Disney Gets A Nice Fat Tax Break For Making Its Streaming Catalog Worse

Wall Street

from the streaming-enshittification dept

We just got done discussing how, as the streaming video space consolidates and grows, it’s starting to behave more and more like the unpopular, consolidated cable and broadcast companies they once disrupted. Cory Doctorow’s theory of enshittification has come to streaming, in a big way.

Netflix now thinks password sharing is the devil. Streaming catalogs are shrinking because hugely profitable companies are increasingly too cheap to pay residuals. Writers are striking because executives making billions of dollars don’t want to pay creatives a basic living wage. Prices and restrictions are increasing at the same time the quality of the streaming service you’re paying for deteriorates.

Mindless mergers and consolidation, and Wall Street’s inevitable need for improved quarterly returns at any cost (even if it profoundly harms long term company and brand health) are taking a sector that was just hitting its stride competitively and innovatively, and turning it inside out. All overseen by upward-failing execs who seem to have no idea what they’re doing (looking at you Time Warner Discovery).

We’ve noted repeatedly how these companies keep pulling shows from their lineups in a bid to save money. Often because they’re just too cheap to pay residuals. Following on the heels of HBO Max, last week, Disney+ pulled more than 100 titles from its lineup, including some (like Willow) it had only just produced. Why? Because it netted them a giant tax break:

According to an SEC filing from late Friday, Disney’s set to write off about $1.5 billion following this streaming purge. It was previously known this was a way for Disney to cut costs, and the filing notes that this will be reflected in the company’s fiscal third quarter. But if you thought this would be a one-and-done affair, that is not the case. Towards the end of the filing, the SEC wrote that Disney is “continuing its review and currently anticipates additional produced content will be removed.” Those removals equate to an additional estimated $400 million. But as far as when these removals may happen (or what canceled shows may be caught in the crossfire), that isn’t touched on in the filing, and Disney hasn’t yet said.

Users were given a week’s notice that this content would be disappearing. Media bean counters, myopically fixated on “growth for growth’s sake,” have begun the enshitification process of making you pay more money for an increasingly worse product. Even if that means harming the company’s long term success, brands, and employee and customer relationships.

Lost in the conversation is the fact that these companies burned through hundreds of billions of dollars on completely pointless megamergers that were supposed to deliver untold synergies, broad resiliency, and untold consumer benefits. These same companies also spent billions more on bloated executive compensation packages, or luxury resorts nobody could afford.

That these companies would have saved untold billions (far more money that it costs to host Willow on a server) by avoiding bloated executive compensation packages, leadership incompetence, or completely pointless mergers (see the $200 billion AT&T set on fire for its disastrous Time Warner and DirecTV deals) is curiously either footnoted or not mentioned at all in the broader conversation.

The MBAs who defend these kinds of decisions as cold calculus, are incapable of stepping back and acknowledging that the entire process of mindless consolidation and enshittification is violent, unpopular, senseless, often completely purposeless, results in untold layoffs and ill will, and actually harms these companies longer term. Because, and this is the gist, the stupidity benefits them personally.

Filed Under: consolidation, max, mergers, missing titles, streaming, video, willow
Companies: disney

Hugely Profitable And Consolidated Streaming Platforms Suddenly Too Cheap To Pay Residuals And Writers, Or Keep Niche Shows Online

Culture

from the dysfunction-junction dept

We’ve noted repeatedly that as the streaming sector grows and consolidates, it’s revealing many of the same problems we saw inherent in traditional, shitty, cable TV. As in the need to provide Wall Street improved quarterly returns at any cost has them doing the sort of things common in the traditional cable sector they used to criticize and disrupt (see Netflix’s password sharing cash grab).

Elsewhere, we’re seeing the byproduct of mindless consolidation results in other problems. Such as with the AT&T/Time Warner/Discovery mess, a series of utterly pointless mergers that have made the end product decidedly worse, while resulting in thousands of layoffs, price hikes, companies too cheap to pay artist residuals, writer strikes, and widespread annoyance and angst.

Warner Brother Discovery has been too cheap to pay artist residuals, resulting in a lot of popular shows being pulled from the company’s HBO Max streaming platform. We’re seeing the same thing over at Disney+, which apparently has proven unable to keep shows they’ve just recently produced — like Willow — online and available to a handful of customers via streaming.

The reason we’re given is that the same giant media conglomerates that spent hundreds of billions of dollars on pointless megamerger sprees, and received tens of billions of dollars in tax breaks for doing absolutely nothing, suddenly can’t afford to pay their writers a living wage, or keep shows like Willow available to consumers:

Streamers like Disney+ have to pay rights-holders and content creators continually in many cases to keep their content on their platforms, but often that content is being viewed by too few people and isn’t driving new subscriptions. As such, these businesses see cuts as obvious ways to save money during turbulent times.

The cuts are occurring at the same time that corporations are once again flexing their muscles in the wake of a brief shift of power toward labor during peak COVID. As the narrative goes, this kind of belt tightening is only wise given the “turbulent times” and a purported recession (?) waiting in the wings. You’re lucky to have a job. Sit down and shut up.

In reality, chipping away at your own streaming catalog is one of several ruthless determinations made by bean counters who are no strangers to wasting hundreds of billions of dollars on failed luxury amusement parks and massive megamergers, but somehow now can’t afford to maintain user access to a relative handful of niche programming:

So who decides which shows should get the boot? Bean counters, mostly, who consider the cost of carrying library content based on how much is paid toward residuals, participations and royalties. That is weighed against viewership and a title’s ability to lure more subscribers — like The Office on Peacock, for example — and create less churn. Ahead of Showtime dumping titles, Chris McCarthy, President/CEO, Showtime and Paramount Media, said that “we will divert investment away from areas that are underperforming and that account for less than 10% of our views.”

But again, it’s not just less popular shows like Willow getting the axe. Sesame Street and other popular kids’ programming have been shown the door. Mad Magazine was an early casualty of merger mania. There’s logic-driven belt tightening, and then there’s just being fucking cheap.

Routinely lost in the conversation is all the endless promises of “untold synergies” that accompanied decades of mindless media consolidation. Synergies that were supposed to have made these companies lean and resilient long ago. In reality, that consolidation instead created a massive, wasteful mess fraught with consistent managerial incompetence that’s increasingly catching up to the industry:

On Tuesday morning, subscribers took to social media to complain that they were having problems logging in to Max, which is replacing the three-year-old HBO Max service. As reported by users, the issues spanned the Max.com website as well as mobile apps including iOS and connected-TV apps on Roku and Samsung TV.

It’s growth for growth’s sake. Change for change’s sake. And dealmaking for dealmaking’s sake. Usually simply to generate tax write offs and let incompetent media executives fail upwards while pretending they’re savvy dealmakers.

You’ll notice that how much money gets wasted in mindless consolidation, pointless megadeals, and sustained managerial incompetence kind of gets lost in the weeds when it comes time to explain why streaming catalogs are shrinking, prices are rising, writers can’t get paid, and layoffs abound. But harmful and often pointless consolidation remains a primary reason streaming is slowly turning into the terrible cable TV sector it used to make fun of.

Filed Under: cable tv, mergers, streaming, streaming tv, video, wall st., willow, writers
Companies: warner bros. discovery