Crypto News: Tariff impacts, the year's first blockbuster, WB candidates

A Minecraft Movie is the first box-office smash of the year. The adaptation of the popular video game opened to $157 million in the US and Canada this weekend and grossed $301 million globally. That's the biggest debut since last July.

Movie theaters and studios needed a hit after a poor start to the year. Ticket sales declined more than 10% in the first quarter compared to a year ago.

Warner Bros. film co-chief Mike De Luca told my colleague Thomas Buckley that he and his partner Pam Abdy accelerated work on the project after taking over the studio. The Minecraft picture was "really joyful, and in a world rife with anxiety, it's something you can share with people of all ages."

The two companies that financed the movie – Warner Bros. and Legendary Entertainment – both claimed credit over the weekend. The project had been in development for a decade by different regimes at both companies.

A Minecraft Movie couldn't have come at a better time for Warner Bros., which released a couple of bombs to start the year, amplifying chatter about the potential departure of De Luca and and Abdy.

Their boss David Zaslav has been meeting with potential replacements, including producer Scott Stuber, Legendary executive Mary Parent, Sony film chief Tom Rothman and Paramount Global co-CEO Brian Robbins. Most of these executives passed, including Rothman, who is in the process of renewing his deal with Sony.

Nothing quiets the critics like a big fat hit.

The outsized performance of one movie can't shake the larger gloom hanging over the industry and economy. We're going to talk through the larger implications of Trump's tariffs for the entertainment business a moment, but first …

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The winners and losers from Trump's tariffs

Donald Trump followed through on his campaign promise to impose wide-ranging tariffs on America's trade partners, prompting the worst stock meltdown since the onset of the coronavirus pandemic.

I will leave the market analysis to the actual experts, like my colleagues John Authers, Joe Weisenthal and Tracy Alloway. But this has already scrambled plans for many media companies. StubHub paused a planned IPO, Nintendo delayed preorders for its new Switch 2 game console and Trump extended the deadline for a TikTok ban.

Shares of just about every major media company fell. It didn't really matter whether you were in hardware or software, entertainment or telecommunications.

While investors are spooked by the prospect of a trade war, recession or maybe even a real war, tariffs won't affect every company the same way. To help make sense of our uncertain economic moment, I asked a few experts to help me answer the biggest questions of the moment.

Is the stock market turmoil just noise or does it have real implications for major media companies? If so, what are they?

Tariffs have a direct impact on companies like Apple, Roku and Amazon that manufacture in other countries and import their products for sale in the US. The tariffs on China now sit at 54%, while the levies can extend beyond 40% in other markets where Apple produces phones, watches, tablets and computers. My colleague Mark Gurman believes the company may hike the price of the iPhone.

Higher prices will squeeze consumers, who will be apt to spend less. The fallout will hit the advertising business and the media companies who count on those ad dollars. Trump unveiled his latest tariffs just a month before the biggest media companies pitch advertisers on the year ahead. Many analysts had already lowered their projections for the next couple of years.

Chinese companies will pull back on advertising with US technology companies, costing the likes of Meta billions of dollars, according to industry analyst Brian Wieser. Auto companies — major advertisers for TV networks — "are probably are getting impacted more broadly in their ad spending," Wieser said.

Advertising accounted for about 35% of sales at Paramount Global last year and about 20% at Warner Bros Discovery. The share is far larger at YouTube, while newer players like Netflix are still trying to prove themselves.

Which companies are best and worst positioned to weather all this?

Software companies and studios are in a better position than companies that import hardware, provided the tariffs don't lead to a recession. Publishing video games is better than selling game consoles. Producing TV shows is better than making TVs.

Warner Bros. Discovery dropped the most of the major entertainment companies Friday. It's not really clear why. Some analysts said it may be the company's debt load, but management has done a good job of reducing leverage.

Is it true the entertainment business does better during tough economic times?

Entertainment is better positioned than many industries, but it doesn't thrive in a recession.

"Consumption often increases — we saw this during the financial crisis. TV viewing activity, for instance, increased the most in markets which were worst hit," Richard Broughton, executive director with Ampere Analysis, told me. The challenge is making money from those consumers. "If people are watching TV because they're not at work, advertisers are unlikely to want to spend to reach them. Similarly, viewers will be less able to afford pay TV or subscription streaming products."

Live experiences are a different matter. Live sports should emerge relatively unscathed. They are local events and have avid fans. Theme parks may suffer. The first thing you do in a recession is cancel your travel plans. Concerts are somewhere in between. Bank of America revised its projections for Live Nation, the world's largest concert promoter, but most experts believe concerts should be OK.

What about streaming services?

If the economy goes into a recession, cancellations will spike. That could be bad news for second- and third-tier streaming services. The 2008 financial crisis had an immediate impact on the advertising market but didn't hurt pay-TV growth for several months.

"Netflix feels not exposed," said Laura Martin, an analyst with Needham & Co. who has a buy rating on the stock. "It doesn't have much advertising, and if people are being more conservative, Netflix isn't the streaming service they turn off." If people are sitting at home more to save money, they will watch more TV.

Even if companies like Netflix and Spotify don't lose customers, the shares may suffer. The stocks have traded at multiples of earnings that don't make much sense by traditional valuations, and if investors recalibrate how they value these businesses, the shares may come down.

One wild card is how other countries respond to these tariffs. What happens if they impose taxes on US streaming services or movies? Some countries, like Italy, want to avoid a trade war. Others may be more aggressive.

Could this impact production in Hollywood?

Media companies are already cutting back on the number of TV series they produce. An economic slowdown will accelerate that trend.

"The instinct is to hoard cash," Martin said. "Stop spending money. Stop greenlighting projects."

Just what everyone wants to hear!

The best of Screentime (and other stuff)

Movie theaters want to put the toothpaste back in the tube

Movie theater owners have come up with a new reason why their business is struggling: windows. They believe studios are releasing movies at home too quickly after they debut in theaters.

"When consumers get bombarded by emails from their streaming provider saying 'watch now' when the film is still in theaters, they get the impression that everything's available in the home right away," Greg Marcus, the CEO of theater owner Marcus Corp., told Thomas Buckley.

Though Marcus used the word streaming, he's really talking about when studios sell movies for home viewing just a few weeks after they open in theaters, known in the industry as premium video-on-demand. Universal often starts selling its movies to home audiences just 17 days after they debut in cinemas.

Theater owners have been complaining about this practice for months and want to keep movies exclusively for at least 45 days. It used to be 90 days or more until the pandemic gave studios leverage to compress the time frame.

Some studios believe that they can release certain movies at home without cannibalizing their performance in theaters. They also don't want to spend on multiple marketing campaigns.

The No. 2 tour in the world is…

Shakira. The Colombian singer is grossing almost $6 million a night and sold out seven nights in Mexico City.

The No. 1 TV show in the US is…

Reacher. The third season of the Amazon hit topped a bunch of Netflix shows.

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