Elijah Abrams
Mouseketeer
- Joined
- Feb 6, 2020
I agree! I really think Disney should do the same thing they did in 1984 and make both Alan Bergman and Dana Walden the new CEO and President, respectively (or basically make them both the new co-CEOs).
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- Thread starter hhisc16
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I have said many times here over the last few years that co-CEO's should be considered but I think you need one to come from Hollywood and one from Parks. Having both from HW will not be good for Parks at all.
Elijah Abrams
Mouseketeer
- Joined
- Feb 6, 2020
Okay, then I think both Alan Bergman (or Dana Walden, but definitely Bergman) and Josh D'Amaro should be the new co-CEOs to replace Iger. Problem solved.
I was just afraid that if D'Amaro was just the only CEO of Disney, then the company would be in another Bob Chapek situation.
Jwaire
DIS Veteran
- Joined
- Sep 17, 2020
Keep in mind, Walden is NOT in charge of studios.
Walden came from Fox and the assets she has control over, the cable and television divisions, haven't exactly been a hit for the company either.
ABC is a third, sometimes fourth, ranked network despite the assets Disney owns (own production studios, franchises, etc.). Disney has also had to renegotiate agreements with cable providers because of the dramatic drop in viewers on their owned cable networks like Freeform, NatGeo, DisneyJr, Disney Channel, etc.
Freeform was down something like 46%+ the last couple of years, one of the largest decreases across the board.
https://variety.com/2023/tv/news/most-watched-channels-2023-tv-network-ratings-1235850482/
So she hasn't been setting the world on fire either.
They BOTH have serious problems. I'm hoping for an outside CEO and President, TBH.
clarker99
DIS Veteran
- Joined
- May 15, 2019
All roads lead to streaming on the Entertainment side of the company. Box office and ratings are not exactly the metrics being used for success anymore.
What is the domino effect if Bergman and/or Walden dont get picked? 1 or both could move on. Lots of moving parts involved with these decisions.
My preference would likely involve an acquisition of Candle Media.
What is the domino effect if Bergman and/or Walden dont get picked? 1 or both could move on. Lots of moving parts involved with these decisions.
My preference would likely involve an acquisition of Candle Media.
That is a good point, history shows that, if one of the 4 internals currently in the running get picked, all the others will quickly run away. Maybe a Candle candidate can help avoid that? Or the co-ceo idea keeps two in house, at least.
Elijah Abrams
Mouseketeer
- Joined
- Feb 6, 2020
But then Disney would end up milking Cocomelon, since Candle owns that, to the point of getting a heavy presence in the parks. I'd rather not go to the parks without cringing at the sight of Cocomelon.
wabbott
DIS Veteran
- Joined
- Aug 4, 2021
https://deadline.com/2024/04/super-bowl-streaming-services-paramount-plus-peacock-1235885676/
Super Bowl Boosts Streaming Services – Ampere Report
By Max Goldbart - International TV Co-Editor April 15, 2024 - 1:29am PDT
At a time of Hollywood contraction, the streamers’ fierce push into live sports appears to be paying off, according to the latest research from Ampere Analysis.
Ampere examined the SVoDs that hold NFL rights versus those without and found big gains in Q1 2024 related to football coverage and the Super Bowl match-up between the 49ers and the Chiefs.
Paramount+ and Peacock, which both show football, saw the number of U.S. internet users claiming to use their platform grow by 22% and 18% respectively over this period, and this monthly active viewing rose even further among NFL fans, with Paramount+ shooting up 30% and Peacock 28%. Amazon Prime Video, which also shows football, saw big gains of 59% from the same fanbase, according to the research.
Paramount+ has seen the biggest growth in monthly active viewing of all the streaming platforms with NFL rights, driven by the Super Bowl, which reports said had the highest U.S. TV ratings since the 1969 moon landing. The February 11 final was a nail biter and had added interest due to the appearance of Taylor Swift in support of her boyfriend – the Chiefs’ Travis Kelce.
All U.S. streaming platforms that hold NFL rights saw average growth in monthly active viewers of 14% between Q3 2023 and Q1 2024, compared to 10% growth across SVoD platforms as a whole, Ampere added.
Sports streaming strategies have been under the microscope this year given that Hollywood is experiencing teething problems on multiple fronts, especially for the newer breed of streamer such as Paramount+ and Peacock. Ampere’s previous research, for example, found that the number of scripted TV seasons being ordered in the U.S. had nearly halved since 2019, as the Brit analysis firm posited a period of “Hollywood displacement.”
Minal Modha, a Research Director at Ampere, said Q2 of this year will likely “see the awarding of the NBA rights, the last chance for platforms or streamers to get a seat at the table for a significant amount of time.”
“The growth in viewership for platforms holding NFL rights shows how important tier 1 sports rights can be to streaming platforms, especially in an increasingly competitive streaming market,” she added.
Super Bowl Boosts Streaming Services – Ampere Report
By Max Goldbart - International TV Co-Editor April 15, 2024 - 1:29am PDT
At a time of Hollywood contraction, the streamers’ fierce push into live sports appears to be paying off, according to the latest research from Ampere Analysis.
Ampere examined the SVoDs that hold NFL rights versus those without and found big gains in Q1 2024 related to football coverage and the Super Bowl match-up between the 49ers and the Chiefs.
Paramount+ and Peacock, which both show football, saw the number of U.S. internet users claiming to use their platform grow by 22% and 18% respectively over this period, and this monthly active viewing rose even further among NFL fans, with Paramount+ shooting up 30% and Peacock 28%. Amazon Prime Video, which also shows football, saw big gains of 59% from the same fanbase, according to the research.
Paramount+ has seen the biggest growth in monthly active viewing of all the streaming platforms with NFL rights, driven by the Super Bowl, which reports said had the highest U.S. TV ratings since the 1969 moon landing. The February 11 final was a nail biter and had added interest due to the appearance of Taylor Swift in support of her boyfriend – the Chiefs’ Travis Kelce.
All U.S. streaming platforms that hold NFL rights saw average growth in monthly active viewers of 14% between Q3 2023 and Q1 2024, compared to 10% growth across SVoD platforms as a whole, Ampere added.
Sports streaming strategies have been under the microscope this year given that Hollywood is experiencing teething problems on multiple fronts, especially for the newer breed of streamer such as Paramount+ and Peacock. Ampere’s previous research, for example, found that the number of scripted TV seasons being ordered in the U.S. had nearly halved since 2019, as the Brit analysis firm posited a period of “Hollywood displacement.”
Minal Modha, a Research Director at Ampere, said Q2 of this year will likely “see the awarding of the NBA rights, the last chance for platforms or streamers to get a seat at the table for a significant amount of time.”
“The growth in viewership for platforms holding NFL rights shows how important tier 1 sports rights can be to streaming platforms, especially in an increasingly competitive streaming market,” she added.
wabbott
DIS Veteran
- Joined
- Aug 4, 2021
https://variety.com/vip/content-spending-profit-data-analysis-2024-1235969532/
April 15, 2024 - 6:00am PDT
2024 Content Spending & Profit Data Analysis: NFLX, DIS, WBD, PAR, NBCU
by Tyler Aquilina
In this article
Hollywood’s formula for success in streaming has transformed dramatically over the past two years, from “grow content spend as much as possible = subscribers = profit someday” to “cut content spend as much as possible + pray subscribers don’t flee = profit soon, hopefully.”
This reversal has already had a profound impact on the contact landscape (R.I.P., peak TV), but its effects on bottom lines are more hazy. No traditional studio, save Warner Bros. Discovery, has yet gotten its streaming segment into the black — and WBD did so in part by lumping in pay TV HBO subscriptions with “direct-to-consumer” revenues.
But data suggests that as expenses have come down, profitability has indeed improved and is poised to either improve further or hold steady this year for most of the major players.
With global content spending among media and tech companies poised to grow at its slowest rate in over a decade this year (excluding the respectively COVID- and strike-affected 2020 and 2023), new estimates from Wall Street research firm Bernstein project a higher return on content investments overall across the legacy media streamers, as well as Netflix, in 2024, rising from around 30 to 34 cents on the dollar.
Using EBITDA as their metric of choice, Bernstein analysts forecast profits per content amortization dollar at the five major non-Big Tech streaming players: Netflix, Disney, WBD, Paramount Global and Comcast’s NBCUniversal.
Of these companies, two — Disney and Paramount — are expected to see modest improvements in profitability this year, while NBCU and WBD will see profits slip slightly, not significantly, from 2023 levels.
Only Netflix, meanwhile, will see a major leap in profitability — unsurprisingly, as the streaming wars’ undisputed champion will likely continue to grow revenues while maintaining more cautious levels of content spending.
Bernstein’s profit analysis focused on amortization rather than cash spending, meaning these figures illustrate the long-term returns on programming costs more so than the short-term. This is arguably a better way to analyze return on content investments, however, as the value of a title may not be realized in the same year the money is spent to produce it.
And it’s a good sign that profits per content dollar already seem to have bottomed out for most companies. Disney has been improving profitability since 2022, the year it hit peak spending on content, while WBD has grown its ROI significantly from the same year, in which the Warner-Discovery merger closed.
These statistics alone do not paint a full picture, of course. For one thing, examining operating income rather than EBITDA would undoubtedly create a much bleaker outlook; both WBD and Paramount posted overall net losses last year despite positive EBITDA (or, in Paramount’s case, OIBDA, the similar but distinct metric used in the company’s corporate filings).
But a closer look at the companies’ balance sheets also reveals improved results, at least where streaming is concerned. Direct-to-consumer losses have narrowed over the past 12 months; even NBCUniversal, which saw its annual loss on Peacock rise year-over-year, managed to trim quarterly expenses in both Q3 and Q4 ’23 from the prior year.
Disney, meanwhile, is in the midst of a remarkable financial rally, most recently shrinking its Q4 ’23 streaming loss by a whopping 86% year-over-year.
The Mouse House appears best positioned among the still unprofitable legacy streamers to make it into the black later this year, following an aggressive cost-cutting campaign spearheaded by CEO Bob Iger. Its cash content spend has fallen substantially, from nearly $30 billion in 2022 to a projected $25 billion this year, per company statements.
NBCU’s and Paramount’s fates are less clear, however. These companies still have a long and difficult road to profits (though perhaps pooling their resources on a joint venture would help) and likely need to trim more expenses to get there, barring a major influx of subscribers. (Peacock executives are undoubtedly awaiting this year’s Olympics coverage with bated breath.) Both companies have also promised investors that their streaming losses have peaked, ratcheting up the pressure to near, if not reach, profitability this year.
With 2024, therefore, set to be a decisive year for the entertainment industry (and major M&A in the offing for at least one studio), content investments, and their returns, will remain closely watched metrics as Wall Street impatiently waits for results. But the studios, and investors, can take some comfort in the fact that the great content spending slowdown does seem to be working.
April 15, 2024 - 6:00am PDT
2024 Content Spending & Profit Data Analysis: NFLX, DIS, WBD, PAR, NBCU
by Tyler Aquilina
In this article
- Profits per content amortization dollar spent at the five major non-Big Tech streamers
- How the slowdown in content spending has led to improved earnings for direct-to-consumer segments
- The companies best and worst positioned to get to profitability in streaming by the end of 2024
Hollywood’s formula for success in streaming has transformed dramatically over the past two years, from “grow content spend as much as possible = subscribers = profit someday” to “cut content spend as much as possible + pray subscribers don’t flee = profit soon, hopefully.”
This reversal has already had a profound impact on the contact landscape (R.I.P., peak TV), but its effects on bottom lines are more hazy. No traditional studio, save Warner Bros. Discovery, has yet gotten its streaming segment into the black — and WBD did so in part by lumping in pay TV HBO subscriptions with “direct-to-consumer” revenues.
But data suggests that as expenses have come down, profitability has indeed improved and is poised to either improve further or hold steady this year for most of the major players.
With global content spending among media and tech companies poised to grow at its slowest rate in over a decade this year (excluding the respectively COVID- and strike-affected 2020 and 2023), new estimates from Wall Street research firm Bernstein project a higher return on content investments overall across the legacy media streamers, as well as Netflix, in 2024, rising from around 30 to 34 cents on the dollar.
Using EBITDA as their metric of choice, Bernstein analysts forecast profits per content amortization dollar at the five major non-Big Tech streaming players: Netflix, Disney, WBD, Paramount Global and Comcast’s NBCUniversal.
Of these companies, two — Disney and Paramount — are expected to see modest improvements in profitability this year, while NBCU and WBD will see profits slip slightly, not significantly, from 2023 levels.
Only Netflix, meanwhile, will see a major leap in profitability — unsurprisingly, as the streaming wars’ undisputed champion will likely continue to grow revenues while maintaining more cautious levels of content spending.
Bernstein’s profit analysis focused on amortization rather than cash spending, meaning these figures illustrate the long-term returns on programming costs more so than the short-term. This is arguably a better way to analyze return on content investments, however, as the value of a title may not be realized in the same year the money is spent to produce it.
And it’s a good sign that profits per content dollar already seem to have bottomed out for most companies. Disney has been improving profitability since 2022, the year it hit peak spending on content, while WBD has grown its ROI significantly from the same year, in which the Warner-Discovery merger closed.
These statistics alone do not paint a full picture, of course. For one thing, examining operating income rather than EBITDA would undoubtedly create a much bleaker outlook; both WBD and Paramount posted overall net losses last year despite positive EBITDA (or, in Paramount’s case, OIBDA, the similar but distinct metric used in the company’s corporate filings).
But a closer look at the companies’ balance sheets also reveals improved results, at least where streaming is concerned. Direct-to-consumer losses have narrowed over the past 12 months; even NBCUniversal, which saw its annual loss on Peacock rise year-over-year, managed to trim quarterly expenses in both Q3 and Q4 ’23 from the prior year.
Disney, meanwhile, is in the midst of a remarkable financial rally, most recently shrinking its Q4 ’23 streaming loss by a whopping 86% year-over-year.
The Mouse House appears best positioned among the still unprofitable legacy streamers to make it into the black later this year, following an aggressive cost-cutting campaign spearheaded by CEO Bob Iger. Its cash content spend has fallen substantially, from nearly $30 billion in 2022 to a projected $25 billion this year, per company statements.
NBCU’s and Paramount’s fates are less clear, however. These companies still have a long and difficult road to profits (though perhaps pooling their resources on a joint venture would help) and likely need to trim more expenses to get there, barring a major influx of subscribers. (Peacock executives are undoubtedly awaiting this year’s Olympics coverage with bated breath.) Both companies have also promised investors that their streaming losses have peaked, ratcheting up the pressure to near, if not reach, profitability this year.
With 2024, therefore, set to be a decisive year for the entertainment industry (and major M&A in the offing for at least one studio), content investments, and their returns, will remain closely watched metrics as Wall Street impatiently waits for results. But the studios, and investors, can take some comfort in the fact that the great content spending slowdown does seem to be working.
Going back to one of those charts from the WSJ article, am I reading this right, that Universal costs 40%+ more than WDW?
clarker99
DIS Veteran
- Joined
- May 15, 2019
Apparently, for those dates, yes.
I don't have access to the article but do they give more details about how they arrived at those costs besides the blurb below it about it being the week of July 5th.
The end results feel misleading since the line skipping service will add on well over a grand and maybe two to the overall price. If the family did that, it would make sense they stayed at one of the resorts that included express pass instead of a mid-tier resort. Plus Genie Plus and ILL aren't really an apples to apples comparison, besides both being skip the line services and feel more akin to a person comparing a budget resort vs a deluxe resort.
I am shocked! The few UO defenders on here always said that those parks were the value leaders??
@wabbott posted the whole article https://www.disboards.com/threads/dis-shareholders-and-stock-info-only.3881254/post-65438336
This sections goes gives some detail, but not much detail:
wabbott
DIS Veteran
- Joined
- Aug 4, 2021
I can speak to that.
We did 4 days and 4 nights @ UO from 4/2 to 4/6. Stayed at the Adventura hotel. No meal plan, park hopping for both parks and the water park, no fast pass (or whatever they call it). Early park admission.
$2,272.68
Eight days and eight nights @ Pop Century, 8 days w/hopper, no Genie or LL. No meal plan. From 4/6 to 4/14.
$3,862.42.
I got $400 knocked off that when they had the Disney+ promo a few months ago.
Enjoyed our visit to UO, but it ain't Disney. I know lots of folks here don't like me because I am critical of how the current regime runs DIS.
But as of now, DIS has the better overall park product compared to CMCSA's Universal Parks.
In my opinion.
We've been to Universal Hollywood once and now once to Universal Orlando. This past week was our ninth trip to WDW and DLR/DCA since 2019.
I need to add that this was for two adults.
We did 4 days and 4 nights @ UO from 4/2 to 4/6. Stayed at the Adventura hotel. No meal plan, park hopping for both parks and the water park, no fast pass (or whatever they call it). Early park admission.
$2,272.68
Eight days and eight nights @ Pop Century, 8 days w/hopper, no Genie or LL. No meal plan. From 4/6 to 4/14.
$3,862.42.
I got $400 knocked off that when they had the Disney+ promo a few months ago.
Enjoyed our visit to UO, but it ain't Disney. I know lots of folks here don't like me because I am critical of how the current regime runs DIS.
But as of now, DIS has the better overall park product compared to CMCSA's Universal Parks.
In my opinion.
We've been to Universal Hollywood once and now once to Universal Orlando. This past week was our ninth trip to WDW and DLR/DCA since 2019.
I need to add that this was for two adults.
Last edited:
wabbott
DIS Veteran
- Joined
- Aug 4, 2021
https://timesofindia.indiatimes.com...viewers-on-platform/articleshow/109323662.cms
Disney may have ‘old-style TV’ plan to keep viewers on platform
TIMESOFINDIA.COM / Apr 16, 2024, 07:14 IST
Disney+ lost 1.3M subscribers post price hike. Planning channels with continuous Star Wars, Marvel, Disney, classic animations, and Pixar films. Channels may include commercials, require subscription, and focus on genres.
Disney+ lost 1.3 million subscribers in the final quarter of 2023 after it hiked prices in October, the company revealed in February this year. Since then, it has been planning to keep its viewers glued to the streaming service, and a report has now claimed that Disney is planning to resort to the old-style TV channel concept to keep its viewers.
The app could soon feature always-on channels – like the cable TV in old days – on which it will continuously play Star Wars and Marvel shows, a report from The Information has claimed.
This means that those watching these channels won’t be able to watch what they want.
“In television, what's old is new again. After more than a decade of growth in streaming services that make viewers click on shows they want to watch "on demand," a growing number of streaming services are offering new "channels" that function more like old-style TV, with a continuous, scheduled stream of shows,” the report said.
In addition to Star Wars and Marvel series, the report said that Disney+ may also add classic Disney animations or Pixar films to these channels dedicated to nonstop streams. These channels may still include commercials, similar to traditional TV, despite users needing a Disney+ subscription to access them.
“Disney is the latest to expand in this market. The company plans to create a series of such channels within its Disney+ streaming service that show programming in specific genres, including either Star Wars or Marvel-branded shows,” the report added citing people involved in the planning.
The Information also said that lots of other companies have already launched such channels, although typically as free offerings rather than within a subscription service.
Disney may have ‘old-style TV’ plan to keep viewers on platform
TIMESOFINDIA.COM / Apr 16, 2024, 07:14 IST
Disney+ lost 1.3M subscribers post price hike. Planning channels with continuous Star Wars, Marvel, Disney, classic animations, and Pixar films. Channels may include commercials, require subscription, and focus on genres.
Disney+ lost 1.3 million subscribers in the final quarter of 2023 after it hiked prices in October, the company revealed in February this year. Since then, it has been planning to keep its viewers glued to the streaming service, and a report has now claimed that Disney is planning to resort to the old-style TV channel concept to keep its viewers.
The app could soon feature always-on channels – like the cable TV in old days – on which it will continuously play Star Wars and Marvel shows, a report from The Information has claimed.
This means that those watching these channels won’t be able to watch what they want.
“In television, what's old is new again. After more than a decade of growth in streaming services that make viewers click on shows they want to watch "on demand," a growing number of streaming services are offering new "channels" that function more like old-style TV, with a continuous, scheduled stream of shows,” the report said.
In addition to Star Wars and Marvel series, the report said that Disney+ may also add classic Disney animations or Pixar films to these channels dedicated to nonstop streams. These channels may still include commercials, similar to traditional TV, despite users needing a Disney+ subscription to access them.
“Disney is the latest to expand in this market. The company plans to create a series of such channels within its Disney+ streaming service that show programming in specific genres, including either Star Wars or Marvel-branded shows,” the report added citing people involved in the planning.
The Information also said that lots of other companies have already launched such channels, although typically as free offerings rather than within a subscription service.
wabbott
DIS Veteran
- Joined
- Aug 4, 2021
https://finance.yahoo.com/news/paramount-dramatic-stock-decline-shows-234136305.html
Paramount’s ‘Dramatic’ Stock Decline Shows a Lack of Faith in Skydance’s David Ellison, Ariel Investments Founder Says
Lucas Manfredi
Mon, Apr 15, 2024, 6:41 PM CDT
As Paramount Global and Skydance Media’s exclusive talks about a potential merger continue, Ariel Investments founder and co-CEO John Rogers Jr. told TheWrap that the media conglomerate’s recent stock decline indicates a lack of faith in Skydance’s CEO David Ellison.
Watching the developments closely, the executive said that he could consider legal action in the event that a deal doesn’t appropriately benefit his clients.
The firm, which is a long-term shareholder with a 1.8% stake in Paramount as of the new year, previously told TheWrap Friday that pursuing exclusive talks with Skydance and a deal that would benefit controlling shareholder Shari Redstone at the expense of other shareholders would be “averse” to the company’s fair market value.
On Monday, he added that they are “talking to our outside counsel.”
Paramount shares have fallen 50% in the past year (Credit: NASDAQ)
“It’s something that we’re going to be looking at carefully because we’ve just never seen anything like this,” Rogers Jr. said. “We hate to do that, but you’ve got to do what’s right for your customers and your shareholders and Ariel mutual funds. We have a responsibility to be fighting for our customers.”
In previous conversations with Paramount management and the board, Rogers Jr. noted that they’ve been “very consistent and strong” in their commitment to upholding their fiduciary responsibilities to shareholders. But he and his firm have been puzzled by the recent developments with regard to Skydance’s offer.
“It’s a weird dichotomy when everyone’s telling you they’re doing everything the right way and then the rumors are that they’re coming to a different conclusion, which is from the very obvious that it’s better to take $26 billion from a well-established, deep-pocketed private equity firm that’s got a world class reputation than to rush into the arms of a smaller company that’s never done anything like this before,” he said.
He pointed to the stock’s recent decline as evidence that the market does not view the Skydance transaction favorably.
“The market is telling everyone that no one believes that David Ellison can do something that’s good for all shareholders in that the stock has traded so poorly, it’s gone down dramatically after all the rumors started. It’s highly, highly, highly unusual,” he explained. “Once most M&A talks start, usually the stock price finds some equilibrium between the beginning price and speculated ending price. To have the stock continue to make new lows shows there’s no appetite for this transaction.”
Skydance, which is valued at more than $4 billion, has been a coproducer with Paramount on projects such as the “Mission: Impossible” franchise and “Top Gun: Maverick.”Its deal, which CNBC reported would include raising new equity and an ownership stake of somewhere between 45% to just over 50%, would be financed with the help of a consortium of investors, including private equity firms RedBird Capital Partners and KKR, as well as Larry Ellison, Ellison’s father and Oracle’s cofounder.
The senior Ellison would reportedly put up some of the new funding and potentially provide Paramount with access to artificial intelligence software and other data technology from Oracle. David, meanwhile, would likely lead the new company, while former NBCUniversal CEO Jeff Shell would also have a major leadership role.
Additionally, management would reportedly be open to divestitures of assets, such as BET Media Group. Bloomberg separately reported that Skydance would look to merge Paramount+ with a rival, such as Peacock, Max or Prime Video, and would hold onto CBS.
Redstone’s National Amusements could receive over $2 billion in cash from the Skydance deal, according to The Wall Street Journal. Skydance would reportedly be acquired in an all-stock deal valued at around $5 billion.
In addition to Skydance, Apollo has made a $26 billion all-cash offer for Paramount, though the media conglomerate has reportedly rebuffed the deal due to concerns around financing for the bid. Meanwhile, Allen Media Group founder Byron Allen placed a $30 billion bid including debt for the company, though its unclear how that deal would be financed, and Paramount Global CEO Bob Bakish met with Warner Bros. Discovery CEO David Zaslav in December about a potential merger, though those talks have since halted.
“I just think that you would want a cash deal. The company isn’t that large and there are a lot of large companies out there that can afford to snap up Paramount easily, as well as the private equity firms that are out there,” Rogers Jr. said. “I have no problem with doing creative strategic thinking to maximize the value of all the different assets, which means possibly breaking up the company, both for financial reasons and regulatory reasons.”
Rogers Jr. believes Paramount is, at minimum, worth above $20 per share.
He touted the company’s assets, including Pluto, BET, Showtime and Paramount Studios. Additionally, he emphasized that the company has been making progress towards streaming profitability and is well positioned with valuable content whether it chooses to continue on with Paramount+, shift to selling content as an arms dealer or pursue both strategies concurrently.
“This is a case where it is still churning out extraordinary content,” he added. “These things are not deteriorating in any fundamental way, so there’s no reason to rush into the arms of the first bid. We’re patient investors here. They should take their time and do the right deal for the long term.”
Ellison and Skydance are currently in the process of conducting due diligence. In order for a deal to be consummated, it must receive approval from Paramount’s special committee of independent directors. On Thursday, Paramount confirmed that three of the members on that committee will not stand for reelection at the company’s annual meeting on June 4, though it did not provide a reason why.
“It’s disappointing because all we can do is speculate that some of these directors were directors that were willing to stand up and respect the entire process of independent directors with independent lawyers and investment bankers guiding them,” he said. “The fact that there’s a split there on the board and the committee is worrisome. Clearly, there’s different points of view on how to go forward.”
He believes that the board departures, combined with the heightened scrutiny and threat of litigation around the Skydance bid, will only make it harder for Ellison to have a successful merger.
“Mergers are hard enough in the best of circumstances, trying to fight for the synergies and go through the regulatory processes and all the things you have to do to make a deal happen and keep employees happy. If you’re spending half your time in court having to deal with the mess that’s there, it’s got to give you pause when you’re about to jump on the high wire act and have that much extra pressure. I just can’t imagine that’s good.”
If the Skydance deal doesn’t pan out, Rogers Jr. emphasized that Paramount has other options available.
“You can make the case that you can be patient and wait to see who wins the election in November and get a more regulatory friendly environment that would be very helpful to more people being willing to bid on the company. As we all know, there’s a real chill on M&A in this country under the current regulatory environment,” he said. “But at the same time, it’s hard to walk away from a certain deal with Apollo. I’m assuming you can negotiate with them and once they came in and they did their due diligence and they did their homework, you don’t have to pick their first bid. It’s always normal in a transaction you start with one price and end up somewhere higher.”
Paramount, which has a market capitalization of $7.5 billion as of Monday’s close, has seen its shares fall 50% in the past year, 27% year to date and 11% in the past six months.
The post Paramount’s ‘Dramatic’ Stock Decline Shows a Lack of Faith in Skydance’s David Ellison, Ariel Investments Founder Says appeared first on TheWrap.
Paramount’s ‘Dramatic’ Stock Decline Shows a Lack of Faith in Skydance’s David Ellison, Ariel Investments Founder Says
Lucas Manfredi
Mon, Apr 15, 2024, 6:41 PM CDT
As Paramount Global and Skydance Media’s exclusive talks about a potential merger continue, Ariel Investments founder and co-CEO John Rogers Jr. told TheWrap that the media conglomerate’s recent stock decline indicates a lack of faith in Skydance’s CEO David Ellison.
Watching the developments closely, the executive said that he could consider legal action in the event that a deal doesn’t appropriately benefit his clients.
The firm, which is a long-term shareholder with a 1.8% stake in Paramount as of the new year, previously told TheWrap Friday that pursuing exclusive talks with Skydance and a deal that would benefit controlling shareholder Shari Redstone at the expense of other shareholders would be “averse” to the company’s fair market value.
On Monday, he added that they are “talking to our outside counsel.”
Paramount shares have fallen 50% in the past year (Credit: NASDAQ)
“It’s something that we’re going to be looking at carefully because we’ve just never seen anything like this,” Rogers Jr. said. “We hate to do that, but you’ve got to do what’s right for your customers and your shareholders and Ariel mutual funds. We have a responsibility to be fighting for our customers.”
In previous conversations with Paramount management and the board, Rogers Jr. noted that they’ve been “very consistent and strong” in their commitment to upholding their fiduciary responsibilities to shareholders. But he and his firm have been puzzled by the recent developments with regard to Skydance’s offer.
“It’s a weird dichotomy when everyone’s telling you they’re doing everything the right way and then the rumors are that they’re coming to a different conclusion, which is from the very obvious that it’s better to take $26 billion from a well-established, deep-pocketed private equity firm that’s got a world class reputation than to rush into the arms of a smaller company that’s never done anything like this before,” he said.
He pointed to the stock’s recent decline as evidence that the market does not view the Skydance transaction favorably.
“The market is telling everyone that no one believes that David Ellison can do something that’s good for all shareholders in that the stock has traded so poorly, it’s gone down dramatically after all the rumors started. It’s highly, highly, highly unusual,” he explained. “Once most M&A talks start, usually the stock price finds some equilibrium between the beginning price and speculated ending price. To have the stock continue to make new lows shows there’s no appetite for this transaction.”
Skydance, which is valued at more than $4 billion, has been a coproducer with Paramount on projects such as the “Mission: Impossible” franchise and “Top Gun: Maverick.”Its deal, which CNBC reported would include raising new equity and an ownership stake of somewhere between 45% to just over 50%, would be financed with the help of a consortium of investors, including private equity firms RedBird Capital Partners and KKR, as well as Larry Ellison, Ellison’s father and Oracle’s cofounder.
The senior Ellison would reportedly put up some of the new funding and potentially provide Paramount with access to artificial intelligence software and other data technology from Oracle. David, meanwhile, would likely lead the new company, while former NBCUniversal CEO Jeff Shell would also have a major leadership role.
Additionally, management would reportedly be open to divestitures of assets, such as BET Media Group. Bloomberg separately reported that Skydance would look to merge Paramount+ with a rival, such as Peacock, Max or Prime Video, and would hold onto CBS.
Redstone’s National Amusements could receive over $2 billion in cash from the Skydance deal, according to The Wall Street Journal. Skydance would reportedly be acquired in an all-stock deal valued at around $5 billion.
In addition to Skydance, Apollo has made a $26 billion all-cash offer for Paramount, though the media conglomerate has reportedly rebuffed the deal due to concerns around financing for the bid. Meanwhile, Allen Media Group founder Byron Allen placed a $30 billion bid including debt for the company, though its unclear how that deal would be financed, and Paramount Global CEO Bob Bakish met with Warner Bros. Discovery CEO David Zaslav in December about a potential merger, though those talks have since halted.
“I just think that you would want a cash deal. The company isn’t that large and there are a lot of large companies out there that can afford to snap up Paramount easily, as well as the private equity firms that are out there,” Rogers Jr. said. “I have no problem with doing creative strategic thinking to maximize the value of all the different assets, which means possibly breaking up the company, both for financial reasons and regulatory reasons.”
Rogers Jr. believes Paramount is, at minimum, worth above $20 per share.
He touted the company’s assets, including Pluto, BET, Showtime and Paramount Studios. Additionally, he emphasized that the company has been making progress towards streaming profitability and is well positioned with valuable content whether it chooses to continue on with Paramount+, shift to selling content as an arms dealer or pursue both strategies concurrently.
“This is a case where it is still churning out extraordinary content,” he added. “These things are not deteriorating in any fundamental way, so there’s no reason to rush into the arms of the first bid. We’re patient investors here. They should take their time and do the right deal for the long term.”
Ellison and Skydance are currently in the process of conducting due diligence. In order for a deal to be consummated, it must receive approval from Paramount’s special committee of independent directors. On Thursday, Paramount confirmed that three of the members on that committee will not stand for reelection at the company’s annual meeting on June 4, though it did not provide a reason why.
“It’s disappointing because all we can do is speculate that some of these directors were directors that were willing to stand up and respect the entire process of independent directors with independent lawyers and investment bankers guiding them,” he said. “The fact that there’s a split there on the board and the committee is worrisome. Clearly, there’s different points of view on how to go forward.”
He believes that the board departures, combined with the heightened scrutiny and threat of litigation around the Skydance bid, will only make it harder for Ellison to have a successful merger.
“Mergers are hard enough in the best of circumstances, trying to fight for the synergies and go through the regulatory processes and all the things you have to do to make a deal happen and keep employees happy. If you’re spending half your time in court having to deal with the mess that’s there, it’s got to give you pause when you’re about to jump on the high wire act and have that much extra pressure. I just can’t imagine that’s good.”
If the Skydance deal doesn’t pan out, Rogers Jr. emphasized that Paramount has other options available.
“You can make the case that you can be patient and wait to see who wins the election in November and get a more regulatory friendly environment that would be very helpful to more people being willing to bid on the company. As we all know, there’s a real chill on M&A in this country under the current regulatory environment,” he said. “But at the same time, it’s hard to walk away from a certain deal with Apollo. I’m assuming you can negotiate with them and once they came in and they did their due diligence and they did their homework, you don’t have to pick their first bid. It’s always normal in a transaction you start with one price and end up somewhere higher.”
Paramount, which has a market capitalization of $7.5 billion as of Monday’s close, has seen its shares fall 50% in the past year, 27% year to date and 11% in the past six months.
The post Paramount’s ‘Dramatic’ Stock Decline Shows a Lack of Faith in Skydance’s David Ellison, Ariel Investments Founder Says appeared first on TheWrap.
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