Is Sony and Fox’s Confirmed Stream Avoiding Business?

Stream will not have a moment. First, SVOD (subscription video on demand) hit the wall, sending commercial-free streams like Netflix and Disney spinning to promote ad-supported alternatives. And now that ad-sales revenue is moving in the same direction as the economy (and inversely with inflation), people who don’t rely on traditional streaming services like Fox and Sony Pictures are laughing all the way to the bank.

It’s not that neither has tried the current direct-to-consumer delivery system. Sonny dipped a toe in the crackling waters before finally trading it for Chicken Soup for the Soul Entertainment. (Yes, it’s the same weird, super-powered company that recently bought Redbox.) Fox distributes about a third, along with partners — and rivals — ABC (Disney) and NBC (NBCUniversal is owned by Comcast). Disney acquired that stake in 2011. He picked up Fox for $71.3 billion in 2019 and now owns all of it.

Currently, Fox’s streaming portfolio consists of the completely free instant service Tubi and Fox News Channel’s companion platform Fox Nation, which carries a subscription fee. These days, Sony’s television and film division, Sony Pictures, is acting as a distributor, so to speak, creating content for other streams, primarily Netflix.

The move appears to be working for them: Sony Pictures’ April-to-June quarter operating profit was a strong $394 million on revenue of $2.64 billion, the company reported on Friday. In the same quarter last year, operating profit was $232 million on revenue of $1.87 billion. At the time, Covid was a big factor in the theater business.

The box office is back, but this past quarter wasn’t all roses for Sony from a big-picture perspective beyond the pictures department; Sony Group Corporation is not immune to macroeconomic conditions. The Japanese company revised its financial guidance for 2022, citing all the same problems as everyone else. Those recession fears haven’t been felt much (yet, at least) at Sony Pictures; Its sister game and network services are a completely different story. 30,000-foot perspective issues explain Sony’s (SONY on the NYSE) 2.5 percent decline today.

Mark Wahlberg releases “Father Stu” on April 13, 2022 at Sony Pictures.

Sony

Shares in Fox nearly doubled today on Sony’s woes, though it had nothing to do with June-quarter earnings after Fox reported its own results on Aug. 10.

Fox is having a pretty good 2022, relatively speaking: Fox stock (FOX on the NASDAQ) is down as of this writing. Only 9 percent year-to-date. Netflix is ​​down 62 percent; Disney is down 33 percent; Comcast is down 27 percent; Amazon is down 20 percent; Starz owner Lionsgate fell 48 percent. Warner Bros.’s earnings fell 41 percent. Roku is down 73 percent; Paramount Global fell 27 percent; AMC Networks was down 17 percent, while Apple was down 11 percent.

Here, Sony Group stock is down 33 percent this year. But still, Sony is like Amazon and Apple in retail, and in movies and television, too. None of these are traditional media stocks.

In early May, Moffett Nathanson researchers called Fox a “buy” in the media sector. That’s still true, Michael Nathanson told IndieWire (pointing out that Facebook owner Meta and YouTube parent Alphabet — fka Google — are buying into Internet stocks) on Friday. In early May, Nathanson’s target price for Fox was $50 per share; It’s priced at $46 today, still a big premium over the $30.90 Fox closed on Friday.

A large part of Nathanson’s bullishness on Fox is the Murdoch-led company’s relatively small streaming footprint. Projections show that Fox will have the lowest digital revenue share of media revenue at least through 2025 (MoffettNathanson estimated in May that 21 percent of the company’s revenue would come from Tubi, Fox Nation, Credible and other digital ads). That can actually be a good thing. Fox has largely avoided SVOD, keeping its streaming investments relatively low, and it shouldn’t be projecting losses for the first few years (at least).

So Fox is lean and mean – and the Murdochs (again) look like media giants. Instead of getting into the expensive streaming wars, Fox has spent its money on live sports and news on online television — the most old-school option. In other words, the future of media may well lie in the past.

Just kidding, streaming rules. But maybe not financially – and we’re serious about that.

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