'Shakeout has begun' after $5-billion streaming loss for Netflix rivals

financialpost.com:

The world’s largest traditional entertainment companies face a reckoning in 2024 after losing more than US$5 billion in the past year from the streaming services they built to compete with Netflix Inc.

Walt Disney Co., Warner Bros Discovery Inc., Comcast Corp. and Paramount Global — entertainment conglomerates that have been growing ever larger for decades — are facing pressure to shrink or sell legacy businesses, scale back production and slash costs following billions in losses from their digital platforms.

Shari Redstone, Paramount’s billionaire controlling shareholder, has effectively put the company on the block in recent weeks. She has held talks about selling the Hollywood studio to Skydance, the production company behind Top Gun: Maverick, people familiar with the matter say.

Paramount chief executive Bob Bakish also discussed a possible combination over lunch with Warner chief executive David Zaslav in mid-December. In both cases, the discussions were said to be at an early stage and people familiar with the talks cautioned that a deal might not materialize.

Beyond their streaming losses, the traditional media groups are facing a weak advertising market, declining television revenues and higher production costs following the Hollywood strikes.

Rich Greenfield, an analyst at LightShed Partners LLC, said Paramount’s deal discussions were a reflection of the “complete and utter panic” in the industry.

“TV advertising is falling far short, cord-cutting is continuing to accelerate, sports costs are going up and the movie business is not performing,” he said. “Everything is going wrong that can go wrong. The only thing (the companies) know how to do to survive is try to merge and cut costs.”

But as the traditional