The media industry is in turmoil, and that’s not changing any time soon
Striking Writers Guild of America (WGA) members walk the picket line in front of Netflix offices as SAG-AFTRA union announced it had agreed to a ‘last-minute request’ by the Alliance of Motion Picture and Television Producers for federal mediation, but it refused to again extend its existing labor contract past the 11:59 p.m. Wednesday negotiating deadline, in Los Angeles, California, July 12, 2023.
Mike Blake | Reuters
Traditional TV is dying. Ad revenue is soft. Streaming isn’t profitable. And Hollywood is practically shut down as the actors and writers unions settle in for what is shaping up to be a long and bitter work stoppage.
All of this turmoil will be on investors’ minds as the media industry kicks off its earnings season this week, with Netflix up first on Wednesday.
Netflix, with a new advertising model and push to stop password sharing, looks the best positioned compared to legacy media giants. Last week, for instance, Disney CEO Bob Iger extended his contract through 2026, telling the market he needed more time at the Mouse House to address the challenges before him. At the top of the list is contending with Disney’s TV networks, as that part of the business appears to be in a worse state than Iger had imagined. “They may not be core to Disney,” he said.
“I think Bob Iger’s comments were a warning about the quarter. I think they are very worrying for the sector,” said analyst Michael Nathanson of SVB MoffettNathanson following Iger’s interview with CNBC’s David Faber on Thursday.
Although the soft advertising market has been weighing on the industry for some quarters now, the recent introduction of a cheaper, ad-supported option for services like Netflix and Disney+ will likely be one bright spot as one of the few areas of growth and concentration this quarter, Nathanson said.
Iger has talked at length in recent investor calls and Thursday’s interview about how advertising is part of the plan to bring Disney+ to profitability. Others, including Netflix, have echoed the same sentiment.
Netflix will report earnings after the close Wednesday. Wall Street will be keen to hear more details about the rollout of its password sharing crackdown in the U.S. and state of its newly launched ad-supported option. The company’s stock is up nearly 50% this year, after a correction in 2022 that followed its first subscriber loss in a decade
Investor focus will also be on legacy media companies like Paramount Global, Comcast Corp. and Warner Bros. Discovery, which each have significant portfolios of pay-TV networks, following Iger’s comments that traditional TV “may not be core” to the company and all options, including a sale, were on the table. These companies and Disney will report earnings in the weeks ahead.
Strike woes
Scene from “Squid Game” by Netflix
Source: Netflix
Just a week ahead of the earnings kickoff, members of The Screen Actors Guild – American Federation of Television and Radio Artists joined the more than 11,000 already-striking film and television writers on the picket line.
The strike – a result of the failed negotiations with the Alliance of Motion Picture and Television Producers – brings the industry to an immediate halt. It’s the first dual strike of this kind since 1960.
The labor fight blew up just as the industry has moved away from streaming growth at all costs. Media companies saw a boost in subscribers – and stock prices – earlier in the pandemic, investing billions in new content. But growth has since stagnated, resulting in budget cuts and layoffs.
“The strike happening suggests this is a sector in tremendous turmoil,” said Mark Boidman, head of media and entertainment investment banking at Solomon Partners. He noted shareholders, particularly hedge funds and institutional investors, have been “very frustrated” with media companies.
Iger told CNBC last week the stoppage couldn’t occur at a worse time, noting “disruptive forces on this business and all the challenges that we’re facing,” on top of the industry still recovering from the pandemic.
These are the first strikes of their kind during the streaming era. The last writers strike occurred in 2007 and 2008, which went on for about 14 weeks and gave rise to unscripted, reality TV. Hollywood writers have already been on strike since early May of this year.
Depending on the longevity of the strike, fresh film and TV content could dry up and leave streaming platforms and TV networks – other than library content, live sports and news – bare.
For Netflix, the strikes may have a lesser effect, at least in the near-term, Insider Intelligence analyst Ross Benes said. Content made outside the U.S. isn’t affected by the strike — an area where Netflix has heavily invested.
“Netflix is poised to do better than most because they produce shows so well in advance. And if push comes to shove, they can rely on international shows, of which they have so many,” said Benes. “Netflix is the antagonist in the eyes of strikes because of how it changed the economics of what writers get paid.”
Traditional TV doom
The decline of pay-TV subscribers, which has ramped up in recent quarters, should continue to accelerate as consumers increasingly shift toward streaming.
Yet, despite the rampant decline, many networks remain cash cows, and they also supply content to other parts of the business — particularly streaming.
For pay-TV distributors, hiking the price of cable bundles has been a method of staying profitable. But, according to a recent report from MoffettNathanson, “the quantity of subscribers is falling far too fast for pricing to continue to offset.”
Iger, who began his career in network TV, told CNBC last week that while he already had a “very pessimistic” view of traditional TV before his return in November, he has since found it’s even worse than he expected. The executive said Disney is assessing its network portfolio, which includes broadcaster ABC and cable channels like FX, indicating a sale could be on the table.
Paramount is currently considering a sale of a majority stake in its cable-TV network BET. In recent years Comcast’s NBCUniversal has shuttered networks like NBC Sports and combined sports programming on other channels like USA Network.
“The networks are a dwindling business, and Wall Street doesn’t like dwindling businesses,” said Nathanson. “But for some companies, there’s no way around it.”
Making matters worse, the weak advertising market has been a source of pain, particularly for traditional TV. It weighed on the earnings of Paramount and Warner Bros. Discovery in recent quarters, each of which have big portfolios of cable networks.
Advertising pricing growth, which has long offset audience declines, is a key source of concern, according to MoffettNathanson’s recent report. The firm noted that this could be the first non-recessionary year that advertising upfronts don’t produce increases in TV pricing, especially as ad-supported streaming hits the market and zaps up inventory.
Streamers’ introduction of cheaper, ad-supported tiers will be a hot topic once again this quarter, especially after Netflix and Disney+ announced their platforms late last year.
“The soft advertising market affects everyone, but I don’t think Netflix is as affected as the TV companies or other established advertising streamers,” said Benes. He noted while Netflix is the most established streamer, its ad tier is new and has plenty of room for growth.
Advertising is now considered an important mechanism in platforms’ broader efforts to reach profitability.
“It’s not a coincidence that Netflix suddenly became judicious about freeloaders while pushing a cheaper tier that has advertising,” said Benes, referring to Netflix’s crackdown on password sharing. “That’s pretty common in the industry. Hulu’s ad plan gets more revenue per user than the plan without advertising.”
Are more mergers coming?
Last week’s ruling from a federal judge that Microsoft’s $68.7 billion acquisition of game publisher Activision Blizzard should move forward serves as a rare piece of good news for the media industry. It’s a signal that significant consolidation can proceed even if there’s temporary regulatory interference.
Although the Federal Trade Commission appealed the ruling, bankers took it as a win for dealmaking during a slow period for megadeals.
“This was a nice win for bankers to go into board rooms and say we’re not in an environment where really attractive M&A is going to be shot down by regulators. It’s encouraging,” said Solomon Partners’ Boidman.
As media giants struggle and shareholders grow frustrated, the judge’s ruling could fuel more deals as “a lot of these CEOs are on the defensive,” Boidman added.
Regulatory roadblocks have been prevalent beyond the Microsoft deal. A federal judge shut down book publisher Penguin Random House’s proposed purchase of Paramount’s Simon & Schuster last year. Broadcast station owner Tegna scrapped its sale to Standard General this year due to regulatory pushback.
“The fact that we are so focused on the Activision-Microsoft deal is indicative of a reality that dealmaking is going to be an enormous tool going forward to solidify market position and jump your company inorganically in ways you couldn’t do yourself,” said Jason Anderson, CEO of Quire, a boutique investment bank.
These CEOs won’t just do a deal to do a deal. From this point forward, it will take a higher bar to consolidate.
Peter Liguori
former Tribune Media CEO
Anderson noted bankers are always thinking about regulatory pushback, however, and it shouldn’t necessarily be the reason deals don’t come together.
Warner Bros. and Discovery merged in 2022, ballooning the combined company’s portfolio of cable networks and bringing together its streaming platforms. Recently, the company relaunched its flagship service as Max, merging content from Discovery+ and HBO Max. Amazon bought MGM the same year.
Other megadeals occurred before that, too. Comcast acquired U.K. broadcaster Sky in 2018. The next year, Disney paid $71 billion for Fox Corp.’s entertainment assets – which gave Disney “The Simpsons” and a controlling stake in Hulu, but makes up a small portion of its TV properties.
“The Simpsons”: Homer and Marge
Getty / FOX
“The Street and prognosticators forget that Comcast and Sky, Disney and Fox, Warner and Discovery —happened just a few years ago. But the industry talks as if these deals happened in BC not AD times,” said Peter Liguori, the former CEO of Tribune Media who’s a board member at TV measurement firm VideoAmp.
Consolidation is likely to continue once companies are finished working through these past mergers and get past lingering effects of the pandemic, such as increased spending to gain subscribers, he said. “These CEOs won’t just do a deal to do a deal. From this point forward, it will take a higher bar to consolidate.”
Still, with the rise of streaming and its lack of profitability and bleeding of pay-TV customers, more consolidation could be on the way, no matter what.
Whether M&A helps push these companies forward, however, is another question.
“My kneejerk reaction to the Activision-Microsoft ruling was there’s going to be more M&A if the FTC is going to be defanged,” Nathanson said. “But truth be told, Netflix built its business with licensing content and not having to buy an asset. I’m not really sure the big transactions to buy studios have worked out.”
–CNBC’s Alex Sherman contributed to this article.
Disclosure: Comcast owns NBCUniversal, the parent company of CNBC.
The Nasdaq MarketSite in New York, June 9, 2023.
Michael Nagle | Bloomberg | Getty Images
Silicon Valley executives and financiers publicly opened their wallets in support of President Donald Trump’s 2024 presidential run. The early returns in 2025 aren’t great, to say the least.
Following Trump’s sweeping tariff plan announced Wednesday, the Nasdaq suffered steep consecutive daily drops to finish 10% lower for the week, the index’s worst performance since the beginning of the Covid pandemic in 2020.
The tech industry’s leading CEO’s rushed to contribute to Trump’s inauguration in January and paraded to Washington, D.C., for the event. Since then, it’s been a slog.
The market can always turn around, but economists and investors aren’t optimistic, and concerns are building of a potential recession. The seven most valuable U.S. tech companies lost a combined $1.8 trillion in market cap in two days.
Apple slid 14% for the week, its biggest drop in more than five years. Tesla, led by top Trump adviser Elon Musk, plunged 9.2% and is now down more than 40% for the year. Musk contributed close to $300 million to help propel Trump back to the White House.
Nvidia, Meta and Amazon all suffered double-digit drops for the week. For Amazon, a ninth straight weekly decline marks its longest such losing streak since 2008.
With Wall Street selling out of risky assets on concern that widespread tariff hikes will punish the U.S. and global economy, the fallout has drifted down to the IPO market. Online lender Klarna and ticketing marketplace StubHub delayed their IPOs due to market turbulence, just weeks after filing with the Securities and Exchange Commission, and fintech company Chime is also reportedly delaying its listing.
CoreWeave, a provider of artificial intelligence infrastructure, last week became the first venture-backed company to raise more than $1 billion in a U.S. IPO since 2021. But the company slashed its offering, and trading has been very volatile in its opening days on the market. The stock plunged 12% on Friday, leaving it 17% above its offer price but below the bottom of its initial range.
“You couldn’t create a worse market and macro environment to go public,” said Phil Haslett, co-founder of EquityZen, a platform for investing in private companies. “Way too much turbulence. All flights are grounded until further notice.”
CoreWeave investor Mark Klein of SuRo Capital previously told CNBC that the company could be the first in an “IPO parade.” Now he’s backtracking.
“It appears that the IPO parade has been temporarily halted,” Klein told CNBC by email on Friday. “The current tariff situation has prompted these companies to pause and assess its impact.”
‘Cave rapidly’
During last year’s presidential campaign, prominent venture capitalists like Marc Andreessen backed Trump, expecting that his administration would usher in a boom and eliminate some of the hurdles to startup growth set up by the Biden administration. Andreessen and his partner, Ben Horowitz, said in July that their financial support of the Trump campaign was due to what they called a better “little tech agenda.”
A spokesperson for Andreessen Horowitz declined to comment.
Some techies who supported Trump in the campaign have taken to social media to defend their positions.
Venture capitalist Keith Rabois, a managing director at Khosla Ventures, posted on X on Thursday that “Trump Derangement Syndrome has morphed into Tariff Derangement Syndrome.” He said tariffs aren’t inflationary, are effective at reducing fentanyl imports, and he expects that “most other countries will cave and cave rapidly.”
That was before China’s Finance Ministry said on Friday that it will impose a 34% tariff on all goods imported from the U.S. starting on April 10.
At Sequoia Capital, which is the biggest investor in Klarna, outspoken Trump supporter Shaun Maguire, wrote on X, “The first long-term thinking President of my lifetime,” and said in a separate post that, “The price of stocks says almost nothing about the long term health of an economy.”
However, Allianz Chief Economic Advisor Mohamed El-Erian warned on Friday that Trump’s extensive raft of import tariffs are putting the U.S. economy at risk of recession.
“You’ve had a major repricing of growth prospects, with a recession in the U.S. going up to 50% probability, you’ve seen an increase in inflation expectations, up to 3.5%,” he told CNBC’s Silvia Amaro on the sidelines of the Ambrosetti Forum in Cernobbio, Italy.
Former Microsoft CEOs Bill Gates, left, and Steve Ballmer, center, pose for photos with CEO Satya Nadella during an event celebrating the 50th Anniversary of Microsoft on April 4, 2025 in Redmond, Washington.
Stephen Brashear | Getty Images
Meanwhile, executives at tech’s megacap companies were largely silent this week, and their public relations representatives declined to provide comments about their thinking.
Microsoft CEO Satya Nadella was in the awkward position on Friday of celebrating his company’s 50th anniversary at corporate headquarters in Redmond, Washington. Alongside Microsoft’s prior two CEOs, Bill Gates and Steve Ballmer, Nadella sat down with CNBC’s Andrew Ross Sorkin for a televised interview that was planned well before Trump’s tariff announcement.
When asked about the tariffs at the top of the interview, Nadella effectively dodged the question and avoided expressing his views about whether the new policies will hamper Microsoft’s business.
Ballmer, who was succeeded by Nadella in 2014, acknowledged to Sorkin that “disruption is very hard on people” and that, “as a Microsoft shareholder, this kind of thing is not good.” Ballmer and Gates are two of the 12 wealthiest people in the world thanks to their Microsoft fortunes.
C-suites may not be able to stay quiet for long, especially if the recent turmoil spills into next week.
Lise Buyer, who previously helped guide Google through its IPO and now works as an adviser to companies going public, said there’s no appetite for risk in the market under these conditions. But there is risk that staffers get jittery, and they’ll surely look to their leaders for some reassurance.
“Until markets settle out and we have the opportunity to access valuation levels, public company CEOs should work to calm potentially distressed employees,” Buyer said in an email. “And private company managements should refine plans to get by on dollars already in the treasury.”
— CNBC’s Hayden Field, Jordan Novet, Leslie Picker, Annie Palmer and Samantha Subin contributed to this report.
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