Streaming‘s difficult economics will make business consolidation “inevitable,” within the view of Candle Media Co-CEO Kevin Mayer, however Large Tech and Hollywood are more likely to stay in separate camps.
Mayer shared his outlook in an look on the Yahoo Finance Make investments convention in New York. A lot of the 15-minute sit-down targeted on the Walt Disney Co., the place Mayer was a longtime senior exec and now serves as an advisor to CEO Bob Iger. “Bob has his hands full,” Mayer mentioned of the myriad points dealing with Disney, from activist traders to stressed shareholders to varied shifting strategic components. The 72-year-old high exec is “very capable and multifaceted. He has a lot of range, so he can handle it. … You have to be disciplined, and Bob’s always been very strategic.”
As to Disney’s lagging inventory value, Mayer mentioned the market is “reacting to uncertainty” about the way forward for Hulu, ESPN, the management of the corporate and different facets of the media large.
Throughout his stint operating the strategic planning group at Disney, Mayer engineered a historic run of M&A offers, together with the acquisitions of Marvel, Pixar and most of twenty first Century Fox. Previous to his 2020 exit, he spearheaded the launch of Disney+ and has gone on to give attention to streaming and digital content material at Candle and as chairman of sports activities streamer DAZN and CEO of TikTok.
An experiment DAZN ran with packaging streaming-only rights to European soccer led Mayer to consider that ESPN has appreciable upside when pricing its forthcoming stand-along streaming service. Lengthy funded by distribution charges from pay-TV suppliers, ESPN is actively plotting out a future as a direct-to-consumer service. One of many dilemmas in bringing it to market is about the place to cost it. On paper, ESPN has the potential to be the most costly providing in fashionable streaming historical past, effectively above the $23-a-month high of the general-entertainment market, given its trove of sports activities rights.
Having discovered early traction with Disney+ by pricing it at $6.99 a month, Mayer recalled deciding to take the same tack in Italy, going to market at about €10 under prior ranges established by Sky. DAZN then determined to spice up the worth from €20 Euros to €35 and located that few if any subscribers stop the service because of this. The takeaway: “Sports fans who really want their sports will pay a lot for it,” Mayer mentioned.
Mayer declined to deal with the state of Disney’s efforts to discover a strategic associate for ESPN because it mounts its direct-to-consumer push. Extra broadly, he mentioned, the sheer expense of reaching scale in streaming, whose revenue margins are unlikely ever to succeed in the historic highs of linear TV, will result in M&A. Mayer mentioned it’s “not obvious” to him that extra Amazon-MGM-style mash-ups of Large Tech and leisure are within the offing. “I think there’s a little bit of nervousness there about how the two will intersect if they’re both under one roof,” he mentioned of tech and Hollywood. “I’m not sure it’s an obvious thing that a high-growth, tech-focused company that’s really about its engineering and its product at its core would be a great home for creativity and the type of storytelling that Hollywood represents.”
These sorts of “cultural mismatches make buyers nervous,” he continued. “Also, if you’re Apple TV+ or Google, you have access to programming from independent producers of content” like Candle Media. “If you want content for your streaming services, you can always buy it at arm’s length.”
Succession at Disney has traditionally been a troublesome course of, Mayer acknowledged. Iger returned as CEO in November 2022 after his hand-picked successor, Bob Chapek, made a collection of missteps and was ousted by the board. Iger agreed to a short-term contract and has mentioned a particular committee is weighing candidates for Disney’s future CEO however a lot uncertainty continues to cloud the method. “It’s just hard,” he mentioned, “especially if you’re a CEO as successful as Bob, I think it pains him to see the company not live up to the standards he had set for it. Stepping back in was something he felt he just had to do.”
Iger and the board “will pick a great successor,” Mayer predicted, noting there are a variety of viable inner candidates. Requested if he would think about entering into the job, which as a substitute went to Chapek when Iger final handed the baton, Mayer demurred.
As for the way forward for Candle, which is backed by personal fairness large Blackstone, the exec mentioned there are three attainable outcomes: an acquisition by a strategic purchaser; an IPO; or a sale to a different P.E. agency. “We’re set up for any of them,” he mentioned.
