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Disney Drop Sends Media Stocks Toward Worst Decline in 30 Years

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(Bloomberg) — Walt Disney Co. just suffered its worst one-day rout in 21 years. Warner Bros. Discovery Inc., Lions Gate Entertainment Corp. and AMC Entertainment Holdings Inc. are all trading for less than $10. Paramount Global — the home of MTV, CBS and Top Gun: Maverick — has lost half of its value this year.

In a matter of months, Hollywood’s feel-good streaming story has turned into a horror show.

Consumers are streaming more movies and shows, and watching less in theaters and on traditional channels. To encourage the switch and attract subscribers, media companies are putting some of their best programs online. But the new services are losing boatloads of money, even as viewers drop traditional channels in droves. Executives who promised a smooth transition to the digital era are getting punished by Wall Street, with media stocks headed toward their steepest annual loss since at least 1990.

“The media and entertainment industry is going though a major transition,” said Porter Bibb, a longtime investor and observer of the business. “They’ve entered the tunnel, and nobody knows where they’re going to come out.”

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The shift is evident in the number of consumers canceling their pay-TV subscriptions. Cable-TV giants Comcast Corp. and Charter Communications Inc. together lost almost 800,000 TV subscribers last quarter. At that pace, it will mean millions of fewer customers to help pay for MTV, CNN and ESPN.

The one bright light this quarter was Netflix Inc., whose subscriber loss in the first half of the year prompted a reevaluation of the industry’s business models and stock values. The streaming industry pioneer reported a better-than-expected 2.41 million new subscribers last quarter. Its shares are still down 57% this year.

Losses at Disney’s direct-to-consumer arm, driven by the Disney+ streaming service, more than doubled to $1.47 billion in the company’s fiscal fourth quarter, due to higher programming expenses and the cost of rolling the service in new countries.

Weakness in cable-television advertising revenue also hurt the company’s performance, as it has for other media giants. Disney finished the day down 13%, the biggest one-day loss since Sept. 17, 2001, when trading resumed after the Sept. 11 terrorist attacks.

The losses in media stocks aren’t all Hollywood entertainment companies. The biggest loser in the S&P 500 Media & Entertainment Index this year is Facebook parent Meta Platforms Inc., which gets nearly all of its revenue from advertising. Meta is down 70% this year.

The deterioration of Disney’s traditional TV business may be the bigger shocker from this week’s earnings, according MoffettNathanson analyst Michael Nathanson. The company projected high single-digit profit growth next year, well below what he’d been expecting.

“Rarely have we ever been so incorrect in our forecasting of Disney profits,” Nathanson wrote in a research note on Wednesday. “It appears that the negative economic force of cord-cutting (plus a weakening ad market) has finally begun to manifest in Disney’s FY 2023 results,”

Disney’s sales, at $20.2 billion, came up about $1 billion short of analysts’ projections. Earnings, excluding certain items, fell to 30 cents share, missing the average estimate of 51 cents from analysts surveyed by Bloomberg.

Disney told investors this week that losses in its streaming business have peaked.

At the Paley International Council Summit in New York Wednesday, Disney Chief Executive Officer Bob Chapek acknowledged Wall Street’s frustration with the massive investments in online TV, including ESPN+ and Hulu.

“Our investors expect us to have a return on that,” he said.

The company, he noted, is celebrating it 100-year anniversary next year. There will be speed bumps, Chapek said, especially when trying a new business model.

“But it’s certainly better than the other option, which is to become extinct,” he said.

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CTV National News: Social media giants sued – CTV News

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CTV National News: Social media giants sued  CTV News

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India’s media – captured and censored

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Across almost every form of media in India – social, broadcast and print – Narendra Modi and the BJP hold sway.

With India amid a national election campaign, its news media is in sharp focus. Until recently it was believed that the sheer diversity of outlets ensured a range of perspectives, but now, India’s mainstream media has largely been co-opted by the Bharatiya Janata Party and Prime Minister Narendra Modi. Just how did the media in India get to this point and what does it mean for the upcoming elections?

Featuring:

Ravish Kumar – Former Host, NDTV
Shashi Shekhar Vempati – Former CEO, Prasar Bharati
Pramod Raman – Chief Editor, MediaOne
Amy Kazmin – Former South Asia Bureau Chief, Financial Times
Meena Kotwal – Founder, The Mooknayak

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Social media lawsuit launched by Ontario school boards

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Premier Doug Ford says that lawsuits launched by four Ontario school boards against multiple social media platforms are “nonsense” and risk becoming a distraction to the work that really matters.

The school boards, including three in the Greater Toronto Area, have launched lawsuits seeking $4.5 billion in damages against Snapchat, TikTok, and Meta, the owner of both Facebook and Instagram, for creating products that they allege negligently interfere with student learning and have caused “widespread disruption to the education system.”

But at an unrelated news conference in Ottawa on Friday, Ford said that he “disagrees” with the legal action and worries it could take the focus away from “the core values of education.”

“Let’s focus on math, reading and writing. That is what we need to do, put all the resources into the kids,” he said. “What are they spending lawyers fees to go after these massive companies that have endless cash to fight this? Let’s focus on the kids, not this other nonsense that they are looking to fight in court.”

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Four separate but similar statements of claim were filed in Ontario’s Superior Court of JusticSocial media lawsuit launched by Ontario school boards pervasive problems such as distraction, social withdrawal, cyberbullying, a rapid escalation of aggression, and mental health challenges,” Colleen Russell-Rawlins, the director of education with the Toronto District School Board, said in a news release issued Thursday.

“It is imperative that we take steps to ensure the well-being of our youth. We are calling for measures to be implemented to mitigate these harms and prioritize the mental health and academic success of our future generation.”

The school boards are represented by Toronto-based law firm Neinstein LLP and the news release states that school boards “will not be responsible for any costs related to the lawsuit unless a successful outcome is reached.”

These lawsuits come as hundreds of school districts in the United States file similar suits.

“A strong education system is the foundation of our society and our community. Social media products and the changes in behaviour, judgement and attention that they cause pose a threat to that system and to the student population our schools serve,” Duncan Embury, the head of litigation at Neinstein LLP, said in the new release.

“We are proud to support our schools and students in this litigation with the goal of holding social media giants accountable and creating meaningful change.”

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