- Hollywood facing its first collective work stoppage in 63 years
- Savage streaming wars adding to the pressure on studios
- Zoo Digital plunges 30% as strikes impact work projects
Hollywood’s glittering stars joining crew and writers in striking is another hammer blow for companies supplying the vast film and TV industry. The root cause of the pain appears to be technology’s unstoppable ascent in their industry, with everyone scared stiff that AI (artificial intelligence) is coming for their jobs, with robots taking over, Terminator-style.
The sight of Jane Fonda and Lily Tomlin on picket lines alongside news this week that stars Cillian Murphy and Emily Blunt walked out of the red carpet premier of potential blockbuster Oppenheimer in support of their industry colleagues, has not gone unnoticed.
Coupled with major studios tightening their belts in an increasingly savage streaming war, shares prices are coming under hefty selling pressure.
Heavy hitters like Disney (DIS:NYSE) and Warner Bros Discovery (WBD:NASDAQ) are around 20% down since 2023 peaks in February, although Netflix (NFLX:NASDAQ) has outperformed thanks to decent subscriber growth and progress for its new ads-backed layer.
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HOLLYWOOD STRIKES HIT BRITAIN
But the pressure is not only being felt on the US’s west coast, even the UK has movie and TV service suppliers getting a kicking. Today (14 Jul) saw shares in Zoo Digital (ZOO:AIM) walloped after warning that revenues fell more than expected in the first quarter to 30 June 2023.
The little-known Sheffield and Los Angeles-based business runs an in-house designed, multi-tools cloud technology platform that allows media owners to repackage their TV and film content for different geographies, languages, formats, and technologies.
‘The uncertainty around the extent of these effects and how long they will last have spooked investors, with this morning’s sell-off helping push ZOO’s shares down by almost two-thirds year-to-date,’ said Megabuyte analyst Rob Warensjo.
Zoo shares lost almost 30% in morning trade today, pushing the year to date slide to 60%.
It is not alone in feeling the pain. Facilities by ADF (ADF:AIM) calls itself the number one provider of premium production facilities like make-up, costume and artiste accommodation trailers with a 35% share of the high-end television market thanks to its fleet of over 500 vehicles.
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It has worked with all the leading production companies, including the BBC, ITV (ITV), Netflix, Sky, Disney, HBO and Apple (AAPL:NASDAQ), and was involved in major TV series, including The Crown, Gangs of London and Peaky Blinders.
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But as film and TV productions slow, and potentially grind to a virtual halt, investors have fled the stock. Shares in the company, which listed in London at 50p at the start of 2022, are down 22% in 2023, and are trading at barely half their peak 81p.
Zoo remains optimistic for the long-term, and it does appear to be well-placed, but it could take a while (and an end to Stateside strikes) before investors are willing to back the business again.
‘Zoo is upbeat that former business levels will return swiftly and drive a return to revenue growth in the second half of full year 2024 (to 31 March 2024),’ says Warensjo. Net cash as of the end of June was $23 million.
