So, watching current events, several things stand out to me:
- Broadcast media is beaten down, with few prospects for improvement outside of M&A and consolidation
- Traditional sources of journalism (newspapers, magazines, etc.) are at their lowest valuations in memory
- Social media content providers (META, RDDT, PINS, etc.) are a mixed bag, with most struggling how to best monetize the subscription value of their content outside of advertising
- Advertising on the above is nearing saturation (maybe?), and consumer fatigue is growing (maybe?)
- Movie studios appear to be fighting for a bigger slice of a shrinking pie
- Specialty content providers (ESPN, reality TV, celebrity trackers, political loudmouths, etc.) don't seem to have the growth prospects they used to enjoy.
- Outside of Netflix, it's a terrible segment of the market, with bad results and worse prospects.
Bottom line, they're all in a world of hurt. The bright side I see involves AI - - I've seen several deals where RDDT (as an example) has been paid by Chat GPT or the like for access to their content. This is still a bit strange to me, as RDDT isn't really a content creator, just a glorified message board, but they are apparently able to justify a value for what they have. Clearly, several news sources (FoxNews, The Atlantic, NY Times, and others) have done similar things. The terms of these deals have not been disclosed, to my knowledge, so I don't know if they're paid a pittance, or is it replicable throughout the industry, with growth prospects going forward?
The investable question for me is does this future income stream (I'm assuming they aren't paid a lump sum up front for unlimited future rights to their content) justify investing in this beaten-down sector? I'm intrigued, but unconvinced. Anyone have insights to share, here?
NOTE: Full disclosure: I bought PARA, DIS, WBD, and RDDT over the past 6-12 months, partially due to this premise, but mostly as M&A targets. It has been a failed premise, thus far. PARA's recent acquisition was a total snoozer, from a financial reward perspective.
- Broadcast media is beaten down, with few prospects for improvement outside of M&A and consolidation
- Traditional sources of journalism (newspapers, magazines, etc.) are at their lowest valuations in memory
- Social media content providers (META, RDDT, PINS, etc.) are a mixed bag, with most struggling how to best monetize the subscription value of their content outside of advertising
- Advertising on the above is nearing saturation (maybe?), and consumer fatigue is growing (maybe?)
- Movie studios appear to be fighting for a bigger slice of a shrinking pie
- Specialty content providers (ESPN, reality TV, celebrity trackers, political loudmouths, etc.) don't seem to have the growth prospects they used to enjoy.
- Outside of Netflix, it's a terrible segment of the market, with bad results and worse prospects.
Bottom line, they're all in a world of hurt. The bright side I see involves AI - - I've seen several deals where RDDT (as an example) has been paid by Chat GPT or the like for access to their content. This is still a bit strange to me, as RDDT isn't really a content creator, just a glorified message board, but they are apparently able to justify a value for what they have. Clearly, several news sources (FoxNews, The Atlantic, NY Times, and others) have done similar things. The terms of these deals have not been disclosed, to my knowledge, so I don't know if they're paid a pittance, or is it replicable throughout the industry, with growth prospects going forward?
The investable question for me is does this future income stream (I'm assuming they aren't paid a lump sum up front for unlimited future rights to their content) justify investing in this beaten-down sector? I'm intrigued, but unconvinced. Anyone have insights to share, here?
NOTE: Full disclosure: I bought PARA, DIS, WBD, and RDDT over the past 6-12 months, partially due to this premise, but mostly as M&A targets. It has been a failed premise, thus far. PARA's recent acquisition was a total snoozer, from a financial reward perspective.
