licensing

Continued growth in streaming subscriptions and strong domestic tourism to its theme parks propelled Walt Disney Co.’s fiscal third quarter earnings, even as its theatrical results dipped, the company said Wednesday.

The Burbank media and entertainment giant reported $23.7 billion in revenue for the three-month period that ended June 28, up 2% compared with the same quarter a year earlier. Earnings before taxes totaled $3.2 billion, 4% higher than a year ago . Earnings per share were $2.92, up from $1.43 last year.

“We are pleased with our creative success and financial performance,” Disney Chief Executive Bob Iger said in a statement. “With ambitious plans ahead for all our businesses, we’re not done building, and we are excited for Disney’s future.”

The company’s entertainment division, which includes its studios, Disney+, Hulu and linear television business, reported $10.7 billion in revenue, 1% higher than a year earlier. Its operating income, however, totaled $1 billion, down 15% compared with the previous year. That was the result of lower results in content sales and licensing, which includes theatrical distribution, and linear television.

Disney’s content sales and licensing unit reported revenue of $2.3 billion, up 7% compared with a year ago , but recorded a loss of $21 million in operating income. The company attributed that to lower theatrical distribution results during the third quarter of this year, when it released Disney and Pixar’s original animated film “Elio,” which struggled at the box office, as well as Marvel Studios’ “Thunderbolts*,” which received strong critical reviews but had a middling commercial performance.

The earnings only captured part of the theatrical results for the live-action adaptation of “Lilo & Stitch,” which would go on to gross $1 billion in global box office revenue. The quarterly earnings were also negatively impacted by the comparison to last year’s “Inside Out 2” box office performance.

Disney’s linear networks including ABC and the Disney Channel continued to struggle, reporting revenue of $2.3 billion, down 15% compared with last year. Operating income fell 28% to $697 million. Part of that decline was due to the lower international results stemming from the company’s Star India merger.

Still, Disney’s streaming business saw gains during the third quarter, posting a 6% increase in revenue to $6.2 billion and operating income of $346 million, compared with a loss of $19 million a year earlier.

The company now has 183 million Disney+ and Hulu subscriptions.

Disney’s theme parks also boosted revenues, despite concerns about a drop-off in international tourism to the U.S. fueled by trade tensions. The experiences division, which includes the Disney theme parks, cruise line and Aulani resort and spa in Hawaii, reported revenue of $9.1 billion, up 8% compared with the previous year. Operating income rose 13% to $2.5 billion.

Disney said visitors spent more at the parks during the third quarter, and that its domestic parks and experiences operating income increased 22% to $1.7 billion.

Disney’s sports unit, which includes ESPN, reported revenue of $4.3 billion, down 5%, due to higher programming and production costs for the NBA and college sports rights and the lack of NHL Stanley Cup Finals rights, which Disney has every other year. Operating income was $1 billion, up 29% from last year.

Ever since operetta composer Victor Herbert sued Shanley’s restaurant in New York in 1917 to force it to pay for playing his song on a player-piano, songwriters and music publishers have depended on Performing Rights Organizations to make sure they get compensated.

For much of the last century, three organizations dominated the industry, a relatively staid and unglamorous corner of the music scene that remained largely unchanged throughout the eras of radio, records and CDs. But the rise of streaming has led to a surge in revenue and spawned a handful of new organizations looking to cash in.

Now there are at least half a dozen PROs in the United States, representing songwriters and publishers, each demanding that bars, restaurants, hotels and other venues pay a fee or risk being sued.

Businesses say the rising licensing costs have become overwhelming, and some question whether it’s even worth playing music at all. The House Judiciary Committee last fall asked the Copyright Office to investigate the current system and consider potential reforms. In February, the Office opened an inquiry and received thousands of comments from businesses and songwriters.

“The growing proliferation of PROs and their lack of transparency have made it increasingly difficult to offer music in our establishments,” hundreds of small businesses from across the country wrote to the Copyright Office in a joint letter.

“The issue is not that small businesses are unwilling to pay for music,” they wrote, adding that the current system is unfair and untenable. “Small businesses can be left feeling like PROs have them over the proverbial barrel.”

Creating a welcoming ambiance in a restaurant or yoga studio isn’t as simple as putting on a Spotify playlist. Streaming has unleashed trillions of songs, and every one must be licensed and have royalties paid to the songwriter whenever any track is played in public. Violations can cost up to $150,000 per infringement.

This booming market for music publishing has led to a windfall for the two major PROs. The American Society of Composers, Authors and Publishers, founded in 1914, and BMI, established in 1939, together represent more than 90% of musical compositions in the U.S. today with talent lists covering Taylor Swift, Olivia Rodrigo, Jay-Z, Lady Gaga and Eminem, to name a few. SESAC, founded in 1931, rounds out the original three and operates on an invite-only basis.

ASCAP, the oldest and, as a nonprofit, the only PRO to publicly share data on its collections and payout, has seen revenue jump to $1.8 billion in 2024 from $935 million in 2010. Broadcast Music Inc., in its last public report as a nonprofit in 2022, showed record revenue of $1.6 billion, with 48% of that from digital sources.

This kind of growth hasn’t gone unnoticed. In just over the last 12 years, three new PROs have emerged. Legendary music manager Irving Azoff founded Global Music Rights in 2013, offering “boutique services” and royalty transparency, building a stable of more than 160 high-profile songwriters such as Bad Bunny and Bruce Springsteen.

AllTrack, founded in 2017, caters to smaller, independent songwriters. Pro Music Rights launched in 2018 and says it represents more than 2.5 million musical works, including AI-created music.

Many songs today are composed by several songwriters, each of whom could be affiliated with a different PRO. Therefore, to legally play those songs, establishments must pay for a license from each PRO. Most PROs offer blanket licensing agreements, meaning that they provide access to their entire repertoires for one fee. And while that gives a particular venue a wide range of musical freedom, it also means bars and restaurants are paying for thousands of songs they may never play or are essentially paying twice, in instances where a song with multiple writers is represented by more than one PRO.

The National Restaurant Assn. said its members pay an average of $4,500 per year to license music, or 0.5% of the average U.S. small restaurant’s total annual sales.

“This may not seem like a large amount, but for an industry that runs on an average pre-tax margin of 3%-5%, this cost is significant, especially since operators don’t clearly understand what they get for this particular investment aside from avoiding the very legitimate threat of a business-ending lawsuit,” the association wrote in public comments to the Copyright Office.

The American Hotel & Lodging Assn. said the mushrooming number of PROs has led to “significant increases in both financial and administrative burdens.” It gave an example of one “major global hotel chain” that reported the cost per hotel for PRO license fees rose by about 200% from 2021-25, with some hotels seeing increases of 400% or more.

A large hotel that hosts occasional live music events could be paying a single PRO $5,000 to $20,000 a year. If it’s paying all of the major PROs, it could be incurring as much as $80,000 in fees, according to the association.

BMI said its licensing fees have remained “relatively steady over the years” and are based on objective criteria that apply equally to all similar businesses. Fees for individual bars and restaurants start at just over $1 a day, according to BMI. Other factors that go into licensing fees include the occupancy rate, and the type of music being played — live, DJed or recorded, for example.

Songwriters’ livelihoods

In the 1917 Supreme Court case that delivered Herbert his victory over Shanley’s, Chief Justice Oliver Wendell Holmes wrote: “If music did not pay, it would be given up.”  He wasn’t only referring to the songwriters, but also to the venues themselves and addressing whether music helped generate revenue. The ruling was a win for Herbert personally but also for ASCAP, which he had helped found, and established the royalty payment system that’s largely still in use today.

A spokesperson for ASCAP said an increase in fees paid to songwriters by venues is an appropriate and inevitable outcome of a growing market. The organization’s musical repertoires have grown exponentially over the years to include tens of millions of works, giving music users more music and more choice, the spokesperson said. ASCAP says about 90 cents of every dollar it collects from licensees is made available for distribution to its members as royalties.

“Licensees are seeking more regulation of PROs because they want to pay songwriters less,” ASCAP Chief Executive Elizabeth Matthews said in a statement to Bloomberg. “If transparency, efficiency and innovation are the goals, more free market competition among PROs is the answer— not unnecessary government intervention.”

Songwriters depend on PROs for their livelihoods, especially in the streaming era. Many individual songwriters wrote to the Copyright Office in defense of the PRO system, expressing concern that government regulation would only diminish their hard-won earnings.

“Every royalty payment I receive represents not just compensation for my work, but my ability to continue creating music that enhances these very businesses,” wrote Joseph Trapanese, a composer who has created scores for film and TV.

Performance royalties make up about half of total publishing revenue, which is collected by PROs and dispersed to songwriters, according to the National Music Publishers’ Assn. Last year, only about 5% of songwriters’ earnings came from bars, restaurants and other venues, a figure that is “significantly undervalued,” according to NMPA executive vice president and General Counsel Danielle Aguirre.

“There is a substantial opportunity for growth here,” she said, speaking at the group’s annual meeting in June.

The organization set a goal to significantly increase that money over the next year, likely by enforcing licensing requirements.

Several establishment owners equated the PRO’s efforts to collect fees to a mob-like shakedown, citing aggressive on-site confrontations and threatening letters.

BMI said it spends a lot of time trying to educate business owners on the value that music brings to their establishment, federal copyright law requirements and the importance of maintaining a music license.

Lawsuits are always a last resort, a spokesperson said, which is why BMI spends sometimes years on educational outreach. If those efforts are ignored, however, an in-person visit might occur, and BMI may take legal action.

Opaque, bureaucratic

Despite their differences, songwriters and businesses agree that the current system is opaque and bureaucratic and could serve both sides better.

Businesses complain about the lack of a comprehensive database of songs and the fact that there is no easy system for reporting which songs they’ve played. Meanwhile, songwriters claim that the sheer volume of music and businesses throughout the U.S. makes it hard to track where and when their work is played and to know whether they’ve been properly compensated.

“What’s really being called to question is, is this system working accurately—is the money that should be finding its way to the songwriters’ pockets finding its way in an efficient manner?” said George Howard, a professor at Berklee College of Music. “And the answer is ‘no.’ There’s no excuse for that with the level of technology we have today.”

BMI and ASCAP joined forces in 2020 to launch Songview, a free digital database showing copyright ownership and administration shares for more than 20 million works. The two PROs are exploring including GMR and SESAC, which would add even more songs to the platform.

Some of the complaints about the PRO licensing system go back decades. Michael Dorf, a producer and founder of the legendary Manhattan music club The Knitting Factory, has faced off with PROs numerous times over his 30-some years as a venue operator. In the 1990s, he signed singer-songwriters who performed at his club to his publishing company and submitted their setlists to the PROs, assuming he and his acts would reap the resulting royalties from their performances.

But no money came in

“We didn’t receive one penny,” Dorf, who’s also the founder and chief executive officer of City Winery, said in an interview. “To me, there is a cost of doing business, and we want to have the artists and the songwriters properly paid — we love that. What’s simply frustrating is to pay money and know it’s not going to the reason why it’s being collected.”

Caleb Shreve, a songwriter and producer who’s worked with the likes of Jennifer Lopez and is also chief executive at Killphonic Rights, a rights collection organization, said he hears music he has produced “all the time in yoga spots and bars, and I’ve never seen them on publishing statements.” Many songwriters are convinced the current system favors the biggest artists at the expense of middle-tier and emerging songwriters. Because of the blanket licensing system, BMI and ASCAP don’t track individual song use by those licensees and instead rely on proxy data, like what’s popular on the radio or through streaming platforms, to divvy up those collected fees.

Sometimes radio hits mimic what’s played in an arena, restaurant or bar, but not always.

ASCAP said it tracks trillions of performances every year across all media platforms and only uses sample surveys or proxy data when obtaining actual performance data isn’t feasible or is cost prohibitive.

Technology could be a way to solve the current issues without regulation. London-based Audoo is one company leading the way.

Founded by musician Ryan Edwards in 2018 after he heard his music being played in a department store and discovered he wasn’t getting paid for it, the growing startup uses proprietary listening devices it places in cafes, gyms and other public venues to recognize and log songs. It uploads the data to the cloud, ensuring every artist — not just the chart toppers — receives compensation for their work.

The company has attracted investment from music icons including Elton John and Adele, and its devices are used by PROs in the U.K. and Australia. It made its first foray into the US earlier this year, placing listening devices in about 180 establishments around the Denver area in a test run.The collected data underscored that what’s played in public places doesn’t necessarily mirror what’s on the popular playlists or radio and streaming platforms. Edwards likens the idea of using proxies to political polling — directionally helpful but not precise.

Audoo found that 77,000 unique tracks were played around Denver over two months, split among 26,000 artists, according to data viewed by Bloomberg News. On average, only 6.6% of the top-40 songs played in the venues also appeared on Billboard’s top radio-play chart.

In markets where Audoo has partnered with venues, Edwards said business owners have been proud to support particular songwriters and the music business writ large.

“All of a sudden it went from a push-and-pull of, ‘Why do I owe you money?’ to, ‘OK, I can understand music is funding the people who create,’” Edwards said.

Carman and Soni write for Bloomberg.

Three years before the Olympics, LA28 organizers gave International Olympic Committee officials the kind of Games preview that even Hollywood’s best scriptwriters couldn’t plan.

To begin a visit to check on LA28’s planning progress, the IOC coordination commission attended a game at Dodger Stadium and watched Freddie Freeman hit a walk-off double in the 10th inning to defeat the New York Mets in the same stadium that will host Olympic baseball in three years.

The electric celebration, passing grades for an advanced venue plan and a growing corporate sponsorship portfolio keeps LA28 on track approaching the three-year mark until the 2028 Olympics open in a dual-venue ceremony at SoFi Stadium and the Coliseum.

“We are really confident in the progress we’ve made,” LA28 chairman Casey Wasserman said after the coordination committee’s three-day visit. “We’re focused on what we’ve always done to deliver the greatest Games we are capable of delivering in this city in the most fiscally responsible way that pays dividends for every member of our Olympic movement and our community.”

With the city of Los Angeles facing deep financial problems and transportation updates lagging behind schedule, LA28 is under pressure to deliver a completely privately funded Games. The private group says it remains up to the challenge as fundraising for the L.A. Games has been “going gangbusters,” John Slusher, chief executive of LA28’s commercial operation, said in an interview with The Times.

With six new partnerships this year — matching the total number of deals in all of last year — LA28 has contract revenue worth more than 60% of its total $2.5 billion sponsorship goal. Slusher expects an estimated seven to nine more deals coming this year, and the group is on pace to reach its goal of $2 billion in corporate sponsorship dollars by the end of the year, Slusher and Wassserman said.

“I would tell you where I’m sitting today, we feel very confident we can either meet or exceed that $2.5 billion target,” Slusher said, “which I think people would have called a stretch target in November.”

A major partnership with Honda signaled a boon for business as it was the first founding-level partnership for LA28 since Salesforce signed on in 2021. The cloud-based software company backed out of its deal in 2024. The sudden split raised eyebrows about LA28’s fundraising progress, casting doubt whether the committee could fulfill a promise of a privately funded Games that shielded local and state taxpayers from picking up any debt.

But organizers remained undeterred.

Such twists have marked LA28’s long-planned Olympic journey. The L.A. Games were awarded in 2017 in a rare dual-city announcement that also placed the 2024 Games in Paris. Instead of the typical seven-year lead-up time, LA28 preached patience through an unprecedented 11-year planning period.

“More time is always better than less time,” Wasserman said in an interview with The Times. “The only negative of selling is there’s more distance between deals, so everyone’s like, ‘You’re not doing well.’ Which is never how we’ve been feeling. … My view is judge us when we get to the startline on how we did on sponsorship revenue.”

Judgment time is creeping ever closer. The Olympic Games will open on July 14, 2028.

Although the city has agreed to cover the first $270 million in debt incurred from the Games if LA28 goes overbudget, Wasserman said organizers don’t intend to come close to the financial backstop.

According to the latest financial report filed to the city in March, LA28 plans to cover the proposed $7.1 billion cost with about one-third of the projected revenue coming from domestic sponsorships and another one-third coming from ticketing and hospitality.

“The caliber of new domestic partnerships this year highlights the power of the Olympic Games to bring people together, create long-term value and reflect growing national engagement with LA28’s vision,” said Nicole Hoevertsz, the IOC coordination commission chair.

An artist’s rendering of the rowing venue in Long Beach for the 2028 Los Angeles Olympics. Long Beach is one of several cities that are slated to host events during the Games.

(LA28)

To begin the 2025 sponsorship momentum, LA28 announced an official partnership with AECOM in March as the engineering company will support venue infrastructure for the Games.

Mortgage company Pennymac, mattress brand Saatva, cloud-based data storage company Snowflake and aviation company Archer signed on as official supporters, one tier below a partnership such as AECOM.

While not specifying the financial details, Slusher said he estimated LA28 would make three or four times as much sponsorship revenue this year compared with all of last year.

“Our job is to maximize revenue,” Wasserman said. “I am very confident in our ability to generate, frankly, more revenue that’s ever been generated for a Summer Games in the history of the Olympics. I have no doubt about that.”

While a smaller portion of the budget than sponsorship, merchandise and licensing is gaining momentum as well, Slusher said, as companies clamor for a chance to issue official pins, T-shirts, programs or plush toys.

LA28’s financial report states that it has signed commercial or retail agreements with several companies, including Cisco, Dick’s Sporting Goods and Skims. Licensing and merchandising is projected to bring in $344 million, according to LA28’s latest annual report.

The next major piece will be ticketing, which, with hospitality, is slated to generate $2.5 billion in revenue, a $569 million increase from a June 2024 estimate. LA28 expects to begin registration for the ticket lottery in early 2026.

While LA28 and city officials have hailed the Games as a moment to welcome the world to L.A., concerns about international travel have mounted under the current administration. Delays in visa processing prompted Congressional action ahead of next year’s World Cup. President Trump signed a travel ban Wednesday that bars citizens from 12 countries from entering the United States. On Sunday, the Trump administration deployed the National Guard to Los Angeles amid protests over immigration raids.

The latest Trump order targeting visitors from 12 countries includes exemptions for certain athletes, including those traveling to the United States for major sporting events, and Wasserman was not worried about visa issues affecting the Games.

“It’s very clear that the federal government understands that that’s an environment that they will be accommodating and provide for,” Wasserman said of the recent travel ban. “So we have great confidence that that will only continue. It has been the case to date and it will certainly be the case going forward to the Games.”

Because Wasserman anticipates the majority of ticket sales to be domestic, he said he is not concerned with a potential drop in revenue if international fans don’t attend amid visa or safety concerns.

But Paris 2024, which sold a record 12.1 million tickets for the Olympic and Paralympic Games, sold about 38% of its Olympic tickets to fans living outside France, according to the IOC. The successful event exceeded its ticketing and hospitality revenue target by $397 million and brought in a roughly $30-million surplus.

Continuing the Olympic movement’s success has been at the top of LA28’s mind while bringing the Games back to L.A. for the first time in more than four decades. The 1984 Games were also privately funded and hailed as a massive success for their $225 million surplus that was invested in youth sports. The opportunity to use existing venues in 2028 dramatically reduces potential costs by avoiding new, permanent construction.

“I fully expect that LA28 will be successful in meeting its revenue goals, and I fully expect that the 2028 Olympic and Paralympic Games will be a financial success,” Paul Krekorian, Los Angeles executive director for the office of major events, said in a statement to The Times. “Twice before, Los Angeles has hosted the Olympics, even in the face of adversity, and both of those Games were a huge success for our city and its residents.”

Still, city leaders face enormous pressure to ensure that streets and sidewalks are safe and accessible for the millions of people expected to visit L.A. during the Games. Mayor Karen Bass recently unveiled a citywide initiative called “Shine L.A.” that encourages volunteers to beautify the city with clean-ups and tree plantings ahead of next year’s World Cup and the Olympics.

With city and federal funding, L.A. has planned to overhaul its public transportation system, including a long-awaited Metro station that opened Friday at Los Angeles International Airport. But other updates such as an electrified bus network, expanded rail lines and the LAX people mover have lagged. While the city’s transportation plan is outside of LA28’s Games operation and budget, Wasserman expressed confidence that L.A. will be able to repeat its transit success from the 1984 Games.

But the Olympics have grown larger than ever. A record 11,198 Olympians will compete in 2028. The Paralympics will be the city’s first. Especially with L.A. still recovering from devastating wildfires and a nearly $1 billion deficit, the threat of taxpayers absorbing any costs for the Games looms large.

With financial momentum growing behind the 2028 Games, Wasserman wants to put worried minds at ease.

“The last thing a taxpayer should be worried about is us,” Wasserman said. “We know how to do this. We are proving that every day and we will prove it all the way throughout the process and we are in every sense of the word, giving to the city, not taking from the city.”