0:00
The Toyota Tundra and Tacoma are built to keep going,
0:03
backed by Toyota's reputation for legendary reliability.
0:06
Step into a Tundra with the available I-Force Max hybrid engine,
0:10
delivering impressive torque and serious towing power.
0:13
Or take a look at Tacoma with an available power lift gate,
0:16
so gear goes in fast and the adventure keeps moving.
0:19
Toyota trucks are built to last year after year, mile after mile.
0:24
So drive one home today, visit Toyota.com to find out more.
0:27
Toyota, let's go places.
0:30
Hey listeners, it's Thursday, March 5th.
0:36
I'm Ben Fritz for the Wall Street Journal,
0:38
and this is What's News in Earnings.
0:41
Our look at some of the biggest themes standing out this earnings season.
0:44
Today I'm speaking with Wall Street Journal Media and Entertainment Reporter, Joe Flint.
0:49
It's been a dramatic few months for the media business.
0:51
Warner Brothers Discovery agreed to sell a self-dened Netflix,
0:54
then left the streaming giant at the altar for a better proposal from Paramount.
0:58
Disney picked a new CEO who will be the second person to replace Bob Iyer.
1:03
This is all against a backdrop of rapid declines in the linear television business,
1:07
and struggles by entertainment companies to grow other businesses,
1:10
like streaming and theme parks, fast enough to make up the difference.
1:21
So let's talk first about consolidation and spin-offs.
1:24
So Skydance bought Paramount less summer,
1:26
and now Paramount Skydance has a deal to buy Warner.
1:29
Comcast spun out its cable networks into a new company called Versant
1:33
that isn't doing it very well since its public debut in January.
1:36
What's up with all this reshaping of our media giants?
1:40
Well, both the Paramount Warner deal and Comcast cable spin-off are driven by the desire
1:45
of these companies to be more focused on streaming,
1:48
try to offer real competition to Netflix and Disney Plus.
1:52
And we look at David Ellison that had a Skydance.
1:55
He bought Paramount last year, but even then he thought this is too small
1:59
to compete with those bigger giants.
2:01
So from the get-go he went after Warner,
2:03
believing that that would give him enough scale to compete.
2:07
So now we'll get to see if that actually pans out for him,
2:10
or if he's just saddled another media company with a ton of debt.
2:14
Earlier this week, and just a few days after Paramount's earnings report,
2:17
the company held a call with analysts to talk about the Warner deal.
2:21
They framed it as an ambitious project
2:23
that would reinvigorate entertainment.
2:25
Here's Paramount CEO David Ellison.
2:28
This is not about consolidation.
2:29
It's about reinventing the business.
2:32
We want to expand our reach and enhance our ability to create the world's most compelling
2:36
stories and experiences.
2:38
And we're incredibly excited about this transaction,
2:40
and it will accelerate that ambition.
2:42
Comcast, meanwhile, I wanted to move the bulk of its cable assets,
2:46
including CNBC, MSNBC, and USA,
2:49
to a separate company called Versing.
2:51
Because long-term cable is not the growth engine it once was,
2:55
and NBC Universal is focusing much of their efforts on turning peacock
3:00
into a legitimate streaming competitor.
3:02
Versing just reported that for 2025, profit and revenue both fell,
3:07
but they say they're in a good position to grow this year.
3:10
Disney and Universal have also been investing aggressively in their real-world experiences,
3:14
theme parks and cruise ships.
3:17
Do they have advantages over companies without theme parks and businesses?
3:20
Ben, why don't you tell us more about that?
3:24
So Disney's been in the theme park business since the 1950s,
3:27
but that was always smaller than first its film business and then later television.
3:31
Post-pandemic, however, people have been rushing out to have real-world experiences together.
3:36
It's been a booming part of entertainment.
3:39
And since 2022, experiences, the Disney Division,
3:42
that includes theme parks and cruise ships,
3:44
has accounted for the majority of its profits.
3:46
Last quarter, in fact, it was 72%.
3:49
The company expected to keep growing,
3:51
although the domestic theme parks are facing pressure from fewer foreign visitors coming to the US.
3:57
An NBC Universal, meanwhile, theme parks accounted for nearly all its profits last quarter.
4:01
Its losses from peacock basically covered the profits from film and the shrinking linear
4:06
television business, which includes networks like NBC and Bravo.
4:11
Both companies are expanding aggressively.
4:13
Disney is nearly doubling the size of its cruise ship fleet.
4:16
It's expanding or refurbishing all of its theme parks and is planning a new one in Abu Dhabi.
4:21
Universal just opens its third theme park in Orlando.
4:24
It's building on us just for kids in Texas.
4:27
And we recently reported that it's in talks for a possible theme park in Saudi Arabia.
4:31
So finally, what about streaming, Joe?
4:33
How's the OG Netflix doing?
4:35
And how about the media company's own services like Disney Plus, HBO Max,
4:39
Paramount Plus, and peacock?
4:41
Are they anywhere close to making up for what was lost in linear TV profits?
4:45
They're getting closer, but it's still a long road.
4:48
First, we'll focus on Netflix that, fortunately, for them,
4:52
doesn't have those old linear businesses to worry about.
4:55
They had a good quarter.
4:56
A revenue was up 20%, net income 30%,
4:59
325 million subscribers worldwide.
5:02
But obviously, they too are worried about growth,
5:05
hence their interest in buying the Warner Library and HBO Max.
5:09
And we see them investing more and more in live sports,
5:12
all these things to keep viewers from churning
5:14
and to maintain subscriber growth.
5:17
The others are growing, but linear media and the money
5:20
those cable channels generate are still significant.
5:23
Disney streaming had operating income growing, 72%.
5:28
HBO Max has been growing nicely,
5:30
but they saw a slight decline in earnings
5:32
because of some changes with their distribution deals.
5:35
Peacock, however, lost $550,000,000
5:39
despite some subscriber gains largely through sports.
5:42
The challenges those subscribers are not always long-term.
5:47
They come in, they check out.
5:49
Customers drop off when a season of their favorite show ends
5:52
or at the Olympics end, and I'm already hearing about that,
5:55
now that the Olympics are over, some Peacock subscribers are saying,
5:58
okay, we're done for now.
6:00
I have to say, once the current season of the Pit ends,
6:02
I may be churning for me to go max myself for a little while.
6:06
Well, and that's why they want to merge with Paramount
6:09
so that then you'll stick around for the new season of land.
6:12
And that was what's news in earnings.
6:15
Today's show was produced by Pierre B&MA,
6:17
was supervising producer Tali Arbel,
6:20
additional sound courtesy of S&P Global Market Intelligence.
6:24
I'm back later today when we'll have the PM edition
6:26
of what's news out for you as usual,
6:28
and we'll be back later this earnings season
6:30
diving into another industry.
6:32
Until then, I'm Ben Fritz, have a great day.
6:39
Hey, this is Tellus Demos.
6:45
And I'm Miriam Gottfried.
6:46
We're reporters at the Wall Street Journal
6:48
and the hosts of WSJ's Take on the Week.
6:50
It's a weekly show that gives listeners a leg up
6:53
in the world of markets and investing.
6:54
From the feds moves to market bubbles,
6:56
we dive into the biggest deals,
6:58
key players and business news ahead.
7:00
If you're looking for more news and tools
7:02
that you can use to help navigate the markets,
7:03
consider becoming a subscriber to the Wall Street Journal.
7:06
Visit subscribe.wsj.com.
7:09
Slash Take on the Week to subscribe now.