Shaking seats and piped-in fog: How 4DX is carving out a niche moviegoing market

Chris Hemsworth stars as the villainous Dementus in Warner Bros.’ “Furiosa: A Mad Max Saga.”

Warner Bros. Discovery

In George Miller’s new Mad Max film “Furiosa,” a red paint flare explodes and casts the theater screen in a saturated crimson cloud.

Feet away, among the rows of gyroscopic 4DX chairs, plumes of fog roll in, catching the red hue from the screen as if the flare somehow transcended the fourth wall and infiltrated the cinema. The fog parts, Chris Hemsworth as Dementus comes into focus and grins at the audience.

This is the 4DX viewing experience. It’s one of many multi-sensory moments programmed for “Furiosa: A Mad Max Saga,” which opened in theaters Friday, in order to immerse audiences in Miller’s latest visit to the vast Wasteland. And it amounts to a key value proposition at a time when cinemas are desperate to lure back moviegoers, particularly those in the younger demographics.

“We make movies different,” said Duncan Macdonald, head of worldwide marketing and theatre development for CJ 4DPlex Americas. “We are so different out there, with our motion capabilities and our environmental effects.”

In the wake of the pandemic, audiences grew used to shorter theatrical windows and having access to more content at home. At the same time, pandemic-related shutdowns and production stalls from two Hollywood strikes greatly limited the amount of content hitting theaters. As a result, consumers fell out of the habit of going to cinemas.

Moviegoers who have returned are seeking premium experiences — higher-quality picture and sound — and are willing to pay more for those tickets. 4DX is one option in the premium large format market alongside the likes of IMAX and Dolby Cinema. CJ 4DPlex also owns the ScreenX format.

“Premium movie theatre experiences are key to the health of the industry and with fewer films in the marketplace on average than in past years, the importance and essential nature of a company like 4DX comes into sharp focus,” said Paul Dergarabedian, senior media analyst at Comscore.

4DX utilizes motion seats, practical effects and sensory elements to immerse viewers in a movie. For Warner Bros.’ “Wonka,” the company piped in the smell of chocolate during screenings.

CJ 4DPlex Americas CEO Don Savant says the experience is “complementary” to routine moviegoing experiences, noting that 4DX cinemas attract younger consumers, predominantly in the 10-to-30 age range, who are seeking more experiential viewing.

4DX is a 4D film presentation system developed by CJ 4DPlex, a subsidiary of South Korean cinema chain CJ CGV. It allows films to be augmented with various practical effects, including motion-seats, wind, strobe lights, simulated-snow, and scents.

CJ 4DPlex

For consumers, the 4DX experience costs an average of $8 more than traditional ticket prices, meaning a ticket can range from $20 to $30 each. But the extra cost doesn’t seem to be detering audiences.

Last year, 4DX’s domestic locations tallied $53.4 million in ticket sales.

“Notably, the higher price for premium movie tickets is not a barrier to their success but rather seen as representing a solid value proposition for fans in pursuit of the best possible big screen experience,” Dergarabedian said. “This is good news for theater owners who, facing fewer wide release films in the marketplace, can boost revenues on a per-ticket basis while giving their patrons a great experience that will have them returning to the multiplex more often.” 

And, for major blockbuster titles, 4DX is proving to be even more popular. Ticket sales for Disney’s “Avatar: The Way of Water” topped $83.6 million from 4DX screens, or about 3.6% of the film’s total box office haul. It is currently the highest-grossing film for the screen format, Savant said.

“We want to give customers an easy excuse to leave their homes and visit a local Regal theater,” said CEO Eduardo Acuna of Regal Cinemas. “Premium formats like 4DX offer a movie-watching experience that cannot be replicated by any home theater setup. Each premium format serves a different purpose for storytelling, and each increases the enjoyment of watching a movie in a different and immersive way.”

Acuna noted that 4DX auditoriums are “a strong box office performer” for Regal.

Regal is the largest operator of 4DX screens domestically, with 50 of the 62 locations found in the U.S. and Canada. Globally, there are nearly 750 4DX screens with numerous theatrical partners. The highest volume is in Asia and Europe.

Savant said 4DX is adding around 25 to 30 screens per year worldwide, but is looking to push that figure up to 50 to 60 screens a year. The company is seeking to have around 1,200 4DX locations in the next five years. On average, each theater has around 140 seats.

Moviegoers who venture away from their couches and into a 4DX theater to see Warner Bros.’ “Furiosa” will feel from their seat the rev of motorcycles racing through the desert, smell gunpowder in the air during epic gun battles and even get hit with a soft spray of water as it’s flicked in the face of a character on the screen.

Last year, 4DX programmed more than 100 films for the souped-up viewing experience. Around 40 to 45 of those were major Hollywood titles, Savant said. Others included concert content, musical singalongs, anniversary titles and local language films.

Typically, the 4DX programmers, who are based in Seoul, have two to three weeks to craft the motion and special effects, although Savant said they can turn around a film in a week if the need arises. 4DX can program three titles at a time.

Both Macdonald and Savant referred to 4DX’s programmers as “artists,” describing the process — from the subwoofers in the seats to the fog machines — as different brushstrokes in a work of art.

“Every film is different,” said Macdonald. “So we look at the nuances of the different films that we have and how those are programmed.”

In some cases filmmakers will get involved, offering suggestions for when certain effects should be used and how subtle or bombastic they should feel or look.

“It’s the most dynamic way to see [a film],” Savant said.

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Universal banks on ‘Migration’ to expand its animation lead over Disney

Universal and Illuminations latest animated film centers on a family of ducks who decides to leave the safety of a New England pond for an adventurous trip to Jamaica. However, their well-laid plans quickly go awry when they get lost and wind up in New York City.

Universal

Disney dropped the animation crown. Universal has picked it up.

And, with “Migration” opening Friday, the studio is looking to strengthen its grip.

“Migration,” a comic tale about a family of New England ducks that leave their pond for Jamaica, but end up in New York City, is expected to tally $25 million during its domestic debut. Universal has more conservative expectations, forecasting between $10 million and $15 million in ticket sales for the film’s opening.

While that pales in comparison to the $100 million-plus debuts of Illumination/Universal’s “The Super Mario Bros. Movie” and the latest “Minions” film, it’s comparable to the studio and DreamWorks Animation’s “Puss in Boots: The Last Wish,” which ran in theaters for several months, securing nearly $500 million globally.

“‘Migration,’ with solid word-of-mouth and strong reviews, will have to be judged more on its long-term results than the opening weekend splash,” said Paul Dergarabedian, senior media analyst at Comscore.

Disney’s most recent animated film “Wish” failed to connect with audiences. After generating $31.6 million domestically over the five-day Thanksgiving holiday, the film has grossed a total of $55.2 million in the U.S. and Canada. Globally, the film has reached $127.1 million. The film had a budget of $200 million, not including marketing costs.

For comparison, “Trolls Band Together,” which was released the week before Thanksgiving, secured $30 million for its three-day debut and nearly $180 million worldwide. The film had a budget of $95 million, not including marketing costs.

Representatives from Disney did not immediately respond to CNBC’s request for comment.

How Disney lost the crown

Ariana DeBose stars as Asha in Disney’s new animated film “Wish.”

Disney

Disney established its animated feature empire in the early 20th century with 1937’s “Snow White and the Seven Dwarfs” and continued to dominate, more or less, into the 1980s and 1990s with “The Little Mermaid” and “Beauty and the Beast.”

Later, it acquired Pixar, which together with Walt Disney Animation, generated billions in box-office receipts for the company.

“The world of feature animation has been dominated for decades by Disney and for good reason,” said Dergarabedian. “They set the gold standard.”

Then came the Covid pandemic. While theaters closed, Disney sought to pad its fledgling streaming service Disney+ with content, stretching its creative teams thin, and sending theatrical movies during the pandemic straight to digital.

The decision trained parents to seek out new Disney titles on streaming, not theaters, even when Disney opted to return its films to the big screen. Compounding Disney’s woes was a general sense from audiences that the company’s content had grown overly existential and too concerned with social issues beyond the reach of children.

As a result, no Disney animated feature from Pixar or Walt Disney Animation has generated more than $480 million at the global box office since 2019.

“I think what’s changed is that Disney doesn’t get the benefit of the doubt,” said Josh Brown, CEO at Ritholtz Wealth Management and a CNBC contributor. “And people will not go to a movie just because it’s the latest Disney movie in the way that previous generations did.”

Universal appeal

But as moviegoers have returned to cinemas in the wake of the pandemic, more are gravitating toward Universal’s fare.

“Simply put, Illumination Animation’s only agenda is entertainment,” said Jeff Bock, senior box-office analyst at Exhibitor Relations. “Their animated films are sweet and simple and family audiences appreciate that. Disney sometimes attempts to pack too much into their animated features, and lately have been losing sight of the simplicity of the genre.”

Not to mention, Universal has been revisiting tried and true fan-favorite stories and characters. In fact, Illumination hasn’t released a nonfranchise film since 2016, and only three of the last 10 DreamWorks features have been original stories.

For comparison, of the last eight films released by a Disney animation studio, seven have been original films with just 2022’s “Lightyear,” a “Toy Story” spinoff, tied to an existing franchise. Previously, Disney has thrived bringing new animated material to audiences, but in the post-pandemic world, it has struggled.

It is the exact opposite strategy of Disney’s live-action theatrical releases, which have relied heavily on established franchises. Think “Indiana Jones and the Dial of Destiny,” “The Little Mermaid,” Marvel franchise films and “Haunted Mansion.”

Iger has said that Disney will continue to make sequels, without apology, but admitted that the company needs to be more selective in which franchises it revisits.

“I think there has to be a reason to make them, you have to have a good story,” Iger said during The New York Times’ DealBook Summit in late November.

“Minions: The Rise of Gru” is the sequel to the 2015 film, “Minions,” and spin-off/prequel to the main “Despicable Me” film series.

Universal

In animation, returning to popular characters and worlds is an easy way to capture the attention of parents and kids.

“Because they have seen these characters and related stories before, they have high confidence that they will be high quality, entertaining and ‘brand safe’ for their kids,” said Peter Csathy, founder and chair of advisory firm Creative Media. “And they may even anticipate franchise animated films as much as their kids.”

In developing consistent franchise content like Minions and Trolls, Universal is now able to introduce a new film like “Migration” with a sense of clout. Parents who see that the film is from the same studio that brought other fan favorites to the big screen are then more likely to come out to see it.

It’s what Pixar was able to do so well for nearly three decades.

“With ‘Minions,’ ‘Secret Life of Pets’ and ‘Sing,’ I think Illumination is a brand people are aware of by now,” said Bock. “And that awareness will boost ‘Migration’s’ flight pattern, likely extending its box-office run. That’s key. The long play.”

So far, “Migration” has generally favorable reviews from critics. If audiences respond well, and spread the word, the film could see a solid run, adding to the prestige of Universal’s animation brand.

“The kids animation market opportunity will never grow old, so those playing at the top of the game – as is Illumination – hold the promise and possibility of becoming the next go-to brand for quality animation after Pixar,” said Csathy.

Next year, Disney and Pixar are set to release “Inside Out 2” in June, while Universal and Illumination’s “Despicable Me 4” is scheduled to hit theaters weeks later in July.

Disclosure: NBCUniversal is the parent company of Universal Pictures and CNBC.

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Activist investor ValueAct has been building a stake in Disney

Disney CEO Bob Iger speaking with CNBC’s David Faber at the Allen&Co. Annual Conference in Sun Valley, Idaho.

David A. Grogan | CNBC

ValueAct Capital has taken a significant stake in Disney (DIS) and has been in dialogue with Disney’s management, the Activist Spotlight has learned. This is a new stake not previously disclosed in filings or media reports.

Here’s a breakdown of the situation:

Company: Walt Disney Co.

Business: Disney is one of the most iconic entertainment companies globally. It operates through two segments, Disney Media and Entertainment Distribution; and Disney Parks, Experiences and Products. Disney engages in film and TV content production and distribution activities, as well as operates television broadcast networks and studios.

Stock Market Value: $167 Billion ($91.07 a share)

Activist: ValueAct Capital

Percentage Ownership: n/a

Average Cost: low $80s per share

Activist Commentary: ValueAct has been a premier corporate governance investor for over 20 years. ValueAct principals are generally on the boards of half of ValueAct’s core portfolio positions and have had 56 public company board seats over 23 years. ValueAct has filed 89 13D’s in their history and has had an average return of 57.57% versus 17.52% for the S&P 500 over the same period.

Behind the scenes:

ValueAct knows technology very well as seen by their active investments at Salesforce, Microsoft, and Adobe where they had board seats. They also know media well as active investors at the New York Times, Spotify and 21st Century Fox.

ValueAct began buying Disney this summer during the WGA and SAG strikes and it is one of the firm’s largest positions. The activist investor has been in dialogue with Disney’s management and are still growing their position today.

ValueAct believes that Disney’s theme parks and consumer products businesses and their $10 billion in EBIT (earnings before interest and taxes) are alone worth low $80s per share, ValueAct’s approximate cost basis in the stock.

The theme parks unit has a high return on capital, allowing Disney to further monetize its intellectual property. Amongst its peers like Warner Bros, Paramount and Netflix, Disney is the only one who has this advantage. Moreover, this is a business that is not threatened by technology, but enhanced by it.

For example, Disney’s Genie app, which allows park visitors to be guided through the parks in a way that minimizes their wait time, greatly enhances the visitor experience. Moreover, Disney has recently announced that it will be investing $60 billion into theme parks, which will be money well spent.

Stock Chart IconStock chart icon

Disney YTD

This theme park valuation implies an almost zero valuation for the rest of Disney’s business that includes ESPN, theatrical movie releases, Disney+, Hulu and its television networks. Like digital news and music, video streaming was greatly disrupted by the internet and the low cost of capital from 2016 to 2021 afforded streaming companies, almost unlimited capital to acquire customers at any cost. Then with rising interest rates and inflation, that bubble burst in 2022 and there was a massive re-rating of assets globally.

Many of the high-growth companies that had easy access to capital now find themselves the most capital constrained they had been in a long time. This gives a huge advantage to companies like Disney, which has a market leading brand and an incumbent business model with strong customer relations.

Now, these streaming wars are in the process of resolving and companies are focused more on profitability than acquiring customers at any cost. This means cutting costs and creating growing and sustainable revenue.

ValueAct has experience in both of these areas. At Salesforce, where ValueAct CIO Mason Morfit is on the board, margins have gone from 18% to 32% while the stock has gone from $130 to $220 in 10 months. Disney has already announced an aggressive cost cutting plan, but it is the revenue opportunity that is more interesting here.

At portfolio companies like Adobe, Microsoft, Salesforce, Spotify and the New York Times, ValueAct has advocated for and assisted in creating bundles, pricing tiers and advertising stacks that have led to less churn, more pricing power, higher average revenue per user and even better advertising technology.

Both the New York Times and Spotify increased their bundles (NYT with Wordle, the Athletic, etc.; Spotify with podcasting and audiobooks) and both increased subscription pricing. The New York Times’ stock went from $30 per share to $45 per share and Spotify went from approximately $80 per share to $175 per share. Disney has numerous opportunities for bundling, price tiers, etc. and there are many ways this can work out through its present assets, M&A, alliances and licensing, but intelligently bundling its products will lead to more stable and valuable revenue. Based on similar situations that ValueAct has been involved in, this could lead to up to $15 billion of EBIT for the media assets and a Disney stock price as high as $190 per share.

ValueAct has a history of creating value through board seats, including at Salesforce and Microsoft, but has also added value as active shareholders in situations like Spotify and the New York Times.

I would expect that they would want a board seat here and as someone who has a reputation of working amicably and constructively with boards, the Disney board should welcome them with open arms. Aside from their extensive experience at technology companies and media companies and their innovative and relevant history of growing sustainable revenue at similar companies, there is one other reason shareholders should welcome them to the board.

Bob Iger returned to Disney in 2022 with an initial two-year contract with the explicit goal of righting the ship. The board formed a succession planning committee at that time. Iger subsequently extended his employment agreement through 2026 but longer-term succession remains one of the board’s most important priorities. Having a shareholder representative on the board is very helpful in that area particularly one like ValueAct, whose CIO participated in one of the most audacious and successful CEO successions ever when Satya Nadella replaced Steve Ballmer as CEO of Microsoft. Someone with that experience and perspective would be invaluable in navigating CEO succession at Disney.

Finally, we cannot ignore the fact that Disney is presently the target of a proxy fight by Nelson Peltz and Trian Partners that is turning somewhat confrontational. This certainly gives the Disney board an alternative they were not expecting.

Ken Squire is the founder and president of 13D Monitor, an institutional research service on shareholder activism, and the founder and portfolio manager of the 13D Activist Fund, a mutual fund that invests in a portfolio of activist 13D investments.

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Paramount’s Shari Redstone is open for business, but business may not be open for her

Shari Redstone, president of National Amusements and controlling shareholder of Paramount Global, walks to a morning session at the Allen & Company Sun Valley Conference in Sun Valley, Idaho, July 12, 2023.

David A. Grogan | CNBC

Shari Redstone may have missed her window.

Paramount Global‘s controlling shareholder is open to a merger or selling the company at the right price, according to people familiar with her thinking. And she has been open to it for several years, said the people, who asked not to speak publicly because the discussions have been private.

Spokespeople for Redstone and Paramount Global declined to comment.

The problem has been finding the right deal for shareholders. Market conditions have made a transformative transaction difficult at best and highly unlikely at worst.

“The market is crying out for reshaping media company portfolios and consolidation,” said Jon Miller, chief executive at Integrated Media and a senior advisor at venture firm Advancit Capital, which Redstone co-founded. “But the deck is stacked against large-scale transactions now because of both immediate concerns in terms of ad sales, subscription video numbers and the cost of debt. No one wants to transact at the current market valuations that these companies are given.”

Paramount Global is an archetype for the media industry’s consolidation conundrum. The company consists of Paramount Pictures, the CBS broadcast network, 28 owned-and-operated local CBS stations, the streaming service Paramount+, free advertising-supported Pluto TV, “Star Trek,” “SpongeBob SquarePants,” MTV, Nickelodeon, Comedy Central, BET and Showtime. It also owns the physical Paramount studio lot in Los Angeles, California.

From a sum-of-the-parts perspective, the company holds a strong hand. Many of Paramount Global’s assets would fit nicely within larger media companies.

“Paramount has a tremendous amount of assets in its content library and they own some pretty powerful sports rights in the form of the NFL contract, Champions League soccer and March Madness,” Guggenheim analyst Michael Morris told CNBC last week.

“But, they are still losing money on their streaming service,” Morris said. “They need to pull these things together, right-size the content, super charge that topline through pricing and penetration, and then we can see investors get excited about this idea again.”

Declining revenue from the acceleration of pay-TV cord-cutting, continued streaming losses and rising interest rates have put Redstone in a bind. The company’s market capitalization has slumped to $7.7 billion, nearly the company’s lowest valuation since Redstone merged CBS and Viacom in 2019. At the time, that transaction gave the combined company a market valuation of about $30 billion.

It’s unclear whether staying the course will help turn investor sentiment. Warren Buffett, CEO of Berkshire Hathaway, one of Paramount Global’s biggest shareholders, told CNBC in April that streaming “is not really a very good business.” He also noted that shareholders in entertainment companies “really haven’t done that great over time.”

Paramount Global’s direct-to-consumer businesses lost $424 million in the second quarter and $511 million in the first quarter. The company reports third-quarter earnings Nov. 2.

CEO Bob Bakish said 2023 will be the peak loss year for streaming. Paramount Global cut its dividend to 5 cents per share from 24 cents per share to “further enhance our ability to deliver long-term value for our shareholders as we move toward streaming profitability,” Bakish said in May.

Wells Fargo analyst Steven Cahall suggested earlier this year that Bakish should shut down the company’s streaming business entirely, despite the fact that Paramount+ has accumulated more than 60 million subscribers.

“We believe Paramount Global is worth a lot more either as a content arms dealer or as a break-up for sale story,” Cahall wrote in a note to clients in May. “Great content, misguided strategy.”

Big Tech lifeline

Bob Bakish, CEO of Paramount, speaks with CNBC’s David Faber on Sept. 6, 2023.

CNBC

Executives at Paramount Global continue to hold out hope that a large technology company, such as Apple, Amazon or Alphabet, will view the collection of assets as a way to bolster their content aspirations, according to people familiar with the matter.

Paramount+’s 61 million subscribers could help supersize an existing streaming service such as Apple TV+ or Amazon’s Prime Video, or give Alphabet’s YouTube a bigger foothold into subscription streaming beyond the National Football League’s Sunday Ticket and YouTube TV.

While Federal Trade Commission Chairman Lina Khan has been particularly focused on limiting the power of Big Tech companies, Apple, Amazon and Alphabet may actually be better buyers than legacy media companies from a regulatory standpoint. They don’t own a broadcast TV network, unlike Comcast (NBC), Fox or Disney (ABC). It’s highly unlikely U.S. regulators would allow one company to own two broadcast networks. Divesting CBS is possible, but it’s so intertwined with Paramount+ that separating the network from the streaming service would be messy.

“We believe Paramount Global is too small to win the streaming wars, but it is bite-size enough to be acquired by a larger streaming competitor for its deep library of film and TV content, as well as its sports rights and news assets,” Laura Martin, an analyst at Needham & Co., wrote in an Oct. 9 research note to clients.

Acquiring Paramount Global would be a relative drop in the bucket for a Big Tech company. Paramount Global’s market value was below $8 billion as of Friday. It also has about $16 billion in long-term debt.

Still, even with huge balance sheets and trillion-dollar valuations, there’s no evidence technology companies want to own declining legacy media assets such as cable and broadcast networks. Netflix has built its business specifically on the premise that these assets will ultimately die. Paramount’s lot and studio may be appealing for content creation and library programming, but that would leave Redstone holding a less desirable basket of legacy media assets.

Breakup difficulties

It’s possible Redstone could break up the company and sell off legacy media assets to a private equity firm that could milk them for cash. But Paramount Global’s diminished market valuation, relative to its debt, likely makes a leveraged buyout less appealing for a potential private equity firm.

Moreover, rising interest rates have generally slowed down take-private deals in all industries, as the cost of paying debt interest has soared. Globally, buyout fund deal volume in the first half of 2023 is down 58% from the same period a year ago, according to a Bain & Co. study.

If a full sale to Big Tech and a partial sale to private equity won’t happen, another option for Redstone is to merge or sell to another legacy media company. Warner Bros. Discovery could merge with Paramount Global, though putting together Warner Bros. and Paramount Pictures may hold up deal approval with U.S. regulators.

Beyond regulatory issues, recent history suggests big media mergers haven’t worked well for shareholders. Tens of billions of dollars in shareholder value have been lost in recent media mergers, including WarnerMedia and Discovery, Disney and the majority of Fox, Comcast/NBCUniversal and Sky, Viacom and CBS, and Scripps and Discovery.

Merger partners such as Warner Bros. Discovery also may prefer to sell or merge with a different company, such as Comcast’s NBCUniversal, if regulators allow a big media combination.

Redstone has recently dabbled around the edges, shedding some assets, such as book publisher Simon & Schuster, and engaging in talks to sell a majority stake in cable network BET.

But Paramount Global shelved the idea of selling a stake in BET in August after deciding sale offers were too low to outweigh the value of keeping the network in its cable network portfolio. With the total company’s market valuation below $8 billion, it’s difficult to convince buyers to pay big prices for parts. A change in broader investment sentiment that pushes the company’s valuation higher may help Redstone and other Paramount Global executives get more comfortable with divesting assets.

Selling National Amusements

If Redstone can’t find a deal to her liking, she could also sell National Amusements, the holding company founded by her father, Sumner Redstone, that owns the bulk of the company’s voting shares. National Amusements owns 77.3% of Paramount Global’s Class A (voting) common stock and 5.2% of the Class B common stock, constituting about 10% of the overall equity of the company.

Redstone took a $125 million strategic investment from merchant bank BDT & MSD Partners earlier this year to pay down debt, reiterating her belief in Paramount Global’s inherent value.

“Paramount has the best assets in the media industry, with an incredible content library and IP spanning all genres and demographics, as well as the No. 1 broadcast network, the leading free ad-supported streaming television service and the fastest-growing pay streaming platform in the U.S.,” Redstone said in a statement in May. “NAI has conviction in Paramount’s strategy and execution, and we remain committed to supporting Paramount as it takes the necessary steps to build on its success and capitalize on the strategic opportunities in our industry.”

Selling National Amusements wouldn’t alter Paramount Global’s long-term future. But it is a way out for Redstone if she can’t find a deal beneficial to shareholders.

Paramount Global isn’t actively working with an investment bank on a sale, according to people familiar with the matter. The company is content to wait for a shift in market conditions or regulatory officials before getting more aggressive on a transformational deal, said the people.

Still, Redstone’s predicament aptly sums up legacy media’s current problems. The industry is counting on a turn in market sentiment, while executives privately grumble that in the near term there’s little they can do about it.

WATCH: Mad Money host Jim Cramer weighs in on Paramount Global

Lightning Round: Paramount Global might drop another two to three points lower, says Jim Cramer

Disclosure: Comcast’s NBCUniversal is the parent company of CNBC.

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Disney and Charter reach deal to end cable blackout in time for ‘Monday Night Football’

The blackout fight between cable giant Charter Communications and Disney is over.

Hours ahead of “Monday Night Football,” which airs on Disney’s ESPN, the companies reached a deal that would allow millions of Charter cable customers to watch the game.

The deal will see Disney’s ad-supported streaming apps Disney+ and ESPN+ included in packages for some of Charter’s Spectrum pay TV customers. Disney will receive an increase on the subscriber fees it receives from Charter.

Earlier on Monday CNBC’s David Faber reported a deal between the two companies was nearing and would include a discount on pricing for Disney streaming services for Charter customers.

The news release for the agreement said it includes:

  • The Disney+ basic ad-supported offering will be provided to customers who buy the Spectrum TV Select package.
  • ESPN+ will be provided to subscribers to Spectrum TV Select Plus subscribers.
  • The highly anticipated ESPN streaming service will be made available to Spectrum TV Select subscribers when it launches.

Charter’s and Disney’s stocks, as well as media peers including Warner Bros. Discovery and Paramount Global traded higher Monday afternoon.

Earlier this summer, Charter announced it would soon offer a sports-lite package to customers, primarily nixing regional sports networks and creating a cheaper option for consumers who don’t watch the networks.

Customers on the Spectrum TV Select Plus plan – which includes the regional sports networks – will receive ESPN+ subscriptions as part of their package.

The plans are set to roll out during the third quarter.

Meanwhile, Disney+’s ad-supported option will be provided to customers who select the Spectrum TV Select package. When ESPN launches its direct-to-consumer streaming option, these customers will also receive access to it. (The new ESPN app will be a streaming version of the cable channel, unlike the ESPN+ app, which doesn’t include all programming.)

The inclusion of Disney’s ad-supported streaming apps for Charter’s customers had appeared to be a sticking point in the negotiations that stalled and led to a blackout. While this deal doesn’t appear to give all Charter pay TV customers access to all of Disney’s apps – which also include Hulu – it is a step in that direction as cord cutting ramps up for pay TV distributors.

The dispute between Charter and Disney had been ongoing since late August when carriage renewal negotiations broke down between the two companies and left millions of customers without Disney TV channels, including ESPN, FX and Disney Channel.

At the time of the blackout, Charter had about 14.7 million customers across 41 states, with New York being one of its top TV markets. The dispute dragged on past the NFL season kickoff Thursday, but ended just in time for the “Monday Night Football” matchup between the New York Jets and Buffalo Bills.

As a result, Charter saw some of its Spectrum pay TV customers cut its bundle in favor of internet TV options like Disney’s Hulu + Live TV or Google‘s YouTube TV. In the days after the blackout — which occurred amid the U.S. Open tennis tournament and beginning of the college football season, both of which are featured on ESPN — Disney said Hulu + Live TV sign-ups were more than 60% higher than expected.

While sign ups for internet TV bundles like Hulu + Live TV and YouTube TV are often higher at this time of year due to the NFL and college football, there was a spike in signups recorded by data provider Antenna. While Hulu + Live TV was up more than 60%, YouTube TV – this season’s carrier of the NFL’s “Sunday Ticket” package of out-of-market games – was up about 115%.

The NFL is often the key source of leverage network owners like Disney have in negotiations. Media companies, including Disney, collectively paid more than $100 billion to air NFL games over an 11-year period.

Disney owns broadcaster ABC, which airs some “Monday Night Football” games. ESPN+ has an exclusive “Monday Night Football” game this season, too. Disney agreed to pay around $2.7 billion annually for these rights, CNBC previously reported.

Broadband vs. cable

Carriage disputes and blackouts are a common occurrence. But Charter billed the moment Disney’s networks went dark as a more pivotal moment, as the company proclaimed that the pay TV model was broken.

Satellite TV provider DirecTV and broadcast station owner Nexstar Media Group have been in a similar dispute since earlier in the summer. It has continued past the start of the NFL season. Broadcast networks including CBS and Fox air local NFL games on Sundays.

Hours after the blackout began, Charter executives held an investor call pushing for a revamped deal with Disney that would give Spectrum pay TV customers free access to Disney’s ad-supported streaming apps Disney+, ESPN+ and Hulu.

Disney's succession mess: The inside story of Iger and Chapek

This point in particular seemed to be the sticking point in negotiations.

Disney had responded that its streaming and TV networks weren’t equal due to the original content that premieres exclusively on live TV and its multibillion investments in exclusive streaming content.

The public tussle has highlighted the issues facing media companies. Cord cutting has been rampant and consumers are switching to streaming services at a fast clip. Media companies are using content from their pay TV channels for their streaming services, arguably accelerating the transition.

Yet, the fees generated from pay TV providers like Charter for carrying the live networks are still robust — even if they are decreasing with fewer customers in the bundle — and propping up media companies’ cash flow and profitability. Media companies like Disney are still working to make streaming a profitable business.

ESPN is considered to receive some of the highest fees, even before the Monday deal with Charter. The network receives $9.42 per subscriber a month, while other Disney networks like ESPN2, FX and Disney Channel get $1.21, 93 cents and $1.25, respectively, according to data from S&P Global Market Intelligence. A Disney representative hasn’t commented on the fees. The media giant has more than 20 networks.

While providing pay TV services has long been part of Charter, broadband has usurped it as the cornerstone of its profitability and business. Even as consumers cut the TV cord, they remain as broadband customers.

Charter CEO Chris Winfrey had said the company planned to push for similar terms in upcoming negotiations with other content companies.

In the days following the blackout, Winfrey spoke at an investor conference where he said those discussions with other media content companies were already beginning to take place.

He also reiterated the company’s position that the pay TV model was broken and at an inflection point.

Disclosure: Comcast, which owns CNBC parent NBCUniversal, is a co-owner of Hulu.



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Meta, Alphabet and 10 under-the-radar media stocks expected to soar

The media landscape is going through a difficult transition, and it isn’t only because streaming is such a tricky business.

Companies such as Walt Disney Co.
DIS,
Warner Bros. Discovery Inc.
WBD
and Paramount Global
PARA
have made heavy investments in streaming services as their traditional media businesses wither, only to find that it is harder than it looks to emulate Netflix Inc.’s
NFLX
ability to make money from streaming.

Some of the companies are also saddled by debt, in part resulting from mergers that don’t hold the same shine in the current media landscape.

Needless to say, this is the age of cost-cutting for Netflix’s streaming competitors and many others in the broader media landscape.

Below is a screen of U.S. media stocks, showing the ones that analysts favor the most over the next 12 months. But before that, we list the ones with the highest and lowest debt levels.

All the above-mentioned media companies are in the communications sector of the S&P 500
,
which also includes Alphabet Inc.
GOOGL

GOOG
and Meta Platforms Inc.
META,
as well as broadcasters, videogame developers and news providers.

But there are only 20 companies in the S&P 500 communications sector, which is tracked by the Communications Services Select Sector SPDR ETF
.

High debt

Before looking at the stock screen, you might be interested to see which of the 53 media companies are saddled with the highest levels of total debt relative to consensus estimates for earnings before interest and taxes (EBIT) for the next 12 months, among analysts polled by FactSet. This may be especially important at a time when long-term interest rates have been rising quickly. Dollar amounts are in millions.

Company

Ticker

Debt/ est. EBIT

Total debt

Est. EBIT

Debt service ratio

Total return – 2023

Market cap. ($mil)

Dish Network Corp. Class A

DISH 1,245%

$24,556

$1,973

15%

-57%

$1,773

Madison Square Garden Sports Corp. Class A

MSGS 1,125%

$1,121

$100

-14%

-4%

$3,400

Paramount Global Class B

PARA 656%

$17,401

$2,654

-29%

-13%

$9,529

Consolidated Communications Holdings Inc.

CNSL 651%

$2,152

$331

-26%

6%

$441

TechTarget Inc.

TTGT 629%

$479

$76

16%

-36%

$788

Cinemark Holdings Inc.

CNK 616%

$3,630

$589

61%

81%

$1,908

Cogent Communications Holdings Inc.

CCOI 548%

$1,858

$339

-19%

27%

$3,388

E.W. Scripps Co. Class A

SSP 529%

$3,084

$583

80%

-42%

$552

AMC Networks Inc. Class A

AMCX 492%

$2,945

$599

26%

-29%

$357

Live Nation Entertainment Inc.

LYV 466%

$8,413

$1,805

135%

22%

$19,515

Source: FactSet

Click on the tickers for more about each company, including business profiles, financials and estimates.

Click here for Tomi Kilgore’s detailed guide to the wealth of information available for free on the MarketWatch quote page.

The debt figures are as of the end of the companies’ most recently reported fiscal quarters. The debt service ratios are EBIT divided by total interest paid (excluding capitalized interest) for the most recently reported quarters, as calculated by FactSet. It is best to see this number above 100%. Then again, these service ratios cover only one quarter.

Looking at the most indebted company by quarter-end debt to its 12-month EBIT estimate, it would take more than 10 years of Dish Network Corp.’s
DISH
operating income to pay off its total debt, excluding interest.

Shares of Dish have lost more than half their value during 2023, and the stock got booted from the S&P 500 earlier this year. The company has seen its satellite-TV business erode while it pursues a costly wireless build-out that won’t necessarily drive success in that competitive market. Dish plans to merge with satellite-communications company EchoStar Corp.
SATS
in a move seen as an attempt to improve balance sheet flexibility.

It is fascinating to see that for six of these companies, including Paramount, debt even exceeds the market capitalizations for their stocks. Paramount lowered its dividend by nearly 80% earlier this year as it continued its push toward streaming profitability, and Chief Executive Bob Bakish recently called the company’s planned sale of Simon & Schuster “an important step in our delevering plan.”

You are probably curious about debt levels for the largest U.S. media companies. Here they are for the biggest 10 by market cap:

Company

Ticker

Debt/ est. EBIT

Total debt

Est. EBIT

Debt service ratio

Total return – 2023

Market cap. ($mil)

Alphabet Inc. Class A

GOOGL 22%

$29,432

$133,096

711%

47%

$1,528,711

Meta Platforms Inc. Class A

META 47%

$36,965

$78,129

717%

137%

$634,547

Comcast Corp. Class A

CMCSA 266%

$102,669

$38,539

77%

33%

$187,140

Netflix Inc.

NFLX 197%

$16,994

$8,641

192%

41%

$184,362

T-Mobile US Inc.

TMUS 378%

$116,548

$30,838

32%

-5%

$156,881

Walt Disney Co.

DIS 263%

$47,189

$17,975

88%

-4%

$152,324

Verizon Communications Inc.

VZ 370%

$177,654

$48,031

36%

-11%

$140,205

AT&T Inc.

T 378%

$165,106

$43,681

31%

-20%

$100,872

Activision Blizzard Inc.

ATVI 93%

$3,612

$3,891

2159%

21%

$72,118

Charter Communications Inc. Class A

CHTR 434%

$98,263

$22,651

89%

23%

$62,380

Source: FactSet

Among the largest 10 companies in the S&P Composite 1500 communications sector by market cap, Charter Communications Inc.
CHTR
has the highest ratio of debt to estimated EBIT, while its debt service ratio of 89% shows it was close to covering its interest payments with operating income during its most recent reported quarter. Disney also came close, with a debt service ratio of 88%.

Charter Chief Financial Officer Jessica Fischer said at an investor day late last year that “delevering would only make sense if the market valuation of our shares fully reflected the intrinsic value of the cash-flow opportunity, if debt capacity in the market were limited or if our expectations of cash-flow growth, excluding the impact of our expansion were significantly impaired.”

Meanwhile, Kevin Lansberry, Disney’s interim CFO, said during the company’s latest earnings call that it had “made significant progress deleveraging coming out of the pandemic” and that it would “approach capital allocation in a disciplined and balanced manner.”

Disney’s debt increased when it bought 21st Century Fox assets in 2019, and the company suspended its dividend in 2020 in a bid to preserve cash during the pandemic.

When Disney announced its quarterly results on Aug. 9, it unveiled a plan to raise streaming prices in October. Several analysts reacted positively to the price increase and other operational moves.

Read: The long-simmering rumor of Apple buying Disney is resurfacing as Bob Iger looks to sell assets

The largest companies in the sector, Alphabet and Meta, have relatively low debt-to-estimated EBIT and very high debt-service ratios. Netflix has debt of nearly twice the estimated EBIT, but a high debt-service ratio. For all three companies, debt levels are low relative to market cap.

Low debt

Among the 52 companies in the S&P Composite 1500 communications sector, these 10 companies had the lowest total debt, relative to estimated EBIT, as of their most recent reported fiscal quarter-ends:

Company

Ticker

Debt/ est. EBIT

Total debt

Est. EBIT

Debt service ratio

Total return – 2023

Market cap. ($mil)

New York Times Co. Class A

NYT 0%

$0

$414

N/A

32%

$6,968

QuinStreet Inc.

QNST 18%

$5

$26

-153%

-35%

$513

Alphabet Inc. Class A

GOOGL 22%

$29,432

$133,096

711%

47%

$1,528,711

Shutterstock Inc.

SSTK 26%

$63

$241

39%

-20%

$1,502

Yelp Inc.

YELP 31%

$106

$344

78%

55%

$2,909

Meta Platforms Inc. Class A

META 47%

$36,965

$78,129

717%

137%

$634,547

Scholastic Corp.

SCHL 54%

$108

$201

319%

12%

$1,314

Electronic Arts Inc.

EA 73%

$1,951

$2,678

605%

-2%

$32,425

World Wrestling Entertainment Inc. Class A

WWE 93%

$415

$448

479%

66%

$9,455

Activision Blizzard Inc.

ATVI 93%

$3,612

$3,891

2159%

21%

$72,118

Source: FactSet

New York Times Co.
NYT
takes the prize, with no debt.

Wall Street’s favorite media companies

Starting again with the 52 companies in the sector, 46 are covered by at least five analysts polled by FactSet. Among these companies, 12 are rated “buy” or the equivalent by at least 70% of the analysts:

Company

Ticker

Share “buy” ratings

Aug. 25 price

Consensus price target

Implied 12-month upside potential

Thryv Holdings Inc.

THRY 100%

$21.11

$35.50

68%

T-Mobile US Inc.

TMUS 90%

$133.35

$174.96

31%

Nexstar Media Group Inc.

NXST 90%

$157.08

$212.56

35%

Meta Platforms Inc. Class A

META 88%

$285.50

$375.27

31%

Cars.com Inc.

CARS 86%

$18.85

$23.79

26%

Alphabet Inc. Class A

GOOGL 82%

$129.88

$150.04

16%

Iridium Communications Inc.

IRDM 80%

$47.80

$66.00

38%

News Corp. Class A

NWSA 78%

$20.74

$26.42

27%

Take-Two Interactive Software Inc.

TTWO 74%

$141.42

$155.96

10%

Live Nation Entertainment Inc.

LYV 74%

$84.79

$109.94

30%

Frontier Communications Parent Inc.

FYBR 73%

$15.24

$31.36

106%

Match Group Inc.

MTCH 70%

$43.79

$56.90

30%

Source: FactSet

News Corp.
NWSA
is the parent company of MarketWatch.

Finally, here are the debt figures for these 12 media companies favored by the analysts:

Company

Ticker

Debt/ est. EBIT

Total debt

Est. EBIT

Debt service ratio

Total return – 2023

Market cap. ($mil)

Thryv Holdings Inc.

THRY 227%

$433

$191

53%

11%

$730

T-Mobile US Inc.

TMUS 378%

$116,548

$30,838

32%

-5%

$156,881

Nexstar Media Group Inc.

NXST 358%

$7,183

$2,009

63%

-8%

$5,511

Meta Platforms Inc. Class A

META 47%

$36,965

$78,129

717%

137%

$634,547

Cars.com Inc.

CARS 223%

$451

$202

41%

37%

$1,253

Alphabet Inc. Class A

GOOGL 22%

$29,432

$133,096

711%

47%

$1,528,711

Iridium Communications Inc.

IRDM 306%

$1,481

$483

54%

-7%

$5,977

News Corp. Class A

NWSA 261%

$4,207

$1,611

109%

15%

$11,940

Take-Two Interactive Software Inc.

TTWO 272%

$3,492

$1,283

-40%

36%

$24,017

Live Nation Entertainment Inc.

LYV 466%

$8,413

$1,805

135%

22%

$19,515

Frontier Communications Parent Inc.

FYBR 453%

$9,844

$2,173

85%

-40%

$3,745

Match Group Inc.

MTCH 287%

$3,839

$1,337

540%

6%

$12,177

Source: FactSet

In case you are wondering about how the analysts feel about debt-free New York Times, it appears the analysts believe the shares are fairly priced at $42.60. Among eight analysts polled by FactSet, three rated NYT a buy, while the rest had neutral ratings. The consensus price target was $43.93. The stock trades at a forward price-to-earnings ratio of 27.7, which is high when compared with the forward P/E of 21.7 for the S&P 500
.

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The Investing Club’s top things to watch in the stock market Friday

The Club’s top things to watch Friday, August 25

1. Stocks edge up in premarket trading Friday after coming under pressure Thursday. The market is looking to Federal Reserve Chair Jerome Powell’s speech in Jackson Hole, Wyoming, at 10:05 a.m. ET. Investors expect Powell to argue interest rates will need to stay higher for longer in order to stamp out sticky inflation.

2. The Chinese government on Friday moves to ease its mortgage policies in order to boost China’s struggling property market, but it isn’t enough to generate a rally in Asian markets. The Shanghai Composite Index lost 0.6%, while Hong Kong’s Hang Seng Index fell 1.4%.

3. Chipmaker Marvell Technology (MRVL) delivers a quarter and guidance in line with Wall Street’s expectations, as strength in artificial-intelligence applications is offset by continued weakness in some of its legacy businesses like storage. The stock fell more than 3% in premarket trading Friday. The company increases its outlook for AI, with the expectation to exit the year at a $200 million quarterly run rate, or $800 million annualized. That may not be enough upside for today given the tepid reaction to Club name Nvidia‘s (NVDA) huge upside guide Wednesday, but still a good long-term story.

4. Elsewhere in the the world of AI, Baird says next week’s Google Cloud Next conference could show how Club holding Alphabet (GOOGL) is leveraging AI capabilities. Meanwhile, Oppenheimer reiterates its thesis that Club name Microsoft (MSFT) will be the “operating system for AI.”

5. Retailer Nordstrom (JWN) beats on earnings but reiterates a cautious full-year outlook. The company also notes losses from theft are at a historical high. Shares fell over 4% in extended trading Thursday. More broadly, retail earnings this season have showed that American consumers are spending with value top of mind.

6. Loop Capital on Friday upgrades Netflix (NFLX) to buy, from hold, while raising its price target to $500 a share, up from $425. The firm cites improving fundamentals, while noting the shares have corrected 15% from Netflix stock’s recent gains. Upgrading at this juncture is the right way to look at a sell-off in a high-quality company.

7. More ESPN partnerships on the way? Club holding Amazon (AMZN) is reportedly in talks with fellow Club name Walt Disney (DIS) about developing an ESPN streaming service, according to The Information. Disney currently owns 80% of the sports network.

8. Realty Income Corp (O) on Friday announces a $950 million investment in the real-estate assets of The Bellagio Las Vegas, acquiring a 21.9% indirect interest from Blackstone Real Estate Income Trust (BREIT) that values the property at $5.1 billion.

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Jim Cramer’s top 10 things to watch in the stock market Tuesday

My top 10 things to watch Tuesday, April 11

1. Truist Bank downgraded natural gas producer EQT Corporation (EQT) to hold from buy, while lowering its price target to $28 per share, from $41, on “potentially lower volumes.” Meanwhile, the bank raised its price target on Club holding Coterra Energy (CTRA) to $29 per share, from $26, on the expectation the oil-and-gas producer will “significantly outperform” the broader market in the second half of the year and in 2024. Truist maintained a hold rating on Coterra.

2. Barclays cut its price target on Club holding Constellation Brands (STZ) to $277 per share, from $279, while maintaining an overweight rating. The move is somewhat meaningless given how far the target is from where the stock is, with shares of STZ closing at $224.60 apiece on Monday. The bank also lowered its price target on Lincoln National (LNC) to $20 per-share, from $29, while maintaining an equal weight rating.

3. JPMorgan is positive on Netflix (NFLX) going into its first-quarter earnings, but sees a risk to the second quarter due to its new paid-sharing policy. The bank maintained a price target of $390 per share, along with an overweight rating.

4. Wells Fargo upgraded natural gas exploration-and-production group Range Resources (RRC) to overweight from equal weight, while raising its price target to $31 per share, from $30. The bank expects RRC to “relatively outperform” other gas players in a weak gas price environment. Meanwhile, the bank downgraded Southwestern Energy (SWN) to underweight, or sell, from equal weight, while lowering its price target to $5 per share, from $6 — largely a result of limited capital returns and weak cash flow generation.

5. Guggenheim lowered its price target on Club holding Walt Disney (DIS) to $130 a share, from $140, on the back of moderating growth at its parks and resorts — a target that is very far off. Shares of Disney closed at $100.81 apiece on Monday.

6. Citi reiterated neutral ratings on chipmakers Intel (INTC) and Club holding Advanced Micro Devices (AMD), a result of ongoing weak cloud demand. Still, computer notebook shipments were up 41% in March, month-over-month, 18% above Citi’s estimate.

7. KeyBanc raised its price target on Club holding Nvidia (NVDA) to $320 per share, from $280, citing strengthening demand for artificial intelligence (AI).The semiconductor firm’s graphics processing units (GPUs) have proven central to the proliferation of AI, which reached a tipping point late last year with the launch of OpenAI’s viral chatbot, ChatGPT.

8. Morgan Stanley raised its price target on Club holding Humana (HUM) to $637 per share, from $620, saying the health insurer has “the strongest earnings growth story in managed care through 2025.” The bank maintained an overweight, or buy, rating on the stock. But Morgan Stanley chose UnitedHealth (UNH) as its top pick in the sector, replacing Cigna (CI).

9. UBS lowered its growth estimates on Club holding Microsoft‘s (MSFT) Azure cloud business, suggesting customers will continue to cut back on cloud spending amid slower economic growth. The bank maintained a neutral rating and price target of $275 per share.

10. Despite recent price cuts, electric vehicle maker Tesla (TSLA) should be able to maintain “industry leading” operating margins and is better positioned than competitors to navigate economic headwinds, Baird argued. The firm maintained an outperform, or buy, rating and price target of $252 per share.

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Want to watch MLB games? Making sense of the confusing TV and streaming landscape

Seattle Mariners shortstop J.P. Crawford (3) slides into third to advance on a sacrifice fly against the Oakland Athletics during the third inning at T-Mobile Park, Sept. 28, 2021..

Joe Nicholson | USA TODAY Sports | Reuters

Buy me some peanuts and Cracker Jack – and a bunch of streaming and TV subscriptions, too.

Major League Baseball‘s season opens Thursday, and fans have to navigate various outlets to find their home team’s games this season. This might create some confusion, while causing some viewers to beef up their baseball budgets.

related investing news

CNBC Pro

MLB teams play 162 games during the regular season, giving the league a lot of runway to sign media rights deals with various outlets in a bid to broaden its reach and audience. In recent years, the focus has been on placing more games on streaming services, while traditional cable TV is needed for a bulk of game viewing.

Here’s a breakdown of how the landscape looks, for now.

Home base plan

For the baseball fan looking to watch as many games as possible, a traditional pay TV service is still the go-to place.

Regional sports networks air the majority of local games during the season. In addition, national networks like Disney unit ESPN and Warner Bros. Discovery’s TBS, as well as Fox Corp.‘s broadcast and pay TV networks, take up a decent chunk of the schedule.

There are a few internet-TV bundle competitors that are an option, too. DirecTV’s DirecTV Stream and FuboTV carry most, if not all, regional sports networks. Other providers like Google‘s YouTube TV and Disney’s Hulu Live TV+ carry few, if any, of these networks.

The reason for that? The high fees networks charge pay TV operators. A “regional sports network” fee is broken out on pay TV bills. It varies by the market.

The fate of the regional sports networks has been brought into question. Recently, Diamond Sports, which operates a portfolio of regional sports networks, filed for bankruptcy protection, toppled by a debt load and the loss of pay TV subscribers.

The networks and the streaming services haven’t gone dark and are still expected to show games this season.

Similarly, Warner Bros. Discovery has been looking to exit the regional sports networks it inherited from the acquisition of Warner from AT&T last year, The Wall Street Journal recently reported. While Warner Bros. sent a notice to the teams looking to transition the network rights over to them, the league and Warner Bros. have been in negotiations to keep the networks running normally for the foreseeable future, people familiar with the matter said.

Streaming options

As the traditional TV audience shrinks, the league and the networks have been looking to streaming services to grow MLB’s audience there. However, as more options are introduced, regional sports networks are getting fewer games and fans have to pay more to watch all games.

“From baseball’s perspective there is not only a need to find new audiences but different demographics,” said Will Mao, senior vice president of media rights consulting at Octagon. “It’s been a longtime narrative the baseball audience is getting older. To find the next generation of fans you need to go where more content is consumed, which is digital streaming platforms.”

With a higher rate of consumers dropping pay TV bundles and opting for streaming services, many networks have created direct-to-consumer streaming app options. Few offset the pay TV losses, but at least provide an option for fans wanting to stream.

New England Sports Network, home of Boston Red Sox games, has a streaming option for fans in its region. Diamond Sports’ Bally Sports+ launched last year, but only offers Detroit Tigers, Kansas City Royals, Miami Marlins, Milwaukee Brewers and Tampa Bay Rays games as the company negotiates with the league for streaming rights on a team-by-team basis.

New York Yankees right fielder Aaron Judge (99) rounds the bases after hitting home run number sixty-two to break the American League home run record in the first inning against the Texas Rangers at Globe Life Field.

Tim Heitman | USA TODAY Sports | Reuters

The New York Yankees’ YES Network launched its own option the day before Opening Day, priced at $25 a month. Still, for Yankees fans, it can be particularly confusing. Since last year, 20 of its local games have been on Amazon‘s Prime Video rather than YES or a local broadcast network, stemming from Amazon taking a piece of ownership in the network.

This will mark the second season that Apple‘s Apple TV+ will air two games every Friday night. However this year “Friday Night Baseball” will come at an extra cost – a $6.99 subscription to Apple TV+ – as opposed to when it was free last year.

A set of 19 games will once again air on Sundays on Comcast‘s Peacock beginning April 23 of this year, a bit earlier than its May 8 start last year. Peacock, which costs $4.99 a month, will soon have more information about its announcers for the Sunday broadcasts, many of which air at 11:35 a.m. ET or 12:05 p.m. ET, a bit earlier than the typical MLB start time of 1:05 p.m.

Since 2021, ESPN has begun simultaneously airing games on its streaming service ESPN+, which costs $9.99 a month, and also streams a local RSN game most days throughout the season.

“I do empathize now with the rose-colored glasses many have for the traditional cable bundle. There’s value to bundling we’ve learned not just across media but other industries,” said Mao.

These additional streaming bills come as the cost of pay TV subscriptions from satellite and cable providers varies across the U.S. A recent U.S. News report found that an average cable bill costs more than $200 a month, but that could include bundled services, likely broadband service. The Federal Communications Commission’s most recent report from 2018 shows the average of basic cable at $25.40 a month, with the expanded package averaging $71.31. The former is unlikely to include national sports networks.

Disclosure: Comcast owns NBCUniversal, the parent company of Peacock and CNBC.

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Disneyland reopens Toontown, designed to be inclusive of ‘every single guest’

Mickey Mouse, Minnie, Donald, Daisy, Clarabelle, Goofy, Pluto and Pete stand outside Mickey’s house in the refurbished Toontown at Disneyland.

Disney

Parkgoers at Disneyland in Anaheim, California, will finally be able to return to Mickey’s Toontown this weekend after a yearlong closure for refurbishment.

The cartoon-inspired land has long been a haven for Disney’s younger park guests, offering character meet-and-greets with the likes of Mickey Mouse, Minnie, Donald, Goofy and Pluto, as well as kid-friendly coasters and play areas.

The reimagined Toontown honors the space that first opened in 1993, keeping existing structures like Mickey and Minnie’s houses in tact, albeit with a paint touch-up. But there’s also quite a bit of new infrastructure for kids to explore — with an eye toward inclusivity.

At its core, Toontown’s revamp is all about intention. Imagineers have designed a space for all kids, crafting accessible play spaces, plus quiet areas and shady spots so that its youngest parkgoers have a place to exert their pent-up energy or decompress.

The redesigned land, which opens to the public March 19, is entirely wheelchair accessible, including its slides, and is visually and auditorily approachable for kids who are easily overwhelmed by loud or bright sensory stimuli. The entire land has been repainted in softer colors, and some areas feature more subdued, spa-like musical scores.

“We want every child to know that when they came to this land that this land was designed for them,” said Jeffrey Shaver-Moskowitz, executive portfolio producer at Walt Disney Imagineering. “That they were seen, and that this place was welcoming to them.”

Shaver-Moskowitz said the Imagineers spent time looking at children’s museums and water play spaces to see how kids engage and developed different stations throughout the land to cater to different types of play patterns.

“We know a day at Disneyland can be hectic and chaotic, running from one attraction to another, one reservation to the next,” he said. “We wanted Toontown to not only be exciting, but also decompressing and relaxing and welcoming.”

With that in mind, the Imagineers have introduced more green spaces within the land, places to have picnics, sit and unwind, or play freely.

“We really wanted to take a look at Toontown, knowing how important it was for so many of our guests for many generations growing up and the so many memories here that are connected to the land, and make sure we don’t lose any of that,” Shaver-Moskowitz said. “But, bring a lot of new magic.”

‘Thinking of every single guest’

When guests enter the new Toontown, they will pass through Centoonial Park. The area is anchored by a large fountain, featuring Mickey and Minnie, as well as water tables for kids to dip their hands into, and the “dreaming tree.”

The live tree was selected from the Disney property for its cartoonish limbs and leaves. Around the trunk are sculpted roots that kids can climb over, crawl under and weave through.

“One of the main play functions for little ones is learning the concepts of over, under and through,” Shaver-Moskowitz explained during a media tour of the land earlier this month. “So you’ll see some of the roots are big enough for little ones to crawl under, some of them can be used as balanced beams for little ones who are learning to get their feet underneath them.”

(There is a wheelchair accessible path that navigates through the roots, too.)

Centoonial Park is also situated next to the El Capitoon Theatre, home of Mickey and Minnie’s Runaway Railway ride. Riders are invited to the premiere of Mickey and Minnie’s latest cartoon short “Perfect Picnic.” However, hijinks ensue and guests are whisked away for a ride on Goofy’s train, entering the cartoon world.

The El Capitoon Theatre exterior of Mickey and Minnie’s Runaway Railway ride at Disneyland in Anaheim, California.

Disney

The trackless ride has no restrictions on height or age, allowing even the littlest Disney guest to join in.

Continuing through the land, guests will see Goofy’s new play yard, which wraps around Goofy’s house and features a sound garden, filled with musical bridges and melons, as well as Fort Max, a climbable clubhouse with attached slides.

Shaver-Moskowitz said the roller slides were chosen for the space so littler guests, who often have less mobility in their legs, don’t get stuck at the bottom of the slide. There’s also more space at the bottom of the slides to accommodate guests who need time to get back into wheelchairs.

“We are trying to make sure we’re thinking of every single guest in here,” he said. “Making sure that every little one who comes to play here feels like we’ve designed the space for them.”

Also outside is a small cordoned-off area for babies to crawl around and experience the area safely.

Goofy stands outside his new How-To-Play Yard at Mickey’s Toontown in Disneyland.

Disney

Inside Goofy’s house are a series of games that kids can play to help Goofy cultivate honey from the beehives on his property into candy. Here, little parkgoers can sort candy by flavor and color and watch as a kinetic ball machine activates all around the space.

Extra care was taken to ensure that the sound of the air compressors pushing the balls around has been suppressed, said Shaver-Moskowitz, in an effort to make sure that those with sensory sensitivity won’t be overwhelmed and can still enjoy the experience with their peers.

In a separate area next to Goofy’s new play yard is Donald’s Duck Pond, a water experience for kids. Imagineers intentionally separated this space from the play yard so that parents could better monitor their children around the water elements.

Donald Duck stands outside the new Duck Pond at Mickey’s Toontown in Disneyland.

Disney

Shaver-Moskowitz noted that the previous design of the land meant that kids would occasionally run back to their parents soaking wet, having wandered into the water play place.

Donald’s Duck Pond features a tug boat that spits out water, spinning water lilies, balance beams and rocking toys. Inside the boat, kids can help Huey, Dewey, Louie and Webby with a leak in the hull, turning wheels and levers to push the water outside.

Pack a picnic

The Imagineers have also revamped the food at Toontown. New restaurants such as Cafe Daisy and Good Boy! Grocers offer a wide variety of selections and flavors for young parkgoers and more mature palates.

Michele Gendreau, director of product optimization for food and beverage, explained that the team wanted to make eating easy by creating hand-held food that can be munched on the go.

The menu at Daisy’s café features “flop over” pizzas, hot dogs and wraps. Here, adults can grab a cold brew coffee or honey-mango sweet tea. For dessert, there are mini doughnuts covered in cinnamon sugar.

“Kids want to eat what their parents eat,” said Gendreau, highlighting kid-friendly versions of traditional pizzas.

At Good Boy! Grocers, guests can pick up grab-and-go drinks, snacks and novelties. The roadside stand offers up the “perfect picnic basket,” including up to three snacks and a drink. Kids can choose from a variety of options, from hummus and pickles to granola bars and apple slices.

Baskets are set up at multiple heights to allow even the smallest guests to select their own items, giving them a little autonomy when it comes to meal time.

Merchandise from Mickey’s Toontown at Disneyland.

Disney

Parkgoers can scoop up picnic blankets, T-shirts, toys and other exclusive Toontown merchandise at EngineEar Souvenirs.

Additionally, meet-and-greets with fan favorite characters return to the land. Guests can take photos with Mickey Mouse, Minnie, Donald Duck, Daisy, Pluto, Clarabelle and Goofy. And for the first time at any Disney park, Pete will make an appearance, causing mischief around the neighborhood.

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