“If Wall Street banned earnings from linear from being reported, what would your turnaround plan look like?”
— VP, Corporate Development, Broadcast Group
It would look a lot like Disney’s plan.
Fortunately, or not, depending on your outlook, some of the biggest, key components of Media’s new normal rest in the final fates of America’s Big Media conglomerates. In the very near future, some of entertainment’s most important and indelible brands will either transform into the next iteration of themselves for the next generation of audiences or dissipate into nostalgic splinters within the massive empires of big tech or big finance.
Each of the Big Media Five have specific and quite different strategies for survival. Some actually have strategies. Others, not so much. Which is why some will survive, while others… not so much. After decades of shadowing each other quite closely on business model evolution, the Hollywood herd is finally veering off in different directions.
To be blunt, of the Big Media Five, only Disney seems to actually understand the current transformation assignment.
They’ve packaged all their services into a pure-play streaming bundle; they merged vMVPDs Hulu Live and Fubo to consolidate competition and move full-steam into a new media segment; they truly understand digital ad sales in a way that none of their Traditional Media peers do; and they negotiated the market-making signature deal of the new Pay TV era, allowing them to pursue an orderly transition for their TV holdings from analog to digital — a strategy they are currently expertly employing with ESPN.
This is why their streaming business is now profitable — and growing faster than the market anticipated. That is why they crush the traditional competition in ad sales. And, apparently, it is all a part of Iger’s envisioned plan for the future of Disney itself. Rather than split, spin, or sell off their (still-profitable) old school assets, Disney is using the revenues, profits, and very valuable goodwill as the fuel for the company’s full transformation.
Nearly every company that’s ever made a major evolution has employed this tactic — take profits from your maturing business and funnel them into new businesses. 3M was a mining company. Now they make Post-Its, magnetic tape, and bandages. Sony made potholders. Now they make PlayStations. Amazon sold books. Now — after losing billions en route — they are one of the most valuable companies in the history of the world.
The costs for ESPN’s programming overhead are skyrocketing. Disney’s linear networks are in decline. Iger has been asked — and likely tempted — to cut off these declining but still profitable businesses and sell them off, as did Roberts and Zaslav.
What happens to these massive Media players still does matter.
They still represent most of America’s TV and movies — and most of the world’s most valuable IP.
ESHAP Says
Disney is NOT ejecting their traditional channels like so much old junk, as are Comcast and WBD, who have both apparently, simply given up transforming and are focused solely on trashing. Disney is (finally) handling the transformation of ESPN as well as any OG television player has ever handled the evolution of a traditional mega TV brand.
The differences between Disney and Paramount, FOX, WBD/Disco Bros, and Comcast/NBCU Kabletown could not be more stark. That’s why I wrote recently that we are witnessing the “end of Traditional Media,” and why Disney will likely be the only one of them left standing.
Disney will definitely not succeed in all aspects of the new game. But, of all the traditional Hollywood industrial complex oligarchs, they are the only one playing the right game.
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Evan Shapiro, dubbed the “Cartographer of the Media Universe,” is known for his widely cited maps, infographics, and sharp industry analysis. Through his Media War & Peace newsletter, ESHAP transformation agency, and Media Odyssey podcast, he charts the future of media for executives worldwide. An Emmy and Peabody Award-winning producer (Portlandia, Brick City, Please Like Me), Shapiro’s work spans TV, film, and podcasts. He also taught for 18 years at NYU’s Stern School of Business.
