WSJ What’s News - What’s News in Earnings: Merger News Dominates the Entertainment Business

Episode Date: March 5, 2026

Bonus Episode for Mar. 5. Reports from entertainment companies this quarter underline what’s driving consolidation in the industry. Paramount Skydance won a bidding war against Netflix for Warner Bros. Discovery, while Comcast spun out its cable networks into a new company. Wall Street Journal media and entertainment reporter Joe Flint discusses what stood out from Comcast, Disney, Netflix, Paramount, Warner Bros. Discovery and Versant. Ben Fritz hosts this special bonus episode of What's News in Earnings, where we dig into companies’ earnings reports and analyst calls to find out what’s going on under the hood of the American economy. Sign up for the WSJ's free Markets A.M. newsletter. Learn more about your ad choices. Visit megaphone.fm/adchoices

It's never too early to plan your summer story in Europe with WestJet, from rolling countryside to cobblestone streets. Begin your next chapter. Book your seat at westjet.com or call your travel agent. WestJet, where your story takes off. Hey listeners, it's Thursday, March 5th. I'm Ben Fritz for the Wall Street Journal, and this is What's News in Earnings?

Our look at some of the biggest themes standing out this earnings season. Today I'm speaking with Wall Street Journal, media and entertainment reporter Joe Flint. It's been a dramatic few months for the media business. Warner Brothers Discovery agreed to sell itself to Netflix, then left the streaming giant at the altar for a better proposal from Paramount. Disney picked a new CEO who will be the second person to replace Bob Iyer. This is all against a backdrop of rapid declines in the linear television business

and struggles by entertainment companies to grow other businesses like streaming and theme parks fast enough to make up the difference. Joe, let's talk first about consolidation and spinoffs. So Skydance bought Paramount last summer, and now Paramount Skydance has a deal to buy Warner. Comcast spun out its cable networks into a new company called Versant that isn't doing very well since its public debut in January. What's up with all this reshaping of our media giants? Well, both the Paramount Warner deal and Comcast cable spinoff are driven by the desire of these companies be more focused on streaming, try to offer real competition to Netflix and Disney Plus.

And we look at David Ellis and the head of Skydance. He bought Paramount last year. But even then, he thought, this is too small to compete with those bigger giants. So from the get-go, he went after Warner, believing that that would give him enough scale to compete. So now we'll get to see if that actually pans out for him or if he's just saddled another media company with a ton of debt. Earlier this week, and just a few days, days after Paramount's earnings report, the company held a call with analysts to talk about the Warner deal. They framed it as an ambitious project that would reinvigorate entertainment. Here's Paramount CEO, David Ellison. This is not about consolidation. It's about reinventing the business.

We want to expand our reach and enhance our ability to create the world's most compelling stories and experiences. And we're incredibly excited about this transaction, and it will accelerate that ambition. Comcast, meanwhile, wanted to move the bulk of its cable assets. including CNBC, MSNBC, and USA to a separate company called Versen, because long-term cable is not the growth engine it once was, and NBC Universal is focusing much of their efforts on turning Peacock into a legitimate streaming competitor. Versant just reported that for 2025, profit and revenue both fell,

but they say they're in a good position to grow this year. Disney and Universal have also been investing aggressively in their real-world experiences, theme parks and cruise ships. Why is that? Do they have advantages over companies without theme parks and businesses? Ben, why don't you tell us more about that? Sure thing, Joe.

So Disney's been in the theme park business since the 1950s, but that was always smaller than first it's film business and then later television. Post-pandemic, however, people have been rushing out to have real-world experiences together. It's been a booming part of entertainment.

And since 2022, experiences, the Disney division that includes theme parks and cruise ships has accounted for the majority of its profits. Last quarter, in fact, it was 72%. The company expected to keep growing, although the domestic theme parks are facing pressure from fewer foreign visitors coming to the U.S.

At NBC Universal, meanwhile, theme parks accounted for nearly all its profits last quarter, as losses from Peacock basically covered the profits from film and the shrinking linear television business, which includes networks like NBC and Bravo. Both companies are expanding aggressively. Disney is nearly big, doubling the size of its cruise ship fleet, it's expanding or refurbishing all of its theme parks,

and is planning a new one in Abu Dhabi. Universal just opens its third theme park in Orlando, it's building one that's just for kids in Texas, and we recently reported that it's in talks for a possible theme park in Saudi Arabia. So finally, what about streaming, Joe? How's the OG Netflix doing? And how about the media company's own services like Disney Plus, HBO Max, Paramount Plus, and Peacock, are they anywhere close to making up for what was lost in linear TV profits? They're getting closer, but it's still a long road. First, we'll focus on Netflix that fortunately for them doesn't have those old linear businesses to worry about. They had a good quarter. Revenue was up 20 percent, net income 30 percent, 325 million subscribers worldwide. But obviously, they too

are worried about growth, hence their interest in buying the Warner Library in HBO Max, and we see them investing more and more in live sports, all these things to keep viewers from churning and the maintain subscriber growth. The others are growing, but linear media and the money those cable channels generate are still significant. Disney streaming had operating income growing 72%. HBO Max has been growing nicely, but they saw a slight decline in earnings because of some changes with their distribution deals. Peacock, however, lost $550 million to despite some subscriber games largely through sports. The challenge is those subscribers are not always long term.

They come in, they check out. Customers drop off when a season of their favorite show ends or if the Olympics end. And I'm already hearing about that now that the Olympics are over. Some peacocks subscribers are saying, okay, we're done for now. I have to say, once the current season of the pit ends, I may be churning from HBO Max myself for a little while. Well, and that's why they want to merge with Paramount so that then you'll stick around for the new season of Landmen.

And that was What's News and Earnings. Today's show was produced by Pierre Bienname with supervising producer Tali Arbel. Additional sound, courtesy of S&P Global Market Intelligence. Come back later today when we'll have the PM edition of What's News out for you as usual. And we'll be back later this earnings season, diving into another industry.

Until then, I'm Ben Fritz. Have a great day.