Friday, August 07, 2015

Brave New World

This wave seems to be cresting.

It's been two days of harsh reckoning for the entertainment industry as long-simmering concerns about declining pay-TV subscriptions boiled up in quarterly earnings reports, leading investors to dump shares of media stocks amid worries that a key Hollywood money pot is threatened..

The massive sell-off — one analyst called it "the media meltdown" — came after Walt Disney Co. warned investors late Tuesday that profit from ESPN and other cable channels would not be as robust as initially thought because fewer consumers are subscribing to full pay-TV packages.

The sell-off continued Thursday as Viacom disappointed Wall Street with weak sales. Over the last two days, Time Warner slid 10%, Disney shares dropped 11%, Fox fell nearly 13% and Viacom plunged 21%. ...

Diz Co. has ridden the ESPN cash cow for years, but that animal is getting feeble and doesn't produce as much milk.

The pricing structures and business models conglomerates have enjoyed are now being reshaped (eliminated?) by ever-changing technology. The days of high-priced cable packages give way to Subcription Video on Demand, YouTube and pirate sites. Teenagers and Twenty-Somethings want their entertainment at cut-rate prices. Or free.

Which presents challenges to our fine, entertainment conglomerates. They have to find new ways to squeeze money from all those new platforms ... without alienating the public that consumes content, something of a conundrum.

Movie companies face their own versions of record companies' earlier plight: When little silver disks got replaced with song downloads off the internet, and $16 CDs became history. How Disney, Fox, Warners (etc.) navigate their newer tech challenges is a tale that continues to unfold.


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