Too Much TV: Your TV Talking Points For Tuesday, May 16th, 2023

Is being a bad streaming executive the same thing as fraud?

Here's everything you need to know about the world of television for Tuesday, May 16th, 2023.

DISNEY EX-CEO BOB CHAPEK SUED FOR STREAMING LOSSES, SLUMPING STOCK
Local 272 Labor Management Pension Fund has filed a lawsuit against the former Disney CEO along with former executive Kareem Daniel, current CFO Christine McCarthy and the company itself alleging violations of securities law for misleading statements about Disney+ and the health of the streaming business.

Filed on May 12th, the 39-page suit cites a November 8th earnings miss by Disney in its quarterly financial results including "a monumental" operating loss of $1.47 billion for streaming. Disney also reported a decline in its average revenue per Disney+ subscriber, which led to a stock sell-off. It is being filed "on behalf of all purchasers of Disney common stock between December 10, 2020 and November 8, 2022, inclusive."

The suit makes a number of claims and while it's difficult to know how accurate the claims might be, the lawsuit is certainly entertaining to read:

31. During the Class Period, defendants repeatedly misled investors about the success of the Disney+ platform by concealing the true costs of the platform, concealing the expense and difficulty of maintaining robust Disney+ subscriber growth, and claiming that the platform was on track to achieve profitability and 230- 260 million paid global subscribers by the end of fiscal year 2024.

32. Defendants made these representations notwithstanding the fact that initial subscriber numbers for Disney+ had been boosted temporarily and unsustainably by a low launch price of $6.99 per month, a bevy of additional shortterm, low-cost promotions, and a near-captive audience of consumers who were homebound due to COVID-19 restrictions. As a result, the consumers most likely to subscribe to Disney+ had already done so by the start of the Class Period. Furthermore, Disney was suffering staggering costs in creating the content needed to attract such a large number of subscribers in the highly competitive streaming wars that were then raging among Disney’s many competitors such as Netflix, Apple TV+, Amazon Prime, Paramount+, HBO Max, YouTube, and Peacock. In truth, during the Class Period, Disney+ was never on track to achieve the 2024 profitability and subscriber figures provided to investors and such estimates lacked a reasonable basis in fact.

33. To conceal these adverse facts, defendants engaged in a fraudulent scheme designed to hide the extent of Disney+ losses and to make the growth trajectory of Disney+ subscribers appear sustainable and 2024 Disney+ targets appear achievable when they were not. Specifically, defendants used the newly created DMED to inappropriately shift costs out of the Disney+ platform and onto DMED, under the direction of Chapek and Daniel and with the knowledge of McCarthy, debuted content created for Disney+ initially on a legacy platform in order to shift marketing and production costs onto that platform. Under the newly reorganized Company, the initial costs of marketing campaigns were generally recognized in the DMED distribution platform of initial exploitation, with allocation of programming and production costs driven by distribution of the relevant content across windows. As part of a scheme to make Disney+’s financial performance appear more successful than it was, defendants aired certain shows that were supposed to be Disney+ originals – such as the mystery show The Mysterious Benedict Society and the medical drama Doogie Kameāloha, M.D. – first on legacy television networks such as the Disney Channel. By doing so, a significant portion of the marketing and production costs of the shows were shifted away from Disney+ and on to the legacy platforms. Despite this cost-shifting scheme, defendants repeatedly represented during the Class Period that platform distribution decisions were made based on different reasons, such as customer preferences and what was best for the business commercially.

The suit reads as a near livid pushback against Chapek's "streaming first" approach and whether or not you agree with that move, I'm not sure that I see the crossover from "bad business decision" to fraud. 

I'll also mention that this shifting of content back-and-forth from linear to streaming to shift content costs on another platform is not unusual. That was one of the original reasons behind the "FX on Hulu" initiative. And Warner Bros. Discovery frequently does a similar thing with content produced by the Discovery linear channels and those created for Discovery+. Those kind of moves might be described as "misleading accounting practices," but it's not fraud. At least, not at the level where anyone can be convicted of the crime.

But it's worth reading the entire lawsuit, because it does a nice job of recounting the reign of Bob Chapek as Disney CEO, highlighting the many times he was bullish on Disney+. Until he wasn't.

INFOGRAPHIC OF THE DAY

ODDS AND SODS
* Indiana Jones and the Raiders of the Lost Ark, Indiana Jones and the Temple of Doom, Indiana Jones and the Last Crusade, Indiana Jones and the Kingdom of the Crystal Skull, and the television series The Adventures of Young Indiana Jones will premiere May 31st on Disney+. For those of you who remember, the original ABC version of the TV series included wraparounds of an "Old Indy," played by George Hall. Steven Spielberg reportedly hated the segments and had them removed when the show was released into syndication and DVD. That is the version that will be streaming on Disney+.

* Hulu today announced the renewal of The Kardashians for 20 additional episodes. I suspect there will be some sort of family drama.

* Would I Lie To You has been canceled by The CW after one season. 

* Season three of HBO’s Painting With John will debut its six-episode season on Friday, June 2nd.

* During Tuesday's Disney’s Upfront presentation, it was announced that season two of Loki will premiere Friday, October 6th, while the Hawkeye spinoff Echo will debut Wednesday, November 29th. Echo will have a binge drop release schedule, while episodes of Loki will be released on a weekly schedule

* Season three of Hulu's Only Murders In The Building will premiere on August 8th.

* Luke Bryan and Peyton Manning will return as hosts for the 57th Annual CMA Awards, airing Wednesday, November 8th on ABC.

* Win Or Lose, the first original TV series from Pixar, premieres this December on Disney+

* Season two of Joe Pickett is premiering Sunday, June 4th.

* The HBO Original stand-up comedy special Sarah Silverman: Someone You Love premieres Saturday, May 27th.

* HGTV's sweet spot for new primetime shows are ones with a couple - one person a real estate agent and the other a contractor. There's another one on the way and Small Town Potential is set in Hudson Valley, NY and premieres Wednesday, June 14th.

TWEET OF THE DAY

WHAT'S NEW FOR TUESDAY:
* Angel City (HBO)
* Anna Nicole Smith: You Don't Know Me (Netflix)
* La Chica Invisible (Hulu)
* 9-1-1 Lone Star Season Finale (Fox)
* The Tower 2: Death Message (Britbox)
* Zarna Garg: One In A Billion (Prime Video)

Click Here to see the list of all of the upcoming premiere dates for the next few months.

SEE YOU WEDNESDAY!

If you have any feedback, send it along to Rick@AllYourScreens.com and follow me on Twitter @aysrick.