Every week, Next TV writers Danielle Frankel and David Bloom discuss the latest happenings in the technology, media and communications industries.
David Bloom: Dan-oh, we're in the middle of a heatwave of August, and we've got more news than we expected this week. BTW, I loved the scene in the original Hawaii Five-O where McGarrett calls James MacArthur's character that. Fun fact about the original: It ran for a staggering 12 seasons and 281 episodes, and won two Emmys (for music, of course). It was one of the most violent shows in primetime, and its gun-toting of bad guys was still a topic of debate among critics, Congress, and the FCC at the time. But Five-O was also a pioneer in casting a much more diverse cast than was common at the time, especially Asian/Pacific Islander cast members. Harry End, Kam Hong, Zulu, Danny Kamekona, Kwan Hee Lim, Tommy Fujiwara, and Seth Sakai are all set to appear for at least 20 episodes. It was a more accurate reflection of Honolulu's diverse population, but a stark contrast to most Hollywood productions of the time, which were more likely to feature witches, Martians, and talking horses than people of color. So it was, and still is, a small step forward. If you wake up a little late, put on the theme song.
But looking back, the Digital Entertainment Group released their home entertainment half-year stats. Streaming is up big time, especially FAST and ad-supported premium VOD (think ad-supported tiers like Hulu, Netflix, Amazon, etc.), which brought in over $5 billion in ad revenue for the quarter. Overall streaming revenue grew 27% to nearly $23 billion for the half. Not bad, eh? Meanwhile, the old-school home entertainment channels (EST, TVOD) languished like minor cable networks, with no must-see theatrical releases at the start of the year. The only areas of growth are premium collectible “steelbooks” and Ultra HD Blu-ray discs. So, do you still buy the occasional UHD box set of Pirates of the Caribbean or similar? I stopped buying them altogether pre-pandemic, but it's a bit different.
(Image courtesy of Digital Entertainment Group)
Daniel Frankel: The last time I played a Blu-ray was in the first month of the pandemic, which was “On Any Given Sunday.” And that was after I got the player out of storage. As for the post-DVD/Blu-ray Digital Entertainment group, I'm a bit stumped. Literally 90% of what the organization considers measurable U.S. “home entertainment business” is actually subscription video on demand streaming… this is as measured by Omdia, DEG's research partner. And some might argue that SVOD falls into the “television” category. I don't think there's any “home entertainment” anymore. As for Omdia's SVOD data, yes, it's always increasing, as Netflix continues to grow.
(Image courtesy of David Bloom)
Bloom: Of course, the big news today is that the judge granted an injunction to freeze the release of Venu in response to Fubo's antitrust lawsuit. I recall you thinking Fubo's case was pretty strong, and apparently the judge thought so too. There's usually a high bar to get an injunction granted, especially for a content initiative that hasn't even been released yet. I have two questions for you: 1) What do you think of the judge's initial decision (a follow-up hearing is scheduled for next week), and 2) Given this somewhat ominous initial decision, what are the chances that Venu will actually be released? The $42.99/month price they announced doesn't look like a good deal to consumers, especially outside of mid-winter NBA games now streaming on Peacock. Fubo's stock price soared in response to this news (if you can define “soar” as going from $1.30 to $1.59 per share). However, none of the co-conspirators, or defendants, suffered any consequences from the decline in stock prices. So, what do you think?
Also read: Venu Sports faces possible preliminary injunction
(Image courtesy of Yahoo Finance)
Frankel: This whole thing, being part of a joint venture, is not entirely his fault, but consider the preliminary injunction granted to Venu Sports on Friday to be another disaster resulting from the corporate oversight of a man named David Zaslav. So, you're 100% right. Injunctions like this are really hard to get. The judge did something unusual, believing that Venu Sports poses a clear threat to market competition and consumer choice. Zaslav? Iger? Murdoch? Didn't they see what was around the corner here? It's astonishing.
(Image credit: Getty Images)
I have no idea how Wall Street will make that decision, and I'm not sure if Fubo's newfound influence over distributors will make its future 20% brighter, but I suspect it will make the plight of non-sports cable channels even more dire. The Disney Channel won't be helped when Disney is forced to sever its ties with ESPN in pay-TV licensing negotiations.
Bloom: I think Venu's legal problems fit into the “calculated gamble” part of the company's business plan. It was a roll of the dice and a game of snake eyes, or, better yet, craps. Apparently Fubo decided to go with the name Zelig, as seen in the newsreels this week.
For the past four years, Fubo's chairman of the board has been Edgar Bronfman Jr., the Seagram heir who sold his fortune to buy Universal and later headed Warner Music. Now Bronfman is making a last-minute move to buy Paramount Global before the “go-shop” clause in David Ellison's Paramount bid expires in a few days. But as Lightshed Partners' Rich Greenfield suggested in a research note published late Friday, why? David Ellison's father, Larry, is one of the five richest people on the planet. Ellison (and his partners Redbird Capital, etc.) should be able to outbid any takeover offer from the Bronfman Group (including, what, a $500 million offer from Roku). In Greenfield's calculation, two things matter. One is whether Bronfman can come up with enough cash to buy back at least 20% of the non-Redstone shares in a proposal that is unlikely to trigger a shareholder lawsuit. The second is, of course, Shari Redstone, the only vote that matters. At the very least, this is another compelling episode of the already five-season corporate soap opera that's set to be adapted to series soon on Apple TV Plus or Max.
Frankel: My attention was quickly diverted to the glorious thing that is right-wing sports Twitter. I know that the No. 1 NFL draft pick has a history riddled with failure and there are very few sure things at the quarterback position.
I want to put this on the record loud and clear: I'm rooting for the Bears this year. I want them to do well. They deserve it. I'll be sad if Caleb Williams is as bad as I expect him to be. I hope I'm wrong.August 17, 2024
But who can look at Caleb Williams and not be convinced he'd be a successful NFL quarterback? The improvisation, the accuracy, the poise. He's got it all. He proved it in three high-level seasons of college football against some of the worst offensive lines in the game. In my humble opinion, he's the most sure-fire player since John Elway. There'll be a statue of this guy next to Michael Jordan in Chicago one day. Stay tuned.
Speaking of Max, it's in the red again. Its parent company, Warner Bros. Discovery, just took a $9.1 billion write-down on its cable network, which was until recently its biggest source of revenue. Warner's stock price is at an all-time low. The company has more than $41 billion in debt, and stock analysts are starting to talk about the need to break up Warner Bros. But this week, in a co-written article, Variety's editor-in-chief Cynthia Littleton suggested that “the company's overall financial situation is better than it appears, and executives are committed to maintaining its investment-grade rating.” I wonder what Variety is seeing that we're not seeing. Oh yeah, by the way, I saw Alien: Romulus. It's a respectable minor movie franchise event that seems to pose little risk to the Alien brand and story canon. The filming locations, and apparently much of the crew, were from Budapest. It couldn't have cost Disney and Fox much to produce this respectable movie for franchise lovers. In fact, Disney would probably keep taking such low-risk appearances all day long. It reminded me a bit of 2016's Rogue One: A Star Wars Story, directed by Gareth Edwards.
Alien: Romulus | Teaser Trailer – Watch on YouTube
Bloom: Think of this as the Schrodinger's cat of the stock market. WBD could be both a terrible stock in the short term and a stock that could hurt in the long term. The hard part is going from short to long.
Schrödinger's Cat: A Thought Experiment in Quantum Mechanics – Chad Orzel – Watch on YouTube
There is certainly a lot to dislike about WBD's various businesses and industries, especially for nervous short-term investors. That's why the stock has fallen by more than two-thirds. For investors prepared to hold for years, not weeks, it's a different story. There's one key factor: WBD's net debt of $38 billion is still huge and ugly, but most of that debt has a very long repayment schedule (say, into the 2060s). Even better, about 90% of the debt is at low fixed rates and immune to interest rate fluctuations. Plus, WBD is generating a lot of cash, which allows it to pay down some of its debt early. This cash flow protects WBD's credit rating, if not its stock market valuation. The pared-down Max looks much more minimal today, but costs are at breakeven and there's no longer a bleeding scar on the balance sheet. That's how some investors see it, while others are looking at a dead cat.
