Briefing on the future of television: Disney, Paramount and Warner Bros. Discovery quantify the gap between TV and streaming
This week’s Future of TV briefing examines how the second quarter of 2024 could mark an inflection point for companies’ traditional TV and streaming businesses.
If there was ever a point in time that marked the Rubicon between the past and the future of the television business, this may have been the last week.
When Disney, Paramount Global and Warner Bros. Discovery released their latest quarterly reports, they revealed that the streaming business is finally in the black, while the traditional TV business looks even bleaker.
This trend has been emerging for years, but last week the two companies quantified the change on a new scale. Disney and Paramount reported profits from streaming for the first time, while Paramount and Warner Bros. Discovery wrote down the value of their cable television businesses.
Streaming profits
- Disney: $47 million profit
- Paramount: $26 million profit
Depreciation for traditional television
- Paramount: Write-down of $6 billion
- WBD: $9.1 billion write-down
To be clear, streaming is far from making up for the declines in the traditional TV business. First, Paramount’s $26 million in streaming profits represent less than half a percentage point of the value its traditional TV business lost in the three-month period. Moreover, Paramount’s shrunken traditional TV business — including CBS and its cable TV stations — still generated $1.0 billion in profits in the quarter, about 39 times the profits of its streaming business.
Nevertheless, streaming is finally starting to gain acceptance, while traditional television is becoming increasingly streamlined.
This had to happen at some point if the axiom that streaming is the future of television was to be true. But why now?
Well, mainly because Paramount and WBD had no choice but to recognize the real value of their traditional TV businesses. Paramount is about to be acquired by Skydance Media. Meanwhile, WBD just lost the NBA rights, which would have been a goldmine for its cable TV network TNT.
And to further underscore the importance of sports to TV and streaming companies’ profits, if ESPN+ hadn’t contributed $66 million to profits, Disney would have reported a $19 million loss in its streaming business for the most recent quarter. That’s much closer to breaking even than the $505 million loss its streaming business posted in the second calendar quarter of 2023. But it’s still the difference between profit and loss.
As for streaming profits, they appear to be driven by both lower costs and higher revenues. Paramount cut its streaming spending by $235 million year-over-year, putting it just above breakeven. And in an executive commentary document released with the quarterly report, Disney cited “strong cost management” – in addition to higher subscription and advertising revenue – as a factor that brought Disney+ and Hulu closer to breakeven.
That said, this latest round of TV companies’ quarterly earnings reports could mark a tipping point at which the value gap between TV and streaming can be quantified. But the latest numbers also show how far companies have to go to close the gap between the two.
What we heard
“AdImpact is a good source of information on political spending that has already taken place and will take place in the coming months. The forecast is that CTV will account for 15%, cable TV about the same amount and broadcast TV about three times as much.”
— CTV Industry Executive
Key figures
Year-over-year percentage increase in the amount advertisers planned to spend on Warner Bros. Discovery’s Max in this year’s upfront market.
1 billion US dollars: According to Paramount Global, this is how much money advertisers agreed to spend on the company’s streaming inventory in the recent upfront market.
Year-over-year percentage increase in the total amount advertisers intended to spend in the latest upfront market on TelevisaUnivision.
18.8 million: Number of active accounts for Vizio’s connected TV platform at the end of the second quarter of 2024.
90%: Percent of Peacock’s programmatic ad sales related to the Olympics that came from advertisers who had not previously promoted the sporting event.
$30: How much the price of an NFL Sunday Ticket subscription will increase on August 15.
15%: Percentage of Paramount’s U.S. employees that the company will lay off.
What we covered
TikTok and Snap offer influencer agencies access to data and developers to gain competitive advantages:
- An influencer agency has signed a deal with TikTok that includes a dedicated platform representative, customized data queries and premium ad placements.
- Influencer marketing platforms have signed deals with Snap to improve access to creators’ data on the platform.
Read more about TikTok and Snap’s influencer offerings here.
How brands are engaging with the Paralympics:
- Three advertisers favor the Paralympics to reach television viewers while promoting their purpose marketing efforts.
- British broadcaster Channel 4 has created three different levels of Paralympics sponsorship packages this year.
Read more about the Paralympic Games here.
As athletes embrace working with influencers, “a new kind of agency” is emerging:
- New agency types combine sports talent management, influencer-style matchmaking and content production in a single organization.
- Klutch Sports Group, Status Creative, Ten Toes and B-Engaged represent the trend.
You can read more about sports marketing here.
What we read
Former YouTube CEO Susan Wojcicki dies:
Wojcicki, who led YouTube for nine years and previously ran Google’s advertising business, died after a two-year battle with cancer, according to Adweek.
Netflix outsources NFL production to external service providers:
According to the Wall Street Journal, CBS Sports will produce the NFL games that Netflix will stream on Christmas Day.
Instagram prioritizes the number of views:
According to The Verge, views will replace reach, likes, comments and shares as the main metric that Meta’s own platform will use to evaluate videos and other content.
Stand-up comedy is a serious matter:
According to the Hollywood Reporter, streaming services such as Netflix, Hulu and Amazon Prime Video are involved in a bidding war for stand-up specials.
Does Venu violate antitrust laws?:
According to The Athletic, three members of Congress have asked the U.S. Department of Justice to investigate whether Disney, Fox and Warner Bros. Discovery are violating antitrust laws with their sports streaming joint venture.
ISpot receives US JIC certification:
After Comscore and VideoAmp, which also compete for this purpose, received certification from the US Joint Industry Committee in April, iSpot.tv received the industry group’s seal of approval this week – also for age and gender-based transactions – according to AdExchanger.
