Mid-Week Mini-Haul: Calling Shots and Blockbuster Debt
What happens when a cherished institution gets passed from buyer to buyer, and a pop-star that's an economy on her own decides to settle down.
This week has been a little hectic, so we’re dropping a mini-haul with some news that just couldn’t wait for the weekend.
Paramount and WBD, the new Blockbuster?
Along with more than a dozen lawsuits to block the merger in the past week, Arete Research downgraded Paramount Skydance to a “sell” and slashed their price target to $2 (the lowest target on Wall Street). Why? Too much debt. But we’re not here to analyze a leveraged balance sheet.
We’re here to recommend a documentary; ”The Last Blockbuster.”
The 2020 film follows that final Blockbuster store, still operating all on it’s own in Bend, Oregon. Watch it for two reasons. It’s enjoyable and nostalgia filled, and it outlines a commonly missed reason Blockbuster went bankrupt while Netflix became a $300+ billion dollar company: debt overload.
Blockbuster was bought and sold many times over the years. When Viacom spun it off in 2004, it was worth roughly $4 billion, and was carrying roughly $1 billion in debt (roughly 25% of it’s value). When Paramount completes it’s purchase of WBD it will be worth an estimated $135 billion... with $79 billion in debt. That’s about 60% debt.
Another threat to Blockbuster? A major chunk of it’s revenue was from late fees, which Netflix eliminated with it’s subscription model. Paramount / WBD’s version of late fees? Linear Cable Television.
While there is a lot of legal action brewing, based on historical precedent there isn’t much that can stop the dal from closing. But history also isn’t kind to those who ignore dying revenue streams and try to strong arm their way to the top with debt.
History doesn’t just repeat, it also refinances.
Taylor, in residence?
We had good time breaking down ‘Diary of a Show Girl’ in Episode 7, and spent a good amount of time speculating wildly about what comes next for Taylor Swift. Paige brought us the Las Culturistas reporting about their take and we fully agreed (Will and Paige did at least): Taylor’s next move would be a residency.
New reporting from Rob Shuter’s ‘Naughty But Nice’ claims Swift is exploring a residency worth up to $1 billion, with Madison Square Garden and the Sphere in Vegas as the reported frontrunners. Nothing is confirmed as of yet, but Taylor’s PR engine rarely slips up.
The wedding may have been the cover story. Per one insider, everyone assumed the MSG conversations were about the ceremony, but the real prize being discussed was the residency. DRGNews
She’s not blazing new territory, but she would dwarf what came before. Billy Joel’s MSG run grossed an estimated $266.7 million over 104 shows. Celine Dion’s Vegas residencies pulled a combined $681.3 million. A billion would lap them both. As one exec put it, she’s not competing with Billy or Celine. She’s competing with herself.
Consider this our receipt. We’ll be collecting more.
We hope y’all have a great end to the week and we’ll see you in our next full newsletter.
Steph, Jamie, and Will