Todd Spangler NY Digital EditorIt’s been a brutal year so far for Wall Street — the Dow has dropped for seven weeks straight in its worst performance since 2001 — and most media companies have been harder hit than the broader financial markets amid ongoing gyrations.The stock volatility has been triggered by a range of troubling indicators, including higher interest rates aimed at dousing rising inflation as well as supply-chain disruptions, labor shortages and geopolitical uncertainty due to Russia’s war in Ukraine.With players like Netflix, Disney, the newly formed Warner Bros.
Discovery and Paramount Global in the thick of the streaming wars, there has been a new post-pandemic reset: Investors are more closely scrutinizing the growth dynamics and economics of video streaming.
Hollywood’s conventional wisdom has been that streaming will eat the world. But after Netflix — the canary in the streaming coal mine, as it has the biggest subscriber base — reported a drop in subscribers in the first quarter, Wall Street is wondering if the upside is as big as previously anticipated. “Investors are realizing that user growth may not translate into attractive video streaming profitability given the high costs associated with content, user acquisition and retention, and global expansion,” says Chris Vollmer, managing director at consulting firm MediaLink.Amid the turmoil, Paramount got a major vote of confidence from Warren Buffett: Shares in the media conglom (formerly known as ViacomCBS) shot up 15% on May 17 after the billionaire’s Berkshire Hathaway disclosed that it had amassed more than $2 billion worth of shares in recent months.
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