Linear television advertising and original production are in sharp decline and sport cannot be expected to save the industry, Ken Ziffren said today.

“Overall, the combination of online and social media usage is not going to increase consumer spending,” the famously cautious co-founder of Ziffren Brittenham LLP warned the Beverly Hills Bar Association in his annual lecture on Friday. “I don’t know if we can reverse these trends… if we can take them back to the old situation of 2020, when consumer and entertainment spending here and around the world experienced growth that exceeded the Consumer Price Index.”

In addition, self-described “pessimist” Ziffren pointed out how much programming on social media is now free to watch, as well as the serious and seemingly irreversible decline that has occurred with the “incursion of technology companies” into the advertising market.

“We seem to be heading in the ‘wrong direction,'” Ziffren said bluntly. In his analysis of the industry, the lawyer focused on the advertising rates charged by streamers (with the exception of Apple) and the quiet but dramatic shift of these companies away from the ups and downs of Wall Street. “Cheaper streaming through bundling” and a shift to unscripted broadcasts and sports will not increase consumer spending, Ziffren predicted.

Major media outlets are facing a painful reckoning as the audience numbers and associated advertising revenues that have sustained them for decades are dwindling.

Profits from the streaming business are still slim, and can’t yet compensate for losses from broadcast and cable TV. The massive writedowns earlier this month to bring the value of linear assets back to size showed just how bad things are – a $9.1 billion loss at Warner Bros. Discovery and about $6 billion at Paramount. Shares of those companies have plunged especially because both carry a nearly crippling debt load that makes it even harder to get out the other side.

As Ziffren emphasized on Friday, you are not doing anyone any favors when the overall box office declines.

While the last-minute bid for Shari Redstone by Edgar Bronfman Jr.’s consortium sets everything in motion, Paramount could begin a second life with Skydance and its deep-pocketed backers once the merger is complete – assuming it goes through. There is no rescue in sight for WBD, perhaps in its darkest period after the likely loss of the NBA. Shares have fallen about 70% since the merger.

Disney and Comcast are in much better shape, although theme parks (both) and broadband (Comcast) have plateaued post-Covid. First-mover Netflix and arms dealers like Sony appear to be weathering the transition best. Ironically, the fickle movie studios that Wall Street used to shun in favor of powerful cable brands are, in some quarters, the best part of the business.

As in previous years, the Dean of Law spoke today at the BHBA’s Entertainment Law Summit at the Skirball Cultural Center. Consolidation in the French market, growth in the Indian market, the reprivatization of Endeavor, WBD’s lawsuit against the NBA over basketball rights and the Venu debacle were some of the topics Ziffren addressed at the start of his remarks.

“Every entertainment project will cost more than before,” the lawyer said in the wake of last year’s strikes and the collective bargaining agreements that ended them. These rising costs are a major factor in the stagnant production we have seen this year, Ziffren said. The debt burden is also hurting many companies, he noted.

Recently appointed and re-elected to LA Mayor Bass’ newly formed Entertainment Advisory Board, Ziffren, the City of Angels’ film czar, is something of a true Mandarin the industry has not seen in decades. In this role, the experienced attorney enjoyed the full trust of studio and agency executives, as well as political players and Wall Street, in a wide variety of cases and situations.

That is why his words on Friday are so important.

Ziffren cites several studies examining the steady decline of linear television advertising and the decline of original productions by streamers. Given his years of experience in the industry and his prestige, his comments on Friday have the potential to create explosive force that could take Nixon to China.

Slightly positive: Media and entertainment stocks mostly rose today after Fed Chairman Jerome Powell indicated that interest rates will be cut at the central bank’s September meeting. That’s great news and just in time, but there are serious issues we need to grapple with.

Also today at the well-attended BHBA event, Robert A. Darwell was honored by Shepard Mullin as Entertainment Lawyer of the Year. Among those in attendance today were Jeff Berg, Britney Spears’ attorney Mathew Rosengart and Johnny Depp’s attorney Camille Vasquez.

Jill Goldsmith contributed to this report