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Happy Sunday,
Okay, I was tempted to sneak “Kardashians” into this week’s email subject line to perk up interest. I know, I know. Debt. But let me explain why I think it’s an important issue, particularly as talk of a corporate debt crisis is beginning to surface.
We are smack in the middle of earnings season and one metric we don’t see get as much attention as others is short-term and long-term debt. Carrying a large debt load is problematic for a score of reasons, such as that in a rising interest rate climate, servicing that debt puts added cost burdens on Hollywood when the industry is already challenged. Staying up on the whirring treadmill to throw off free cash flow to tend to the debt is never-ending. A load of debt also restricts the ability to invest in new areas of opportunity, like M&A, new streaming launches and even R&D.
Here’s a look what the biggest players are carrying in debt.
- Comcast — $99 billion (short-term and long-term debt as of Sept. 30).
- Charter Communications — $95 billion (total debt as of Sept. 30).
- The Walt Disney Company — $42.2 billion (short-term and long-term debt as of June 28).
- Warner Bros. Discovery — $34.5 billion (gross debt as of Sept. 30)
- Netflix — $14.5 billion (long-term debt as of Sept. 30)
- Paramount Global — $13.3 billion (long-term debt, as of September 30).
Let’s take the most recent headline-grabber as an example. When Warner Bros. Discovery came together in 2022 through an acquisition by Discovery, the new entity inherited more than $50 billion in debt. That debt load, while lower today, limited its ability to spend on new streaming content. Instead, it led to cost-cutting and layoffs to improve free cash flow and pressured its stock price as leadership prioritized deleveraging over growth.
Debt-to-equity ratios (dividing the company’s total debt by its total shareholder equity) are how analysts look at this. WBD has a debt-to-equity ratio that is between 0.93 to 0.96, higher than the the industry averages for film studios and production companies of 0.3 to 0.8. With the company’s proposed split, the thinking was that $20 billion or so would go to the slower-growth cable networks side, and the rest to the movie studio and HBO company.
As the national political dialogue seems to be shifting to issues of “affordability,” reflecting the over-leveraged pressures on consumers and household finances, it may be time for debt to be a larger part of the corporate conversation, too.
Have a fruitful week ahead free of balance sheet headaches.
Tom Lowry
Senior Vice President/Editorial Strategy
tom.lowry@thewrap.com
1. Revenue 💵 Pie Shifts for Video This past week Activate Consulting came out with its data-rich annual forecast across a whole bunch of entertainment sectors, from which we highlighted a few in this article.
Another chart that stood out for us was this one showing the shift in revenues across the $300 billion video ecosystem. Note that extraordinary growth in revenue generated by social video advertising, estimated to be $68 billion in 2025, says Activate. That is a 27% gain in four years.
2. A History of Bubbles 🫧 This past week The Financial Times posted this instructive chart on the price-to-earnings ratios from previous “bubbles,” compared to today’s environment, in which many market watchers feel we are in bubble territory because of AI speculation.
Why are we focusing our spotlight this week on an executive from Big Pharma, you ask?
We are sharing Sally Susman’s story with you because of what it might impart in terms of the value of communications skills, and, well, it’s newsworthy.
At a time when NYC mayoral candidate Zohran Mamdani‘s novel ideas vilified him to the business community, the executive vice president and chief corporate affairs officer at Pfizer embraced his candidacy early on and offered her advice. As we all know by now, Mamdani won New York City’s mayoral race last Tuesday — a stunning turnaround for someone who months before was a relative unknown. Throughout the campaign, he was given high praise for his use of media and how he communicated his proposed policies. Particularly with a steadfast focus on affordability.
“Last summer, following Mamdani’s stunning primary victory, many friends and colleagues were anxious that this Democratic candidate was too liberal, too anti-business, too inexperienced for the global stage, and simply too young. So, I sought out the chance to meet him—and was pleasantly surprised to find that Mamdani is an active listener, respectful and open to ideas from across the spectrum, even from this more-than-middle-aged, politically moderate capitalist,” Susman wrote in an op-ed in Time magazine last week.
Of course, an exec at the top of the org chart of Big Pharma, which has drawn its own fair share of criticisms, might seem like an odd choice for Mamdani to lean on for advice. Or not.
“He also acknowledged that his campaign rhetoric had unsettled parts of New York’s Jewish and business communities — and that rebuilding trust across those divides would be among his first tests as mayor. At the end of our first meeting, I asked how I could help. He suggested I introduce him to other business leaders and those with experience beyond his own. I arranged a few such convenings.”
It’s no surprise then that Mamdani embraced her. In 2022, Forbes named Susman one of the world’s most influential CMOs for Pfizer’s efforts to combat vaccine misinformation. Three years before, she had been the recipient of the Matrix Award from New York Women in Communications and was named a LinkedIn Top Voice.
In 2023, her book “Breaking Through: Communicating to Open Minds, Move Hearts and Change the World” was published.
The Connecticut College grad who studied at the London School of Economics, who lives in New York City and Sag Harbor, N.Y. with her wife, was no stranger to politics, having served on Capitol Hill as a legislative assistant handling trade and foreign investment issues for the Senate Commerce Committee, then as deputy assistant secretary for legislative affairs in the Clinton Administration.
“New Yorkers have always risen to critical moments — demanding not perfection, but courage and connection,” she continued in Time. “Several prominent business leaders have already voiced cautious optimism, seeing in Mamdani a chance to reset the relationship between City Hall and commerce.
“The election is over; governing begins. It will take both the mayor’s openness and the business community’s willingness to engage in good faith to keep New York a place where dreamers, doers and dissenters can still build something extraordinary together. I’m confident Mamdani is open and eager.”
Will Susman give up a high-paying job in pharma to maybe join Mamdani in City Hall? It’s early days but worth remembering her name.
Report: Private Jet Bookings Out of New York City Surge Post-Mamdani Mayoral Victory, Luxury Travel Advisor
A Tale of Two Economies, KPMG
Can the Midwest Become Hollywood’s Next Hotspot? Illinois Bets Big with New Studio Complex, Stagerunner