This week’s entertainment industry earnings are all about the labor disputes gripping Hollywood, as twin strikes by the Writers Guild of America and actors union SAG-Aftra rage on.
Three months into the work stoppage, the writers union and the group representing studios walked away from the latest attempts to restart negotiations this weekend, all but ensuring that film and TV production in the US stays shut down for the foreseeable future.
Walt Disney Co., Fox Corp. and Paramount Global are reporting amid rising scrutiny caused by the labor disputes. Beyond chafing worker relations, all three companies’ television businesses are expected to have a negative impact on results. Disney might even rid itself of its networks altogether. Warner Bros. Discovery Inc., despite beating expectations last Thursday, reported weak TV advertising revenue. The silver screen, meanwhile, is basking in a pink Barbie glow.
Monday: Paramount’s (PARA US) second-quarter sales probably fell 4.5% as its advertising segment lags. Its linear advertising revenue probably fell as it’s exposed to budgets shifting to digital outlets, Bloomberg Intelligence said, adding that visibility on a recovery remains “extremely limited.” Paramount may also provide an update on strategic asset sales as it considers selling its Simon & Schuster publishing business.
- Skyworks Solutions (SWKS US) sales are expected to drop by a double-digit percentage for a third straight quarter as the smartphone market goes from bad to worse. TD Cowen analysts now expect the industry will shrink 6% in 2023 after seeing a 5% drop previously, even as Apple Inc. plans to keep phone shipments steady this year. Skyworks faces even stiffer competition for the iPhone maker’s business, which accounts for about 60% of its revenue, after Apple deepened its ties with rival Broadcom Inc. earlier this year.
Tuesday: Fox (FOXA US) is expected to report sales stalled, maybe even fell, after eight consecutive quarters of growth. Advertising revenue probably also slipped. While the dip in total revenue may only be about 0.1% in its fiscal fourth quarter, the weakness is expected to persist; it faces a tough comparison after last year’s Super Bowl and men’s World Cup. Fewer National Football League playoff games and a lack of political advertising could also pose challenges, though Fox’s limited scripted content could mitigate the impact of the Hollywood strikes.
- Lyft (LYFT US), unlike Uber Technologies Inc., is not expected to report its first operating profit. Strong demand for ride-sharing will have been offset by fare reductions aimed at stabilizing its market share, Jefferies said. The operating loss is seen shrinking to $173 million from $373 million, consensus shows.
- Rivian Automotive (RIVN US) may post an operating loss of $1.56 billion. Average selling prices exceeding $80,000 make some of their vehicles ineligible for tax credits, motivating would-be buyers to seek alternatives, Bloomberg Intelligence said.
- Eli Lilly’s (LLY US) sales are projected to grow 16.9%, snapping two straight quarters of declines. Its drug roster is diverse and growing, with diabetes drug Trulicity and cancer treatment Verzenio set to be its two largest segments with rising sales. Still, the drug that has captured public attention is diabetes treatment Mounjaro, as patients who took it in a trial lost about a quarter of their body weight.
Wednesday: Disney’s (DIS US) revenue growth could slow to 4.7% in the fiscal third quarter, after rising 13.3% in the previous quarter. The media and entertainment segment’s sales were probably little changed, while there’s some concern the company’s parks — though still growing — have waning attendance. Disney could offload its television offerings as the networks are “in secular decline and getting worse,” BI said.
- Roblox (RBLX US) is projected to report 13.7% bookings growth, though it may beat expectations thanks to user-generated content, BI said. The company could also benefit from artificial-intelligence content boosting engagement and hours spent on its platform. AI should also help Roblox improve content creation through speed and quality, Truist analysts said.
Thursday: Alibaba (BABA US) sales growth probably accelerated to 8.6% in its fiscal first quarter. Business in China is showing signs of improving as online commerce remains resilient, Truist Securities analysts said, with Alibaba successfully navigating the holiday shopping season. Margins were likely steady as cost cuts were offset by investments to keep pace in the artificial intelligence arms race, Truist said.
Friday: No notable earnings.
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--With assistance from Immanual John Milton.
Author: Gabriel Sanchez, Redd Brown and Ignacio Gonzalez