Again Disney CEO Bob Iger put it bluntly about six months ago. This is Hollywood’s “age of great anxiety.”
Over the past decade, Wall Street has encouraged the world’s biggest entertainment companies to dive into streaming, dismantling old business models. Investors have since cooled down to the idea. Rising interest rates combined with a slowing economy have led to his brutal 2022 stock market revaluation of companies that make movies, TV, music and news.
Among the media executives and creative people I talk to, there’s not much to expect in 2023. They expect this year to be tough, and it’s not without drama. Here are some of the stories to watch in 2023.
• More “Scarjo vs Disney” type showdowns between stars and studios. In September 2021, Disney’s then-CEO Bob Chapek experienced his first major setback. Actor Scarlett Johansson and her streaming of the film were in disagreement over her release. black widowAccording to the Financial Times, Johansson has sued Disney over its decision to release the film online.
Even if most of us return to “normal,” cinemas are showing about 30% fewer movies than they were pre-pandemic. It seems inevitable that another controversy between studios and talent will arise.
In 2021, when Warner made the drastic choice to release all its movies online on the same day as in theaters, studios ended up paying tens of millions of dollars to appease some stars. But now Warner and other major studios are in cost-cutting mode. It’s not easy to justify writing checks to appease on-screen talent. And as Netflix and others introduce advertising into their streaming his platforms, talent his agents are also looking to get some of the money.
• Rupert Murdoch’s proposal to reunite Fox and News Corp is unbalanced. Murdoch said in October that he hopes to combine the two companies in an all-stock merger. A “special committee” of independent directors has since evaluated the transaction. We’ll wait for their verdict, probably in the coming weeks. But some shareholders have already expressed concerns. And although Mr Murdoch and his family trusts control about 40% of the voting stock, any transaction requires a majority of independent shareholders to vote in favor of the proposal.
Speculation abounds among shareholders, bankers and analysts about how this chessboard will perform. Could Murdoch spin Wall Street Journal owner Dow Jones out of Newscorp to make the deal sweeter for shareholders, or would it sell other parts of the business?
• Inflation is coming to US Spotify users. A Spotify subscription has cost $10 a month since the music service debuted in the US in 2011. The largest music marketplace.
This has been a source of frustration for record labels. Over the same period, Netflix subscription prices nearly doubled from $8 to $15.49 per month. Spotify’s biggest rival, Apple Music, raised its prices by $1 in October. It seems almost inevitable that Spotify will follow suit. Spotify shareholders may wonder why it hasn’t happened yet.
• Sports continue to defy the broader economy. For the TV industry, 2022 was marked by program cancellations, budget pressures and layoffs. But not so much in sports, one corner of the entertainment industry where a pair of Arizona basketball teams sold last month for a total valuation of $4 billion. That’s almost double the $2.35 billion it won.
The sale served as a reminder of the NBA’s values as it prepares to renegotiate its broadcasting rights. Under the current deal, which runs through the 2024-25 season, Disney’s ESPN and Warner’s Turner are paying the NBA about $2.6 billion a year. Warner CEO David Zaslav is trying to negotiate in public, saying his company “doesn’t have to have the NBA.” With the group’s interest in sports on its streaming service, the price of these rights is sure to skyrocket.
Outside of sports, however, 2023 looks set to be another year of anxiety for the media.