Hollywood strikes to dampen Big Media's holiday expectations
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[October 30, 2023]
By Samrhitha A and Chavi Mehta
(Reuters) - Big media firms are expected to warn starting this week that
studio revenues will slow in the coming quarters as dual Hollywood
strikes left them with a thin release slate.
Walt Disney, Warner Bros Discovery and Paramount - which together
account for nearly half of Hollywood revenues - have delayed the release
of films, including "Dune: Part 2."
That leaves the studios with little to follow the third-quarter success
of "Barbenheimer", with TD Cowen predicting that box-office revenue in
the last three months of the year could be roughly a third lower than
pre-pandemic levels.
After a strong November line up with "The Marvels," "Trolls Band
Together" and a "Hunger Games" prequel, big Christmas releases are few.
There is no obvious December blockbuster on the scale of "Avatar: The
Way of Water," the highest-grossing film in 2022, or the 2021 hit
"Spider-Man: No Way Home."
The first dual work stoppage of writers and actors in 63 years has
halted most productions since May. While the scribes began returning to
work following a 148-day strike after reaching a deal with producers, it
remains unclear when the actors would return.

Even if a deal is reached with the actors soon, Wall Street does not
expect a quick respite for the studios as it could take weeks for
productions to resume.
Analysts expect studio revenues at Disney and Warner Bros Discovery to
slow to 2.9% and 4.7% between October and December, while Paramount will
likely post a drop of 1.9%, according to LSEG data.
That compares with third-quarter estimates for a rise of 4.4% at Disney,
12.5% at Warner Bros Discovery and 16.2% at Paramount.
"With the major media companies trying very hard to turn the direction
of margins back in a positive direction, in part by raising price on OTT
services, the potential for an extended dry period for new content
carries serious risks," TD Cowen said.
The companies as well as Netflix have raised prices of their streaming
services this year, betting that consumers will pay more or opt for
cheaper, ad-supported services that are more lucrative for the business.
Netflix, which makes many of its shows and movies overseas, reported
earlier this month 9 million estimate-smashing subscriber additions in
the September quarter and said it expected similar additions in the
holiday period.
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A biker goes by Warner Bros. Studios the day after the Writers Guild
of America (WGA) announced it reached a preliminary labor agreement
with major studios in Burbank, California, U.S., September 25, 2023.
REUTERS/Mario Anzuoni
 Higher fees powered growth in
streaming revenue - likely 6.9% at Warner Bros Discovery, 14.2% at
Disney and 33% at Paramount - in the September quarter, potentially
reducing losses at the money-losing Disney+ and Paramount+ services.
CABLE TV PRESSURE
Media companies have long been grappling with a decline in cable TV.
This has forced Disney to consider the sale of the assets that had
long helped subsidize its streaming losses.
"The only bright spot is ESPN, which is the linchpin that holds the
bundle together and viewership has stabilized over the last few
years despite accelerated cord-cutting," said Bernstein analyst
Laurent Yoon of Disney, which he said has the largest exposure to
traditional cable TV among the major media companies.
Disney has said it will break out sports programming revenue from
the holiday quarter, and earlier this month disclosed declining
sales and profit at ESPN, for which CEO Bob Iger has signaled he
wants to find a partner to help create a streaming service.
Disney is expected to report its fifth straight quarterly decline in
linear TV revenue, a fall of 3.8%. Warner Bros Discovery and
Paramount are expected to see declines of 5.4% each in their cable
TV businesses.
Overall revenue at Disney is expected to rise 6%, Warner Bros
Discovery to inch 2.1% higher and Paramount to grow 2.8%.
Paramount will report quarterly earnings on Nov. 2, while Disney and
Warner Bros Discovery are slated for Nov. 8.
(Reporting by Samrhitha Arunasalam and Chavi Mehta in Bengaluru;
Additional reporting by Dawn Chmielewski in Los Angeles; Writing by
Aditya Soni; Editing by Sayantani Ghosh)
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