Winter Is Coming, Traders. Hollywood Stocks Gonna Drop
Earnings reports from Roku to Peacock are sending warning signs ahead of a buckling economy. Experts say "fly south"
As ominous earnings roll in for the last financial quarter, the players who run some of Hollywood’s big streaming services are flashing warning signs that content spending might be reined in fairly soon. Amid decades-high inflation and a looming recession that have severely curtailed what advertisers are willing to spend, big media companies on Thursday reported little-to-no gains in paid subscribers to platforms from Roku and NBCUniversal’s Peacock.
Which means those big-budget scripts sitting in the bottom drawer might need to be sold fast, before the funding goes away.
This is a vicious cycle: Studios are looking to save money without sacrificing quality or surefire hits. Which means services like Apple TV+, HBO Max, Netflix, Disney+, Hulu and Paramount+ may need to make some tough choices in a year where content spending for those platforms could top $50 billion or more, according to analysts.
It is too early to tell exactly how much studios will cut back from their streaming fare — and such decisions hinge on how much money advertisers trim trying to lure belt-tightening consumers.
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Here were the highlights of Thursday’s earnings:
Comcast: The cable giant reported second-quarter revenue of $30 billion and an adjusted earnings per share of $1.01, a rise of 20.2% year over year as a result of a record quarter for the conglomerate in cable and a big numbers from its theme parks. However, Peacock didn’t grow a single subscriber.
Roku: The streamer posted overall revenue of $764 million, up 18% year over year, which couldn’t quite meet expectations due to a depressed ad sales market. It added another 1.8 million active accounts, bringing the company to a total of 63.1 million.
Imax: Blockbusters like “Top Gun: Maverick” fueled $74 million in revenue at the specialty-theater brand. Though, it still reported a $2.9 million loss due to COVID-19 closures in China. CEO Richard Gelfond said its his tickets sell at a premium, which is why market share is going up.
Apple: The subscription services business, which includes Apple TV+ and Apple Music, secured $19.6 billion in revenue for the the fiscal third quarter — down slightly from the year-ago period. The company, like Amazon, did not break out user data. Apple has more than 860 million paid subscribers, up 4% from the year-ago period.
Amazon: The consumer powerhouse beat Wall Street expectations with $121.2 billion of revenue, up 7 percent from a year earlier and well above projections. It still posted a $2 billion loss. Hard to tell how Prime Video did, but CFO Brian Olsavsky said the entire company’s ad business grew while competitors saw retreats.