Warner Bros. Discovery (WBD) has named former BBC and New York Times executive Mark Thompson as its CEO. It comes at a time of great change for the media industry. Traditional media companies like Disney (DIS), Paramount (PARA), and Warner Bros. Discovery are seeing their cable businesses decline while they are investing a lot of money in their streaming businesses. Activate CEO Michael Wolf says all of these companies are trying to position themselves for the "direct-to-consumer" future and, as a result, they will increase their spending on content. Several of the big streamers have started raising prices. Wolf says thinks that, in the future, viewers are going to "churn in and out among these services, price might not be the reason that determines it. It's just more about the availability of programming on those networks and streaming services," Wolf tells Yahoo Finance Live. When it comes to the Hollywood strikes, Wolf calls the timing of the strikes "inopportune," saying the "profit pools for programming production are drying up" and that the "revenue streams for these shows aren't necessarily settled."

Video Transcript

SEANA SMITH: CNN has a new CEO. Warner Brothers Discovery appointing Mark Thompson as chief executive of the cable news network. He previously served as director general of the BBC as well as CEO of the "New York Times." Thompson coming to CNN at a critical time for the media industry as cord cutting accelerates and traditional TV struggles to keep up.

Here to discuss this and much more, we want to bring in Michael Wolf, CEO of Activate. Michael, it's great to see you here. So let's start with CNN's new appointment for their CEO Mark Thompson. Is he the best candidate for this job, and why?

MICHAEL WOLF: He comes with an incredible pedigree and an incredible track record. So between understanding television from the BBC and managing a massive news organization to what he accomplished as the CEO of the "New York Times" company, especially in terms of building a subscription base and continuing to expand their users-- now, here's what's happening.

Ironically, up until recently, CNN was the largest news website, roughly about 400 million unique visitors. And just recently, "The New York Times" overtook it just by a couple of million. And so I think we're going to see-- it's going to continue to, of course, be a race between those two as long-- as well as others-- MSNBC and Fox News and even the "New York Post" and, of course, Yahoo Finance.

AKIKO FUJITA: Yeah, we appreciate you adding that Yahoo Finance in there, Michael. You know, this, of course, comes at a time-- when you think about, especially in the streaming space, there's this real divide that's happening between linear and digital. You're talking about CNN, which we tend to think more as linear. You know, Bob Iger over at Disney is looking at options for ESPN and what to do there. I mean, what kind of shakedown you think is coming when you think about brands like Warner Brothers Discovery as well as Disney in terms of linear and digital?

MICHAEL WOLF: Yeah, so part of what we're seeing and what really is driving this urge to merge among these companies is the need to really position themselves in this world, where increasingly, we have fewer and fewer subscribers. We now have 70 million people in 70 million homes in the US that are subscribing to cable.

And we expect it-- at Activate, we expect it to go down into roughly 60 in the next couple of years. And at the same time, these streaming services are their big cash drains. They're very deep expenses for the next couple of years. And it's no different how long it took for each of these companies to make their cable networks profitable.

So cable networks have been the golden goose. Suddenly, we have something new coming on in streaming. They're all trying to position themselves for this future, this direct-to-consumer future. And I think that-- by the way, despite the fact that the CEOs of these companies say that they're going to cut back on their spending on programming, we think and we see and we forecast that there are expenses for and then their investments in programming are going to continue to be at these levels and, in fact, continue to increase.

SEANA SMITH: Michael, that, of course, then brings up the question of pricing when it comes to the streaming side of the business, right? Because we know Bob Iger time and time again has reiterated the fact that he is focusing on profitability for their streaming division. And Disney recently raising prices following a number of their competitors who have done so very recently. How do these media companies-- how are they thinking about price hikes and balancing that with making sure that they don't see a massive increase in churn?

MICHAEL WOLF: Well, I mean, it's-- you really hit the nail on the head, which is they're trying to strike that right balance. And so the fact that we've seen some decline in Netflix in the last quarter, really some of that reflects a couple of things. One is price increase but the also the eliminating password sharing. And so you would have thought that would have increase the number of subscribers.

So I think that what's the bigger issue is not whether those price can be sustained. But also, they're having a lot of churn. It's very easy to watch a set of shows on Disney+ and then drop it and go to Max and watch it.

So it's-- we as a firm, we forecast that by 2026, the average subscriber will have six streaming services. They're just not going to be the same six. They're going to churn in and out among these services. Price might not be the reason that determines it. It's just more about the availability of programming on those networks and streaming services.

AKIKO FUJITA: Yeah, I'm surprised at that number, Michael, at six because it feels like-- you know, I was thinking back to the conversation with streaming first launched. It was about the optionality. And you--

MICHAEL WOLF: Yes.

AKIKO FUJITA: --don't have to pay for these massive cable bundles. And it feels like cable is cheaper when you consider six different subscriptions you have to pay for. It feels like increasingly sports could be one that could make a lot of these places very sticky because it is one that comes up on a weekly basis, maybe not as much churn. I mean, how do you think these streaming services are positioning themselves on sports with that very idea in mind that there is a limit to how many streaming services viewers want to subscribe to?

MICHAEL WOLF: Yeah, I mean, precisely, they're-- the-- what we're going to see is that-- and already seeing is that between Apple and Peacock and Amazon and others, they're already getting streaming rights for sports. They're not getting all of it. So you've got Amazon with "Thursday Night Football" as well as they're going to do one preseason game and a special game on Black Friday. And we're going to see that all the way through to Apple really locking up Major League Soccer for the next year.

So we're going to see those games go back and forth. And yes, it's going to be another reason for people to watch. But you can't get all of the games in the same place. So you're going to have to subscribe to different services. And you're going to have to keep watching them on television in order-- if you're really an avid super sports fan.

SEANA SMITH: Michael, we're talking about the media landscape right now. We also have to talk about the strike that's going on, right? Because when we talk about the pressure that so many of these media Giants are facing, it almost seems like from all angles, obviously, the strike is another pressure point here for these companies, for the studios, for the streamers. How much more challenging is the next several months going to be the longer that this strike goes on for? And I guess who is best positioned given the circumstances we're in today?

MICHAEL WOLF: Yeah, I'm hopeful that the strike won't last forever. Part of it is that the time is really an opportune. The profit pools for programming production are drying up there. Even though there's a whole set of new shows, there-- they're really at much lower cost levels. And so I'm not sure there's going to be a lot of profit left to distribute.

And this-- the other reason why it's in an opportune time is because the revenue streams for these shows aren't necessarily settled. And so the actors and the writers may find themselves in a position where they put their earnings more at risk than less as they want to have a piece of the profits. And the profits may not be there.

Interestingly, the last time that one of these strikes took place a lot, last time was well over 10 years ago. And at that point, they were arguing about who got residuals from DVD rights. So the world has changed. And yes, the relationships with writers and actors and artists are going to change. But this is a tough time to be making those demands.

SEANA SMITH: And it is a tough time, certainly a tough time for both sides right now. All right, Michael, always great to have you. Thanks so much for joining me.

MICHAEL WOLF: Great to be here.