- In STREAMING NEWS, Disney prices up its new streaming service and cord-cutting savings narrow
- In RETAIL NEWS, Primark dip its toes into online retailing, Ted Baker and Arcadia have a shake-up while WH Smith enjoys big rent reductions
- In INDIVIDUAL COMPANY NEWS, Uber admits it may never make a profit (!) and Boeing parts makers suffer fallout
- In OTHER NEWS, GoT’s Kit Harington shaves his beard after reading yesterday’s Watson’s Daily 😂. For more details, read on…
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STREAMING NEWS
So Disney announces more details of its streaming offering and cord-cutting gets slightly less attractive…
Disney prices new streaming service at $6.99 a month (Wall Street Journal, Erich Schwartzel and Joe Flint) shows that the company’s new streaming service, Disney+, will launch in November for $6.99 a month as an ad-free subscription service based on its biggest franchises (including Star Wars and Marvel Studios) and original programming. An annual subscription is even cheaper (clearly it is copying the Watson’s Daily subscription model ????) at $69.99 and is almost half the equivalent Netflix subscription. The company expects to garner between 60 million and 90 million subscribers by the end of fiscal 2024 (which is the point at which it will be profitable), with operating losses peaking between 2020 and 2022 given the expense of producing and licensing. In contrast, Netflix has 139 million subscribers worldwide. The field of streamers will be joined by Apple’s service this autumn, AT&T’s WarnerMedia and Comcast’s NBCUniversal equivalent offerings. * SO WHAT? * I think that Disney has a pretty strong and attractive offering in terms of programming for a new kid on the block. However, it is entering what will be an increasingly competitive landscape and I just think that streaming is going to be a massive money pit. In the end, I think that only the biggest
companies with the deepest pockets (or the ones that can raise the most money from investors) will survive. Over time, I think that consumers will hit “subscription fatigue” and cut back, at which time I would expect streamers to consolidate. This won’t happen overnight, but I would expect the winners and losers to become apparent over the next two to three years.
Cord-cutters’ savings shrink as online TV services raise prices (Wall Street Journal, Drew Fitzgerald) is an interesting article because it shows that the benefits of cancelling your cable/satellite TV service and switching to streamers are starting to narrow. YouTube TV said this week that it was raising its monthly subscription prices by $10 to $50 (but adding channels such as HGTV and Food Network) and T-Mobile US is looking to launch a $100-a-month TV service with over 275 channels. Streaming services Sling TV, DirecTV Now and Hulu have all increased the prices of their basic packages over the last year. * SO WHAT? * The battle for customers is going to increase greatly, as per what I said in the other story in this section, and I think that the smaller players are going to have rougher time of it than the larger players because it’s so easy to switch subscriptions these days. Funnily enough, I was going to join the legions of cord-cutters recently after umpteen years as a Sky subscriber, but when it came to cancellation, Sky offered some big upgrades, included Netflix (which is what I was going to go for anyway) and cut the price. Little guys can’t afford to do that. There is bound to be a lot of consolidation going forward.
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RETAILER NEWS
There’s lots of “bitty” news (and for fans of Little Britain – not that kind of “bitty”) about UK retailers today what with Primark inches towards first online trial (Financial Times, Jonathan Eley) showing that the budget fashion retailer owned by Associated British Foods is looking at offering click-and-collect services that will effectively help Primark to supply its full product range to customers at smaller outlets. * SO WHAT? * It has so far avoided online shopping and directed customers instead to its high street shops in the belief that adding the extra delivery capability will impact costs quite considerably given the low average price points. In actual fact, this has not held the company back, but I think that click-and-collect seems to be a reasonable alternative.
Then Ted Baker under pressure to publish findings of inquiry into founder (The Guardian, Jasper Jolly) shows that the independent inquiry into founder Ray Kelvin’s behaviour conducted by Herbert Smith Freehills has now concluded, but the contents aren’t being released. Ted Baker said that it would launch “acceptable workplace conduct” training programmes for staff, some new HR policies and appoint Lindsay Page, who has been acting chief exec since December, as chief exec to replace Ray Kelvin, who resigned last month. Investors obviously want to know the contents of the report because they could give an indication as to future legal or reputational risks, but it looks like they’re not going to get a sniff. * SO WHAT? * Ted Baker will be hoping that this will draw a line under the
whole incident and that its latest actions will be enough to deflect further criticisms and change the company culture. It may well have effects on the way other retailers conduct their business, but I’m sure that they won’t be making a song and dance about it as shouting about the implementation of such policies could imply that they have had problems that could then lead to investors selling out for fear of legal entanglements as per Ted Baker.
Philip Green appoints restructuring experts to Arcadia board (The Guardian, Kalyeena Makortoff) continues the story of Arcadia’s ongoing overhaul as Big Phil just appointed two restructuring experts to the board who bring “significant restructuring and governance expertise”. This is happening just ahead of a widely-expected major restructuring programme via a company voluntary arrangement (CVA) that is likely to involve the closure of dozens of shops.
Smith’s pays no rent on 20 of its high street stores, says boss (Daily Telegraph, Ashley Armstrong) shows that WH Smith put in a solid performance yesterday, with only a 2% decline in its high street business over the six months to the end of February (its second best performance on the high street over the last ten years), an 18% sales boost for its group travel sales and an 8% hike in its dividend. * SO WHAT? * This is all good, but I think that the most interesting thing about this article was that it highlighted the dire current state of the high street as landlords are willing to cut rent entirely for the right tenants as the company said that it doesn’t pay ANY rent on about 20 of its shops! Chief exec Stephen Clarke said that “The market is so distorted that in most cases our business rates are higher than the rent bill, so landlords have been happy for us to not pay rents rather than the shop be empty and then having to cough up instead”. It just goes to show that the big chains still get all the preferential treatment!
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INDIVIDUAL COMPANY NEWS
Uber lowers expectations and Boeing suppliers suffer…
In Uber warns it may never make profit (The Times, James Dean) we see a rare glimpse of contrition by a major company as it warned last night about its prospects in the run-up to its upcoming stock market flotation. The world’s largest ride-hailing company said last night that it made a $3bn operating loss last year alone! Its Initial Public Offering (IPO) will be the largest since Alibaba, the Chinese e-tailing behemoth, listed on the NASDAQ in 2014, raising $25bn. Uber is expected to raise about $10bn, putting a valuation on the company at about $100bn. * SO WHAT? * It’s rare to see a company like Uber paint anything other than a fantastically rosy picture ahead of flotation. However, that does not mean it’s undervalued. There are still a lot of legal risks and potential landmines within – but I guess at least Uber is being honest. Lyft’s recent deflation following a puffed-up IPO has not helped Uber’s cause, that’s for sure.
You are probably used to hearing negative news about Boeing at the moment, given the scandal surrounding their faulty 737 MAX aircraft, but Boeing suppliers weigh response to 737 production cuts (Financial Times, Patti Waldmeir and Sylvia Pfeifer) looks down the supply chain with companies like Spirit Aerosystems (which produces 70% of the 737’s aerostructure including the fuselage, pylons and wing leading edges) Triumph Group (which makes gearboxes and other parts for the 737), Safran, Meggitt and Melrose have all seen their shares take a nosedive since the whole sage erupted. They are currently producing enough to supply 52 planes per month (Boeing’s usual rate of production) but given that they are going to be cutting this to 42 per month, you can see the stockpiling that is going to occur while Boeing races to remedy its faults. * SO WHAT? * The longer this drags on, the worse it will be for all concerned, given that Boeing is the world’s biggest commercial aircraft manufacturer. The pain will be felt by all in the supply chain.
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OTHER NEWS
And finally, in other news…
It’s possible that Game of Thrones actor Kit Harington saw yesterday’s entry Men with beards more likely to ‘have smaller testicles than those without’ (The Mirror, Courtney Pochin http://tinyurl.com/y2rl9787) and decided to take action as per Kit Harington shaved his beard and Game of Thrones fans can’t cope with the ‘utter travesty’ (Evening Standard, Emma Powell https://tinyurl.com/y48qu8lg). Coincidence?
Then I thought I’d sign off today with something controversial. How much would you sell your bestie for?? This might provide some interesting insight: Brits would happily give up their best friend for £131,000, study finds (The Mirror, Courtney Pochin https://tinyurl.com/yy97az7t).
I hope you have a great weekend! Watson’s Daily will be taking a break from now until after Easter, so will return bright and breezy on Tuesday 23rd April. See you all then!