The new year in Hollywood always brings certain traditions: resolutions, predictions, last-minute deals squeezed in before quarter-end. Naturally, media reporters reflect on everything that went wrong during the last 12 months and pretend to have the answers to make it better.
So, in the film industry’s spirit of doing the same thing repeatedly until it stops working, here’s our wrap-up of the themes that defined entertainment in 2023 and how they’ll bleed into the next 52 weeks.
Paramount Global is up for sale; there’s no doubt about that. It’s all anyone in the media industry seems to be talking about, so get ready for a year of merger mania in Hollywood.
Warner Bros. Discovery has held early talks to combine its business with Paramount, putting Batman, Superman, HBO, HGTV, “Paw Patrol,” “Yellowstone,” MTV and “Top Gun” all under one roof. This comes after news that Skydance’s David Ellison was kicking the tires on National Amusements, Paramount’s controlling shareholder run by Shari Redstone.
Does Comcast now get into the mix? What happens to the news business if CNN and CBS News are part of the same corporation? The apparent urgency to do some kind of deal does not bode well for the overall state of the media industry. Regulatory agencies will take note, and depending on how the 2024 election goes, it may be the worst time to try to complete such a deal.
Fewer streamers, but some might become profitable
Few people dispute the idea that there are too many streaming services, and not all of them can survive. Jason Kilar, founding CEO of Hulu and former head of WarnerMedia, argued in an essay that streaming services have to achieve a certain scale, say 200 million global subscribers, to become sustainable businesses.
Disney has been folding Hulu content into Disney+ for a “one-app experience.” Paramount+ has already swallowed up the Showtime brand and might not last as a standalone streamer, given that it could become part of Warner Bros. Discovery. People love “Poker Face” and I’m a fan of “Killing It,” but if there’s a compelling strategy for Peacock, it’s not clear. Cellphone providers are already starting to offer package deals of competing streaming services.
Many legacy media companies have said that 2024 will be the year in which their streaming services turn profitable. Maybe so, but it will be a while still before the quarterly earnings make up for all the billions of dollars in cash they burned in the course of this transformation trying to become Netflix.
Analyst Rich Greenfield, who encouraged traditional studios to go all-in on streaming, now says companies who are not Netflix should pull back on their ambitions. Mergers and acquisitions, he said in a recent blog post, won’t save them. “Legacy media companies simply do not have time to wait and hope for M&A as a strategy,” he wrote.
A hot labor summer sequel
Six months of strikes turned 2023 into what for many was almost a lost year in the movie and TV business and did billions of dollars in damage to the local economy. And to think that it’ll be a mere 2 ½ years before Hollywood is at it again when the hard-won Writers Guild of America and SAG-AFTRA contracts come up for renewal.
Actually, scratch that. Because negotiations for the International Alliance of Theatrical Stage Employees’ contract, which covers below-the-line workers, are set to begin in a matter of months, raising the prospect of yet another summer of labor unrest. Just thinking about it is exhausting.
Surely, the Alliance of Motion Picture and Television Producers, its member studios and the labor leaders on the other side have learned something from the seemingly never-ending debacle. It’s never really been in IATSE’s nature to strike. It hasn’t happened in the union’s roughly 130-year history. But past behavior doesn’t necessarily predict future behavior, especially now.
There should be more effort to avoid prolonged and devastating strikes by having the sides communicate more between contract negotiations and start serious talks well before the bargaining agreements expire.
A movie business recovery deferred
If Hollywood can let go of the idea that the theatrical movie business will be an $11 billion annual domestic gross revenue anytime soon, or maybe ever, that might be a mind-set for a healthier industry.
With this year’s U.S.-Canada box office up about 20% from last year but still down about $2.5 billion from pre-pandemic levels, it’s clear that the shortage of wide releases is the main cause of the shortfall. It’s not a coincidence that there were about 18% fewer major movies this year than in 2019, pretty close to the gap in total ticket sales.
That, plus lackluster results from “Wish,” “The Marvels,” and “Killers of the Flower Moon,” dampened the enthusiasm from the overperformance of movies such as “Taylor Swift: The Eras Tour” and “Five Nights at Freddy’s.”
Which brings us to 2024, which is looking bleak because of the delays in production caused by the strikes. The loss of “Captain America: Brave New World,” “Mission: Impossible — Dead Reckoning Part Two,” “Snow White,” “Spider-Man: Beyond the Spider-Verse,” “Avatar 3,” “Blade” and others could represent a combined $1.7 billion in revenue vanished from the year, according to analyst Eric Handler.
Does the movie business have a demand problem? Maybe. It definitely has a supply problem. Some of the adult-oriented, more serious movies will remain largely streaming propositions, with Netflix continuing to offer patronage to directors making interesting projects, like Todd Haynes’ tonally adventurous “May December.” And who knows how long Apple will be willing to put $250 million behind a Ridley Scott historical epic like “Napoleon,” with a strategic rationale that remains unclear.
On the plus side, studios’ experiments with windowing (i.e., more flexibility to quickly bring theatrical releases to home viewing platforms, whether that’s a $20 rental or streaming), seem to have paid off. Universal, for example, is still taking risks, including through its Focus Features unit. Can a business be smaller but healthier? We might have to wait until 2025 for the answer.
Will Disney go on offense again?
Walt Disney Co. CEO Bob Iger has been saying that he’s moved beyond his “fixing” mode to one of building. But what does that look like?
Never mind that the company is still in many ways on the defensive, having to fight off a proxy fight from activist investor Nelson Peltz that has the support of former Marvel boss Ike Perlmutter and jilted former Chief Financial Officer Jay Rasulo. At least Florida Gov. Ron DeSantis’ war on wokeness seems to have backed off the Mouse House for now.
Plus, there’s the quality control issues at Marvel Studios to contend with, in addition to animation, which needs to get its creative mojo back.
Due to the strike fallout, the Disney slate looks thin. “Deadpool 3” is the lone Marvel Studios release scheduled. They now have to rework the endpoint of the current saga without Jonathan Majors. Iger has walked back much of the talk of maybe thinking about spinning off the linear networks, including ABC, while he’s still charging ahead with making ESPN into a full-blown direct-to-consumer offering.
He’s reorganized the company by putting the power back in the hands of the creative heads. In other words, the pressure is on.
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Stuff we wrote
It hosted one of L.A.’s oldest film festivals, then it collapsed. What happened? Outfest, which hosted one of the industry’s most prominent LGBTQ+ film festivals, faced a financial crisis after a series of clashes between board members and the group’s former executive director.
A wild year for cable news: Shakeups, firings and ratings challenges. Fox News and CNN saw declines from last year while MSNBC saw a slight gain. The networks still face an existential threat from cable cord-cutting.
‘Schindler’s List’ is 30. It may be more valuable now for how divisive it remains. A remarkable essay by Times film critic Justin Chang: Three decades after the film’s release and Oscar success, its impact is still being felt, both aesthetically and as a strategy for addressing the unthinkable.
Finally …
Everyone talks about the best new albums of the year. But what about the top reissues? Beyond the recent remaster of The Replacements’ “Tim” (which we’ve already discussed), it’s a great time to check out “The Complete Dirty South,” an expansion of a total masterwork by Drive-By Truckers, which came out almost 20 years ago.