW lost control of the RCID. Chapek was a public relations nightmare.
wabbott
DIS Veteran
- Joined
- Aug 4, 2021
https://finance.yahoo.com/news/memo...t-deliver-for-retail-investors-123042555.html
The muggles are coming!!!!
Memo to Disney CEO Bob Iger: Now you must deliver for retail investors
Brian Sozzi · Executive Editor
Updated Sun, Apr 7, 2024, 12:20 PM EDT
Maybe I'm going to tell you something here you already know, but it warrants repeating.
I do not think the majority of public company corporate boards, C-suites, investor relations departments, and other related teams generally give a horse's butt about the retail investor. Aka the average investor aka Main Street aka a person grinding away each day in the hopes of living comfortably in retirement.
Chances are that's you, reading this Sunday morning, drinking a cup of homemade coffee while wondering if you should add 25 more shares of something priced under $5. Or one share of Nvidia (NVDA).
How can I make such a bold proclamation?
For one, I talk to people in all these groups every single day of my waking life, and have for 21 years. Everyone is so fixated on their compensation plans, perks of the gig, what institutional investors may do, what a competitor is saying on TV, and if an influential sell-side analyst is about to slash estimates and drop a rating.
Other worries include business plans, their execution of them, and nailing the highly publicized succession to an underboss.
I never hear them discuss how their actions may affect the average investor. And I mean never.
Secondarily, just look at how companies speak to the outside world when they are forced to do so. It continues to be some form of morse code that requires a Harvard honors degree to decode.
Take 10 minutes today and try to read the last earnings call transcript for Microsoft (MSFT). Here it is for easy reference. Be honest, do you have any idea what they are talking about, and how it may shape the value of the 10 shares you own? Probably not; I am often lost in the jargon myself.
Good luck trying to comprehend all the abbreviations in the notoriously exhaustive earnings release from Coca-Cola (KO). Here is the company's last earnings report. How can a company that makes such simple products (water with various sugars and dyes) put out such complicated earnings releases?
I bring all this up in the wake of the Disney (DIS) vs. Nelson Peltz boardroom battle.
Throughout the entire ordeal, we heard Disney CEO Bob Iger fire back at billionaire Peltz. We heard Peltz fire back at the very fit 73-year-old Iger. We saw both parties beg and plead to get the support of institutional investors such as BlackRock and T. Rowe Price.
Neither person spoke directly to retail investors, probably because they thought it was beneath their existence on Earth. Neither one went Elon Musk style and held a webcast to take questions from the average shareholder.
Iger could have done this; they're a media company and surely have the assets to execute (drop me a line, Bob, we can host these webcasts on Yahoo Finance).
At the end of the day, it was the retail investor that played a large role in the final outcome.
Retail investors represent just under 40% of Disney's shareholder base. Some 75% of retail investors who cast votes backed Disney's slate, the Wall Street Journal reported.
If Peltz had spoken directly to this group, maybe he would have a board seat at Disney. If Iger had appealed directly to this group, maybe his win would've been even larger — giving him yet another moment to boast about at a movie premiere before he retires maybe in 2026.
So now my message to Iger is this: The average investor who owns your stock because they enjoy Mickey, your movies, and the dividend check has supported you and what you want to do. Show them respect because they are a powerful group. Deliver for them.
Retail trading volume hit a high in 2023. Between 2019 and 2022, direct stock ownership increased to 21% from 15%, according to Federal Reserve data, the largest change on record.
Meanwhile, the World Economic Forum estimates that retail investors will account for 61% of global assets under management by 2030. That number stood at 52% in 2021.
Retail investors are a force to be reckoned with, Interactive Brokers chief strategist Steve Sosnick told me.
"They certainly follow the action and are attracted to the big names and oddball situations that crop up," said Sosnick.
He is right.
And Bob, you can't get complacent either or this group will turn — and likely influence larger investors more than this latest go around. Execute, or else.
"The pressure on Bob Iger [until he retires in 2026] will stay really right," Needham analyst Laura Martin said on Yahoo Finance Live. "Activists are circling this company and they're only kept at bay if the share price keeps going up."
Disney declined to make Bob Iger available to Yahoo Finance for an interview.
Brian Sozzi is Yahoo Finance's Executive Editor. Follow Sozzi on Twitter/X @BrianSozzi and on LinkedIn. Tips on deals, mergers, activist situations, or anything else? Email brian.sozzi@yahoofinance.com.
The muggles are coming!!!!
Memo to Disney CEO Bob Iger: Now you must deliver for retail investors
Brian Sozzi · Executive Editor
Updated Sun, Apr 7, 2024, 12:20 PM EDT
Maybe I'm going to tell you something here you already know, but it warrants repeating.
I do not think the majority of public company corporate boards, C-suites, investor relations departments, and other related teams generally give a horse's butt about the retail investor. Aka the average investor aka Main Street aka a person grinding away each day in the hopes of living comfortably in retirement.
Chances are that's you, reading this Sunday morning, drinking a cup of homemade coffee while wondering if you should add 25 more shares of something priced under $5. Or one share of Nvidia (NVDA).
How can I make such a bold proclamation?
For one, I talk to people in all these groups every single day of my waking life, and have for 21 years. Everyone is so fixated on their compensation plans, perks of the gig, what institutional investors may do, what a competitor is saying on TV, and if an influential sell-side analyst is about to slash estimates and drop a rating.
Other worries include business plans, their execution of them, and nailing the highly publicized succession to an underboss.
I never hear them discuss how their actions may affect the average investor. And I mean never.
Secondarily, just look at how companies speak to the outside world when they are forced to do so. It continues to be some form of morse code that requires a Harvard honors degree to decode.
Take 10 minutes today and try to read the last earnings call transcript for Microsoft (MSFT). Here it is for easy reference. Be honest, do you have any idea what they are talking about, and how it may shape the value of the 10 shares you own? Probably not; I am often lost in the jargon myself.
Good luck trying to comprehend all the abbreviations in the notoriously exhaustive earnings release from Coca-Cola (KO). Here is the company's last earnings report. How can a company that makes such simple products (water with various sugars and dyes) put out such complicated earnings releases?
I bring all this up in the wake of the Disney (DIS) vs. Nelson Peltz boardroom battle.
Throughout the entire ordeal, we heard Disney CEO Bob Iger fire back at billionaire Peltz. We heard Peltz fire back at the very fit 73-year-old Iger. We saw both parties beg and plead to get the support of institutional investors such as BlackRock and T. Rowe Price.
Neither person spoke directly to retail investors, probably because they thought it was beneath their existence on Earth. Neither one went Elon Musk style and held a webcast to take questions from the average shareholder.
Iger could have done this; they're a media company and surely have the assets to execute (drop me a line, Bob, we can host these webcasts on Yahoo Finance).
At the end of the day, it was the retail investor that played a large role in the final outcome.
Retail investors represent just under 40% of Disney's shareholder base. Some 75% of retail investors who cast votes backed Disney's slate, the Wall Street Journal reported.
If Peltz had spoken directly to this group, maybe he would have a board seat at Disney. If Iger had appealed directly to this group, maybe his win would've been even larger — giving him yet another moment to boast about at a movie premiere before he retires maybe in 2026.
So now my message to Iger is this: The average investor who owns your stock because they enjoy Mickey, your movies, and the dividend check has supported you and what you want to do. Show them respect because they are a powerful group. Deliver for them.
Retail trading volume hit a high in 2023. Between 2019 and 2022, direct stock ownership increased to 21% from 15%, according to Federal Reserve data, the largest change on record.
Meanwhile, the World Economic Forum estimates that retail investors will account for 61% of global assets under management by 2030. That number stood at 52% in 2021.
Retail investors are a force to be reckoned with, Interactive Brokers chief strategist Steve Sosnick told me.
"They certainly follow the action and are attracted to the big names and oddball situations that crop up," said Sosnick.
He is right.
And Bob, you can't get complacent either or this group will turn — and likely influence larger investors more than this latest go around. Execute, or else.
"The pressure on Bob Iger [until he retires in 2026] will stay really right," Needham analyst Laura Martin said on Yahoo Finance Live. "Activists are circling this company and they're only kept at bay if the share price keeps going up."
Disney declined to make Bob Iger available to Yahoo Finance for an interview.
Brian Sozzi is Yahoo Finance's Executive Editor. Follow Sozzi on Twitter/X @BrianSozzi and on LinkedIn. Tips on deals, mergers, activist situations, or anything else? Email brian.sozzi@yahoofinance.com.
wabbott
DIS Veteran
- Joined
- Aug 4, 2021
Josh D'Amaro's PR staff on the job, plumping up his prospects to succeed Bob Iger as CEO.
https://www.cnbc.com/2024/04/07/dis...y-maker-its-spending-to-keep-it-that-way.html
Disney’s parks are its top money maker — and it plans to spend $60 billion to keep it that way
Published Sun, Apr 7 2024 - 8:00 AM EDT
by Sarah Whitten@sarahwhit10
Key Points
The California theme park’s Main Street was quiet: no cheery tunes from famed barbershop quartet the Dapper Dans, no clanging railroad bell, and no wafting scent of waffle cones from the Gibson Girl Ice Cream Parlor.
It had been more than a year since the Covid pandemic had forced Disney’s domestic parks to shutter, but D’Amaro, chair of Disney’s experiences division, was confident guests would flood back in when the gates reopened.
His confidence was well founded. D’Amaro’s division is now Disney’s best-performing segment, rebounding and offering stability in recent quarters as Disney shuffles to adapt its entertainment business to match consumer habits that changed after the pandemic.
On that quiet day in 2021, D’Amaro had been in charge of the parks, experiences and consumer products division, now just called experiences, for only a little more than a year. He took the helm when Bob Chapek was tapped as CEO in early 2020. D’Amaro spent much of those 12 months dealing with substantial operating losses from global park closures, a docked fleet of cruise ships and a plunge in hotel visits.
Revenues fell 35% in 2020, a nearly $10 billion decrease from the $26.2 billion the experiences division had tallied in the year before the pandemic. Then revenue dropped an additional 3% in 2021.
But a lot has changed in three years. D’Amaro — sitting in a conference room in Burbank, an hour north of Disneyland and just a few miles from the heart of Disney’s theme park creative engine, Walt Disney Imagineering — has much to brag about.
The experiences division posted record revenue of $32.5 billion in fiscal 2023, a 16% increase from the prior year. Operating income jumped 23% to $8.95 billion.
D’Amaro described the pandemic as “an opportunity to take a breath” and a time for his division to “think about what we wanted the future to look like.”
“So, as difficult as that situation was, we saw it as a platform, a new vantage point for us to look at the operation,” he said.
While its parks were shuttered, Disney continued construction of its Avengers Campus themed land in Disneyland and touched up old favorites such as the King Arthur Carousel. And it built new rides, and refurbished others, in the years that followed.
World of Frozen opened in Hong Kong Disneyland in November, and a Zootopia land opened in Shanghai Disneyland in December. The company also launched two new rides at Walt Disney World in Florida: a “Guardians of the Galaxy”-themed ride in its Epcot park in 2022, and a “Tron”-themed roller coaster in the Magic Kingdom in April 2023.
Additionally, the company has revamped attractions and themed park areas, turning the Pacific Wharf area of Disneyland’s California Adventure into San Fransokyo Square, based on the animated hit “Big Hero 6,” updating Mickey’s Toon Town at Disneyland and making major transformations at Epcot.
Those investments, coupled with new technology in mobile ordering and the ability for guests to pay to skip to the front of the line for certain rides, have kept guests coming and boosted Disney’s earnings at a time when the entertainment division is struggling to recapture its late-2010s boom.
“Sitting here now, today, you’ve seen our results; our results have been record-setting as recently as the last first-quarter earnings,” D’Amaro said. “Record revenue, record margins, record operating income. So, the recovery has been swift, it’s been strong. But more importantly, I think the future looks incredibly bright for our segment — and the company, quite frankly.”
In 2023, experiences was the best-performing part of Disney’s business, accounting for 36% of the company’s total revenue but 70% of its operating income. Meanwhile, Disney’s entertainment division, which includes its theatrical and streaming businesses, represented 45% of revenue but just 11% of operating income.
The ability to get more out of the parks in recent years was crucial for CEO Bob Iger and Disney’s board as they tried to make the company more profitable and improve share performance. On Wednesday, Disney beat back activist investor Nelson Peltz’s proxy fight, reelecting its full board.
D’Amaro said about 70% of that money will go toward “new experiences” in domestic and international parks, along with cruise lines. The other 30% will go toward technology and infrastructure, including maintenance of existing attractions.
Innovation at theme parks has been a central goal since Walt Disney ran the company. Disney’s founder used to say that its theme parks would “never be finished” and would evolve to meet consumer demand and changing tastes, along with developments in technology.
Walt Disney Imagineering has long been on the cutting edge of development. Its innovations, from ride mechanics and animatronics to creature design and immersive architecture, have made Disney’s parks a standout in the industry.
Last year, guests caught a glimpse of one of these innovations — a trio of tottering bipedal robots from Star Wars called BDX droids. First spotted at California Disneyland’s Star Wars: Galaxy’s Edge, they are just one iteration of a new technology Disney Imagineering is developing to bring walking robotic characters to life.
Disney Engineers create the mechanics for the remote-controlled droids to move and balance, and work with animators to give those movements personality. The robots were designed to have childlike curiosity, reflected through cheeky head tilts and chirping beeps, along with a special emote dubbed “tantrum,” where their eyes glow red and they emit a high-pitched squeal.
Guests who visit Galaxy’s Edge in the next three months may stumble across this trio as part of Disney’s “Season of the Force.” They add to the regular roaming character meet-and-greets with the likes of Rey, Chewbacca, Kylo Ren and stormtroopers.
Disney hopes hands-on innovations such as the robots will keep guests coming.
“Those moments where there’s a spark, there’s an emotion that’s on full display, where a guest is interacting with an attraction or a cast member or a character, it’s very real and genuine,” said D’Amaro.
That emotion was on display at the South by Southwest conference in March 2023, when Disney debuted a new iteration of its “stuntronics” robot, this time in the form of Judy Hopps from “Zootopia.” This technology had previously been used to create the Spider-Man leap stunt at Avengers Campus. During the 2023 presentation, Imagineers showed the audience how the Judy Hopps robot could balance on roller blades and perform somersaults.
The biggest audience reaction came at the end of the presentation, when an Imagineer lifted the bot to sit on his shoulders and it realistically moved its legs to fit around his neck, as a child would. The simple motion — programmed just for the presentation, Imagineers told CNBC — captured something intrinsic to the human experience.
D’Amaro said those moments show why it’s important for Disney animators to be part of the development process: As the Imagineers craft new technologies, the artists can help bring them to life.
It shows in Disney’s rebrand of Splash Mountain. In both the California and Florida parks, the company is refurbishing the ride into Tiana’s Bayou Adventure, which will feature dozens of animatronic characters from “The Princess and the Frog.”
Disney Imagineers have developed all-electronic audio-animatronics for the ride for characters such as Lewis, the trumpet-playing alligator from the film. Disney revolutionized animatronics decades ago with its hydraulic, or liquid-fueled, and pneumatic, or air-fueled, systems, but the electronic animatronics for Tiana’s Bayou allow for more refined and precise movement, making them appear more realistic.
Similar animatronics can be seen in the rides Smuggler’s Run and Rise of the Resistance, in Galaxy’s Edge.
Interior pieces of some of the animatronics were crafted using 3-D printing, resulting in a lighter-weight material.
“They continue to push the envelope of storytelling and creativity,” D’Amaro said of the Imagineering team.
He cited the recently shuttered Star Wars Galactic Starcruiser, a hotel and immersive experience that took guests on a two-day “voyage” in space. It was a 48-hour interactive story that allowed fans to physically play in the Star Wars universe.
“This is something that had never been done before,” D’Amaro said. “It was difficult to even explain to the public, and I think it was incredibly brave for us to move into this space. ... And this, to me, says Imagineering is still at its best today.”
High ticket prices deterred the average parkgoer, and the Galactic Starcruiser shuttered in September. Still, D’Amaro said the experiment was a learning opportunity for the company.
“Those learnings are being employed on the next experiences, which we haven’t even announced yet,” he said.
Storytelling is at the heart of everything across Disney’s experiences division.
This extends to Disney’s cruise line and hotels, as well as its video game business. The company has a fleet of five cruise ships, and plans to add three more by fiscal 2026.
The Disney Wish, which made its maiden voyage in 2022, was the first addition to the fleet in a decade and bet big on its powerhouse franchises to entice travelers to the high seas.
There’s a “Frozen” sing-along dinner and a Marvel dining experience, as well as a Star Wars-inspired Hyperspace Lounge. The ship also has the first ever Disney water ride attraction on board, the AquaMouse.
“This is something I think that’s really important, the idea of the Disney difference,” D’Amaro said. “That this company works together as one is more powerful now than I think it ever has been — whether it’s [entertainment co-chair] Alan Bergman in the studios creating a new property that we can then take to Disney experiences and bring it to life and extend that story in brand new ways, or franchises that are birthed out of the theme parks.”
Disney’s ‘blue sky’
Disney’s experiences division has immediate expansion plans — even before the bulk of the planned $60 billion investment kicks in.
Next to open for Disney is Fantasy Springs, an eighth port at the Tokyo DisneySea park. The land will be home to three new areas — inspired by the films “Frozen,” “Tangled” and “Peter Pan” — as well as the new Tokyo DisneySea Fantasy Springs Hotel.
Concept and design work is also underway for the Tropical Americas area at Disney’s Animal Kingdom in Florida. There have been no official updates on the previously announced third ride at Avengers Campus in the California Adventure area at Disneyland.
The company is developing what it’s dubbed “blue sky” ideas for its parks — projects that are still in early development and may ultimately not see the light of day.
Disney has teased that an area based on “Coco” or “Encanto” or both could be underway in the Magic Kingdom. There were also talks about opening an area of the Magic Kingdom that would be overrun by Disney villains.
During the company’s investor meeting this week, Iger even teased the possibility of an “Avatar” land at Disneyland in California.
“We have thousands of acres of land still to develop,” Iger said during the Morgan Stanley Conference in March. “We could actually build seven new full lands if we wanted to around the world, including the ability to increase the size of Disneyland in California, which everybody thinks is kind of landlocked, by 50%.”
Price points for these projects will vary, if they do come to fruition. The recent additions of the two Star Wars: Galaxy’s Edge lands in Disneyland and Disney World are estimated to have cost $1 billion each.
That’s where the $60 billion investment comes in.
Disney likely won’t spend it all soon.
“We actually have a fairly good idea in the near term of what’s being built, but we’re purposefully not going to allocate it all,” Iger said at a media event Tuesday, according to the Los Angeles Times. “Because who knows? In five years we can end up with a giant hit movie — think ‘Frozen’ — that we may want to mine essentially as an attraction, or a hotel or restaurant in our parks. So you want to maintain some flexibility.”
But Iger won’t be head of the company in five years, if all goes according to plan. The CEO, who returned to the post in 2022, is set to step down at the end of 2026. Disney’s board is in the process of succession planning.
D’Amaro is on the short list.
His track record helming Disney experiences is part of a 26-year career with the Walt Disney Company, in which D’Amaro has held posts as chief financial officer for consumer products and global licensing and chief commercial officer for Walt Disney World Resort.
For now, however, D’Amaro said he is concentrating on his current post. He called it a “blessing” to have Iger back as CEO.
“I’m focused on Disney experiences,” he said when asked about potential succession plans. “And I’m focused on driving innovation and storytelling forward and paying tribute to our fans and continuing to grow this business.”
https://www.cnbc.com/2024/04/07/dis...y-maker-its-spending-to-keep-it-that-way.html
Disney’s parks are its top money maker — and it plans to spend $60 billion to keep it that way
Published Sun, Apr 7 2024 - 8:00 AM EDT
by Sarah Whitten@sarahwhit10
Key Points
- Disney’s experiences division, which includes its theme parks, is the best-performing part of Disney’s business as the company tries to adapt to changes in movie and TV viewing habits.
- Josh D’Amaro, who leads the division, is overseeing additions and changes to the parks as Disney pledges $60 billion in investments in the segment over the next decade.
- From innovations in robotics and animatronics to more immersive storytelling, Disney is looking for new ways to keep people coming to its parks.
The California theme park’s Main Street was quiet: no cheery tunes from famed barbershop quartet the Dapper Dans, no clanging railroad bell, and no wafting scent of waffle cones from the Gibson Girl Ice Cream Parlor.
It had been more than a year since the Covid pandemic had forced Disney’s domestic parks to shutter, but D’Amaro, chair of Disney’s experiences division, was confident guests would flood back in when the gates reopened.
His confidence was well founded. D’Amaro’s division is now Disney’s best-performing segment, rebounding and offering stability in recent quarters as Disney shuffles to adapt its entertainment business to match consumer habits that changed after the pandemic.
On that quiet day in 2021, D’Amaro had been in charge of the parks, experiences and consumer products division, now just called experiences, for only a little more than a year. He took the helm when Bob Chapek was tapped as CEO in early 2020. D’Amaro spent much of those 12 months dealing with substantial operating losses from global park closures, a docked fleet of cruise ships and a plunge in hotel visits.
Revenues fell 35% in 2020, a nearly $10 billion decrease from the $26.2 billion the experiences division had tallied in the year before the pandemic. Then revenue dropped an additional 3% in 2021.
But a lot has changed in three years. D’Amaro — sitting in a conference room in Burbank, an hour north of Disneyland and just a few miles from the heart of Disney’s theme park creative engine, Walt Disney Imagineering — has much to brag about.
The experiences division posted record revenue of $32.5 billion in fiscal 2023, a 16% increase from the prior year. Operating income jumped 23% to $8.95 billion.
D’Amaro described the pandemic as “an opportunity to take a breath” and a time for his division to “think about what we wanted the future to look like.”
“So, as difficult as that situation was, we saw it as a platform, a new vantage point for us to look at the operation,” he said.
While its parks were shuttered, Disney continued construction of its Avengers Campus themed land in Disneyland and touched up old favorites such as the King Arthur Carousel. And it built new rides, and refurbished others, in the years that followed.
World of Frozen opened in Hong Kong Disneyland in November, and a Zootopia land opened in Shanghai Disneyland in December. The company also launched two new rides at Walt Disney World in Florida: a “Guardians of the Galaxy”-themed ride in its Epcot park in 2022, and a “Tron”-themed roller coaster in the Magic Kingdom in April 2023.
Additionally, the company has revamped attractions and themed park areas, turning the Pacific Wharf area of Disneyland’s California Adventure into San Fransokyo Square, based on the animated hit “Big Hero 6,” updating Mickey’s Toon Town at Disneyland and making major transformations at Epcot.
Those investments, coupled with new technology in mobile ordering and the ability for guests to pay to skip to the front of the line for certain rides, have kept guests coming and boosted Disney’s earnings at a time when the entertainment division is struggling to recapture its late-2010s boom.
“Sitting here now, today, you’ve seen our results; our results have been record-setting as recently as the last first-quarter earnings,” D’Amaro said. “Record revenue, record margins, record operating income. So, the recovery has been swift, it’s been strong. But more importantly, I think the future looks incredibly bright for our segment — and the company, quite frankly.”
In 2023, experiences was the best-performing part of Disney’s business, accounting for 36% of the company’s total revenue but 70% of its operating income. Meanwhile, Disney’s entertainment division, which includes its theatrical and streaming businesses, represented 45% of revenue but just 11% of operating income.
The ability to get more out of the parks in recent years was crucial for CEO Bob Iger and Disney’s board as they tried to make the company more profitable and improve share performance. On Wednesday, Disney beat back activist investor Nelson Peltz’s proxy fight, reelecting its full board.
Always innovating
The division’s strength is why Disney has pledged to invest $60 billion in experiences over the next 10 years — a key part of its strategy to keep the parks fresh and relevant in a competitive segment.D’Amaro said about 70% of that money will go toward “new experiences” in domestic and international parks, along with cruise lines. The other 30% will go toward technology and infrastructure, including maintenance of existing attractions.
Innovation at theme parks has been a central goal since Walt Disney ran the company. Disney’s founder used to say that its theme parks would “never be finished” and would evolve to meet consumer demand and changing tastes, along with developments in technology.
Walt Disney Imagineering has long been on the cutting edge of development. Its innovations, from ride mechanics and animatronics to creature design and immersive architecture, have made Disney’s parks a standout in the industry.
Last year, guests caught a glimpse of one of these innovations — a trio of tottering bipedal robots from Star Wars called BDX droids. First spotted at California Disneyland’s Star Wars: Galaxy’s Edge, they are just one iteration of a new technology Disney Imagineering is developing to bring walking robotic characters to life.
Disney Engineers create the mechanics for the remote-controlled droids to move and balance, and work with animators to give those movements personality. The robots were designed to have childlike curiosity, reflected through cheeky head tilts and chirping beeps, along with a special emote dubbed “tantrum,” where their eyes glow red and they emit a high-pitched squeal.
Guests who visit Galaxy’s Edge in the next three months may stumble across this trio as part of Disney’s “Season of the Force.” They add to the regular roaming character meet-and-greets with the likes of Rey, Chewbacca, Kylo Ren and stormtroopers.
Disney hopes hands-on innovations such as the robots will keep guests coming.
“Those moments where there’s a spark, there’s an emotion that’s on full display, where a guest is interacting with an attraction or a cast member or a character, it’s very real and genuine,” said D’Amaro.
That emotion was on display at the South by Southwest conference in March 2023, when Disney debuted a new iteration of its “stuntronics” robot, this time in the form of Judy Hopps from “Zootopia.” This technology had previously been used to create the Spider-Man leap stunt at Avengers Campus. During the 2023 presentation, Imagineers showed the audience how the Judy Hopps robot could balance on roller blades and perform somersaults.
The biggest audience reaction came at the end of the presentation, when an Imagineer lifted the bot to sit on his shoulders and it realistically moved its legs to fit around his neck, as a child would. The simple motion — programmed just for the presentation, Imagineers told CNBC — captured something intrinsic to the human experience.
D’Amaro said those moments show why it’s important for Disney animators to be part of the development process: As the Imagineers craft new technologies, the artists can help bring them to life.
It shows in Disney’s rebrand of Splash Mountain. In both the California and Florida parks, the company is refurbishing the ride into Tiana’s Bayou Adventure, which will feature dozens of animatronic characters from “The Princess and the Frog.”
Disney Imagineers have developed all-electronic audio-animatronics for the ride for characters such as Lewis, the trumpet-playing alligator from the film. Disney revolutionized animatronics decades ago with its hydraulic, or liquid-fueled, and pneumatic, or air-fueled, systems, but the electronic animatronics for Tiana’s Bayou allow for more refined and precise movement, making them appear more realistic.
Similar animatronics can be seen in the rides Smuggler’s Run and Rise of the Resistance, in Galaxy’s Edge.
Interior pieces of some of the animatronics were crafted using 3-D printing, resulting in a lighter-weight material.
Telling stories in the parks
Disney’s ambitions to grow its experiences unit hinge in part on making its attractions feel more real.“They continue to push the envelope of storytelling and creativity,” D’Amaro said of the Imagineering team.
He cited the recently shuttered Star Wars Galactic Starcruiser, a hotel and immersive experience that took guests on a two-day “voyage” in space. It was a 48-hour interactive story that allowed fans to physically play in the Star Wars universe.
“This is something that had never been done before,” D’Amaro said. “It was difficult to even explain to the public, and I think it was incredibly brave for us to move into this space. ... And this, to me, says Imagineering is still at its best today.”
High ticket prices deterred the average parkgoer, and the Galactic Starcruiser shuttered in September. Still, D’Amaro said the experiment was a learning opportunity for the company.
“Those learnings are being employed on the next experiences, which we haven’t even announced yet,” he said.
Storytelling is at the heart of everything across Disney’s experiences division.
This extends to Disney’s cruise line and hotels, as well as its video game business. The company has a fleet of five cruise ships, and plans to add three more by fiscal 2026.
The Disney Wish, which made its maiden voyage in 2022, was the first addition to the fleet in a decade and bet big on its powerhouse franchises to entice travelers to the high seas.
There’s a “Frozen” sing-along dinner and a Marvel dining experience, as well as a Star Wars-inspired Hyperspace Lounge. The ship also has the first ever Disney water ride attraction on board, the AquaMouse.
“This is something I think that’s really important, the idea of the Disney difference,” D’Amaro said. “That this company works together as one is more powerful now than I think it ever has been — whether it’s [entertainment co-chair] Alan Bergman in the studios creating a new property that we can then take to Disney experiences and bring it to life and extend that story in brand new ways, or franchises that are birthed out of the theme parks.”
Disney’s ‘blue sky’
Disney’s experiences division has immediate expansion plans — even before the bulk of the planned $60 billion investment kicks in.
Next to open for Disney is Fantasy Springs, an eighth port at the Tokyo DisneySea park. The land will be home to three new areas — inspired by the films “Frozen,” “Tangled” and “Peter Pan” — as well as the new Tokyo DisneySea Fantasy Springs Hotel.
Concept and design work is also underway for the Tropical Americas area at Disney’s Animal Kingdom in Florida. There have been no official updates on the previously announced third ride at Avengers Campus in the California Adventure area at Disneyland.
The company is developing what it’s dubbed “blue sky” ideas for its parks — projects that are still in early development and may ultimately not see the light of day.
Disney has teased that an area based on “Coco” or “Encanto” or both could be underway in the Magic Kingdom. There were also talks about opening an area of the Magic Kingdom that would be overrun by Disney villains.
During the company’s investor meeting this week, Iger even teased the possibility of an “Avatar” land at Disneyland in California.
“We have thousands of acres of land still to develop,” Iger said during the Morgan Stanley Conference in March. “We could actually build seven new full lands if we wanted to around the world, including the ability to increase the size of Disneyland in California, which everybody thinks is kind of landlocked, by 50%.”
Price points for these projects will vary, if they do come to fruition. The recent additions of the two Star Wars: Galaxy’s Edge lands in Disneyland and Disney World are estimated to have cost $1 billion each.
That’s where the $60 billion investment comes in.
Disney likely won’t spend it all soon.
“We actually have a fairly good idea in the near term of what’s being built, but we’re purposefully not going to allocate it all,” Iger said at a media event Tuesday, according to the Los Angeles Times. “Because who knows? In five years we can end up with a giant hit movie — think ‘Frozen’ — that we may want to mine essentially as an attraction, or a hotel or restaurant in our parks. So you want to maintain some flexibility.”
But Iger won’t be head of the company in five years, if all goes according to plan. The CEO, who returned to the post in 2022, is set to step down at the end of 2026. Disney’s board is in the process of succession planning.
D’Amaro is on the short list.
His track record helming Disney experiences is part of a 26-year career with the Walt Disney Company, in which D’Amaro has held posts as chief financial officer for consumer products and global licensing and chief commercial officer for Walt Disney World Resort.
For now, however, D’Amaro said he is concentrating on his current post. He called it a “blessing” to have Iger back as CEO.
“I’m focused on Disney experiences,” he said when asked about potential succession plans. “And I’m focused on driving innovation and storytelling forward and paying tribute to our fans and continuing to grow this business.”
- Joined
- Apr 29, 2004
I'm at a total loss to understand the premise of this story. All current shareholders are created equal and receive equal benefits (earnings). Should one class of Disney shareholders (if there were more than one class) get something different? Why?
Jwaire
DIS Veteran
- Joined
- Sep 17, 2020
We are going to start seeing so much of this with D'Amaro and Walden as they battle it out for the CEO slot. It wouldn't surprise me if they both hired out consultants to work with their PR teams.
On D'Amaro, some key facts from the article:
D’Amaro described the pandemic as “an opportunity to take a breath” and a time for his division to “think about what we wanted the future to look like.”
“So, as difficult as that situation was, we saw it as a platform, a new vantage point for us to look at the operation,” he said.
...
“Sitting here now, today, you’ve seen our results; our results have been record-setting as recently as the last first-quarter earnings,” D’Amaro said. “Record revenue, record margins, record operating income. So, the recovery has been swift, it’s been strong. But more importantly, I think the future looks incredibly bright for our segment — and the company, quite frankly.”
Translation: I'm just as responsible for the prices hikes and service cuts at Walt Disney World as Bob Chapek
It shows in Disney’s rebrand of Splash Mountain. In both the California and Florida parks, the company is refurbishing the ride into Tiana’s Bayou Adventure, which will feature dozens of animatronic characters from “The Princess and the Frog.”
Translation: The WDW ride has almost 70 animatronics, Disneyland even more like 100. We are ripping out most of them. A handful of the couple of the dozen of new ones are advanced.
He cited the recently shuttered Star Wars Galactic Starcruiser, a hotel and immersive experience that took guests on a two-day “voyage” in space. It was a 48-hour interactive story that allowed fans to physically play in the Star Wars universe.
“This is something that had never been done before,” D’Amaro said. “It was difficult to even explain to the public, and I think it was incredibly brave for us to move into this space. ... And this, to me, says Imagineering is still at its best today.”
Translation: Easily a $500+ million experiment gone bad between construction costs, labor and marketing dollars spent.
D’Amaro said about 70% of that money will go toward “new experiences” in domestic and international parks, along with cruise lines. The other 30% will go toward technology and infrastructure, including maintenance of existing attractions.
“We actually have a fairly good idea in the near term of what’s being built, but we’re purposefully not going to allocate it all,” Iger said at a media event Tuesday, according to the Los Angeles Times. “Because who knows? In five years we can end up with a giant hit movie — think ‘Frozen’ — that we may want to mine essentially as an attraction, or a hotel or restaurant in our parks. So you want to maintain some flexibility.”
Translation: We still have lots of Fox debt and serious concerns about our future business units. The $60 billion is just a fictional number to appease critics.
Next to open for Disney is Fantasy Springs, an eighth port at the Tokyo DisneySea park. The land will be home to three new areas — inspired by the films “Frozen,” “Tangled” and “Peter Pan” — as well as the new Tokyo DisneySea Fantasy Springs Hotel.
Translation: We'll be glad to take credit for a project that we didn't pay to build and have no financial interest in, other than nominal licensing fees.
On D'Amaro, some key facts from the article:
D’Amaro described the pandemic as “an opportunity to take a breath” and a time for his division to “think about what we wanted the future to look like.”
“So, as difficult as that situation was, we saw it as a platform, a new vantage point for us to look at the operation,” he said.
...
“Sitting here now, today, you’ve seen our results; our results have been record-setting as recently as the last first-quarter earnings,” D’Amaro said. “Record revenue, record margins, record operating income. So, the recovery has been swift, it’s been strong. But more importantly, I think the future looks incredibly bright for our segment — and the company, quite frankly.”
Translation: I'm just as responsible for the prices hikes and service cuts at Walt Disney World as Bob Chapek
It shows in Disney’s rebrand of Splash Mountain. In both the California and Florida parks, the company is refurbishing the ride into Tiana’s Bayou Adventure, which will feature dozens of animatronic characters from “The Princess and the Frog.”
Translation: The WDW ride has almost 70 animatronics, Disneyland even more like 100. We are ripping out most of them. A handful of the couple of the dozen of new ones are advanced.
He cited the recently shuttered Star Wars Galactic Starcruiser, a hotel and immersive experience that took guests on a two-day “voyage” in space. It was a 48-hour interactive story that allowed fans to physically play in the Star Wars universe.
“This is something that had never been done before,” D’Amaro said. “It was difficult to even explain to the public, and I think it was incredibly brave for us to move into this space. ... And this, to me, says Imagineering is still at its best today.”
Translation: Easily a $500+ million experiment gone bad between construction costs, labor and marketing dollars spent.
D’Amaro said about 70% of that money will go toward “new experiences” in domestic and international parks, along with cruise lines. The other 30% will go toward technology and infrastructure, including maintenance of existing attractions.
“We actually have a fairly good idea in the near term of what’s being built, but we’re purposefully not going to allocate it all,” Iger said at a media event Tuesday, according to the Los Angeles Times. “Because who knows? In five years we can end up with a giant hit movie — think ‘Frozen’ — that we may want to mine essentially as an attraction, or a hotel or restaurant in our parks. So you want to maintain some flexibility.”
Translation: We still have lots of Fox debt and serious concerns about our future business units. The $60 billion is just a fictional number to appease critics.
Next to open for Disney is Fantasy Springs, an eighth port at the Tokyo DisneySea park. The land will be home to three new areas — inspired by the films “Frozen,” “Tangled” and “Peter Pan” — as well as the new Tokyo DisneySea Fantasy Springs Hotel.
Translation: We'll be glad to take credit for a project that we didn't pay to build and have no financial interest in, other than nominal licensing fees.
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Elijah Abrams
Mouseketeer
- Joined
- Feb 6, 2020
Now I'm worried Josh D'Amaro will win and become the new Disney CEO, leaving Dana Walden out in the cold. I just feel that he will be worse than Bob Chapek.
Then Disney should just sell off most of the Fox IP and assets they bought, especially if they want to expand their parks with quality stuff, or end up having to deal with another proxy battle with Nelson Peltz.
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wabbott
DIS Veteran
- Joined
- Aug 4, 2021
I might add a condensed translation: "I do what my boss Bob Iger tells me to do, every single time, as I don't want to get fired like CFO Christine McCarthy did."
wabbott
DIS Veteran
- Joined
- Aug 4, 2021
https://www.hollywoodreporter.com/b...lix-disney-warners-paramount-nbcu-1235868631/
Streaming Profit Report: A Year Spent Chasing Netflix
A streaming promised land has not been reached by Hollywood powerhouses, Wall Street agrees. But it's instructive to look beyond quarterly earnings updates for a fuller picture.
by Georg Szalai
April 8, 2024 8:51am PDT
Several years into Hollywood giants’ streaming pushes, they still find themselves confronted with that famous Jerry Maguire line from Wall Street: “Show me the money!” In the case of streaming, “the money” means profits.
With Netflix having been crowned by some observers as the king of streaming, Hollywood CEOs have focused on making their streaming business units profitable after an initial focus on subscriber growth.
The full year of 2023 provided some positives for sector watchers. One entertainment titan ended up eking out a small profit for its streaming unit, while two others narrowed their losses in their divisions with their core streaming businesses, with one of those promising to start turning black ink this year. And another sector biggie made clear that 2023 marked its year of peak losses in streaming.
But Hollywood conglomerates’ streaming results still make for a sharp contrast with Netflix’s continued growth in its annual bottom line. And entertainment biggies remain in the stage of proving that they can make money in streaming and, importantly, get to sustainable profitability.
That is particularly important for investors as Hollywood has seen the bottom line of its cable TV networks businesses, once the key growth drivers and profit centers of entertainment conglomerates, hit by cord-cutting and the growth of streaming. Research firm Ampere Analytics recently forecast that streaming revenue would overtake pay TV subscription revenue in the U.S. for the first time in the third quarter of 2024, helped by the addition of ad tiers by various streamers. “Streaming will continue to race ahead as traditional pay TV declines – with the value of pay TV in 2028 expected to fall to half the value it saw at its peak in 2017,” its report predicted.
But which companies can follow up revenue growth with streaming profits and who can get them to scale? This kind of streaming promised land has not been reached by Hollywood powerhouses, the Street agrees.
No surprise that Hollywood CEOs have been looking to tout their streaming progress and successes. An analysis must keep in mind that the divisions that contain Hollywood companies’ streaming businesses are not directly comparable. After all, some of them don’t include all streaming services of a company or include additional operations. Warner Bros. Discovery’s “Direct-to-Consumer,” or DTC, unit, for example, consists of its streaming and premium pay-TV services, meaning HBO is part of it. Meanwhile, the Walt Disney Co.’s “Direct-to-Consumer” division does not include ESPN+. And Comcast’s NBUniversal breaks out revenue and profit for its streamer Peacock, which is part of its broader Media unit.
Meanwhile, Netflix has long been a streaming-focused company that last year ended its DVD rental offering. But it has also started pushing into businesses beyond streaming, such as gaming and merchandise.
So while a direct comparison of all these businesses is not an apples-to-apples affair, it is educative and allows to see longer-term trends beyond quarterly updates. Keep in mind that Disney’s fiscal year runs through the fall, while The Hollywood Reporter calculated DTC results for the calendar year 2023 to focus on a comparable period.
With all that out of the way, here is a closer look at Hollywood giants’ streaming business units in 2023.
Netflix
The only way has been up for the global streaming giant as of late. It kept growing its full-year revenue, “primarily due to the 8 percent growth in average paying memberships, partially offset by a 1 percent decrease in average monthly revenue per paying membership.”
Indeed, Netflix added 29.5 million members in 2023, up from 8.9 million in 2022, boosted by its password-sharing crackdown and the late 2022 launch of a cheaper advertising-supported subscriber tier, ending 2023 with around 260 million worldwide users. “Revenues earned from sources other than monthly membership fees were not material,” the streamer highlighted. But “in 2024, we see big opportunities,” it noted. Those include the chance to “tap into a significant new long-term revenue and profit pool by scaling our ads business.”
With its full-year operating expenses only rising 3 percent in 2023, compared with a 7 percent revenue increase, Netflix’s operating margin climbed from 18 percent to 21 percent, and its profit jumped 25 percent.
“If we continue to execute well and drive continuous improvement — with a better slate, easier discovery and more fandom — while establishing ourselves in new areas like advertising and games, we believe we have a lot more room to grow,” the streamer touted in its fourth-quarter letter to shareholders.
Netflix’s first-ever “What We Watched” report, covering the first half of 2023, touted The Night Agent as its top show with more than 812 million hours of total watch time, followed by season 2 of comedy-drama Ginny & Georgia (665 million hours of view time), and Korean drama The Glory (622 million hours). Action-thriller The Mother, starring Jennifer Lopez, came out on top of the film list with more than 249 million hours.
NBCUniversal says it has now passed peak losses in streaming. Its parent Comcast followed Netflix’s latest financial update, reporting that it grew its subscribers to streamer Peacock by more than 50 percent to 31 million as of the end of 2023. While that percentage growth came in above peers, it also came off a smaller user base.
Peacock posted the biggest full-year loss among entertainment giants’ streaming businesses, but started its turn toward profitability. After previously vowing that 2023 would mark the year of “peak losses” in streaming, it posted a $2.7 billion loss related to Peacock for the year, up from a $2.5 billion loss in 2022, but slightly better than previously targeted. Peacock revenue jumped by two-thirds in the latest year, and its losses narrowed to $565 million in the third quarter from a year-ago loss of $614 million, marking a turning point after a time of growing quarterly losses. The fourth-quarter loss again showed progress, narrowing from $978 million in 2022 to $825 million in the final period of 2023. “For 2024, we expect to show meaningful improvement in losses versus 2023,” Comcast president Michael Cavanagh told a recent earnings conference call. Universal’s Five Nights at Freddy’s was “the highest-grossing horror film of 2023 and also set a record on Peacock as the most watched title of all time in the first five days of its release,” he also was happy to tout.
Management’s take on its streaming progress is bullish. “Only three years in, we’re achieving a level of scale with paying subs that’s about 60 percent of the level of the streamers that have been out there for many years domestically, ex-Netflix. And we’re holding a very strong average revenue per user (ARPU) at $10 per sub,” Cavanagh said. “Leveling off a little bit of the growth rate of programming spend as we get to this level is clearly part of the improvement in Peacock losses standalone that will be a factor as we see continued strong growth on the revenue side, given the higher level of subs” and expected further growth. But he also emphasized that Comcast’s strategy is “to manage Peacock and our linear TV businesses as one.” That is different from other players’ focus on making streaming units as profitable as possible. “I’m less focused on what standalone Peacock losses are doing than I am on doing what’s right for the long term for the totality of the media business, which is linear and streaming,” Cavanagh said. “I think we’ve navigated a very good path for us.”
The subscriber picture has been more mixed. It lost 1.3 million core Disney+ subscribers in the latest quarter amid a price hike to end the year with 111.3 million, up 7.0 million for all of 2023. Meanwhile, Disney+ Hotstar in India returned to growth, adding 700,000 users in the latest quarter to reach 38.3 million, but that was down from 57.5 million at the end of 2022.
In total, Disney wrapped up 2023 with 149.6 million Disney+ subscribers, compared with 161.8 million as of the end of 2022.
Hulu, of which Disney agreed to to take full ownership under a deal with Comcast unveiled in late 2023, also continued to expand its customer base. Its streaming-only subscriptions grew by 1.6 million to 45.1 million subscribers in 2023, while its live TV plus SVOD plan gained around 100,000 users to end the year with 4.6 million.
With this backdrop, on his most recent earnings conference call, Disney CEO Bob Iger reiterated his goal of making the streaming unit profitable by the fourth quarter of Disney’s current fiscal year, which is the third quarter of calendar year 2024. “In 2019, Disney+ launched with nearly 500 films and 7,500 episodes of television from across the worlds of Disney. Three years later, its meteoric rise is considered one of the most successful rollouts in the history of the media business,” Iger argued before vowing: “Now it’s time for another transformation… one that rationalizes our enviable streaming business and puts it on a path to sustained growth and profitability.”
Calling this his “number one priority,” Iger concluded: “We are focused on the success of our streaming business and the return it generates for our shareholders long into the future.”
Part of that is a strategic focus he has applied across the company, namely a focus on core brands and franchises, which, he has touted, “have consistently delivered higher returns,” better curation of general entertainment content, revisiting the balance between global and local content, potential pricing adjustments and a fine-tuning of “our advertising initiatives on all streaming platforms.”
Speaking of the recently launched Disney+ ad tier, it hasn’t made a huge financial splash yet, but management expects it to start providing a “meaningful financial impact” later this fiscal year.
Morgan Stanley analyst Benjamin Swinburne is bullish on Disney’s path to streaming profits. “By the end of fiscal year 2024, the two most impactful businesses to Disney shares should be inflecting – with streaming turning profitable and [theme] parks growth accelerating,” he wrote in a report, in which he boosted his stock price target by $25 to $135 while sticking to his “overweight” rating on Disney.
Despite a slight loss in the fourth quarter, it became the first Hollywood conglomerate to turn a profit for the unit housing its streaming business for a full year – albeit a tiny one.
WBD’s 2023 profit of $103 million for its DTC division compared with a loss of nearly $2.1 billion in 2022, “driven by growth across all revenue streams, as well as more efficient marketing spend and lower content expense.”
Revenue growth was helped by subscriber price increases and gains in the Max U.S. ad-lite user tier, as well as higher content revenue thanks to a “higher volume of licensing deals” as WBD looked to monetize its content in various ways, including via deals with third parties.
Overall, the conglomerate ended 2023 with 97.7 million streaming subscribers, including the recent acquisition of Turkish streamer BluTV, a slight gain from the 96.1 million recorded at the end of 2022.
“We fought hard to get Max to be profitable last year,” Zaslav told Wall Street analysts on his latest earnings call. We are now committed to driving profitable {revenue] growth.”
Over the next two years, the company would use “a number of meaningful growth levers,” the CEO vowed, including the rollout of Max in key international markets, starting with the recent launch in Latin America, followed by territories in the Europe/Middle East/Africa and Asia-Pacific regions. After all, so far, “we are only available in less than half the addressable households and markets as compared to our larger peers,” Zaslav explained.
“We’re also driving better segmentation and monetization by launching the new ad-supported offering which is currently only available here in the U.S.” By the end of 2024, it should be available in more than 40 markets.
Also key to streaming growth ahead will be the “refreshing and reigniting” of WBD’s content pipeline at Max. “The strikes really slowed down production,” Zaslav lamented.
New market launches and relaunches elsewhere will mean that the streaming unit will end the first half of 2024 “modestly negative,” followed by profitability in the back half, said WBD CFO Gunnar Wiedenfels. “Net-net, we currently expect the DTC segment to be profitable for the year as we continue to pivot our focus to profitable top line growth.”
Management also said WBD was “on track” to hit its target of $1 billion in streaming earnings in 2025. “2024 will certainly lay important foundations for achieving this goal,” promised Wiedenfels.
But amid no track record of streaming profits at Hollywood giants and WBD’s need to pay down debt and manage costs, some wonder about the future of streaming profits. “The prospect for meaningful DTC segment profits remains unclear,” Swinburne argued in a post-earnings report.
Peter Supino, analyst at Wolfe Research, also said that the promising DTC trends at WBD could be outweighed by “intense” pressure at its cable networks unit. “With overall company revenue declining, the question becomes: can the revenue mix shift to studio and DTC combined with further cost cuts stabilize EBITDA?” he argued. “If not, 80 percent of profits still tied to linear and $44 billion of debt makes for a challenging investment case. Despite some recent improvement in core advertising, we see no internal nor external force that would stabilize networks. If that is correct, total EBITDA will continue to face a roughly $1 billion per year headwind which more durable studio and DTC segments may struggle to outrun.”
Paramount Global
Paramount Global is asking investors for patience and a bit more time when it comes to streaming profits. Led by CEO Bob Bakish, it has been the topic of much deal chatter as of late. But management emphasized its focus on making money, including from the company’s streaming business, touting that “streaming investment peaked ahead of plan.”
All in all, Paramount’s streaming loss for 2023 narrowed slightly, while its streaming revenue jumped more than 35 percent, led by a 46 percent subscription gain, helped by a price increase, and 17 percent ad growth.
The company lauded “strong growth in engagement and revenue, and improved operational efficiency.”
Streaming user growth also continued last year. Paramount+ ended 2023 with 67.5 million subscribers, a gain of 11.6 million over the 12-month period. Ad-funded streamer Pluto TV grew monthly active users in 2023, but the company didn’t disclose a latest user figure.
Bakish’s takeaway on the latest earnings conference call: “We hit peak streaming losses in 2022, a year ahead of schedule, with further significant improvement expected in 2024.” While Paramount’s domestic streaming business will only become profitable in 2025, Bakish called that “a significant and exciting milestone in the company’s transformation.”
While some analysts argue that management’s promise to cut back on original spending, including local programming in international markets, to focus on the biggest hits could affect streaming growth ahead, Paramount believes it can avoid that.
“We’ve learned that Paramount+ subscribers outside the United States spend nearly 90 percent of their time with our global Hollywood hits. Meaning we can keep them engaged while right-sizing our investment in content that does not travel around the world,” Paramount CFO Naveen Chopra told Wall Street analysts.
“Paramount+’s value proposition is strong: cornerstone original and library content and top-tier movies and sports in an integrated package,” he argued. “This proposition allows us to continue to grow subscribers and drive revenue by deepening engagement, improving retention, and increasing monetization. And we continue to believe that the key to deeper engagement and retention is savvy programming execution and a stable volume of original content. It’s about smartly combining acquisition drivers like the NFL, blockbuster films, and our slate of hit Paramount+ originals with lower-cost library and affinity programming.”
Many on Wall Street remain cautious on Paramount though. Swinburne in a recent note to investors addressed chatter about possible consolidation or asset sales. “This speculation has not and does not shift our view that the risk skews to the downside on Paramount shares at current levels,” he said. “There are no easy fixes to the secular trends the traditional TV business faces or to rapidly drive streaming profitability.”
Streaming Profit Report: A Year Spent Chasing Netflix
A streaming promised land has not been reached by Hollywood powerhouses, Wall Street agrees. But it's instructive to look beyond quarterly earnings updates for a fuller picture.
by Georg Szalai
April 8, 2024 8:51am PDT
Several years into Hollywood giants’ streaming pushes, they still find themselves confronted with that famous Jerry Maguire line from Wall Street: “Show me the money!” In the case of streaming, “the money” means profits.
With Netflix having been crowned by some observers as the king of streaming, Hollywood CEOs have focused on making their streaming business units profitable after an initial focus on subscriber growth.
The full year of 2023 provided some positives for sector watchers. One entertainment titan ended up eking out a small profit for its streaming unit, while two others narrowed their losses in their divisions with their core streaming businesses, with one of those promising to start turning black ink this year. And another sector biggie made clear that 2023 marked its year of peak losses in streaming.
But Hollywood conglomerates’ streaming results still make for a sharp contrast with Netflix’s continued growth in its annual bottom line. And entertainment biggies remain in the stage of proving that they can make money in streaming and, importantly, get to sustainable profitability.
That is particularly important for investors as Hollywood has seen the bottom line of its cable TV networks businesses, once the key growth drivers and profit centers of entertainment conglomerates, hit by cord-cutting and the growth of streaming. Research firm Ampere Analytics recently forecast that streaming revenue would overtake pay TV subscription revenue in the U.S. for the first time in the third quarter of 2024, helped by the addition of ad tiers by various streamers. “Streaming will continue to race ahead as traditional pay TV declines – with the value of pay TV in 2028 expected to fall to half the value it saw at its peak in 2017,” its report predicted.
But which companies can follow up revenue growth with streaming profits and who can get them to scale? This kind of streaming promised land has not been reached by Hollywood powerhouses, the Street agrees.
No surprise that Hollywood CEOs have been looking to tout their streaming progress and successes. An analysis must keep in mind that the divisions that contain Hollywood companies’ streaming businesses are not directly comparable. After all, some of them don’t include all streaming services of a company or include additional operations. Warner Bros. Discovery’s “Direct-to-Consumer,” or DTC, unit, for example, consists of its streaming and premium pay-TV services, meaning HBO is part of it. Meanwhile, the Walt Disney Co.’s “Direct-to-Consumer” division does not include ESPN+. And Comcast’s NBUniversal breaks out revenue and profit for its streamer Peacock, which is part of its broader Media unit.
Meanwhile, Netflix has long been a streaming-focused company that last year ended its DVD rental offering. But it has also started pushing into businesses beyond streaming, such as gaming and merchandise.
So while a direct comparison of all these businesses is not an apples-to-apples affair, it is educative and allows to see longer-term trends beyond quarterly updates. Keep in mind that Disney’s fiscal year runs through the fall, while The Hollywood Reporter calculated DTC results for the calendar year 2023 to focus on a comparable period.
With all that out of the way, here is a closer look at Hollywood giants’ streaming business units in 2023.
Netflix
The only way has been up for the global streaming giant as of late. It kept growing its full-year revenue, “primarily due to the 8 percent growth in average paying memberships, partially offset by a 1 percent decrease in average monthly revenue per paying membership.”
Indeed, Netflix added 29.5 million members in 2023, up from 8.9 million in 2022, boosted by its password-sharing crackdown and the late 2022 launch of a cheaper advertising-supported subscriber tier, ending 2023 with around 260 million worldwide users. “Revenues earned from sources other than monthly membership fees were not material,” the streamer highlighted. But “in 2024, we see big opportunities,” it noted. Those include the chance to “tap into a significant new long-term revenue and profit pool by scaling our ads business.”
With its full-year operating expenses only rising 3 percent in 2023, compared with a 7 percent revenue increase, Netflix’s operating margin climbed from 18 percent to 21 percent, and its profit jumped 25 percent.
“If we continue to execute well and drive continuous improvement — with a better slate, easier discovery and more fandom — while establishing ourselves in new areas like advertising and games, we believe we have a lot more room to grow,” the streamer touted in its fourth-quarter letter to shareholders.
Netflix’s first-ever “What We Watched” report, covering the first half of 2023, touted The Night Agent as its top show with more than 812 million hours of total watch time, followed by season 2 of comedy-drama Ginny & Georgia (665 million hours of view time), and Korean drama The Glory (622 million hours). Action-thriller The Mother, starring Jennifer Lopez, came out on top of the film list with more than 249 million hours.
NBCUniversal
NBCUniversal says it has now passed peak losses in streaming. Its parent Comcast followed Netflix’s latest financial update, reporting that it grew its subscribers to streamer Peacock by more than 50 percent to 31 million as of the end of 2023. While that percentage growth came in above peers, it also came off a smaller user base.
Peacock posted the biggest full-year loss among entertainment giants’ streaming businesses, but started its turn toward profitability. After previously vowing that 2023 would mark the year of “peak losses” in streaming, it posted a $2.7 billion loss related to Peacock for the year, up from a $2.5 billion loss in 2022, but slightly better than previously targeted. Peacock revenue jumped by two-thirds in the latest year, and its losses narrowed to $565 million in the third quarter from a year-ago loss of $614 million, marking a turning point after a time of growing quarterly losses. The fourth-quarter loss again showed progress, narrowing from $978 million in 2022 to $825 million in the final period of 2023. “For 2024, we expect to show meaningful improvement in losses versus 2023,” Comcast president Michael Cavanagh told a recent earnings conference call. Universal’s Five Nights at Freddy’s was “the highest-grossing horror film of 2023 and also set a record on Peacock as the most watched title of all time in the first five days of its release,” he also was happy to tout.
Management’s take on its streaming progress is bullish. “Only three years in, we’re achieving a level of scale with paying subs that’s about 60 percent of the level of the streamers that have been out there for many years domestically, ex-Netflix. And we’re holding a very strong average revenue per user (ARPU) at $10 per sub,” Cavanagh said. “Leveling off a little bit of the growth rate of programming spend as we get to this level is clearly part of the improvement in Peacock losses standalone that will be a factor as we see continued strong growth on the revenue side, given the higher level of subs” and expected further growth. But he also emphasized that Comcast’s strategy is “to manage Peacock and our linear TV businesses as one.” That is different from other players’ focus on making streaming units as profitable as possible. “I’m less focused on what standalone Peacock losses are doing than I am on doing what’s right for the long term for the totality of the media business, which is linear and streaming,” Cavanagh said. “I think we’ve navigated a very good path for us.”
Walt Disney
Disney CEO Bob Iger and his team are getting closer. For the final calendar quarter of 2023, Disney reported its latest narrowed streaming loss, excluding ESPN+, which is part of the company’s sports unit. The $138 million quarterly loss was a clear improved over the year-ago deficit of nearly $1 billion. And for the full calendar year 2023, the company cut its streaming losses by more than half.The subscriber picture has been more mixed. It lost 1.3 million core Disney+ subscribers in the latest quarter amid a price hike to end the year with 111.3 million, up 7.0 million for all of 2023. Meanwhile, Disney+ Hotstar in India returned to growth, adding 700,000 users in the latest quarter to reach 38.3 million, but that was down from 57.5 million at the end of 2022.
In total, Disney wrapped up 2023 with 149.6 million Disney+ subscribers, compared with 161.8 million as of the end of 2022.
Hulu, of which Disney agreed to to take full ownership under a deal with Comcast unveiled in late 2023, also continued to expand its customer base. Its streaming-only subscriptions grew by 1.6 million to 45.1 million subscribers in 2023, while its live TV plus SVOD plan gained around 100,000 users to end the year with 4.6 million.
With this backdrop, on his most recent earnings conference call, Disney CEO Bob Iger reiterated his goal of making the streaming unit profitable by the fourth quarter of Disney’s current fiscal year, which is the third quarter of calendar year 2024. “In 2019, Disney+ launched with nearly 500 films and 7,500 episodes of television from across the worlds of Disney. Three years later, its meteoric rise is considered one of the most successful rollouts in the history of the media business,” Iger argued before vowing: “Now it’s time for another transformation… one that rationalizes our enviable streaming business and puts it on a path to sustained growth and profitability.”
Calling this his “number one priority,” Iger concluded: “We are focused on the success of our streaming business and the return it generates for our shareholders long into the future.”
Part of that is a strategic focus he has applied across the company, namely a focus on core brands and franchises, which, he has touted, “have consistently delivered higher returns,” better curation of general entertainment content, revisiting the balance between global and local content, potential pricing adjustments and a fine-tuning of “our advertising initiatives on all streaming platforms.”
Speaking of the recently launched Disney+ ad tier, it hasn’t made a huge financial splash yet, but management expects it to start providing a “meaningful financial impact” later this fiscal year.
Morgan Stanley analyst Benjamin Swinburne is bullish on Disney’s path to streaming profits. “By the end of fiscal year 2024, the two most impactful businesses to Disney shares should be inflecting – with streaming turning profitable and [theme] parks growth accelerating,” he wrote in a report, in which he boosted his stock price target by $25 to $135 while sticking to his “overweight” rating on Disney.
Warner Bros. Discovery
It wasn’t much, but it was a profit. Late in the latest earnings season, Warner Bros. Discovery touted the turnaround in its streaming unit, which includes HBO in addition to streamer Max.Despite a slight loss in the fourth quarter, it became the first Hollywood conglomerate to turn a profit for the unit housing its streaming business for a full year – albeit a tiny one.
WBD’s 2023 profit of $103 million for its DTC division compared with a loss of nearly $2.1 billion in 2022, “driven by growth across all revenue streams, as well as more efficient marketing spend and lower content expense.”
Revenue growth was helped by subscriber price increases and gains in the Max U.S. ad-lite user tier, as well as higher content revenue thanks to a “higher volume of licensing deals” as WBD looked to monetize its content in various ways, including via deals with third parties.
Overall, the conglomerate ended 2023 with 97.7 million streaming subscribers, including the recent acquisition of Turkish streamer BluTV, a slight gain from the 96.1 million recorded at the end of 2022.
“We fought hard to get Max to be profitable last year,” Zaslav told Wall Street analysts on his latest earnings call. We are now committed to driving profitable {revenue] growth.”
Over the next two years, the company would use “a number of meaningful growth levers,” the CEO vowed, including the rollout of Max in key international markets, starting with the recent launch in Latin America, followed by territories in the Europe/Middle East/Africa and Asia-Pacific regions. After all, so far, “we are only available in less than half the addressable households and markets as compared to our larger peers,” Zaslav explained.
“We’re also driving better segmentation and monetization by launching the new ad-supported offering which is currently only available here in the U.S.” By the end of 2024, it should be available in more than 40 markets.
Also key to streaming growth ahead will be the “refreshing and reigniting” of WBD’s content pipeline at Max. “The strikes really slowed down production,” Zaslav lamented.
New market launches and relaunches elsewhere will mean that the streaming unit will end the first half of 2024 “modestly negative,” followed by profitability in the back half, said WBD CFO Gunnar Wiedenfels. “Net-net, we currently expect the DTC segment to be profitable for the year as we continue to pivot our focus to profitable top line growth.”
Management also said WBD was “on track” to hit its target of $1 billion in streaming earnings in 2025. “2024 will certainly lay important foundations for achieving this goal,” promised Wiedenfels.
But amid no track record of streaming profits at Hollywood giants and WBD’s need to pay down debt and manage costs, some wonder about the future of streaming profits. “The prospect for meaningful DTC segment profits remains unclear,” Swinburne argued in a post-earnings report.
Peter Supino, analyst at Wolfe Research, also said that the promising DTC trends at WBD could be outweighed by “intense” pressure at its cable networks unit. “With overall company revenue declining, the question becomes: can the revenue mix shift to studio and DTC combined with further cost cuts stabilize EBITDA?” he argued. “If not, 80 percent of profits still tied to linear and $44 billion of debt makes for a challenging investment case. Despite some recent improvement in core advertising, we see no internal nor external force that would stabilize networks. If that is correct, total EBITDA will continue to face a roughly $1 billion per year headwind which more durable studio and DTC segments may struggle to outrun.”
Paramount Global
Paramount Global is asking investors for patience and a bit more time when it comes to streaming profits. Led by CEO Bob Bakish, it has been the topic of much deal chatter as of late. But management emphasized its focus on making money, including from the company’s streaming business, touting that “streaming investment peaked ahead of plan.”
All in all, Paramount’s streaming loss for 2023 narrowed slightly, while its streaming revenue jumped more than 35 percent, led by a 46 percent subscription gain, helped by a price increase, and 17 percent ad growth.
The company lauded “strong growth in engagement and revenue, and improved operational efficiency.”
Streaming user growth also continued last year. Paramount+ ended 2023 with 67.5 million subscribers, a gain of 11.6 million over the 12-month period. Ad-funded streamer Pluto TV grew monthly active users in 2023, but the company didn’t disclose a latest user figure.
Bakish’s takeaway on the latest earnings conference call: “We hit peak streaming losses in 2022, a year ahead of schedule, with further significant improvement expected in 2024.” While Paramount’s domestic streaming business will only become profitable in 2025, Bakish called that “a significant and exciting milestone in the company’s transformation.”
While some analysts argue that management’s promise to cut back on original spending, including local programming in international markets, to focus on the biggest hits could affect streaming growth ahead, Paramount believes it can avoid that.
“We’ve learned that Paramount+ subscribers outside the United States spend nearly 90 percent of their time with our global Hollywood hits. Meaning we can keep them engaged while right-sizing our investment in content that does not travel around the world,” Paramount CFO Naveen Chopra told Wall Street analysts.
“Paramount+’s value proposition is strong: cornerstone original and library content and top-tier movies and sports in an integrated package,” he argued. “This proposition allows us to continue to grow subscribers and drive revenue by deepening engagement, improving retention, and increasing monetization. And we continue to believe that the key to deeper engagement and retention is savvy programming execution and a stable volume of original content. It’s about smartly combining acquisition drivers like the NFL, blockbuster films, and our slate of hit Paramount+ originals with lower-cost library and affinity programming.”
Many on Wall Street remain cautious on Paramount though. Swinburne in a recent note to investors addressed chatter about possible consolidation or asset sales. “This speculation has not and does not shift our view that the risk skews to the downside on Paramount shares at current levels,” he said. “There are no easy fixes to the secular trends the traditional TV business faces or to rapidly drive streaming profitability.”
Elijah Abrams
Mouseketeer
- Joined
- Feb 6, 2020
Maybe Josh should stand up to Iger over his actions, especially recently. Heck, all of the employees and executives of Disney should take a page from A Bug’s Life and stand up to Iger!
wabbott
DIS Veteran
- Joined
- Aug 4, 2021
https://finance.yahoo.com/news/paramount-shareholder-says-skydance-media-142351671.html
Paramount Shareholder Says Skydance Media’s ‘Sub-Optimal’ Bid Would Be ‘Detrimental’ to Company Value
Lucas Manfredi
Mon, Apr 8, 2024, 10:23 AM EDT
A major Paramount Global shareholder has penned a letter to the media conglomerate’s board urging the company to avoid taking a “sub-optimal” bid from David Ellison’s Skydance Media as the two parties have entered exclusivity talks about a possible merger.
The letter comes from Matrix Asset Advisors, which currently owns 355,445 Paramount shares on behalf of its clients and itself and has over $1 billion in assets under management.
The firm says that it firmly believes in the potential for Paramount to “thrive in the evolving media & entertainment ecosystem,” throwing its full support behind CEO Bob Bakish and the board’s turnaround strategy.
“However, we are distressed by recent reports that the Board is strongly considering a sub-optimal bid from Skydance that prioritizes the interests of one shareholder over the broader shareholder base. As reported, this deal focuses on monetizing Shari Redstone’s shareholding for cash at a significant premium,” the letter states. “The vast majority of shareholders would not receive a similar premium and would be forced to finance a speculative investment in Skydance in a transaction significantly dilutive to shareholder value. Overall, this transaction, as contemplated, would be detrimental to the company’s value and contrary to the Board’s fiduciary duty.”
Matrix goes on to say that it is “especially galling” that the board has not seriously considered a $26 billion cash offer from Apollo Global due to concerns about deal financing.
“This objection can be cured by giving Apollo the same deference (30 days that is being given to Skydance) to perform diligence and confirm financing. And the valuation certainty of a cash bid is vastly superior to a notional valuation that Skydance is assuming for itself in the second-step transaction, a clear conflict of interest,” the letter adds.
The firm emphasizes that the current rumored deal with Skydance would be a “home run” for controlling shareholder Shari Redstone at the expense of the rest of the company’s non-controlling shareholders and that it would oppose any deal that “dilutes current shareholders or fails to reflect the true value of the company.”
“It is unfortunate that Ms. Redstone finds herself in an urgent need to raise cash at a time when Paramount’s stock is at a low ebb. But her unique problem should not penalize the other 90% of the company’s shareholders,” they added. “We respectfully urge the Paramount Global Board of Directors to reject any proposal that impairs shareholder value and instead to focus on initiatives that enhance the long-term prospects of the company. We also urge the Board to uphold their FIDUCIARY OBLIGATIONS and act in the interest of ALL shareholders, not just Shari Redstone and Skydance. Anything short of that would be a breach of your responsibilities as directors of a publicly traded company, would likely invite shareholder lawsuits, and put a permanent shadow over your tenure as directors of Paramount Global.”
A spokesperson for Paramount declined to comment on the letter, while Skydance and National Amusements did not immediately return TheWrap’s request for comment.
The deal between Skydance and Paramount, which CNBC reported would include raising new equity and an ownership stake of somewhere between 45% to just over 50%, would be financed with the help of a consortium of investors, including private equity firms RedBird Capital Partners and KKR, as well as Ellison’s father and Oracle cofounder Larry Ellison.
Larry Ellison would reportedly put up some of the new funding and potentially provide Paramount with access to artificial intelligence software and other data technology from Oracle. David Ellison would likely lead the new company, while former NBCUniversal CEO Jeff Shell would also have a major leadership role. Additionally, management would reportedly be open to divestitures of assets, such as BET Media Group.
Bloomberg separately reported that negotiators are considering a dividend or stock repurchase and eliminating the two-class share structure that gives the Redstone family control with less than 10% of Paramount’s overall stock to get support from its other shareholders (National Amusements owns 77.3% of its Class A (voting) common stock and 5.2% of its Class B common stock). The outlet notes that Skydance would look to merge Paramount+ with a rival, such as Peacock, Max or Prime Video, and would hold on to CBS.
Skydance, which is valued at more than $4 billion, has been a co-producer with Paramount on projects such as the “Mission: Impossible” franchise and “Top Gun: Maverick.” In addition to Skydance and Apollo, Warner Bros. Discovery CEO David Zaslav met with Paramount Global CEO Bob Bakish in December about a potential merger, though those talks have since been halted. Additionally, Allen Media Group founder Byron Allen placed a $30 billion bid including debt for the company, though it’s unclear how that deal would be financed.
Paramount, which reported long-term debt of $14.6 billion as of the end of 2023 and currently has a market capitalization of $7.85 billion, saw its shares dive over 5% during Monday’s trading session.
The post Paramount Shareholder Says Skydance Media’s ‘Sub-Optimal’ Bid Would Be ‘Detrimental’ to Company Value appeared first on TheWrap.
Paramount Shareholder Says Skydance Media’s ‘Sub-Optimal’ Bid Would Be ‘Detrimental’ to Company Value
Lucas Manfredi
Mon, Apr 8, 2024, 10:23 AM EDT
A major Paramount Global shareholder has penned a letter to the media conglomerate’s board urging the company to avoid taking a “sub-optimal” bid from David Ellison’s Skydance Media as the two parties have entered exclusivity talks about a possible merger.
The letter comes from Matrix Asset Advisors, which currently owns 355,445 Paramount shares on behalf of its clients and itself and has over $1 billion in assets under management.
The firm says that it firmly believes in the potential for Paramount to “thrive in the evolving media & entertainment ecosystem,” throwing its full support behind CEO Bob Bakish and the board’s turnaround strategy.
“However, we are distressed by recent reports that the Board is strongly considering a sub-optimal bid from Skydance that prioritizes the interests of one shareholder over the broader shareholder base. As reported, this deal focuses on monetizing Shari Redstone’s shareholding for cash at a significant premium,” the letter states. “The vast majority of shareholders would not receive a similar premium and would be forced to finance a speculative investment in Skydance in a transaction significantly dilutive to shareholder value. Overall, this transaction, as contemplated, would be detrimental to the company’s value and contrary to the Board’s fiduciary duty.”
Matrix goes on to say that it is “especially galling” that the board has not seriously considered a $26 billion cash offer from Apollo Global due to concerns about deal financing.
“This objection can be cured by giving Apollo the same deference (30 days that is being given to Skydance) to perform diligence and confirm financing. And the valuation certainty of a cash bid is vastly superior to a notional valuation that Skydance is assuming for itself in the second-step transaction, a clear conflict of interest,” the letter adds.
The firm emphasizes that the current rumored deal with Skydance would be a “home run” for controlling shareholder Shari Redstone at the expense of the rest of the company’s non-controlling shareholders and that it would oppose any deal that “dilutes current shareholders or fails to reflect the true value of the company.”
“It is unfortunate that Ms. Redstone finds herself in an urgent need to raise cash at a time when Paramount’s stock is at a low ebb. But her unique problem should not penalize the other 90% of the company’s shareholders,” they added. “We respectfully urge the Paramount Global Board of Directors to reject any proposal that impairs shareholder value and instead to focus on initiatives that enhance the long-term prospects of the company. We also urge the Board to uphold their FIDUCIARY OBLIGATIONS and act in the interest of ALL shareholders, not just Shari Redstone and Skydance. Anything short of that would be a breach of your responsibilities as directors of a publicly traded company, would likely invite shareholder lawsuits, and put a permanent shadow over your tenure as directors of Paramount Global.”
A spokesperson for Paramount declined to comment on the letter, while Skydance and National Amusements did not immediately return TheWrap’s request for comment.
The deal between Skydance and Paramount, which CNBC reported would include raising new equity and an ownership stake of somewhere between 45% to just over 50%, would be financed with the help of a consortium of investors, including private equity firms RedBird Capital Partners and KKR, as well as Ellison’s father and Oracle cofounder Larry Ellison.
Larry Ellison would reportedly put up some of the new funding and potentially provide Paramount with access to artificial intelligence software and other data technology from Oracle. David Ellison would likely lead the new company, while former NBCUniversal CEO Jeff Shell would also have a major leadership role. Additionally, management would reportedly be open to divestitures of assets, such as BET Media Group.
Bloomberg separately reported that negotiators are considering a dividend or stock repurchase and eliminating the two-class share structure that gives the Redstone family control with less than 10% of Paramount’s overall stock to get support from its other shareholders (National Amusements owns 77.3% of its Class A (voting) common stock and 5.2% of its Class B common stock). The outlet notes that Skydance would look to merge Paramount+ with a rival, such as Peacock, Max or Prime Video, and would hold on to CBS.
Skydance, which is valued at more than $4 billion, has been a co-producer with Paramount on projects such as the “Mission: Impossible” franchise and “Top Gun: Maverick.” In addition to Skydance and Apollo, Warner Bros. Discovery CEO David Zaslav met with Paramount Global CEO Bob Bakish in December about a potential merger, though those talks have since been halted. Additionally, Allen Media Group founder Byron Allen placed a $30 billion bid including debt for the company, though it’s unclear how that deal would be financed.
Paramount, which reported long-term debt of $14.6 billion as of the end of 2023 and currently has a market capitalization of $7.85 billion, saw its shares dive over 5% during Monday’s trading session.
The post Paramount Shareholder Says Skydance Media’s ‘Sub-Optimal’ Bid Would Be ‘Detrimental’ to Company Value appeared first on TheWrap.
HokieRaven5
DIS Veteran
- Joined
- Mar 5, 2020
Disney changing it up and doing a morning release for Q2:
The Walt Disney Company will discuss fiscal second quarter 2024 financial results via a live audio webcast beginning at 8:30 a.m. ET / 5:30 a.m. PT on Tuesday, May 7, 2024.
Results will be released before the opening of regular trading on May 7, 2024.
https://thewaltdisneycompany.com/disneys-q2-fy24-earnings-results-webcast/
The Walt Disney Company will discuss fiscal second quarter 2024 financial results via a live audio webcast beginning at 8:30 a.m. ET / 5:30 a.m. PT on Tuesday, May 7, 2024.
Results will be released before the opening of regular trading on May 7, 2024.
https://thewaltdisneycompany.com/disneys-q2-fy24-earnings-results-webcast/
wabbott
DIS Veteran
- Joined
- Aug 4, 2021
https://www.msn.com/en-us/money/companies/paramount-faces-a-mountain-of-distrust/ar-BB1ljZF1
Paramount Faces a Mountain of Distrust
Ownership structure shades deal talks, leaving regular shareholders with few options aside from voting with their feet
By Dan Gallagher
April 9, 2024 - 6:00 am EDT
The closer Paramount Global gets to finding an actual buyer, the less the company seems to be worth. It isn’t a fluke.
Paramount has lost more than one-third of its market value since early December, when reports first emerged that the company was entertaining discussions with Skydance Media over a possible merger. The stock has seen a few brief upticks in that time, mostly driven by news of other potential buyers showing interest. One such move took place this past week after The Wall Street Journal reported late on April 3 that private-equity giant Apollo Global Management had put up a $26 billion all-cash offer for the company. Paramount’s stock price jumped 15% in the final minutes of trading that day following the report.
But the shares have since shed those gains and then some. That is because enthusiasm for any potential deal for the struggling media giant tends to fade quickly in light of the harsh reality that it would face. Paramount—home to film franchises such as “Mission Impossible” and popular streaming hits such as “Yellowjackets”—is effectively controlled by Shari Redstone, daughter of late media mogul Sumner Redstone, through National Amusements, a holding company and movie theater chain owned by the family. National Amusements has about 77% of Paramount’s voting stock despite holding less than 10% of the company’s total equity.
That ownership structure raises worries that any buyout deal could be tilted in favor of the Redstone family at the expense of regular shareholders. Paramount’s board has a special committee tasked with evaluating any deal in the best interests of all shareholders, but investors seem to have little faith in that process. The stock slid nearly 8% on Monday following reports over the weekend that the deal being discussed would involve a $2 billion payout for the Redstone family while other shareholders would get shares of a combined Paramount/Skydance entity—effectively diluting their existing stakes. The board’s special committee hasn’t engaged with Apollo given the 30-day exclusivity window it has agreed to with Skydance, according to the Journal’s reporting.
“While clearly dilutive to public shareholders in the short-term, the board appears to be stuck with no other options available,” media analyst Rich Greenfield of LightShed Partners wrote in a note over the weekend. In a report last week, Laurent Yoon of Bernstein wrote that, even with an independent committee on the Paramount board, “the appearance of self-dealing will be hard to get past.” Even famed value investor Warren Buffett doesn’t seem to see much value anymore; Berkshire Hathaway—Paramount’s largest noncontrolling shareholder—sold nearly one-third of its stake in the company during the fourth quarter.
Wall Street is equally skeptical. Only 28% of analysts rate Paramount’s shares a buy, which is the lowest percentage of bullish ratings on any major media firm, according to FactSet. Even deeply indebted Warner Bros. Discovery has buy ratings from 55% of analysts. Peter Supino of Wolfe Research did upgrade Paramount to a neutral rating last week, but mostly on the notion that the likelihood of some deal makes the stock a poor target for short selling.
“With a higher probability for a change in ownership of Paramount, we see less opportunity to extract further value from the downside,” Supino wrote.
Long-term Paramount shareholders are still far from assured of a happy ending.
Write to Dan Gallagher at dan.gallagher@wsj.com
Paramount Faces a Mountain of Distrust
Ownership structure shades deal talks, leaving regular shareholders with few options aside from voting with their feet
By Dan Gallagher
April 9, 2024 - 6:00 am EDT
The closer Paramount Global gets to finding an actual buyer, the less the company seems to be worth. It isn’t a fluke.
Paramount has lost more than one-third of its market value since early December, when reports first emerged that the company was entertaining discussions with Skydance Media over a possible merger. The stock has seen a few brief upticks in that time, mostly driven by news of other potential buyers showing interest. One such move took place this past week after The Wall Street Journal reported late on April 3 that private-equity giant Apollo Global Management had put up a $26 billion all-cash offer for the company. Paramount’s stock price jumped 15% in the final minutes of trading that day following the report.
But the shares have since shed those gains and then some. That is because enthusiasm for any potential deal for the struggling media giant tends to fade quickly in light of the harsh reality that it would face. Paramount—home to film franchises such as “Mission Impossible” and popular streaming hits such as “Yellowjackets”—is effectively controlled by Shari Redstone, daughter of late media mogul Sumner Redstone, through National Amusements, a holding company and movie theater chain owned by the family. National Amusements has about 77% of Paramount’s voting stock despite holding less than 10% of the company’s total equity.
That ownership structure raises worries that any buyout deal could be tilted in favor of the Redstone family at the expense of regular shareholders. Paramount’s board has a special committee tasked with evaluating any deal in the best interests of all shareholders, but investors seem to have little faith in that process. The stock slid nearly 8% on Monday following reports over the weekend that the deal being discussed would involve a $2 billion payout for the Redstone family while other shareholders would get shares of a combined Paramount/Skydance entity—effectively diluting their existing stakes. The board’s special committee hasn’t engaged with Apollo given the 30-day exclusivity window it has agreed to with Skydance, according to the Journal’s reporting.
“While clearly dilutive to public shareholders in the short-term, the board appears to be stuck with no other options available,” media analyst Rich Greenfield of LightShed Partners wrote in a note over the weekend. In a report last week, Laurent Yoon of Bernstein wrote that, even with an independent committee on the Paramount board, “the appearance of self-dealing will be hard to get past.” Even famed value investor Warren Buffett doesn’t seem to see much value anymore; Berkshire Hathaway—Paramount’s largest noncontrolling shareholder—sold nearly one-third of its stake in the company during the fourth quarter.
Wall Street is equally skeptical. Only 28% of analysts rate Paramount’s shares a buy, which is the lowest percentage of bullish ratings on any major media firm, according to FactSet. Even deeply indebted Warner Bros. Discovery has buy ratings from 55% of analysts. Peter Supino of Wolfe Research did upgrade Paramount to a neutral rating last week, but mostly on the notion that the likelihood of some deal makes the stock a poor target for short selling.
“With a higher probability for a change in ownership of Paramount, we see less opportunity to extract further value from the downside,” Supino wrote.
Long-term Paramount shareholders are still far from assured of a happy ending.
Write to Dan Gallagher at dan.gallagher@wsj.com
wabbott
DIS Veteran
- Joined
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https://finance.yahoo.com/news/investors-call-skydance-deal-paramount-130000382.html
Investors Call Skydance Deal for Paramount ‘Suboptimal’ and Warn of Lawsuitsby Lucas Manfredi
Tue, Apr 9, 2024, 9:00 AM EDT
As Paramount and Skydance inch closer towards a deal that would give David Ellison’s media company control through Shari Redstone and National Amusements’ stake, shareholders are expressing concern that a deal could decrease their ownership stakes and close off better options for a sale.
For a deal to go through, it must win approval from Paramount’s special committee, which was formed in January to balance competing interests in the different companies. But the committee faces the difficult challenge of striking a balance between a deal that is in line with the interests of Redstone — Paramount’s majority shareholder through her stake in National Amusements — while upholding its fiduciary responsibility to the rest of its shareholders, some of whom argue that Apollo Global Management’s competing bid is being unfairly ignored.
“Shari Redstone is literally only looking out to maximize the value of Shari Redstone, which is terribly disconcerting,” David Katz, president and chief investment officer of Matrix Assets Advisers, which owns more than 350,000 Paramount shares, told TheWrap. “The shareholder base in aggregate would like everybody to be treated fairly and be on a level playing field.”
Other investors including Gabelli Asset Management CEO Mario Gabelli, who owns 5 million shares of Paramount’s voting stock, and John W. Rodgers Jr., whose firm, Ariel Investments, owned 1.8% of Paramount’s shares as of the end of last year, have expressed similar concerns.
And on Monday, Justin Evans of Blackwood Capital Management wrote the Paramount board of directors to complain about the looming deal. “The last thing the company shareholders need is yet another silver-spooned movie enthusiast to run our entertainment company into the ground,” Evans wrote.
If Redstone attempts to move forward with a Skydance deal against the recommendation of the special committee, lawsuits from shareholders could get “nasty and expensive,” Stefano Bonini, an associate professor of finance at Stevens Institute of Technology, told TheWrap.
An insider with knowledge of Redstone’s thinking told TheWrap that “the special committee has a lot of power” and that its recommendation “is hard to overrule as a board or majority owner, because you have to show why your reason to overrule it is better than the special committee’s special investigation. If you were to overrule it as a board member, you’d need a good reason to sway shareholders.”
The insider told TheWrap that those on the special committee — who have not been publicly named — include Nicole Seligman, a prominent lawyer and former EVP and general counsel of Sony Corporation, and Dawn Ostroff, the former chief content officer of Spotify and a former president of Conde Nast Entertainment. Both also sit on the board of Paramount Global.
Redstone, who is Paramount’s non-executive chairwoman, has recused herself from the committee, which is advised by Centerview Partners and the law firm Cravath, Swaine & Moore.
The firm argues that while it may be a “home run” for Redstone that would monetize her controlling stake for cash at a “significant premium,” it would be at the expense of the company’s other shareholders and “detrimental” to Paramount’s value.
Matrix also said it is “especially galling” that Paramount’s independent committee has not seriously considered a $26 billion cash offer from Apollo made on March 31, including assumption of debt. The private equity firm should be given the same deference as Skydance to perform due diligence and confirm its financing, Matrix added, noting that the “valuation certainty of a cash bid is vastly superior to a notional valuation that Skydance is assuming for itself in the second-step transaction, a clear conflict of interest.”
In an interview with TheWrap, Katz estimated that the Apollo deal could result in anywhere from $18 to $21 per share for Paramount shareholders, while Skydance’s deal would be about $11 per share. The estimate accounts for a $3-per-share premium for the voting stock. (National Amusements owns 77.3% of its Class A (voting) common stock and 5.2% of its Class B common stock).
“We just wanted to remind the board and the independent committee that their obligation as directors is to protect all shareholders, not just take care of Shari Redstone,” Katz said.
After making its letter to Paramount’s board public, Katz said his firm received letters of support from other Paramount shareholders who shared Matrix’s concerns.
Representatives for Paramount and National Amusements declined to comment on the letter. Skydance did not immediately return TheWrap’s request for comment.
Nicole Seligman, member of the Paramount special committee
Larry Ellison would reportedly put up some of the new funding and potentially provide Paramount with access to artificial intelligence software and other data technology from Oracle. David Ellison would likely lead the new company, while former NBCUniversal CEO Jeff Shell would also have a major leadership role. Additionally, management would reportedly be open to divestitures of assets, such as BET Media Group. Bloomberg separately reported that Skydance would look to merge Paramount+ with a rival, such as Peacock, Max or Prime Video, and would hold on to CBS.
Redstone’s National Amusements could receive over $2 billion in cash from the Skydance deal, according to The Wall Street Journal. Skydance would reportedly be acquired in an all-stock deal valued at around $5 billion.
Lloyd Greif, CEO of the Los Angeles-based investment banking firm Greif & Co., told TheWrap that Paramount’s decision to enter exclusive talks with Skydance is a “head scratcher.”
“They’ve had an opportunity for the last four months going on five months to make something happen here. Who says that’s going to change in 30 days?,” Greif said. “Now it’s no longer a one-firm playing field… public companies by definition need to consider all offers because you’re responsible to all public shareholders to protect their interests and make sure they get the best deal, not effectively what looks like an inside deal.”
Apollo’s offer is more than the entire market capitalization of Paramount Global, which is currently around $7.6 billion plus debt of $14.6 billion.
While acknowledging that $26 billion may not be the right price, Greif pointed out that Paramount has chosen not to negotiate with Apollo.
“The argument is that they haven’t done due diligence, but by the same token that’s a self-fulfilling prophecy because you haven’t given them the opportunity to do due diligence,” he said. “I don’t think anybody can question their ability to do a deal this size, and therefore to pull the rug out from under them before they even have a chance to dig in seems extremely inappropriate.”
Greif added that Skydance may not have moved fast enough to close a deal for National Amusements, giving Apollo time to enter the fray. But he emphasized that Centerview Partners or another investment bank will need to provide a fairness opinion for Apollo’s offer.
“It’s going to be tough to say [Skydance] is the best deal out there when there’s another deal out there that hasn’t been given fair consideration,” Greif said.
Bloomberg noted that negotiators in the Paramount/Skydance deal are considering a dividend or stock repurchase and eliminating the two-class share structure that gives the Redstone family control with less than 10% of Paramount’s overall stock to get support from its other shareholders — National Amusements owns 77.3% of its Class A (voting) common stock and 5.2% of its Class B common stock.
“Those things are all patently absurd,” Katz said. “If the Apollo deal is worth $21 a share, and if Skydance is getting this business from the regular shareholders at $11 a share, they’re basically stealing the company and all these extras don’t amount to anything. I’d be shocked if any shareholders are satisfied or if that does anything for them.”
But Redstone is potentially exposing Paramount to shareholder lawsuits. “It would be very easy to argue you had an independent committee that said, ‘Wait, pause, you need to gather all the offers and all the possible information to make sure that the deal you’re approving is the deal that maximizes the value for everyone,’” said Bonini, the finance professor. “And you decided to ignore it and thereby you determine a loss for shareholders or financial damage, which is exactly what a security class action lawsuit is all about.”
Gabelli told TheWrap that he has “no issue” if Redstone were to get a premium on the sale — as long as the clients he represents are given a fair shake.
“Everybody knows that there’s going to be some arm wrestling if I don’t like what Shari gets for her voting stock versus what our clients get,” he said. “If it’s the same, there won’t be litigation.”
While acknowledging the legal risk, the insider believes the deal between Paramount and Skydance is “very close” to being done.
“If the board thought the deal was going to fail, it wouldn’t have entered into exclusivity. So I believe it’s pretty close,” the person said. “But I don’t see how they will get out of this without a bunch of lawsuits.”
The post Investors Call Skydance Deal for Paramount ‘Suboptimal’ and Warn of Lawsuits appeared first on TheWrap.
Investors Call Skydance Deal for Paramount ‘Suboptimal’ and Warn of Lawsuitsby Lucas Manfredi
Tue, Apr 9, 2024, 9:00 AM EDT
As Paramount and Skydance inch closer towards a deal that would give David Ellison’s media company control through Shari Redstone and National Amusements’ stake, shareholders are expressing concern that a deal could decrease their ownership stakes and close off better options for a sale.
For a deal to go through, it must win approval from Paramount’s special committee, which was formed in January to balance competing interests in the different companies. But the committee faces the difficult challenge of striking a balance between a deal that is in line with the interests of Redstone — Paramount’s majority shareholder through her stake in National Amusements — while upholding its fiduciary responsibility to the rest of its shareholders, some of whom argue that Apollo Global Management’s competing bid is being unfairly ignored.
“Shari Redstone is literally only looking out to maximize the value of Shari Redstone, which is terribly disconcerting,” David Katz, president and chief investment officer of Matrix Assets Advisers, which owns more than 350,000 Paramount shares, told TheWrap. “The shareholder base in aggregate would like everybody to be treated fairly and be on a level playing field.”
Other investors including Gabelli Asset Management CEO Mario Gabelli, who owns 5 million shares of Paramount’s voting stock, and John W. Rodgers Jr., whose firm, Ariel Investments, owned 1.8% of Paramount’s shares as of the end of last year, have expressed similar concerns.
And on Monday, Justin Evans of Blackwood Capital Management wrote the Paramount board of directors to complain about the looming deal. “The last thing the company shareholders need is yet another silver-spooned movie enthusiast to run our entertainment company into the ground,” Evans wrote.
If Redstone attempts to move forward with a Skydance deal against the recommendation of the special committee, lawsuits from shareholders could get “nasty and expensive,” Stefano Bonini, an associate professor of finance at Stevens Institute of Technology, told TheWrap.
An insider with knowledge of Redstone’s thinking told TheWrap that “the special committee has a lot of power” and that its recommendation “is hard to overrule as a board or majority owner, because you have to show why your reason to overrule it is better than the special committee’s special investigation. If you were to overrule it as a board member, you’d need a good reason to sway shareholders.”
The insider told TheWrap that those on the special committee — who have not been publicly named — include Nicole Seligman, a prominent lawyer and former EVP and general counsel of Sony Corporation, and Dawn Ostroff, the former chief content officer of Spotify and a former president of Conde Nast Entertainment. Both also sit on the board of Paramount Global.
Redstone, who is Paramount’s non-executive chairwoman, has recused herself from the committee, which is advised by Centerview Partners and the law firm Cravath, Swaine & Moore.
A “suboptimal” bid
On Monday, Matrix, which owns 355,445 Paramount shares on behalf of its clients and itself and has over $1 billion in assets under management, penned a letter to the media conglomerate’s board in which it knocked Skydance’s bid as “suboptimal.”The firm argues that while it may be a “home run” for Redstone that would monetize her controlling stake for cash at a “significant premium,” it would be at the expense of the company’s other shareholders and “detrimental” to Paramount’s value.
Matrix also said it is “especially galling” that Paramount’s independent committee has not seriously considered a $26 billion cash offer from Apollo made on March 31, including assumption of debt. The private equity firm should be given the same deference as Skydance to perform due diligence and confirm its financing, Matrix added, noting that the “valuation certainty of a cash bid is vastly superior to a notional valuation that Skydance is assuming for itself in the second-step transaction, a clear conflict of interest.”
In an interview with TheWrap, Katz estimated that the Apollo deal could result in anywhere from $18 to $21 per share for Paramount shareholders, while Skydance’s deal would be about $11 per share. The estimate accounts for a $3-per-share premium for the voting stock. (National Amusements owns 77.3% of its Class A (voting) common stock and 5.2% of its Class B common stock).
“We just wanted to remind the board and the independent committee that their obligation as directors is to protect all shareholders, not just take care of Shari Redstone,” Katz said.
After making its letter to Paramount’s board public, Katz said his firm received letters of support from other Paramount shareholders who shared Matrix’s concerns.
Representatives for Paramount and National Amusements declined to comment on the letter. Skydance did not immediately return TheWrap’s request for comment.
Nicole Seligman, member of the Paramount special committee
Skydance vs Apollo
Skydance, which is valued at more than $4 billion, has been a co-producer with Paramount on projects such as the “Mission: Impossible” franchise and “Top Gun: Maverick.” Its deal, which CNBC reported would include raising new equity and an ownership stake of somewhere between 45% to just over 50%, would be financed with the help of a consortium of investors, including private equity firms RedBird Capital Partners and KKR, as well as Larry Ellison, Ellison’s father and Oracle’s cofounder.Larry Ellison would reportedly put up some of the new funding and potentially provide Paramount with access to artificial intelligence software and other data technology from Oracle. David Ellison would likely lead the new company, while former NBCUniversal CEO Jeff Shell would also have a major leadership role. Additionally, management would reportedly be open to divestitures of assets, such as BET Media Group. Bloomberg separately reported that Skydance would look to merge Paramount+ with a rival, such as Peacock, Max or Prime Video, and would hold on to CBS.
Redstone’s National Amusements could receive over $2 billion in cash from the Skydance deal, according to The Wall Street Journal. Skydance would reportedly be acquired in an all-stock deal valued at around $5 billion.
Lloyd Greif, CEO of the Los Angeles-based investment banking firm Greif & Co., told TheWrap that Paramount’s decision to enter exclusive talks with Skydance is a “head scratcher.”
“They’ve had an opportunity for the last four months going on five months to make something happen here. Who says that’s going to change in 30 days?,” Greif said. “Now it’s no longer a one-firm playing field… public companies by definition need to consider all offers because you’re responsible to all public shareholders to protect their interests and make sure they get the best deal, not effectively what looks like an inside deal.”
Apollo’s offer is more than the entire market capitalization of Paramount Global, which is currently around $7.6 billion plus debt of $14.6 billion.
While acknowledging that $26 billion may not be the right price, Greif pointed out that Paramount has chosen not to negotiate with Apollo.
“The argument is that they haven’t done due diligence, but by the same token that’s a self-fulfilling prophecy because you haven’t given them the opportunity to do due diligence,” he said. “I don’t think anybody can question their ability to do a deal this size, and therefore to pull the rug out from under them before they even have a chance to dig in seems extremely inappropriate.”
Greif added that Skydance may not have moved fast enough to close a deal for National Amusements, giving Apollo time to enter the fray. But he emphasized that Centerview Partners or another investment bank will need to provide a fairness opinion for Apollo’s offer.
“It’s going to be tough to say [Skydance] is the best deal out there when there’s another deal out there that hasn’t been given fair consideration,” Greif said.
Bloomberg noted that negotiators in the Paramount/Skydance deal are considering a dividend or stock repurchase and eliminating the two-class share structure that gives the Redstone family control with less than 10% of Paramount’s overall stock to get support from its other shareholders — National Amusements owns 77.3% of its Class A (voting) common stock and 5.2% of its Class B common stock.
“Those things are all patently absurd,” Katz said. “If the Apollo deal is worth $21 a share, and if Skydance is getting this business from the regular shareholders at $11 a share, they’re basically stealing the company and all these extras don’t amount to anything. I’d be shocked if any shareholders are satisfied or if that does anything for them.”
Legal risk
The insider said it was likely that Redstone was most interested in negotiating with David Ellison because he “cares” about Hollywood and the media industry. “He’s more than just the numbers, and that matters to Shari, and they’ve also indicated they’re not necessarily in favor of breaking up the company, which many just assume they should,” the insider added.But Redstone is potentially exposing Paramount to shareholder lawsuits. “It would be very easy to argue you had an independent committee that said, ‘Wait, pause, you need to gather all the offers and all the possible information to make sure that the deal you’re approving is the deal that maximizes the value for everyone,’” said Bonini, the finance professor. “And you decided to ignore it and thereby you determine a loss for shareholders or financial damage, which is exactly what a security class action lawsuit is all about.”
Gabelli told TheWrap that he has “no issue” if Redstone were to get a premium on the sale — as long as the clients he represents are given a fair shake.
“Everybody knows that there’s going to be some arm wrestling if I don’t like what Shari gets for her voting stock versus what our clients get,” he said. “If it’s the same, there won’t be litigation.”
While acknowledging the legal risk, the insider believes the deal between Paramount and Skydance is “very close” to being done.
“If the board thought the deal was going to fail, it wouldn’t have entered into exclusivity. So I believe it’s pretty close,” the person said. “But I don’t see how they will get out of this without a bunch of lawsuits.”
The post Investors Call Skydance Deal for Paramount ‘Suboptimal’ and Warn of Lawsuits appeared first on TheWrap.
HokieRaven5
DIS Veteran
- Joined
- Mar 5, 2020
Preliminary voting results from the Shareholder Meeting filed with the SEC:
https://www.sec.gov/ix?doc=/Archives/edgar/data/0001744489/000095015724000595/form8-k.htm
https://www.sec.gov/ix?doc=/Archives/edgar/data/0001744489/000095015724000595/form8-k.htm
wabbott
DIS Veteran
- Joined
- Aug 4, 2021
https://finance.yahoo.com/news/paramount-shareholder-aspen-sky-trust-005913656.html
Paramount Shareholder Aspen Sky Trust Urges Board to End Exclusive Talks With Skydance
The Wrap· Paramount
Lucas Manfredi
Tue, Apr 9, 2024, 8:59 PM EDT
Paramount shareholder Aspen Sky Trust has joined Matrix Asset Advisors in its opposition of the current exclusive talks with David Ellison’s Skydance Media regarding a potential acquisition of the company through Shari Redstone’s National Amusements.
“The dilution of shareholder valuation to advance the position of a single shareholder with a position on the Board of Directors, as currently being reported, is more than questionable. At a minimum, it transcends ethical boundaries and breaches the fiduciary duties the Board of Directors owes to its shareholder base,” Aspen’s legal counsel The Riley Firm sent in a letter to the board on Tuesday.
“Specifically, we find that the actions taken by Paramount’s Board of Directors in halting discussions with or otherwise denying viable bidders the courtesy of a 30-day due diligence inspection period (during which funding would be confirmed), while offering this courtesy exclusively to Skydance Media, is a per se violation of the Board’s fiduciary duties to its shareholders,” the letter continued.
The firm, which owns 6,574,397 Paramount shares amounting to nearly 1.3% of the total reported float of shares trading and more than 1% of the total shares issued, argues that the Skydance bid places the company’s shareholders into a “hyper speculative business arrangement with the Redstone family at the helm while the remaining 90% of shareholders are left floating without life rafts.” They also note that competing bids from Apollo Global Management and Allen Media Group founder Byron Allen “do not include anywhere near the same reward-risk scenario.”
The Riley Firm is calling on the board to abandon its exclusive talks with Skydance and to engage in competitive bidding negotiations.
“Any merger discussions and/or transactions that systematically foregoes competitive bidding in favor of exclusive discussions with a single company – especially where that bidder is offering to promote the financial position of a single shareholder over that of the general base — is averse to the fair market valuation of the company,” the letter argues. “Such a result would, at a minimum, provide cause to investigate the ethical motives underlying the transaction. Assuredly, such a result would expose Paramount to liabilities for investor losses based on breaches of fiduciary duties (among other obligations), potential personal liability exposure of the Board of Directors engaging in this reprehensible behavior and should spark security compliance investigations.”
It also asks that the board forego discussions with any future bidders that would “propose instant rewards for one or a few interested parties while saddling the remaining shareholders with all the risk or, even more concerning, unbridled dilution of value as presented in the current set of circumstances.”
Skydance, which is valued at more than $4 billion, has been a co-producer with Paramount on projects such as the “Mission: Impossible” franchise and “Top Gun: Maverick.” Its deal, which CNBC reported would include raising new equity and an ownership stake of somewhere between 45% to just over 50%, would be financed with the help of a consortium of investors, including private equity firms RedBird Capital Partners and KKR, as well as Larry Ellison, Ellison’s father and Oracle’s cofounder.
The senior Ellison would reportedly put up some of the new funding and potentially provide Paramount with access to artificial intelligence software and other data technology from Oracle. David, meanwhile, would likely lead the new company, while former NBCUniversal CEO Jeff Shell would also have a major leadership role.
Additionally, management would reportedly be open to divestitures of assets, such as BET Media Group. Bloomberg separately reported that Skydance would look to merge Paramount+ with a rival, such as Peacock, Max or Prime Video, and would hold onto CBS.
Redstone’s National Amusements could receive over $2 billion in cash from the Skydance deal, according to The Wall Street Journal. Skydance would reportedly be acquired in an all-stock deal valued at around $5 billion.
In addition to Skydance, Paramount Global CEO Bob Bakish met with Warner Bros. Discovery CEO David Zaslav in December about a potential merger, though those talks have since halted. Allen placed a $30 billion bid including debt for the company, though it’s unclear how that deal would be financed, and Apollo has placed a $26 billion all-cash offer, which was reportedly rebuffed due to concerns around how the bid would be financed.
In addition to Matrix and Aspen Sky Trust, Blackwood Capital Management, which owns an aggregate of 122,000 Paramount class B shares and 13,600 class A (voting) shares, slammed the Skydance deal in a separate letter sent to the board on Monday.
“If you believe that the proposed Skydance deal is truly a better offer, then the only way to avoid litigation is to provide to all current shareholders the option to sell their shares at the same price as Ms. Redstone,” Blackwood wrote. “The last thing the company shareholders need is yet another silver-spooned movie enthusiast to run our entertainment company into the ground.”
Paramount, which had a market capitalization of $7.6 billion as of Tuesday’s close and a reported $14.6 billion in debt at the end of 2023, has seen its shares fall 23.8% year to date and 11.7% in the past six months.
The post Paramount Shareholder Aspen Sky Trust Urges Board to End Exclusive Talks With Skydance appeared first on TheWrap.
Paramount Shareholder Aspen Sky Trust Urges Board to End Exclusive Talks With Skydance
The Wrap· Paramount
Lucas Manfredi
Tue, Apr 9, 2024, 8:59 PM EDT
Paramount shareholder Aspen Sky Trust has joined Matrix Asset Advisors in its opposition of the current exclusive talks with David Ellison’s Skydance Media regarding a potential acquisition of the company through Shari Redstone’s National Amusements.
“The dilution of shareholder valuation to advance the position of a single shareholder with a position on the Board of Directors, as currently being reported, is more than questionable. At a minimum, it transcends ethical boundaries and breaches the fiduciary duties the Board of Directors owes to its shareholder base,” Aspen’s legal counsel The Riley Firm sent in a letter to the board on Tuesday.
“Specifically, we find that the actions taken by Paramount’s Board of Directors in halting discussions with or otherwise denying viable bidders the courtesy of a 30-day due diligence inspection period (during which funding would be confirmed), while offering this courtesy exclusively to Skydance Media, is a per se violation of the Board’s fiduciary duties to its shareholders,” the letter continued.
The firm, which owns 6,574,397 Paramount shares amounting to nearly 1.3% of the total reported float of shares trading and more than 1% of the total shares issued, argues that the Skydance bid places the company’s shareholders into a “hyper speculative business arrangement with the Redstone family at the helm while the remaining 90% of shareholders are left floating without life rafts.” They also note that competing bids from Apollo Global Management and Allen Media Group founder Byron Allen “do not include anywhere near the same reward-risk scenario.”
The Riley Firm is calling on the board to abandon its exclusive talks with Skydance and to engage in competitive bidding negotiations.
“Any merger discussions and/or transactions that systematically foregoes competitive bidding in favor of exclusive discussions with a single company – especially where that bidder is offering to promote the financial position of a single shareholder over that of the general base — is averse to the fair market valuation of the company,” the letter argues. “Such a result would, at a minimum, provide cause to investigate the ethical motives underlying the transaction. Assuredly, such a result would expose Paramount to liabilities for investor losses based on breaches of fiduciary duties (among other obligations), potential personal liability exposure of the Board of Directors engaging in this reprehensible behavior and should spark security compliance investigations.”
It also asks that the board forego discussions with any future bidders that would “propose instant rewards for one or a few interested parties while saddling the remaining shareholders with all the risk or, even more concerning, unbridled dilution of value as presented in the current set of circumstances.”
Skydance, which is valued at more than $4 billion, has been a co-producer with Paramount on projects such as the “Mission: Impossible” franchise and “Top Gun: Maverick.” Its deal, which CNBC reported would include raising new equity and an ownership stake of somewhere between 45% to just over 50%, would be financed with the help of a consortium of investors, including private equity firms RedBird Capital Partners and KKR, as well as Larry Ellison, Ellison’s father and Oracle’s cofounder.
The senior Ellison would reportedly put up some of the new funding and potentially provide Paramount with access to artificial intelligence software and other data technology from Oracle. David, meanwhile, would likely lead the new company, while former NBCUniversal CEO Jeff Shell would also have a major leadership role.
Additionally, management would reportedly be open to divestitures of assets, such as BET Media Group. Bloomberg separately reported that Skydance would look to merge Paramount+ with a rival, such as Peacock, Max or Prime Video, and would hold onto CBS.
Redstone’s National Amusements could receive over $2 billion in cash from the Skydance deal, according to The Wall Street Journal. Skydance would reportedly be acquired in an all-stock deal valued at around $5 billion.
In addition to Skydance, Paramount Global CEO Bob Bakish met with Warner Bros. Discovery CEO David Zaslav in December about a potential merger, though those talks have since halted. Allen placed a $30 billion bid including debt for the company, though it’s unclear how that deal would be financed, and Apollo has placed a $26 billion all-cash offer, which was reportedly rebuffed due to concerns around how the bid would be financed.
In addition to Matrix and Aspen Sky Trust, Blackwood Capital Management, which owns an aggregate of 122,000 Paramount class B shares and 13,600 class A (voting) shares, slammed the Skydance deal in a separate letter sent to the board on Monday.
“If you believe that the proposed Skydance deal is truly a better offer, then the only way to avoid litigation is to provide to all current shareholders the option to sell their shares at the same price as Ms. Redstone,” Blackwood wrote. “The last thing the company shareholders need is yet another silver-spooned movie enthusiast to run our entertainment company into the ground.”
Paramount, which had a market capitalization of $7.6 billion as of Tuesday’s close and a reported $14.6 billion in debt at the end of 2023, has seen its shares fall 23.8% year to date and 11.7% in the past six months.
The post Paramount Shareholder Aspen Sky Trust Urges Board to End Exclusive Talks With Skydance appeared first on TheWrap.
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