5-Year Hit: Legacy Media Profits Halved, Linear Ads Share Decline

• by Wayne Friedman , June 21, 2024

Over the last five years -- amid dramatic declines in linear TV, theatrical movies -- overall collective profitability for major TV/movie networks based media companies has been cut in half, while streaming has a promise that it has yet to deliver.

Global cash flow, earnings before interest taxes depreciation and amortization (EBITDA) among six large legacy media companies declined to $17.2 billion in 2023 from $37.3 billion in 2018, according to MoffettNathanson Research.

This list includes Walt Disney, NBCUniversal, Warner Bros. Discovery, Paramount Global, Fox Corp. and AMC Networks.

Linear TV during this period sank to $22.9 billion ($32.6 billion in 2018) in profits, with studio production/content down to $2.5 billion (from $4.4 billion in 2018).

Premium streaming has a long way to go to make up those declines. In 2023, direct-to-consumer (D2C) losses were at $8.3 billion.

However, recently Warner Bros. Discovery said it is now on the road to consistent profitability, with Walt Disney also projecting streaming profits by the fourth quarter of this year.

One major factor, according to the report, is that consumer spending on video -- even with the addition of new premium streaming platforms -- has barely grown.

Now at a projected $142 billion for 2024 -- up from $140 billion (2019). Analysis says it has not helped that all premium streaming owners keep steadily raising prices.

In addition, U.S. box-office office revenue continues to struggle to get back to pre-pandemic, pre-streaming levels. It is projected to total $8.1 billion this year -- down from $11.4 billion in 2019.

Movie studios have slowed theatrical releases over that period, and are estimated to be at 95 this year -- down from 130 in 2019.

While streaming remains a significant factor, MoffettNathanson notes that linear TV advertising has also been hit with media dollars moving to online, retail, as well as streaming. 

Linear TV advertising is now at 18% share of U.S. advertising -- dropping from 31% in 2019.

Online advertising (ex-retail) now has a 55% share of all U.S. advertising (44% in 2019). 

Retail media is at 12% (versus 5% in 2019), while premium streaming is at 3% (vs. 1% in 2019). Both these areas have grown on a compounded annual basis at 38% and 39% respectively.