Bundle of investment news: Black Widow, Zoom and Disney

Пачка инвестновостей: черная вдова, zoom и disney

Disney went to peace with Black Widow - and the consequences could be felt by the entire streaming world. Five9 won't sell Zoom, because china.

Disclaimer: when we talk about, that something has grown, we mean comparison with the same quarter a year earlier. Since all US issuers, then all results are in dollars. When creating the material, sources were used, inaccessible to users from the Russian Federation. Hopefully, you know, what to do.

Cinema is not for everyone

Disney (NYSE: DIS) and actress Scarlett Johansson reach settlement over Disney's breach of contract with actress. Movie Black Widow Released Simultaneously In Theaters And On Disney + Streaming Service, which greatly reduced the box office's box office, - and Johansson, according to the terms of the contract, in addition to her fee of $ 20 million, she received a percentage of the fees in cinemas. Respectively, the fewer tickets were sold, the less money the performer of the role of Natasha Romanova received. Johansson demanded from the studio 80 million dollars, but will receive, according to some sources, around 40 million. This story is very revealing..

A significant - if not most - of the money is paid to filmmakers and top stars from cinemas.. The pandemic broke this scheme, because schedule release of films has shifted so often, and theatrical box office fell so much, among other things, due to social distancing measures in cinemas, that it was not possible to collect sufficient amounts. Therefore, the films began to be released in streaming simultaneously with the release in the cinema - the so-called hybrid release. By the way, this practice did not pay off: it is very difficult to recoup the costs of a large blockbuster on a streaming service. After all, renting a movie for 30 $ for home viewing, you can gather in front of the screen a crowd of 10 person - and a ticket per person to the cinema costs 10-15 $.

Johansson and her lawyers, like the management of Disney, counted on, that "Widow", which was completely ready for release even before the beginning of the entire coronavirus history and was supposed to be released in the spring 2020, will collect at the worldwide box office $ 1.2 billion. Based on these calculations, Johansson should have received the same 80 million. As a result, the film came out in the summer. 2021 and raised about 378 million - including "thanks" to the release of the film on the streaming service simultaneously with cinemas. And since, to paraphrase the famous businessman Leo Galante, streaming was not included in the deal and the studio receives all the income from streaming, Johansson was extremely unhappy.

The Johansson story is important for investors: the income of media conglomerates traded on the exchange depends on it. for example, AT&T (NYSE: T) in 2020, more than $ 200 million had to be paid in compensation to the authors and blockbuster stars of the then still owned Warner Media for, that the films came out in a hybrid format.

Disney executives were brave at first and refused to give in to Johansson, but now it suddenly backed down and paid her half of the required amount - although the lawsuit has not even gained momentum and, in theory, could have dragged on for years. So such conflicts can flare up and in the future affect the reporting of companies.. Although it is impossible to say for sure and everything depends on the terms of legal agreements in the case of each specific film. As they say, someone else's contract - darkness.

In the long term, this can also negatively affect the profitability of streaming services.: most likely, studios will pay generous royalties to stars and creators on condition, that they will not then claim anything, including content licensing revenues. The latter is a very important source of income for creators and movie stars..

for example, TV series "Friends". Few will argue, that for most of the cast, the series was the peak of their careers, and the series ended a very, very long time ago. But all the actors remain very rich people.: in total, they receive about $ 20 million for all six per year simply from reruns of the series.

Typically, studios paid about 60-70% of the cost of making a series or film., and the rest came from the partner company, who invented the content and then created it. therefore, eg, in the credits of many films other than a studio name like 20th Century Fox, Columbia Pictures you can always find the names of other companies, e.g. Scott Free in Ridley Scott's films. These companies, in fact, and make movies, and carry financial risks in the process - usually directors and actors. In exchange for sharing financial risks with a large studio, the creators get licensing rights.

Netflix (NASDAQ: NFLX), one of the key pillars of streaming and a model for all its competitors, did differently. The company pays generously for the work of the creators and actors, but in return takes away the rights to content from them. Team, content creator, receives, in addition to paying all the costs of the creation with fees, approximately 30% from the cost of creating content as payment for the rights to it - this can be considered "compensation". And after that, the team no longer receives anything from the content in the future., all rights remain with Netflix.

This is a problem for many content creators., because if the content becomes very successful, then the lost profits in the future will be enormous. Whether to expect, that Disney and other "new" streaming businesses will be able to embrace the Netflix model, - there is no definite answer, since there are several complications here.

Looking closely at Netflix content, then you can see, that for the most part there are stars and creators - these are often figures of the second order, Netflix doesn't have such an abundance of giants, like Disney and Warner. How the same Disney will negotiate and pay-overpay a clip of rich and famous actors and creators, we have already roughly seen in the example with Johansson. Shareholders of streaming services may already begin to be afraid of reflecting the growth of expenses in the reporting. Big deals of this kind look extremely ruinous: the same Netflix bought the rights to two sequels to Knives Out for $ 465 million - and it's just about the exclusive rights to films, and their creation has yet to be paid. I don't think, what is the case with the Disney movie, traditionally relying on big stars, the company will be able to save a lot.

You can expect, that streaming companies will be able to cut costs to a large extent by working with actors and directors from the Old World. So, the third part of "Bad Boys" instead of the dear Michael Bay was filmed by little-known directors from Belgium. And English actors are a good example of economy without sacrificing quality.: with a high level of acting, the British by American standards actually work for food. So, Englishmen Tom Hardy and Benedict Cumberbatch received for playing the roles of Venom and Doctor Strange 7 and 2 million - and there they had quite a lot of screen time and the resulting load. At the same time, American Jeremy Renner is in favor of 16 minutes in the second "Avengers" received more than 6 million. So there is a possibility of a "British invasion" on the screens - European actors are like Russian IT specialists: by American standards get a penny, but they work just as well, like in the USA.

However, also possible, that streams and creators will be fighting a war of attrition - and streaming can simply force creators to accept their terms, when content creators run out of money: no excess work, but you need to live on something. On the other hand, the story with Johansson shows, that streams and studios do not consider their bargaining position to be particularly strong and therefore tend to give weakness.

The expected growth in streaming costs casts doubt on the break-even point of many new streaming services within the timeframe they have indicated.. This is very bad, because unreasonable and overestimated expectations of investors regarding streaming and push the quotes of these companies up - and sometimes contribute to their fall in case of disappointment. And this we do not even take into account the growth in costs of film production in the context of a pandemic.: the corresponding expenses add 10-20% to the cost of making a film or series.

So all of the above should be considered by everyone, who “invests in streaming, because it is promising ".

I'm a simple American investor, i don't want money, respect strong senile leader Biden

Zoom Video Conferencing Service (NASDAQ: ZM) was going to buy cloud provider Five9 (NASDAQ: FIVN) for 15 billion dollars. Now he's his, seem to be, won't buy: Five9 shareholders suddenly voted against the sale. The explanation for this sounds unconvincing enough to, so that any self-respecting investor would refuse to believe in him: say, Zoom's growth will slow down, because people will meet more live.

Let's not argue with this thesis, but still worth noting, that the reason for refusal is absolutely unconvincing from the point of view of the shareholder: Five9 is a loss-making company, and in anticipation of the rate hike and loan price hike, its shareholders should pray to Zoom for, that she even buys this company. Okay, the complaint was the cheapness of the Zoom proposal: Five9 bought with a premium 13%. But no, of all the reasons we chose the strangest and most stupid.

I think, that it is related to the investigation of Chinese ties Zoom: a large part of the company's team works in China. And the founder of the company is from China, although I got an American passport. At the same time, both companies will continue to cooperate., as before. Basically, the news about the failure of the Five9 deal is very sad.

It's bad here then, that the non-public control loop of American society is now reflected in commercial transactions. With the sale of Zoom, Five9 investors would get some premium and the opportunity to profit from the business., which may well go bankrupt.

I refuse to believe, that investors voluntarily voted against the sale of the company on such grounds: most likely, this was preceded by negotiations between Five9 shareholders and "respected people", who explained to them, that you shouldn't sell your business. Otherwise, for refusal, they would have nominated another, more good reason. US national security considerations are not very relevant here.: Five9 specializes in calls, chats and mailings. I strongly doubt, that the information extracted from Five9 would help Chinese hackers more codes from the entrances of Russian houses. However, the disposition of the American ruling circles to "not let" the Chinese into high-tech industries is quite obvious. At the same time, the selectivity of Americans seems very interesting.. for example, in the case of the American film industry, investors react to the penetration of Chinese capital and political influence in almost no way.

In general, the cancellation of the deal with Five9, most likely, will be part of a campaign to expel Chinese investors from the US, which can negatively affect the prospects for buying other unprofitable startups - which will be bad for the shareholders of the latter. However, there is also a bright spot in this situation: the falling cost of unprofitable startups will be a benefit for tech companies, who will inevitably buy them. As they say, failure of one is an opportunity for another.

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