The turbulent period in the US media industry has just begun, and the massive layoffs are just one of the signs that the turbulent period is just coming.
At present, the main reasons for the impact on the US media industry are as follows: First, the shift to streaming media is blocked. Many entertainment companies have spent huge sums on streaming services over the past few years, and those expenses are now weighing on their finances. The Walt Disney Company, Warner Bros. Discovery and Paramount Universal, for example, lost $2.5 billion in streaming in the most recent quarter alone. On Nov. 29, AMC Television Network AG said it would lay off 20% of its U.S. workforce, citing losses from unsubscribing cable TV services from its streaming app.
The second is the loss of viewers and subscribers. For example, CNN’s parent company, Warner Bros. Discovery, faced low ratings, resulting in a huge drop in advertising revenue and challenges to its profit model, leading to layoffs in the past week. CNN’s sister channel HLN TV will stop broadcasting live programming. According to statistics, cable companies are now losing nearly 10% of their customers every year. Netflix chairman Reed Hastings said: “Linear TV will die in five to ten years”; Disney CEO Bob said: “Linear TV is going to a huge cliff.”; Investment analyst Michael Ney “After Disney’s latest earnings report, it looks like the cliff may be closer than any of us thought,” Sen said.
The third is that advertising revenue is slowing and the outlook is not optimistic, including concerns about the economic recession and slowing advertising spending, and user growth during the new crown pandemic is now retreating. In particular, advertising sales in traditional media will slow down. has shrunk by 4%. The overall advertising revenue of digital media has declined, but the growth of giants is strong. The growth rate of digital media giants in 2022 is lower than the average in recent years. According to the indicators of the first three quarters, it is expected that the top two (Google, Meta) will have net advertising revenue in 2022. Combined growth of 5% and 41% growth in 2021 is the first time ever below overall market growth, and their share of global ad sales has stagnated at 42% after a sharp and sustained rise over the past 15 years. Meanwhile, the other top 15 media owners Amazon, ByteDance, Microsoft and Apple continue to post strong double-digit growth in 2022.
What needs attention is that the media business has ushered in the worst year on Wall Street in the past three decades. The stock price of the largest media company in the United States will fall by more than 50% in 2022, much higher than the broader market.
Cut off the “udder on the bull”. In accordance with the law of survival of the fittest, many major media companies in the United States have adopted cost-cutting and layoff models in a timely manner. In the past week alone, American news organizations, television networks, film and television production companies and entertainment giants have laid off hundreds of people, including Warner Bros. Gannett Newspapers announced 200 layoffs this month, following 400 layoffs earlier this year. AMC Television Network announced 200 layoffs last week, saying it would cut about 20 percent of its U.S. workforce. The layoffs of media companies show that people are generally worried about the global economic outlook, and this is only a signal of the beginning of the prelude, and the launch of subsequent large-scale layoffs is also expected. At the same time, layoffs in the entire American society are also on the rise. A report showed that the number of layoffs announced by U.S. employers jumped 13% to 33,843 last month, the highest level since last February.
While media companies are laying off employees, the US job market is doing extremely well. On December 2, the U.S. Department of Labor stated that the U.S. labor market remains historically tight. In recent months, employment in the information field has grown faster than the general level of the labor market. From January to November, employment in this field increased by 5%, which is double the overall employment over the same period.
A jobs report showed that hiring remained strong and wages were also growing rapidly. Employers added 263,000 nonfarm payrolls in November and the unemployment rate held steady at 3.7%. The U.S. labor shortage reflects a surge in early retirement, the deaths of hundreds of thousands of working-age people from COVID-19, as well as a sharp drop in immigration and slower population growth. Falling commodity prices and rents, which have been the main drivers of inflation over the past 18 months, may not be enough if businesses don’t slow down their hiring.
This phenomenon shows that the resilience of the US economy is strong and the probability of a recession is not high. And, the health of the balance sheets of US companies and individuals is better than people expected. Countries other than the United States should focus on the self-salvation of the economic recession, rather than worrying about the problems of the United States.
Diluted the Fed’s efforts to fight inflation. Still-strong hiring and rapid wage growth will worry Fed officials as they try to slow both trends to avoid rising prices and wages that become increasingly entrenched across the economy. The rapid growth of wages in the United States has become a “stumbling block” to controlling inflation. Federal Reserve Chairman Powell pointed out: “Strong recruitment and wage growth are the main driving forces to keep service costs high.” The worry must be solved by raising interest rates. Powell promised: “The Fed Are looking to raise the base rate enough to slow the economy, hiring and wage growth.”
In this sense, the work of the Federal Reserve is not complicated, that is, “add water to the face, and add more water when there is too much water”. (Fortune Chinese website)
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