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Disney’s media and entertainment division plunged into losses as SVOD content cost increases outpaced revenue growth.
Cost cuts will primarily impact non-sports and international output, raising questions about the supply of Disney+’s content in Europe.
Bob Iger’s reorganisation to three operating units will be transformative only when associated with a growth strategy.
“The real issue is that the price appears too high,” says Alice Enders at Enders Analysis. “Really what people are looking at is comparable deals, and it does seem like a lot.”
She added “The master rights holders simply cannot agree on the basic parameters of the sale.”
“Breaking up the News Corp stable is likely to release more value for shareholders in due course,” says Claire Enders, founder of Enders Analysis. “Rupert Murdoch did not have convincing arguments for value add.”
She added “There will have to be much renewed discipline at News Corp. We are always sympathetic to protecting plurality (everywhere) but it isn’t an argument the stock market has any time for. There is still time for digital transformation of those titles that can make it.”
"The risk for Google is that Bing catches up as a product, and siphons usage away," Joseph Teasdale, Enders Analysis' head of tech told Insider.
He added that Google "delivers better results for advertisers, with higher click-through rates, particularly on mobile, and it commands higher prices, suggesting a higher proportion of clicks lead to conversion, or that conversions are more measurable."
Spotify’s strategy to invest massively in podcasts weighed on its costs and chewed up its operating profits, a bad combination that led CEO Daniel Ek to admit he 'got a little carried away'.
Spotify's podcast investment did not deliver the benefit of reduced music licensing costs on the premium tier.
Podcast investments in North America have not materially altered Spotify's slower post-pandemic subscriber growth in that geography, and do not travel outside their home country as readily as music.
Sky is coping reasonably well with the shock of retrenching consumer spending, with revenues almost flat in Q4 2022.
However, profits are under pressure, as the increases in Sky’s costs cannot be fully passed on to customers, and the product mix is rebalanced towards telecoms and variable costs.
Management continues to leverage Sky’s brand strength and its critical mass of consumers to enter new markets, this time with home insurance.
BT’s revenue and EBITDA growth fell in the December quarter, with consumer broadband in particular suffering from weakening volumes and ARPU, as last year’s price rise benefit wanes and broader macro pressures hit.
Openreach, however, had an improved quarter, with the broadband market returning to growth, full fibre build and take-up progressing at or ahead of expectations, and the altnet threat fairly subdued.
Inflationary price rises in April will give a temporary fillip, and likely help drive a decent 2023/24 for Group financials, but it will take much longer for full fibre benefits to really be felt.
