The year has gotten off to a good start financially for Big Media. Stock prices have been on the upswing, and earnings reports released during the past two weeks have been generally strong.

But the numbers demonstrating the health of Hollywood’s core businesses have not eased anxiety about where those numbers are headed. The focus at the major conglomerates is on jockeying and positioning their biggest assets for the digital future, when the distribution vehicles that bring TV and movies to America and the world will look very different from those that currently generate the lion’s share of profits.

The emphasis on efforts to future-proof the biggest brands — HBO, ESPN, MTV, Disney, Warner Bros., Fox, and Paramount — was evident as CEOs and CFOs talked up their earnings and growth stories to investors on Wall Street. These are the major themes that came to light.

Here’s the skinny. 2017 is a put-up-or-shut-up year for skinny bundles. The rise of lower-cost streaming-channel packages brewing from DirecTV Now, Hulu, and YouTube (and maybe others) has analysts obsessed with not only tracking the demand for such services but with trying to determine whether the OTT packages will add to Hollywood’s bottom line or will cannibalize subscribers to higher-priced traditional MVPD bundles. Affiliate-fee growth is crucial at a time when programming costs are rising, since the biggest brands must invest more in marquee shows to maintain their competitive positions; content expenditures at ESPN, HBO, and the Turner networks will rise by double digits this year, executives acknowledge.

Among CEOs, hope springs eternal that the new entrants offering cheaper and easier-to-navigate programming services (read: an interface more like that of Netflix) will be a windfall, reversing the trend of declining subscribers from traditional MVPDs.

“We think this wave we’re seeing is really a signal of what’s to come and what the future will be,” said Disney chairman-CEO Bob Iger, putting a sunny forecast on ESPN’s prospects to realize affiliate-fee gains.

The radical overhaul of Viacom’s 25 domestic cable channels that was unveiled Feb. 9 was in large part CEO Bob Bakish’s attempt to brace the company for skinny- bundle-ization. The decision to funnel most of the programming and marketing resources to Viacom’s six channels with the most well-known brand names — MTV, Nickelodeon, Nick Jr., Comedy Central, BET, and Paramount Network (a rebranding of Spike TV) — is a bid to make that cluster, which targets distinct audience segments, become a must-have for distributors in the future.

“There is a very compelling market opportunity in the development of an entertainment pack,” Bakish said.

“Leadership needs to be held accountable.”
Bob Bakish, Viacom

Meanwhile, 21st Century Fox co-chairman Lachlan Murdoch made a comment that reinforced what many pay TV watchers already suspected: Hulu’s charge into the channel-distribution business was driven by the desire of its parent companies — Fox, NBCUniversal, Disney, and Time Warner — to affect how rivals assemble their services.

“One of the reasons Hulu is embarking on this strategy is also to influence that [pay TV] ecosystem and what is the core bundle,” Murdoch said.

Hulu’s package has yet to launch, but it has “already been successful in terms of having some influence in terms of how these packages of core channels are being put together,” he said. (Also, it’s official: CEOs have added to the industry’s alphabet soup by dubbing streaming channel providers “DMVPDs” — that first “D” is for digital.)

Going it alone. The appetite for the majors to leap into direct-to-consumer OTT distribution — also at the risk of losing affiliate fees from traditional MVPDs — was another burning question for analysts.

Time Warner impressed the Street by disclosing that its standalone HBO Now streaming service has surpassed 2 million subscribers after nearly two years on the market. Turner in November launched its Filmstruck SVOD platform, targeting cinephiles. Time Warner is amassing the technical firepower to build more such services — a business that would be enhanced if its merger with AT&T is approved this year.

Disney is preparing to launch a standalone ESPN offering in 2017, Iger reaffirmed, and sees potential too for a kidvid offering. Fox is making big moves in the overseas arena — CEO James Murdoch was effusive about the growth of the Hotstar platform in India — but the company is taking a wait-and-see attitude for the U.S.

Viacom’s Bakish, meanwhile, has enough fires to put out without worrying about making enemies among his biggest customers. He clearly attempted to curry favor with Comcast, DirecTV, et al., vowing to “reinforce the pay TV ecosystem by being highly selective in striking agreements with over-the-top distributors, confining those deals to largely library content.”

Succession, succession, succession. The real surprise during Disney’s call was that it wasn’t until the third question that Iger was asked whether he would change his plan to step down as CEO in June 2018. With no successor on the horizon (at least publicly) and barely more than a year to go, Iger’s statement that he is “open” to revising his exit date seemed an understatement.

Bob Iger’s contract as Disney CEO is up next year.
Mark J. Terrill/AP/REX/Shutterstock

The lack of an obvious candidate to replace the Disney topper underscores the uncertainty media conglomerates are facing about the new skill sets required to manage content-and-distribution companies.

Sony Pictures Entertainment is in the hunt for a CEO with Michael Lynton’s pending departure. The job search is so important that Sony Corp. chief Kazuo Hirai is taking an office on the studio’s Culver City lot to supervise the process and will travel back and forth to his headquarters in Tokyo. The film side of the studio is the biggest trouble spot, but the background of the eventual pick will speak volumes about where Sony sees its future in entertainment.

All of the changes unveiled at Viacom have spurred speculation in the industry about Brad Grey’s longevity atop struggling Paramount Pictures. On the same day Paramount posted a $180 million operating loss for the winter quarter, Bakish took pains to emphasize that a new development structure was being put in place to foster collaboration between the studio and the cable networks.

“Leadership needs to be held accountable,” Bakish said when pressed about the possibility of a change at the top of Paramount.

Opening the window. With all the moving and shaking in TV, investors are impatient for meaningful innovation on the film side when it comes to theatrical windowing. Warner Bros. CEO Kevin Tsujihara said Hollywood’s biggest studio is “making a lot of progress” in plans to speed up the delivery of movies to the home, citing the growing prevalence of internet piracy as a spur.

“We’ve been aggressively working with exhibitors to talk about models that will grow the market versus cannibalize the market,” Tsujihara said. “It’s really about giving consumers what they want, because if we don’t give it to them, they’re going to go to the pirated version.”