Cash Is King: Hollywood's Shitty Recession-Proof Fail Safe
The entertainment industry is sitting on a $21 billion cash stockpile from the five big studios. That won't be enough, and here's why.
For Hollywood moguls running the world’s biggest entertainment studios, cash is king.
Disney, Warner Bros. Discovery, Paramount, Fox and Lionsgate are sitting on top of a record $21 billion cash hoard. This is the number everyone in Tinseltown should be looking at as the nation buckles into a recession — not how many subscribers signed up for streaming services with little signs of turning a profit.
Here’s why Hollywood screenwriters, actors, executives and artisans should care: Their jobs might entirely depend on how much studios can stash underneath the mattress. This extra cash can be deployed by way of dividends to keep investors happy, buttress balance sheets to prevent layoffs and provide a powder keg to scoop up companies weakened by an economic downturn.
That’s the good news. The bad news is that no matter how much CEOs bragged during the second-quarter earnings cycle about the amount of money they’ve saved up, it won’t make much of a difference if a recession is prolonged and deep.
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“The studios and their investors should be thankful that they have cash, because it’s better than not having it, but it doesn’t assure you’re not going to go through a lot of pain,” said Hal Vogel, a veteran entertainment industry analyst who authored the book, “Financial Market Bubbles and Crashes.”
But, is it a soft or hard landing?” he added. “I don’t know, maybe they’re just buzzing the control tower.”