Paramount and Disney are chasing a pre-stream pipe dream

{"text":[[{"start":3.55,"text":"Once upon a time, media companies like Paramount and Walt Disney lived a peaceful existence, producing content and licensing it to the highest bidder. But the fairy tale ended when big studios started to engage in costly streaming land grabs against Netflix, creating a glut of video distribution services. Now, both are trying to recapture better times."}],[{"start":25.05,"text":"Paramount Skydance is attempting to solve the streaming wars through its $110bn takeover of Warner Bros Discovery. The process isn’t without hiccups: 12 US states, led by California, are suing in federal court to block the deal, alleging that it will result in excessive concentration in both movie production and distribution of content. "}],[{"start":46.5,"text":"Not true, says Paramount. The company run by Donald Trump ally David Ellison says that the merger will, thanks to cost savings that would increase its total ebitda from $12bn a year to $18bn, leave it better positioned to invest in a fortified slate of film releases and TV shows. Thus it will become a better foil to the likes of Netflix and YouTube. "}],[{"start":69.15,"text":"But what if the right answer for investors isn’t to get bigger in order to win the streaming wars, but to quit that costly fight altogether? A report from Wells Fargo published on Monday claims Disney could add 40 per cent to its market capitalisation by ditching its Disney+ direct-to-consumer service and instead stick to making and selling on video content. "}],[{"start":90.25,"text":"It’s possible that the perks of owning both content and distribution have been exaggerated. Studios built streaming platforms believing it would create a tight bond with viewers. But even the mighty Netflix, which pioneered the model, is now suffering: its shares have fallen a fifth this year. Even hundreds of billions of dollars in investment don’t guarantee a monopoly on long-term customer loyalty."}],[{"start":null,"text":"

"}],[{"start":115.7,"text":"Disney’s digital service has never come close to matching the favourable economics of its studios; Wells Fargo points out that after years of losses its expected operating margin of 13 per cent is less than half what Disney’s legacy studio made in the pre-streaming era. Before the House of Mouse started investing heavily in Disney+, its market capitalisation was 15 times expected earnings, or 15 per cent higher than its valuation now."}],[{"start":144.25,"text":"Paramount often pegs its own steady decline, which started 15 years ago, to a strategy of reselling too much of its back catalogue to a nascent Netflix for easy money. Yet the response has been to spend mounting sums, both on streaming platforms and now on a premium-priced acquisition of Warner Bros Discovery. Netflix may be the fairytale villain, but the companies it displaced are their own worst enemies."}],[{"start":174.8,"text":""}]],"url":"https://audio.ftcn.net.cn/album/a_1784093927_4675.mp3"}