Welcome back to What I’m Hearing, your brief respite from the shock headlines of Trump’s cabinet nominees. I suppose we should be happy the president-elect hates Hollywood people or we’d get Harrison Ford running the F.A.A., Diddy at the A.T.F., Felicity Huffman overseeing federal student loans, and Will Smith and Scott Rudin co-running a national anger management initiative.

Anyway, thanks for the great RSVPs for our Stories of the Season awards event tomorrow. I believe we are now booked, but if you’ve got a last-minute request, email fritz@puck.news.

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Let’s begin…

• Friday Night Lights and the Trump 2.0 bump: Trump’s re-election and the rightward tilt of the country probably isn’t great news for Aaron Sorkin’s planned January 6th movie. But MAGA-friendlier projects could get a boost. Case in point: I’m told Universal TV has a bidding war going for a new Friday Night Lights reboot series with the original team of director Pete Berg, showrunner Jason Katims, and producer Brian Grazer all attached to return. They’ve talked before about getting the FNL gang back together, but this is a new project, TV only, and Katims is behind the pitch, according to two sources. It’ll be different characters but still set in the world of Texas high school football (maybe the QB1 will demand an N.I.L. deal?). Three bidders thus far, so let’s see if it lands at the home platform, Peacock, or if Netflix, which currently has the original series, or Amazon, or another platform, steps up.
• Are you good enough for Zaslav’s “Capability Center”?: Maybe you were one of the thousands of people laid off this year at Warner Bros. Discovery. If so, C.E.O. David Zaslav has a job for you… in Mexico City… for less money. WBD’s new “Capability Center” is aggressively hiring, according to a sponcon interview on the BuiltIn recruiting site. I confirmed they’re looking for accounts payable, receivables, admin jobs, I.T.—not coincidentally, many of the same types of positions that were eliminated in the U.S. during the most recent rounds of layoffs that now hit every six months or so. “We are creating a new collaborative office space that combines cutting-edge technology and innovation through the Mexico Capability Center,” according to Graeme Hastings, head of global business services strategy and transformation. WBD isn’t alone here, of course, and Zaslav has a long history of using outsourcing and freelancers to reduce costs. But some of the recently laid off U.S. employees have been asked to train their replacements south of the border before their time at the company ends soon. Happy holidays.
• Box office over/under: Red One is a nice test of Dwayne Johnson’s star power (and salary demands) after two theatrical underperformers in a row (Black Adam and Jungle Cruise). Tracking has actually dipped a bit this week for the $250 million (!) Christmas movie, so let’s set the line at $35 million. I’ll take the under, based on the momentum and the fact that it’s Amazon, whose biggest movie, last year’s Air, grossed just $89 million worldwide.

Flash forward to today, when Disney’s entertainment streaming unit reported an operating profit of $253 million, basically double analyst estimates. When combined with ESPN+, the overall streaming business made $321 million in the quarter. That’s compared with a $387 million loss a year ago and the number nearly five times that from the Oogie Boogie bungle. For the Disney fiscal year, streaming made $134 million, compared with a $2.61 billion loss in fiscal 2023. Not bad.

So it took Iger, the board-anointed lord and savior of Disney, less than two years to bring the company totally back, right? Not exactly. Iger Himself can’t stop linear TV from cratering. ESPN, which was once in 100 million homes, has dropped to only 66 million customers. The parks and cruise ship business is slowing, and Universal’s Epic Universe is coming hard for the Florida roller coaster and lukewarm turkey leg market.

The unit with the film studio posted a $316 million profit, thanks to Inside Out 2 and Deadpool and Wolverine. But remember, Iger dropkicked three potentially problematic titles, Elio (from Pixar), Snow White (from the live-action studio), and Marvel’s Captain America: Brave New World, from this year to 2025. Disney blamed the strikes, which definitely played a role, but those movies could have come out later in ’24, underperformed, and derailed the Iger comeback narrative. So, like that animatronic Fantasmic dragon that caught on fire at Disneyland in front of horrified children, the problematic films were shut down for retooling. Now, if both Moana 2 and Mufasa: The Lion King perform as hoped, Iger can say Disney has four billion-dollar grossers in 2024, the first year he was fully back in charge. That’s only happened twice before, in 2016 and in 2019 (it was actually a crazy-sounding seven films that year). And they’ll deal with the ’25 slate later.

And most significantly, Disney was confident enough to offer three years of guidance on financials that projected about $1 billion in profit in streaming for 2025, and a 10 percent profit margin in 2026. If only Chapek had said that on the Oogie Boogie call. The guidance is likely why the share price shot up 10 percent today before closing up about 6 percent. “It definitely allays a lot of concerns about the different parts of the business,” analyst Geetha Ranganathan said on BloombergTV this morning.

Why the three-year projection? Hugh Johnston, the relatively new C.F.O., made the media rounds today saying it merely stemmed from confidence in the business and the justification of recent investments in both streaming and the parks. But Rich Greenfield, the Lightshed analyst, noted in a text to me that “the two biggest investor concerns facing Disney are the impact of Epic on theme parks, and the ramp of sports rights costs on ESPN. By giving multi-year guidance, they were able to mitigate those concerns.” Rich called the move a “bold” and “aggressive” strategy that “clearly speaks to a notable shift in investor strategy under Hugh.” It’s also a way to juice the stagnant stock price now before waiting for those projections to materialize.

There’s something else underlying that confidence. It’s becoming clear that Disney, thanks to its strong and consistent branding and baked-in fan base, has an advantage over others in streaming. Yes, it’s all that I.P. and branded content. And it’s the diversified overall business that allows Disney to withstand the decline of TV in a way that others—say, Paramount and Warner Discovery—can’t because their financials are so tied to linear television. If Disney is showing a 10 percent margin on streaming in a couple years, that profit alone will help offset the ongoing collapse of TV. Then add in parks, products, etc.

But it’s also that Disney streaming is branded streaming. Its customers are used to following its content in multiple formats on its journey through the flywheel of fully-integrated monetization. So the movies that work in theaters also really work on Disney streaming (and in Disney parks and Disney cruises and Disney blowout diapers). Inside Out 2 and Deadpool and Wolverine, both massive grossers in theaters, would be big on any streaming service. But they give Disney+ a particularly big and potentially longer boost because they are Disney-branded franchises on a scaled, Disney-branded service. Longer than, say, Barbie on Max or Top Gun: Maverick on Paramount+. To that end, streaming is just becoming another spoke on the wheel for Disney customers, a spoke that will increase in importance as the TV spoke declines.

That’s a bit rich coming from Kilar, whose window-breaking, walled garden strategy at HBO Max during the Covid years ran up huge losses and enraged creatives with a day-and-date movie strategy. But in fairness, he never had the resources needed (AT&T realized only after it decided to go into streaming that it couldn’t spend like Netflix) nor the time horizon to see how much he could scale. The “right” strategy—the one that Iger and, to a lesser extent, others are seeing success with—seems to be a more modest, narrowly tailored content investment, aggressive windowing and third party licensing, and raising prices for ad-free products to push subscribers to watch commercials. Or, basically, television. And if there’s one thing Iger knows well, it’s television.

Got a question, comment, complaint or a good question to ask Denis Villeneuve or Mikey Madison? Email me at Matt@puck.news or call/text me at 310-804-3198.