After a really bumpy first couple of years as Disney head honcho, Bob Chapek finally has had a nice little run, topped by last week’s fascinating announcement that the three Disney-owned streaming services now have ever-so-slightly more subscribers together than Netflix does all by itself. 

That the margin of “victory” was somewhere around 0.2% (note that decimal point) was immaterial for the resulting headlines in this and just about every other relevant publication. Mission accomplished there, whoever you are, replacement Corporate Communications guru!

Not to ever suggest that such an extremely, almost suspiciously narrow lead was perhaps custom engineered to distract subscribers, journalists, investors, competitors and others from all the other Disney streaming news that came out last week, or that’s coming soon. Not to put too fine a point on it, by year’s end, getting such great headlines may be slightly more difficult for Disney, Chapek, and the new guru. Let’s review the bigger picture:

> Price hikes are coming in December, big ones that may affect inflation-addled subscribers’ continued engagement. Disney Plus is jumping 37.5%, to $10.99 a month. Both ad-supported and ad-free Hulu will rise 14.3%. The Disney bundle of D+, ad-supported Hulu, and ESPN Plus will jump 42.8%, to $19.99 per month, same as the top-end Netflix tier. The stand-alone ESPN Plus was already getting a hefty bump to $9.99 a month, though most of its new customers were joining through the bundle. "We thought this was the perfect time to bring up that cost-value equation," Chapek told CNBC on Friday. "We suspect we’ll see growth accelerate in next quarter across the board. So we’re very bullish."

> Subscribers turned off by the price hikes can instead opt into the $12.99/month ad-supported bundle that’s also coming in December. At least some subscribers will take that option, which is designed to generate lots of new revenue and keep around subscribers who might otherwise churn out. If you like your streaming TV like your old cable TV package (but with better ad targeting), it’ll be awesome-ish. Maybe.

> As I wrote previously, Disney’s streaming service in India, Disney Plus Hotstar, is almost certain to lose a lot of subs, admittedly ones who don’t pay very much, between now and next spring. Disney “showed discipline” and didn’t re-up streaming rights for Indian Premiere League cricket that have expired. Re-upping would have cost Disney about $3 billion, more than it spent the past five years for all media rights to the massively popular league. 

> Those Indian subscribers are just one contributor to the relatively low average revenue per user that Disney generates from streaming, an ARPU that dropped another 5% last quarter. Even on the domestic side, Disney generated just 39% as much revenue per user as Netflix in Q2. And let’s not even get into the valid point made by Netflix that Disney triple-counts its domestic bundles, even though it’s the same household getting all three services in millions of accounts. 

> Alongside everything else, Disney indirectly suggested its lead in the subscriber wars might be short-lived. It finally acknowledged that it’s unlikely to reach its previous guidance of 230 million to 260 million streaming subscribers by 2024, cutting by 15 million both the top and bottom end. Disney even devised a new way to define its customer base (another win for New CorpComm Guru!) with “core” and “non-core” subscribers. Non-core is those low-ARPU South Asian subs, of whom the company vaguely said it will have “up to” 80 million by 2024. The company acknowledged predicting who sticks around on Disney Plus Hotstar next spring won’t be clear for a while. Perhaps “up to 80 million” is another example of optimistic number engineering.

> Regardless of lower subscriber projections, Disney executives said streaming operations will break even by 2024, last quarter’s $1.1 billion loss notwithstanding. Those losses were $300 million higher than analyst expectations, but executives said they’re expected to decline going forward. Such sudden fealty to fiscal restraint is part of an industry-wide chorus (see also, Netflix’s various announcements, and David Zaslav’s green-eyeshade work on every corner of HBO Max). Achieving global growth, managing the decline of legacy operations, and still keeping costs to break-even two years hence again seems aggressive. Add in Chapek’s statement to CNBC on Friday that he hopes to reinstitute the company’s dividend, after reducing debt, and it seems rather boldly optimistic.  

> Speaking of complicated and hazy futures, Disney still must figure out what to do with Hulu. Sticky NBCU programming on Hulu such as Saturday Night Live and The Voice are headed to Peacock in the next few weeks. Under a 2019 deal, Disney will need to buy out NBCU’s one-third stake by 2024, for at least $9 billion. Hulu has been on a great run, thanks to FX-first shows such as Dopesick, Reservation Dogs, and Pam & Tommy, and originals such as Only Murders in the Building.. But what’s its future as Disney Plus starts diversifying with foul-mouthed, adult-focused content such as Deadpool? Also, how does Disney get to break even by 2024 if it also has to cough up, say, $10 billion to $15 billion to Comcast? 

So, despite that great headline and Chapek's earlier contract extension, it's still a fraught time even amid Disney's real achievements in streaming. The company's aggressive approach to streaming is the polar opposite of Zaslav's throwback reliance on still-lucrative but fading legacy platforms such as cable TV and theatrical movie releases. 

Which approach will lead to the softer landing in the years ahead? Like so much in Disney’s new numbers, there's plenty of uncertainty here beyond that great headline. Investors, subscribers, advertisers, and partners will need to look deeper to see the more challenging numbers underneath. ▪️

FuboTV reported the loss of another 110,000 customers in the second quarter, pushing the virtual pay TV service's subscriber base back below 1 million. 

The sports-focused vMVPD attributed the decline to a slower than anticipated live-sports content offering during the April-June period. 

So far, no publicly traded pay TV company, virtual or otherwise, has reported customer growth in Q2.

Still, fuboTV subscribers were up 41% year over year to 946,735. And fuboTV stock ticked up over 5% in after-hours trading, with the New York-based live streaming company reporting a 65% year-over-year uptick in total quarterly revenue to $216.1 million, and a 32% increase in ad revenue to $21.7 million. 

However, losing money continues to be an issue for the vMVPD, which has tried to differentiate itself via a live content channel (the Fubo Sports Network) and what was a developing sports-betting portfolio of services. 

FuboTV reported the loss of $116.3 million in Q2, a 22% year-over-year increase. 

In its letter to shareholders, fuboTV management indicated a pullback from its recent aggressive movement into sports betting. Fubo said it's now reviewing the strategy and looking to partner up with somebody. 

"While our disciplined sports book progress continues, in light of a rapidly-evolving macro-economic environment, we believe it is important to be even more capital efficient than originally scoped," the company said. "We are taking steps to de-risk our business and have made the decision to no longer go down the wagering path independently. As a result, we’re evaluating strategic opportunities for our wagering business."

Roku announced the addition of 1.8 million active users in the second quarter, upping its U.S.-leading base of connected TV customers to 63.1 million. 

The figure represented re-accelerated growth for Roku, which only added 1.2 million active users in the first quarter and 1.5 million in the second quarter of 2021. Roku attributed that spry growth to improved smart TV shipments and pricing. 

Roku also saw its advertising revenue grow by 4% sequentially, and 26% year over year, to $673.2 million, partially driven by record upfront commitments that exceeded $1 billion. 

Also read: Roku Drew Record $1 Billion In ad Commitments in Upfront

Roku reported 21% year-over-year growth in average revenue per user, with that figure reaching a record $44.10.

There's the good news. Pretty much all of it.

Roku also reported a narrow decline in the number of hours its users spent on its platform -- the first time we've ever seen that -- and the streaming company fell short of the consensus forecasts conjured by TMT equity analysts, particularly in the area of ad-driven platform revenue. Roku projected only weak platform revenue growth to $700 million for the third quarter, for example (it's all in the pullout chart from the shareholders letter at the bottom of this story).

Indeed, with Roku caught off-guard and comparing the suddenly stalled TV ad market to the early pandemic days of 2020, the after-hours trading picture was nothing like the redemptive narrative experienced by Netflix last week. 

Roku stock was down another 25-plus percentage points in after-hours trading, as denizens of the Wall Street casino again look at the company that makes most of the gadgets we use to stream video in the U.S., while arbitrating many of the advanced ads we see on those devices, and says, "meh."

Before the latest after-hours bloodbath on the Nasdaq, Roku stock closed normal trading Thursday at around $85 a share. It was priced at just over $428 a share at its zenith exactly a year ago. At the time, the streaming company had 8 million fewer active users and generated $120 million less in total quarterly revenue. 

“There was a significant slowdown in TV advertising spend due to the macro-economic environment, which pressured our platform revenue growth,” Roku executives said in a letter to shareholders. “Consumers began to moderate discretionary spend, and advertisers significantly curtailed spend in the ad scatter market (TV ads bought during the quarter). We expect these challenges to continue in the near term as economic concerns pressure markets worldwide.”

Assessing the damage, Insider Intelligence analyst Ross Benes said, “These signs indicate that exuberance over streaming video advertising is tamping down due to challenging economic conditions." 

Roku reported a net loss of $112.3 million in Q2 compared with a net loss of $149.8 million in the same quarter last year. It lost $22 million selling gadgets vs. $6.7 million in Q2 2021. ■

Perhaps disabusing the video business of the notion that sustained double-digit growth is merely a matter of transitioning models from subscriber to advertising focus, YouTube just reported its slowest quarterly revenue growth in more than two years. 

Alphabet said during its second quarter earnings report Tuesday that YouTube generated $7.34 billion from April - June, up 4.8% year over year. The expansion missed equity investor forecasts of around $7.49 billion.

Consider that in the second quarter of 2021, Alphabet reported 84% revenue growth for YouTube. 

"The 2022 revenue growth rates are presented against particularly tough comps as we lapped the recovery in the second quarter of 2021 from the impact of the pandemic in early 2020," Alphabet CFO Ruth Porat told equity analyst during Tuesday's earnings report. "Going forward, the very strong revenue performance last year continues to create tough comps that will weigh on year-on-year growth rates of advertising revenues for the remainder of the year. In YouTube and Network, the pullbacks in spend by some advertisers in the second quarter reflects uncertainty about a number of factors that are challenging to disaggregate.

Notably, YouTube generated ad-sales expansion of only 5.8% in the second quarter of 2020 amid the sudden onset of COVID-19. 

Netflix reported the loss of just under 1 million subscribers globally for the second quarter, bettering its own forecast of 2 million lost users, as well as the projections of legions of suddenly dour equity analysts and insta-pundits breathlessly tracking the streaming company. 

Even better, Netflix predicts that it will grow subscribers by around 1 million globally and return to growth in Q3.

Also read: Netflix Dangles a Shiny Distraction, While HBO Max Scours the Couch for Loose Quarters (Earnings Preview)

Not as happily, the SVOD service provider reported diminished revenue growth of 8.6%, bringing in $7.97 billion from April-June. 

Netflix, which has seen its quarterly revenue growth rate steadily drop from the astronomical 30%-plus range back in the halcyon days of 2019 and 2020, is predicting that Q3 sales growth will come in at around 4.7%. It's primarily blaming the strong U.S. dollar for that. 

So far, investors seem more swayed by the notion that Netflix's subscriber growth prospects don't look nearly as bad as some of the third-party Chicken Little forecasts had suggested. 

Netflix stock was up just under 8% in after-hours trading at the moment this sentence was written — this after rising 5.6% in regular trading on Tuesday.  

Netflix started its tailspin in January, one which accelerated dramatically in April when it reported its first quarterly net customer loss in over a decade. Netflix saw its market capitalization shrink to less than a third of the peak it rose to last October.

 The Silicon Valley company, cast out from FAANG and rendered to junk-bond status on the NASDAQ, began a series of layoffs. It also set out on an intense focus to develop a cheaper ad-supported tier to address the needs of its decreasingly elastic customer base. 

Netflix just announced a partnership with Microsoft to get that off the ground, but it doesn't look like it'll happen until early next year. Ditto Netflix's attempt to crack down on password sharers with an additional $3 fee. 

Despite the massive Q2 popularity of Stranger Things, which is arguably the streaming company's biggest domestic original series hit ever, Netflix lost 1.4 million subscribers in the U.S. and Canada during from April-June vs. a loss of around 400,000 in the same period last year. 

However, Netflix touted 23% revenue growth to $900 million in its Asia-Pacific region, which includes growth priority country India. Netflix said it added 1.1 million APAC customers during Q2 and that the region is now producing almost as much as its also-nascent Latin America operation. 

Look for APAC and India to dominate Netflix’s future earnings discussions. 

As for revenue expansion, Netflix blamed the strong dollar for its quickening growth deceleration. 

“The U.S. dollar continues to strengthen meaningfully against most currencies at a historic pace, with the Euro recently falling below the U.S. dollar for the first time in two decades, a significant headwind for all multinational U.S. companies,” Netflix said in its Q2 letter to shareholders. “We have high exposure to this unprecedented appreciation in the USD because nearly 60% of our revenue comes from outside the U.S. and swings in F/X have a large flow through to operating profit as most of our expenses are in USD and don’t benefit from a stronger USD.” ▪️

When you can’t get adds anymore, you go looking for ads, at least if you’re Netflix. And this week, we’ll hear how well the chase for the latter is going amid what’s likely to be a disheartening lack of success with the former.

And if you already have the adds and the ads, like HBO Max, and you still don’t have enough to cover that humongous pile o’ debt on your balance sheet, you start to reconsider even the smart decisions of your predecessor. 

It’s that kind of season for even the biggest and most successful streaming companies out there, as they start rifling the couch cushions for quarters among other potentially lucrative revenue generators. It’s part of what will make this week a most intriguing one to watch. 

Netflix, of course, got a jump on its promised ad pivot last week, announcing that it has chosen Microsoft to be besties in the ad wars. On Tuesday, Netflix will confirm how close to miserable it was in forecasting it would lose at least 2 million subscribers this quarter. Some analysts are betting the losses are even worse. 

Advertising is supposed to fix a lot of that. It will give cost-conscious consumers a lower-priced alternative, reduce churn (and, alas, engagement), and generate even more data. Most importantly for both Netflix and the investor/analyst community barking at it, an ad-supported tier will create new revenue at a time when ARPU is an increasingly vital metric.  

Microsoft is a formidable technology partner, worth almost $2 trillion and with a huge presence in cloud computing, enterprise software, video games and much else. And Netflix certainly needs help to spin up an ad-supported tier by year’s end, as promised amid April’s disastrous Q1 earnings call. 

And yet, this is all kind of weird timing, announcing your ad sales partner before you’ve even, you know, hired an ad sales chief to actually build the thing. Worse, for all that Microsoft has to offer, it’s not quite set up yet to deliver that ad stack. 

It just picked up supply-side ad platform Xandr in the ongoing AT&T media fire sale for something around $1 billion. That means Microsoft has some serious stackin’ to do if it’s to provide Netflix with a working global ad solution within (consults calendar and toes) five-and-a-half months. 

“It’s very early days and we have much to work through,” COO Greg Peters said. 

Yes, indeed-y. 

Needham’s noted Netflix watcher (and senior analyst) Laura Martin had a more pungent explanation for the early announcement: it’s going to be a really bad earnings call. Netflix needed to dangle something to keep share prices from plunging even further below the 69% collapse they’ve seen so far in 2022. 

Realistically, Martin suggested, a Microsoft-supported ad tier might not arrive until late 2023.  That would be (again consults calendar and toes) about a year, and a couple of hundred billion dollars in market capitalization, late for Netflix’s short-term needs. So if that’s the case, just how bad is this earnings announcement going to be? 

To further spice up her comments, Martin suggested a “hidden agenda”  might be lurking behind Tuesday’s distractions. 

Microsoft is, for instance, the lone contender to build Netflix’s ad services that also could a) afford to buy the streaming giant; and b) get the deal past regulators.

"It could be that Netflix is looking for an exit,” Martin said. “Netflix is trying to get closer to Microsoft in hopes that, after Microsoft digests its Activision acquisition, it turns and buys Netflix next.”

It’s certainly true that Microsoft has some digestin’ to do before it gets to the ad stackin’, as it pushes for government approval of its $69 billion purchase of Activision-Blizzard. Unlike Elon Musk and Twitter, this is a tech deal both sides want, as do activists and investors hoping to extract deeply problematic Activision CEO Bobby Kotick from his decades-long sinecure. 

That deal is hugely additive for one of Microsoft’s biggest areas of leadership: the $160 billion video game sector, where Microsoft already owns the dominant PC gaming operating system and one of the big console platforms. 

It also has a terrific subscription gaming platform, with Xbox Game Pass, and owns more than two-dozen game development studios, led by the 2020 acquisition (Microsoft seems to be doing a lot of acquiring lately) of the publisher behind Elder Scrolls, Fallout, and Doom. 

Also, Netflix founder and Co-CEO Reed Hastings spent five years on the Microsoft board, though he left in 2012, two years before Satya Nadella took over as CEO.

Now, wouldn’t Netflix look nifty bundled up with that collection of big gaming IP? It’s already building its own game division, but a deeper deal or even an acquisition would increase customer engagement for both sides’ subscription offerings, while also creating a potentially useful pipeline of games-to-video and vice versa.  

Martin is, as I like to say, solving for X. 

She’s trying to figure out an unknown component of an equation that otherwise doesn’t add up. Maybe it’s just a Tuesday-deep diversion. 

Or maybe it’s the golden parachute Hastings needs here in his early 60s, after a quarter century of building the world’s biggest streaming service. Does he have the stomach to restructure the company to do things he always opposed (like advertising), in the hope that will extract his baby from the dismayingly deep pothole in which it’s now stuck? 

Goin' 180 ... Again

Meanwhile, talk about besties new and old, HBO Max and parent Warner Bros. Discovery reportedly are reconsidering a relationship with former partner Amazon. That’s a quick boomerang, not even a year after HBO Max walked out, leaving 5 million puzzled subscribers there to figure out where else they might get their fix of Mare of Easttown, Euphoria, Hacks, The Gilded Age, et al. 

The reason for the split? HBO Max wanted all that sweet, sweet DTC relationship for itself, including the billing, usage and demographic data. The surprising split seemed to work out for Warner and HBO Max, which saw streaming adds continue to rise at an estimable rate last fall and this spring. 

But now, WBD is considering going back, DTC data be damned, Bloomberg reported last week. 

The reason is familiar: Need mo’ money. CEO David Zaslav is still whacking budgets and org charts with abandon, trying to navigate a mammoth $55 billion pile of debt. 

It’s a mark of the tight times at WBD that getting back in bed with Amazon is looking pretty good again. It’s probably also a mark of Zaslav’s basic cable background. 

Functionally speaking, Amazon Channels and similar wholesale platforms are largely indistinguishable from a previous generation’s MVPDs. Both reliably deliver wholesale cash without the hassle of programmers trying to keep actual retail customers happy. ARPU matters here too. 

As with Netflix, though, we have to wonder if this is a short-term decision forced by uncomfortable circumstances, or a long-term investment in building a streaming business for the future. Sometimes, you gotta grab the money and run.

Sling TV returned to quarterly growth for the first time since the third quarter of 2020, adding 65,000 subscribers in the second quarter.

The gains compare to a loss of 56,000 subscribers in Q2 of last year, and it's a hopeful sign for Sling TV, with the second quarter usually presenting a tough growth opportunity for pay TV operators. (That's often the month that owners of vacation rentals shut down their service, for one example.)

The Dish Network-owned live streaming service had about 2.439 million users as of the end of June 30, making it the third largest virtual pay TV (vMVPD) service behind Hulu + Live TV and YouTube TV. 

As Dish conceded earlier this year, that's not a great metric, considering that Dish--which launched in February 2015--was first out of the gate by a factor of several years. 

Acknowledging that its UX game for Sling TV is lacking, Dish is in the process of rolling out a dramatically revised user experience, which recently deployed on select high-end Roku devices. 

But any positive subscriber boost might be offset by recent Sling TV price increases--it's monthly price for both the Sling Blue and Sling Orange tiers just increased from $30 to $35 a month. 

Meanwhile, Dish Network's broader pay TV business faces the prospect of a blackout with the largest broadcast station operator, Sinclair. 

Overall, Dish reported a net declined of 67,000 pay TV subscribers, with its legacy satellite TV service losing another 132,000 customers in the second quarter. Dish has 10.99 million remaining pay TV clients, 

Dish reported a revenue gain of nearly 29% in the second quarter to $449 million, with the company picking up an additional 200,000 wireless customers after its purchase of Republic Wireless. 

Dish finished Q2 with 8.9 million wireless customers. 

Roku once again reported huge quarterly gains in its platform business, expanding sales for the ad-driven side of its business by 117% in the second quarter to $523.3 million, and overall revenue by 81% to $645.1 million.

But as the company warned earlier this year, margins on Roku devices went under water due to global supply issues, dipping to a negative 5.9%.

"Within the Player segment, we expect global supply chain constraints and component cost increases to worsen in the second half of 2021, leading to increasing negative player gross margin," Roku said in a letter to shareholders published Tuesday. "We believe these industry supply chain constraints and cost increases for streaming players and TV OEM partners will continue into 2022."

And perhaps more foreboding to Roku's longterm core streaming business goals, subscriber growth has decelerated, and engagement shrunk in Q2.

Also Read: Roku Finishes Upfront With Double Last Year’s Volume

Roku finished Q2 with 55 million active users, up 1.5 million from the first quarter. That's less than half of the 3.2 million active accounts Roku added between Q1 - Q2 last year, a metric that has steadily declined in the year since. 

Meanwhile, the number of hours Roku users spent watching video on the Roku platform declined sequentially by nearly 6% to 17.4 billion hours in Q2. 

Still, Roku's advertising business is growing too fast to get too hung up on the fault lines. 

Average revenue per customer rose by 46% to $36.46, while gross profit was up 130% year over year to $338 million. 

"We continue to make good progress in our international markets," Roku added in its shareholder letter. "In the UK, we enhanced our product offering with the launch of TCL Roku TV models, which we expect will drive further platform adoption. And, we are excited to bring Roku to Germany, starting with players, later this year. We believe our business model will serve us well as we seek to grow in international markets by building scale with our affordable hardware and the Roku OS (the only OS purpose-built for TV), driving user engagement with a best-in-class user experience, and monetizing activities on the platform over time."

A week after it was reported that he met with his ViacomCBS equal, Shari Redstone, to discuss some kind of deal, Comcast CEO Brian Roberts shot down the notion his company is interested in wholesale acquisition or sale. 

"We don't need M&A," Roberts told equity analysts Thursday during Comcast's third-quarter earnings call. "I really love the company we’ve got."

Roberts made his comments as Comcast soundly beat second-quarter analysts' consensus forecasts, adding 354,000 broadband users, and increasing revenue by 11% to $16 billion, among other strong metrics. 

Notably, with the ongoing Tokyo Olympics finally in full swing--the event that was originally supposed to propel NBCU's streaming service, Peacock, to growth when it first launched 54 weeks ago--Comcast said it's up to 54 million signups and 20 million active users. Peacock is poised to begin its international rollout later this year as a free addition on the Sky satellite TV service in Europe, which Comcast owns. 

“If you look at the results of Peacock this quarter, we're the fastest growing streaming service," Roberts said, noting the Peacock brand is only a year old. 

"I can’t imagine a better quarter, an exceptional quarter, and I believe we have much more organic growth ahead. We have a unique company with content and distribution working so well together," Roberts added. 

He said Comcast might consider a partnership to enhance its global streaming position. But as far as adding scale, Roberts noted, "We have all the parts."

Notably, the discussions with ViacomCBS chief Shari Redstone reportedly involve an overseas partnership revolving around streaming. 

YouTube generated $7 billion in advertising revenue in the second quarter, its biggest sales quarter ever, rising 84% year-over-year from the pandemic-effected spring quarter of 2020.

Overall, Alphabet, parent company to Google and YouTube, reported Q2 revenue of $61.9 billion, up nearly 62% year, with net income of $18.5 billion. Again, these performances were the company's best ever. 

During Tuesday's earnings call, Google/Alphabet CEO Sundar Pichai called out YouTube Shorts, the company's answer to TikTok, which averaged 15 billion global daily views in Q2, more than double the 6.5 billion it was averaging at the end of the first quarter. 

Meanwhile, Pichai didn't update the customer growth metrics on virtual pay TV service YouTube TV, noting only that he was "also pleased with the progress we are making with YouTube subscription products across Music, Premium and YouTube TV, each delivering a fantastic experience and content for viewers."

With quarterly ad sales $7 billion, YouTube is the second biggest video platform in the world, trailing only Netflix, which generated more than $7.3 billion in subscription revenue in Q2. 

With $6.9 billion in ad revenue in Q4, YouTube temporarily held the "biggest in video" crown at the turn of the year. 

Netflix has warned investors coming into Tuesday's second-quarter earnings call that subscriber growth will be especially light, expanding by as little as 1 million customers, a key metric that compares badly with the 4 million users worldwide added in the quarantine-fueled second quarter of 2020. 

Given the recent fixation of the Netflix narrative on slowing subscriber growth, some high-profile members of the equity analyst community wonder if the streaming company's announcements of new business ventures into merchandise and games are merely attempts to change the conversation. 

Bernstein analyst Todd Juenger said that some of his peers, “knowing second-quarter results and the third-quarter guide will be received as weak," believe that "Netflix leaked this [gaming] story now in order to change the narrative, distract, divert attention from the core business.” 

In the same note to investors, Juenger insisted he isn't in that group. “In our strong view, Netflix management has never behaved in a way where they would be expected to engage in such short-term diversions to try and impact/protect the stock price.”

Cowan analyst John Blackledge has also rated Netflix as "outperform," believing the best of 2021 will come toward the end of the year. “Management has also called out a content slate weighted toward the second half of 2021," he told investors. 

However, since Netflix announced the hiring for well-traveled former EA and Oculus gaming veteran Mike Verdu last week to run its fledgling online video games initiative, there has been second-guessing of the games strategy in the equity analyst community. 

And it's not surprising that the man who is perhaps Netflix's biggest bear, Wedbush's Michael Pachter, has been among the most vocal of critics. 

"The idea that they're going to launch games next year is crazy," Pachter said while appearing on Bloomberg's Take Stock. "There's no chance they get anything made in the next year."

Netflix leaked last week to Bloomberg that it will add a gaming feature within the next year, providing it at no additional cost to subscribers. 

"I don't see how Netflix has a prayer of pulling this off," Pachter said. 

For starters, Netflix hasn't built out a gaming development team, he pointed out.

"They hired a head coach. They have no players," said Pachter, who also noted the limited amount of gaming DNA among Netflix's upper management team, and the fact that few media companies have succeeded in launching gaming divisions. 

Disney, he said, has tried and failed three times.

Pachter is also puzzled by what intellectual property Netflix could lend to a gaming service add-on. 

"I don't see 'Bridgerton' the game as being all that compelling," he quipped. 

And he also wondered how, from a basic perspective of game control, it might all work. 

"Your TV remote has up, down and sideways motion. That's it. You can't play anything but solitaire," Pachter said.

Finally, the Wedbush analyst took aim at Verdu's frequent employment shifts, suggesting that based on pattern, he'll be out the door in Los Gatos in about two years. 

In the meantime, Pachter added, Netflix will "piss away a billion dollars on this, maybe, more likely two, three hundred million dollars."

Discovery Communications raised its profit forecasts for both 2016 and for the next three-year period.

On its call with analysts to discuss second-quarter earnings on Tuesday (Aug. 2), the company said that recent renewals with distributors locked in solid revenue growth, particularly in Europe where Discovery will have rights to Olympic coverage. Discovery announced a renewal of its distribution deal with Liberty Global covering 12 European markets Tuesday.

Discovery CFO Andrew Warren told analysts that the company was packing ahead of its profit expectations and was raising its guidance for 2016 earnings per share growth from high teens to at least 20%.

Warren also said that over the next three years, in constant currency, the company expected to generate earnings per share growth in the low teens or better, compared with earlier guidance of low double digits.

The increases come despite what will be a difficult third quarter in terms of ad revenue. Because of the Olympics and the decision to air Discovery Channel's popular Shark Week earlier in the summer, ad revenue is likely to be down in the low single-digit range from last year but should rebound to positive in the fourth quarter, Warren said.

Discovery CEO David Zaslav called the move of Shark Week a mistake.

Read more at broadcastingcable.com.

As the earnings season rapidly approaches, analysts see a strong second quarter for cable distributors, a combination of continued momentum and benefits from the six-week strike by Verizon Communications employees in April and May.

Comcast is expected to be the first cable operator out of the earnings blocks, releasing its Q2 results on July 27.

Consolidation catalysts Charter Communications and Altice N.V. — Charter completed its acquisition of Time Warner Cable and Bright House Networks on May 18, while Altice finished its purchase of Cablevision Systems on June 21 — are both slated to release results on Aug, 9.

Actual numbers for Verizon — expected to show subscriber declines, or at least slower increases — aren’t expected until July 26, when the telco officially releases results. That hasn’t stopped some analysts from estimating the damage.

Verizon employees walked off the job on April 13 and stayed out until May 27, when a deal was struck that increased hourly wages and avoided pension cuts for nearly 46,000 unionized workers. The six-week standoff ground Fios installations to a crawl, as contractors were brought in to take up the slack.

UBS Securities telecom analyst John Hodulik predicted Verizon would lose about 33,000 Fios subscribers in Q2, compared to a gain of 26,000 customers in the year-ago period.

Verizon has experienced a steady decline in Fios TV customers over the past several three-month periods: it gained about 178,000 customers in 2015, down from 387,000 additions in 2014. But the strike apparently pushed the telco into the red in the second quarter. Hodulik expects the telco to return to positive video subscriber growth in the third and fourth quarters (about 10,000 each), but at a slower pace.

Verizon chief financial officer Fran Shammo has said in the past that total wireline customers, including non-video subscribers, could flirt with negative territory because of the strike. At a Bank of America Merrill Lynch media conference in London in June, Shammo said because most of the strikers were in installations and maintenance, Verizon was in “catch-up mode” and expected broadband additions to be negative in Q2.

Comcast is expected to continue to temper basic-video subscriber losses in Q2, shedding just 10,000 video customers compared with a loss of 69,000 subscribers in the same period in 2015.

In a note to clients, Hodulik said the results were helped by the Verizon strike as well as the transition of former Fios properties in California, Texas and Florida to Frontier Communications, which wasn’t ready to do a lot of subscriber acquisition marketing while absorbing the territories with some 1.2 million Fios customers.

Overall, Hodulik estimated cable operators would lose a collective 500,000 video subscribers in the second quarter, slightly better than a year ago.

Other analysts weren’t quite as optimistic. Morgan Stanley media analyst Ben Swinburne expects Comcast to shed about 24,000 video customers in the quarter, with Charter dropping 86,000. Analysts share an enthusiasm for improvements in the cable sector for the full year, though. Swinburne estimated Comcast and Charter will both end 2016 on a positive basic-video subscriber note, with Comcast adding 100,000 subscribers and Charter adding 58,000 customers.

“We see another strong sub quarter for cable at the expense of its telco/satellite competition,” Swinburne wrote.

Pivotal Research Group CEO and senior media & communications analyst Jeff Wlodarczak reduced his estimates for Q2 subscriber losses at Comcast from 50,000 to 20,000, based on his belief that churn trends continue to be solid and to better reflect the effects of the Verizon strike.

“We expect a solid cable result in the seasonally weak 2Q,” he wrote.

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Flat revenue at its media networks division and a decline in ad sales at A&E and ESPN helped The Walt Disney Co. to slower than expected growth in the fiscal second quarter, as consolidated revenue rose 4% and  net income increased 2% in the period.

The results were short of Wall Street expectations, which helped drive Disney shares down 6.4% ($6.85 per share) to $99.75 in afterhours trading.

At the Media Networks, revenue was flat at $5.8 billion, as a 3% gain in broadcast revenue as offset by a 2% decline in cable network revenue. Operating income at the unit was up 9% to $2.3 billion, as lower programming costs and higher affiliate fees at ESPN were partially offset by lower ad sales at the sports network and A&E. The conversion of its H2 channel to Viceland durg the period also had a negative impact on the quarter, Disney said.

“We’re very pleased with our overall results in Q2, which marks our 11th consecutive quarter of double-digit growth in adjusted EPS,” said Disney chairman and CEO Robert Iger in a statement. “Our Studio’s unprecedented winning streak at the box office underscores the incredible appeal of our branded content, which we continue to leverage across the entire company to drive significant value. Looking forward, we are thrilled with the Studio’s slate and tremendously excited about the June 16th grand opening of the spectacular Shanghai Disney Resort.”