The coming corporate dramas in Hollywood’s age of anxiety

Bob Iger, the now-once-again chief executive of Disney, put it bluntly about six months ago: this is “the age of great anxiety” in Hollywood.

Over the past decade, Wall Street encouraged the world’s largest entertainment companies to dive into streaming, tearing apart their old business model. Then investors cooled towards the idea. Coupled with rising interest rates and a slowing economy, that led to 2022’s brutal stock market revaluation of the companies that make movies, television, music and news.

Not a lot of respite is expected in 2023 among the media executives and creative people I talk to. They anticipate this year to be tough and it will not be without drama. Here are some of the stories to keep an eye on in 2023:

• There will be more “Scarjo-Disney” type showdowns between the stars and studios. In September of 2021, Disney’s then-chief executive Bob Chapek suffered his first major setback: a disagreement with actor Scarlett Johansson over the streaming release of her film Black Widow. Johannson sued Disney over its decision to release the movie online, which she projected cost her $50mn, the Financial Times reported.

Even as many of us have returned to “normal”, there are still about 30 per cent fewer movies being shown in cinemas than before the pandemic. It seems inevitable that there will be other disputes between studios and talent, particularly big-name actors who previously commanded big paydays from box office sales.

In 2021, when Warner made the dramatic choice to release all of its movies online the same day as in the cinema, the studio ended up paying tens of millions to placate some stars. But now Warner, and the other major studios, are in cost-cutting mode. It won’t be as easy to justify writing cheques to pacify onscreen talent. And as Netflix and others are introducing advertising to their streaming platforms, talent agents are trying to get a share of that money, too.

• Rupert Murdoch’s proposal to recombine Fox and News Corp hangs in the balance. Murdoch revealed in October he wants to combine the companies via an all-stock merger. Since then, “special committees” made up of independent directors have been evaluating the deal. We await their verdict, possibly in the coming weeks. But already some shareholders have aired concerns. And while Murdoch and his family trust control roughly 40 per cent of voting shares, any deal requires a majority of independent shareholders to vote in favour of the proposal.

Speculation is rife among shareholders, bankers and analysts about how this chessboard shakes out. Might Murdoch spin out Dow Jones, owner of the Wall Street Journal, from News Corp to sweeten the deal for shareholders? Or sell other pieces of the business?

• Inflation is coming to Spotify users in the US. A Spotify subscription has cost $10 a month since the music service debuted in the US in 2011. The company has experimented in some markets, but for the most part Spotify has spent more than a decade resisting a price change to its flagship product in the world’s largest music market.

This has been a source of frustration for record labels. In that same time period, the price of a Netflix subscription has nearly doubled, from $8 to $15.49 a month. Apple Music, Spotify’s biggest rival, in October raised its prices by a dollar. It seems all but inevitable for Spotify to follow. Spotify shareholders might well be asking why that hasn’t already happened.

• Sports will continue to defy the wider economy. In the television business, 2022 was characterised by cancelled shows, tighter budgets and lay-offs. But not so much in sports, a corner of the entertainment industry where a pair of Arizona basketball teams were sold last month at a combined valuation of $4bn. That was a record for the US’s National Basketball Association, and almost double the $2.35bn the Brooklyn Nets fetched in 2019.

The sale served as a reminder of the NBA’s value as it prepares to renegotiate fees for airing rights. Under the current deal, which runs through the 2024-25 season, Disney’s ESPN and Warner’s Turner pay the NBA about $2.6bn a year. Warner chief David Zaslav has already tried to negotiate in public, saying that his company doesn’t “have to have the NBA”. But it looks a safe bet that the price for these rights will jump, with tech groups such as Amazon and Apple showing more interest in sports for their streaming services.

Outside of sports, though, 2023 looks like another year of anxiety in media.

anna.nicolaou@ft.com