Iger’s Return To Disney Begs Question Whether Content Is Still King

“Content is king” is a now well-worn bit of conventional wisdom most closely associated with the late media mogul Sumner Redstone. But does it hold up anymore? The stunning return of Bob Iger to the helm at The Walt Disney Company, perhaps the most venerated media company in the world, might be the right move at the right time for that particular institution. But that corporate turmoil is only one data point in a sea of challenges that raise real questions about the broader content businesses and almost all of its putative kings.

The secular industry trends of consumer cord-cutting, declining broadcast TV ratings and the reshaped theatrical market are well entrenched in the fabric of the media business now. Far more worrisome for the future of that business is that almost every strategy to address those challenges has proven to be no panacea. Let’s take stock of those counterpunches from the kings as they seek to protect their kingdoms.

Going direct-to-consumer (DTC)

For years Netflix was rewarded by the markets for its singular dominance of the streaming market. Who needs the costs, infrastructure and business partnerships it takes to succeed in multichannel video or motion picture distribution when you can go directly to your customers with a flood of high-quality content options? Investors kept the checks flowing to Netflix even in the face of years of losses, all banking on the eventual windfall profits to come.

NBCUniversal and News Corp.’s Fox were actually the first movers in DTC with Hulu 15 years ago and Disney jumped in as a partner shortly thereafter. But for years Hulu was still an appendage to companies focused on their traditional cable and broadcasting businesses. It wasn’t until Disney launched Disney+ that the markets really rewarded a major media company for its approach to streaming.

Yet after what looks like a brief honeymoon of applauding every rise in subscriber numbers, the markets now expect streaming to operate like a real business with real profits. Losses have piled up at Peacock and Disney+ and Warner Bros. Discovery has announced plans to merge their streaming services HBO Max and Discovery+ under a still-unnamed successor. WBD’s CEO David Zaslav has made it clear that he’s not interested in being in the sub business if he can’t make money from it. Of course, Paramount has its massive Yellowstone hit on both the Paramount Network and streamer Paramount+, doesn’t it? Actually, that show is streamed on Peacock (don’t ask). Other than Amazon and possibly Apple, whose content businesses are subservient to giant ecommerce and device businesses, who can point to DTC as a long-term business that works for them?

Theaters will come back post-COVID

The picture – no pun intended – in the theatrical business has hardly been pretty as the country and world deal with a post-but-not-post COVID world. Paramount Global’s Top Gun: Maverick is now firmly ensconced as one of the highest grossing films of all time, but how many Tom Cruises are out there? Wakanda Forever and the Marvel universe also seem secure in heading to theaters. But anyone remember the Julia Roberts-George Clooney rom com from September? She Said is a critical darling in the long tradition of heroic journalism such as Spotlight and The Post, but it was dead on arrival at the box office. There’s too much that’s too appealing to watch at home.

Clearly the answer lies in a new structure for “windowing” films. Practically every film – and every TV series for that matter – now requires a customized distribution strategy involving a calibration of the appropriate time (if any) in theaters, the pricing in the digital rental market and appropriate streaming placement whether through subscription or ad-supported only. Netflix’s Knives Out sequel Glass Onion is heavily promoting itself as playing for just one week in theaters. Is that really a motion picture business?

Disney seemingly created a structure for rethinking this with its centralized Disney Media and Entertainment Distribution group, but Iger’s very first move was to fire its head and more or less to declare the approach a failure. You can shift the power equation more on the creative side as Iger plans, but those folks still have to figure out how to run profitable businesses.

M&A is the answer

If content is a good business, then having more of it to sell is a good thing, right? Arising from the ashes of the AT&T-Warner Media merger debacle, Discovery’s minnow swallowed the Warner whale to create Warner Bros. Discovery. Iconic brands from Warner Bros., HBO and CNN, a deep content library, global distribution and a major player in sports with the Turner networks. It’s still too soon to judge the success of a transaction that only closed earlier this year, but as the late philosopher Yogi Berra used to say, “it gets late early out there.”

WBD is just one of many examples where content size alone isn’t the answer. In fact, seemingly within weeks of the deal closing the punditry already started buzzing about the next possible deal for WBD with Comcast or Apple. But would those deals provide the answers to the challenges for motion pictures or money-losing streaming properties?

All of this takes place against a backdrop of a continued flood of video consumption in almost all forms. Maybe content is still king, but not for the kings? In any case it would appear that a business whose foundation is the alchemy of creating valuable intellectual property needs to focus on a much broader definition of how to succeed as a “creative” – it’s not all about the content. It’s very much about finding new forms of creativity on the business side of show business.