Hollywood executives are bracing for a brutal “year of turmoil”
Hollywood executives are bracing for a brutal "turbulent year" as the entertainment industry faces a combined threat of recession, slowing streaming growth, life support for the film industry, and strikes by potential writers.
"There's widespread concern," said Steve Kram, CEO of investment group Content Partners, LLC and former chief operating officer of William Morris Agency.
"You're going to see the entire entertainment industry cutting costs," he added. "You see pressure from financial institutions to reduce debt levels and not provide additional debt capital. [2023] is going to be a tough year. ”
The media industry has been hit hardest as investors loath tech conglomerates that once enjoyed their fortunes but failed to deliver significant profits.
In 2022 the stock market wiped more than half a trillion dollars
In 2022, the largest entertainment conglomerate lost more than $500 billion in market value as investors lost patience with the streaming revolution that propelled Netflix to the top of Hollywood.
Executives and analysts said they did not expect any relief from the massacre coming year. "[2023] is going to be bad," said the CEO of a major media conglomerate. "Some companies are going to have a very, very difficult time."
Morgan Stanley analysts expect the industry's streaming subscriber count to increase to half of what it was in 2021 as streaming "enters a new phase of slower growth and rising costs."
Morgan Stanley's Benjamin Swinburne estimates that the largest U.S. media companies — Disney, Warner Bros. Discovery Channel, Paramount and NBCUniversal — lost more than $10 billion in operating revenue in 2022 due to their foray into streaming.
HBO's owner, Warner Bros. Discovery Channel, has laid off hundreds of employees in the past few months to cope with nearly $50 billion in net debt. The company has also removed dozens of shows from its HBO Max streaming service to cut costs.
Disney, the other traditional media giant, abruptly replaced its chief executive in November
Disney, another traditional media giant, abruptly changed its CEO in November, shortly after revealing it was losing billions of dollars on streaming.
Large theater chains have also been affected as audiences have not yet returned to pre-coronavirus habits and movie studios have been reluctant to release movies in theaters. Cineworld, the second-largest cinema owner, filed for bankruptcy in September.
Adding to the uncertainty in 2023 is a potential writer strike that would have led to a shutdown of Hollywood's largest studios for the first time in 15 years. Hollywood's major unions — the writers' union, the directors' union, and the actors' union — are all preparing for contract negotiations at the start of the new year.
0 Comments