Streaming Services (business / market / service, not content-focused)

[Zorral]

27 minutes ago, Deadlines? What Deadlines? said:

What the hell?

https://www.latimes.com/entertainment-arts/business/story/2021-05-16/why-att-is-spinning-off-hbo-cnn-warner-media-discovery

As we've been witnessing for quite a while, we're going back to the conditions of cable.  To get the one thing one wants one is forced to have access to vast swathes of programming one does not want and will never watch. 

Plus, good scripted programming takes a lot of time, skills, resources, talent, intelligence, experience and creativity, all of which need to be paid for.  Not a good model for capitalism's objectives which is to take the most while giving little-to-nothing.

[RumHam]

Quote

AT&T has spent billions building HBO Max

...Why though? All they really had to do was change the name of the HBO go app and add the non-HBO content. How does that cost billions?

Maybe they're including the cost of all the shows that have come out on HBO Max since, but it's not like HBO wasn't going to keep producing shows anyway so those really shouldn't count. 

[Deadlines? What Deadlines?]

22 minutes ago, Zorral said:

As we've been witnessing for quite a while, we're going back to the conditions of cable.  To get the one thing one wants one is forced to have access to vast swathes of programming one does not want and will never watch. 

Plus, good scripted programming takes a lot of time, skills, resources, talent, intelligence, experience and creativity, all of which need to be paid for.  Not a good model for capitalism's objectives which is to take the most while giving little-to-nothing.

The spun-off company will be taking a big chunk of ATT's debt with it. The sale will probably generate a considerable amount of cash. Win win.

10 minutes ago, RumHam said:

...Why though? All they really had to do was change the name of the HBO go app and add the non-HBO content. How does that cost billions?

Maybe they're including the cost of all the shows that have come out on HBO Max since, but it's not like HBO wasn't going to keep producing shows anyway so those really shouldn't count. 

Costs of restructuring. Infrastructure costs associated with a massive increase in content; marketing; cost of cutting deals to expand HBOMax's reach, etc. They spent almost half-a-billion for Friends.

[Zorral]

Worse and worser:

"You Can Get HBO Max for $5 Less If You Don’t Mind Ads"

https://www.vulture.com/2021/05/hbo-max-with-ads-cheaper-subscription.html

Quote

If you’ve been on the fence about signing up for HBO Max because of its rich price tag ($15 per month), there’s some good news: You’ll soon be able to get the Max experience for “only” $9.99 per month — if you’re willing to put up with some advertising. As has been long expected, WarnerMedia announced Wednesday that it will launch the not-so-artfully-titled HBO Max With Ads the first week of June, offering budget-minded consumers the chance to save one-third of the regular cost in exchange for what it promises will be “the lightest ad load in the streaming industry.” While every series and classic movie on the regular Max will be included, the ad-supported version will not include access to the same-day movie premieres the streamer has been rolling out since December. In other words, if you want to stream In the Heights, you’ll still need to pay full freight....

 

[Corvinus85]

CBS AllAccess and Hulu have had this option for some time.

[RumHam]

On 5/17/2021 at 3:34 PM, Deadlines? What Deadlines? said:

They spent almost half-a-billion for Friends.

I just saw that this isn't even a new season or a single new episode. They paid half-a-billion for a group interview? So strange. 

[Rhom]

Yeah... we are just a year or two away from essentially just having cable without needing Jim Carey to come to our house and be creepy.

[Lord of Rhinos]

3 hours ago, RumHam said:

I just saw that this isn't even a new season or a single new episode. They paid half-a-billion for a group interview? So strange. 

That's not for the reunion special.  HBOMAX is supposedly spending 85 million a year to stream Friends.

[Rhom]

5 hours ago, Lord of Rhinos said:

That's not for the reunion special.  HBOMAX is supposedly spending 85 million a year to stream Friends.

Which doesn’t make sense to me.  It was an NBC show... why would it not be on Peacock?

And the reruns are always on TBS (I think) so does that mean it can’t be streamed from TBS in some format?

Its all so confusing.

[Lord of Rhinos]

4 hours ago, Rhom said:

Which doesn’t make sense to me.  It was an NBC show... why would it not be on Peacock?

And the reruns are always on TBS (I think) so does that mean it can’t be streamed from TBS in some format?

Its all so confusing.

Back in the day there used to be anti-monopoly rules that frowned on television networks airing shows made by their own studios so channels almost always aired shows made by rival studios.  And no, TBS doesn't stream Friends.

[Iskaral Pust]

One big obstacle to getting consumers to return to an expensive all-inclusive cable package is that, aside from live sports, I cannot think of much that I would stay subscribed for.  If I can use the streaming library to catch up on a show’s season, or entire run, in a few weeks — and all of the best shows have just 8-13 eps per season — then I can be a subscription nomad and drift around to graze on the freshest content.  HBO or Disney might get a subscription from me for only 3-4 months of each year.  We’ve broken away from having to experience TV in real time, which means we don’t need to maintain a permanent subscription.

[Rhom]

3 hours ago, Iskaral Pust said:

One big obstacle to getting consumers to return to an expensive all-inclusive cable package is that, aside from live sports, I cannot think of much that I would stay subscribed for.  If I can use the streaming library to catch up on a show’s season, or entire run, in a few weeks — and all of the best shows have just 8-13 eps per season — then I can be a subscription nomad and drift around to graze on the freshest content.  HBO or Disney might get a subscription from me for only 3-4 months of each year.  We’ve broken away from having to experience TV in real time, which means we don’t need to maintain a permanent subscription.

We don't "need" to.  And a significant minority like you probably will be diligent in turning on/off subscriptions as needed.

But... the reality is, gym's don't make money on the members that come regularly.  They make money on the people who pay their membership feels, but don't come.  Its the truth for all subscription based profit models. 

[Iskaral Pust]

21 minutes ago, Rhom said:

We don't "need" to.  And a significant minority like you probably will be diligent in turning on/off subscriptions as needed.

But... the reality is, gym's don't make money on the members that come regularly.  They make money on the people who pay their membership feels, but don't come.  Its the truth for all subscription based profit models. 

You cannot do a year’s worth of exercise in just six weeks at the gym.  So you have to keep the gym membership all the time so that you have the ongoing possibility of exercise, even if you never actually go.  Each workout window of opportunity is locked in time, just like TV episodes used to be.   But now TV shows can be viewed at any time, so I don’t need to keep the subscription indefinitely.  I can watch an entire year’s worth of Mandalorian in just three weeks.  That’s why live sports were so important to cable packages: people wouldn’t give up the opportunity to watch some future live sport event even if they would happily wait for the box set of Dexter DVDs to come from Netflix in red envelopes.

Also, canceling a gym membership feels like giving up on the positive view of yourself, while canceling a streaming service feels virtuous and healthy.  The psychology is different.

You’re probably right that some people will default into oblivious neglect and keep their subscriptions open-ended, but it is incredibly easy to halt or restart a streaming subscription.  That’s why gyms require you to cancel in person, with a special membership manager who’s never there.  The friction is much lower for streaming, so we should see a lot more people willing to drop and pick back up.  The streaming services will quickly try to reintroduce friction.  E.g. in Ireland my parents have to subscribe to Disney+ for a year in advance; they don’t have a month-to-month option.

[Zorral]

Biggest In the World, Prepared to Be Taken Over By Even Bigger, For Even Bigger Profit

The comments to this say it all, just starting with the start of the most recent one -- so many people commenting seem to know a whole lot of the history of all the figures involved and what they've been involved with, and how that has turned out -- generally very badly for everyone and everything involved except themselves, who continue to fail upward$.

 "John Stankey may be the worst executive in the history of corporate America.  He led the failed acquisition attempt of T-Mobile which cost AT&T a $3.8 billion break-up fee.  He led the disastrous acquisition of Direct TV, that AT&T bought for $48 billion, and recently sold for $16 billion.  How do you like that for an ROI?  Did he lose his job for that?  No, he got promoted to CEO!   For the trifecta, he led the disastrous acquisition of Warner Media for $102 Billion. And a $40 billion bridge loan closed the deal?  That's just more debt. 
 
Yes, America, John Stankey still has a job.  Meanwhile, AT&T sold precious data center assets to pay down prior debt it couldn't afford to take on.  Those data center assets and the best fiber optic network in the world could have been used to establish market dominance in cloud computing.  And Cloud Computing is now dominated by Amazon and Microsoft who own neither data centers or the underlying fiber network.

Yes, America, John Stankey still has a job."

https://www.nytimes.com/2021/05/21/business/media/att-discovery-warnermedia-deal.html

Quote

 

For AT&T, the appeal was obvious: shedding a big portion of the crushing debt the company had amassed. But in order to complete the transaction, AT&T needed a bridge loan — worth more than $40 billion. Goldman Sachs could not provide the entire amount, so JPMorgan stepped in to help cover the loan.

Mr. Stankey insisted on another point: He wanted the new company to have a simple ownership structure, with just one class of shares that anyone could buy. It would make the company smoother to run. And by eliminating the use of shares with disproportionate voting power, the AT&T leader would ensure that the new company could be an easier takeover target in the future, should an even bigger suitor — say, Amazon or Apple — come calling.

 

This bodes badly for entertainment's future.

[SpaceChampion]

7 hours ago, Zorral said:

Yes, America, John Stankey still has a job."

gosh, I want a tv series of that guy's life.  Call it Failing Upwards.  Just one bumbling corporate deal after another, while a put-upon executive assistant tries and fails to rescue him from all his mistakes.

[Zorral]

On 5/22/2021 at 9:50 PM, SpaceChampion said:

gosh, I want a tv series of that guy's life.  Call it Failing Upwards.  Just one bumbling corporate deal after another, while a put-upon executive assistant tries and fails to rescue him from all his mistakes.

More analysis of this corporate foolishness's mess.  This one focuses on the long history of outsiders to creative industries' failure when they come charging in.  One of the classics some of us here might be old enough to recall is recalled w/in this analysis:

https://www.washingtonpost.com/business/2021/05/22/discovery-warner-media-att-spinoff/

Quote

 

....The executive from outside Hollywood had a strong reason his company should pay billions to acquire an entertainment giant.

Distribution and content, he said, “have been developing simultaneously — they are like wheels of the same car.” The executive added that, after the sale was complete, the studio’s content could then be “distributed all over the world through a variety of media.”

The statement encapsulates the logic AT&T offered when it bought WarnerMedia several years ago. But it didn’t come from the Texas phone juggernaut. It originated much farther away and longer ago — with Akio Tanii, the former president of the Japanese electronics giant Matsushita, who uttered it back in 1990 to justify his firm’s purchase of Universal Pictures parent MCA.

Less than five years later, with the acquisition a failure, the company sold 80 percent of the studio. Executives said they wanted to focus on their “core business.”

Throughout the modern era, players with rich distribution capabilities have burst into Hollywood with a grand dream to combine their pipes with the film and television pipeline. And almost as often they have skulked out of it, as AT&T did last Monday when, saddled with more than $150 billion in debt, it essentially admitted its purchase of WarnerMedia had been a mistake and spun off the firm in a new combination with Discovery and chief David Zaslav.

Hedge fund Elliott Management, an activist AT&T shareholder, applauded the company for prioritizing its “core business.”

AT&T’s ill-fated media play cost it both time and money

The lessons of AT&T-Warner will be parsed for years and focus on a slew of strategic, management and investment missteps. But some analysts and Hollywood veterans are increasingly raising a more fundamental point: that the culture of Hollywood may simply be too specific for a non-industry player to conquer it.

“It feels a little like ‘Here we go again,’” said Jonathan Kuntz, a preeminent expert on the American film business and a lecturer at UCLA. “When these outsiders ride into Hollywood, it almost never ends well.”

A desire for glamour and the promise of synergy, he says, have blinded would-be conquistadors to the historical realities: Hollywood may attract many foreign players, but its cultural uniqueness eventually drives them out.

Those differences were much on display in AT&T-Warner, experts say....

 

 

[Deadlines? What Deadlines?]

10 hours ago, Zorral said:

More analysis of this corporate foolishness's mess.  This one focuses on the long history of outsiders to creative industries' failure when they come charging in.  One of the classics some of us here might be old enough to recall is recalled w/in this analysis:

https://www.washingtonpost.com/business/2021/05/22/discovery-warner-media-att-spinoff/

 

Gulf and Western ran their studio "at some remove"? All that stuff I heard about Charlie Bluhdorn must have been wrong then.

It's interesting to me that "Covid" never appears once in that article.

Imagine you're ATT and you're carrying a lot of debt going into a recession. One of your subsidiaries, Warner Media, is especially hard hit because box office receipts have cratered world-wide due to the pandemic. Further, they are unlikely to fully recover for another year, if ever. In hindsight, you probably launched your streaming service 6 months later than you should have and the roll out wasn't as successful as it could have been.

You have the choice of continuing to carry this costly business unit or turn it into the kind of cash that you could really use right now. The $40-odd billion in debt that ATT is erasing with this transaction; how long would it take Warner Media to generate that in after-tax profits in the normal run of things? A decade? More? So what do you do?

Maybe it's just that simple. It certainly seems a lot more plausible than a clash of cultures between wall street and main street Hollywood, especially since the corporations have been in there for decades.

[Zorral]

12 hours ago, Deadlines? What Deadlines? said:

It certainly seems a lot more plausible than a clash of cultures between wall street and main street Hollywood, especially since the corporations have been in there for decades.

The failure of outside corps coming into the Entertainment industry has been in play for decades longer, though.  It doesn't only happen with movies, but it sure did happen in the older days when there was a music industry,

Also, the past record of AT&T's guy is one, as pointed out by another poster, of consistently failing upward,  typical of corps' mo and culture.

 

 

 

[Deadlines? What Deadlines?]

On 5/25/2021 at 9:45 AM, Zorral said:

The failure of outside corps coming into the Entertainment industry has been in play for decades longer, though.  It doesn't only happen with movies, but it sure did happen in the older days when there was a music industry,

And there are plenty of examples of film studios that failed without interference from the Wall street types.

On 5/25/2021 at 9:45 AM, Zorral said:

Also, the past record of AT&T's guy is one, as pointed out by another poster, of consistently failing upward,  typical of corps' mo and culture.

Be that as it may, there is an angle to this story the article is ignoring. And regardless of how they got there, there is a pretty good business case for spinning off Warner Media. I'm sure the debt service on that $40-odd billion is several hundred million a year.

Look at Disney. According to Google Finance, Disney's net income, for FY2019, was $11.05 billion. This crashed to a $2.86 billion loss in FY2020. Bob Chapek became CEO in Feb. 2020. If I was evaluating his performance over the last year, would it be remotely fair to do so without accounting for Covid? Of course not.  

Disney, by the way, is also a company who came into this pandemic carrying a significant debt load due to the Fox acquisition. Unlike other studios, they were also positioned to be hit especially hard because of their parks business.  It wouldn't surprise me if they made  an equally dramatic announcement before this pandemic is done.  I wouldn't be surprised if they decided to sell off a piece of the Avatar sequels or the Kingsman Franchise. Maybe even a small stake in Pixar. This is all speculation of course. 

As an aside, it seems to me that Warner Media has been treated a bit too harshly in the entertainment press over the last year. When they announced they were doing simultaneous streaming/theatrical releases for WW84 and throughout 2021, people lost their minds. On the other hand, instead of delaying, Disney released Artimis Fowl and Mulan on Disney+ and there was barely a peep. Black Widow will be getting a simultaneous streaming/theatrical release this summer and I can't detect any criticism at all.  

Edited May 26, 2021 by Deadlines? What Deadlines?

[Zorral]

The entertainment biz continues contracting into fewer and few providers -- and catalog holders.  They are going to destroy the screen business in the way the music business was destroyed for the creators by Spotify et al.

"Amazon agrees to buy MGM in move to widen its entertainment offerings"

https://www.washingtonpost.com/nation/2021/05/26/amazon-agrees-buy-mgm-move-widen-its-entertainment-offerings/

Quote

 

Amazon will buy MGM parent MGM Holdings from its investment-group owners, paying $8.45 billion to put the historic studio of “Rocky,” “The Pink Panther” and James Bond in the hands of the retailing giant.

The move aims to bring much-needed assets to both sides. Like many recent Hollywood entrants, Amazon has struggled to locate the deep well of content enjoyed by Disney, Paramount and other traditional players.

And like many traditional Hollywood players, MGM has struggled to keep up with modern Hollywood, in which deep pockets and digital distribution rule the day.

Now the two entities are coming together, hoping they can achieve together what they have failed to do apart.

“The real financial value behind this deal is the treasure trove of (intellectual property) in the deep catalog that we plan to reimagine and develop together with MGM’s talented team,” Mike Hopkins, Amazon’s senior vice president of Prime Video and Amazon Studios, said in a statement announcing the deal. "It’s very exciting and provides so many opportunities for high-quality storytelling.”....