'Disaster' or Green Shoots Amid the Pandemic? What to Expect From Hollywood Earnings Season

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Wall Street expects entertainment giants' second-quarter financials to be hit hard by the coronavirus pandemic, but there could also be more signs of slow improvements in TV advertising. Hollywood earnings season kicks off with AT&T this morning. Details:

Latest quarterly figures will be"a disaster for all," says Hal Vogel, CEO of Vogel Capital Management and a former entertainment industry analyst.

Pay TV subscriber losses have shown signs of accelerating, while streaming services, from Netflix to Disney's Disney+, have continued to be seen as key near-term beneficiaries of "stay at home" orders, but the question now is how long long consumers will be willing and able to pay for them. He forecasts a 30 percent drop in the U.S. TV advertising market in the second quarter after a 3 percent fall in the first. Jayant is predicting a reduced decline of 20 percent in the just-started third quarter though, followed by a 10 percent decrease in the fourth quarter.

Beyond a highly anticipated update on the early subscriber momentum of the HBO Max streaming service and possible color on the success of the premium VOD release of, Wall Street will look for early signs of whether cord cutting has accelerated amid the pandemic as many have predicted. John Stankey, the former WarnerMedia CEO who recently became CEO of AT&T, had said this on the first-quarter earnings call about the film business: "The theatrical business is obviously a stressed business right now, and theaters are closed. It’s hard to generate revenue, and don’t expect that’s going to be a snapback. I think that’s going to be something that we are going to have to watch the formation of consumer confidence.

Also watch out for potential latest comments from management on Universal's premium VOD and traditional film release strategy following its dispute with exhibitors over the digital release ofDisney is widely seen as the entertainment giant hit across more businesses – from film and TV networks to theme parks – than peers amid the pandemic. But one of the key figures that Wall Street will no doubt spend much time analyzing when the sector giant reports its quarterly results on Aug.

Beyond the financial figures, analysts will also be keen on an update from Disney CEO Bob Chapek, on his second earnings call, about the theme parks business, which he knows so well. "While we assume contribution dollars associated with park re-openings will be positive, the parks division remains a long way from breakeven," Jayant wrote.Fox CEO and executive chairman Lachlan Murdoch and his team will provide their earnings update on the same afternoon as Disney.

Nollen expects all the quarter's trends to add up to a 5.7 percent revenue drop to $2.4 billion, with operating income before depreciation and amortization falling 16 percent to $599 million and net income declining 28 percent to $325 million. on the stock of Fox to "neutral" and boosted his price target by $9 to $31, citing improving advertising trends that led him to increase his financial estimates, among other things.

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