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Roku was a champion. Lionsgate soared, Netflix soared. In 2023, tech stocks crashed. Major media stocks went through various transitions, dominated by the Hollywood strike, linear declines in TV and losses in streaming.
Paramount has fallen. Disney and Fox were mostly flat for the year. Comcast and Sony, giants with other businesses such as broadband, gaming and music, both posted strong results. Warner Bros. Discovery rose slightly. Each company is pursuing profitability in streaming, and their progress will likely influence stock price trends in 2024.
Relatively speaking, 2022 was the only two media stocks that went up for the year: WWE (now part of TKO Group) and Nexstar, compared to a truly disastrous 2022, when only two companies rose in 2023. It was a real bountiful harvest.
2023 was a surprisingly strong year for stocks overall, with the S&P 500 ending the year up more than 24%. Investors ignored high interest rates and inflation, recession fears, threats of a government shutdown, a brief banking crisis and international conflicts, turning around a year that was initially expected to be a bit gloomy for markets. .
Technology in particular brought the heat, largely fueled by the AI craze. The famous FAANG stock group of Facebook (now Meta), Amazon, Apple, Netflix, and Google (now Alphabet) has transformed into the Magnificent Seven. (From the movie) Newly coined this year by analysts: Alphabet, Amazon, Apple, Meta, Microsoft, Invidia, Tesla. This gang contributed significantly to the overall profits. Adjacent technology stocks, from Snap to Spotify, also rose.
Exhibitor opinion was divided amid concerns about the outlook for box office revenue in 2024. Advertising was weak, but broadcast stocks fell on expectations of a political tsunami.
And this year ended with a buzz about M&A, which has not yet gained traction but could boost stock prices in 2024. It doesn’t hurt that, after raising rates 11 times in the past two years, the Federal Reserve has finally signaled it may cut rates in 2024.
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Roku grew by 119% and became the king of media in 2023.
Remember back in March, when the company anxiously announced that a quarter of its cash was in Silicon Valley banks, wiped out in the biggest bank failure since 2008? Disaster was averted when the FDIC agreed to fully insure all deposits and Roku took over. There. The business has benefited from a shift in TV ad spending from linear to digital, expansion overseas and the sale of smart TVs from many brands. Could be a potential takeover target.
disney, the only entertainment stock in the 30-member DJIA, rose slightly this year. This is well above the year-to-date high of $110 in January, when the market was excited about the return of CEO Bob Iger. But these are complicated times, with linear TV in steady decline, streaming still in the red, and Disney facing a series of box office declines.
Among other things, Iger paid a previously agreed minimum amount of $8.6 billion to acquire the remaining Hulu from Comcast. Further debt is likely as the two sides team up to establish a valuation. He is a bit baffled by interesting offers from his networks ABC and Linear, and is looking for a strategic partner for his ESPN ahead of the eventual streaming launch. Disney is reportedly in a deal with Reliance for its Indian assets.
Wall Streeters are hoping the new year will bring updates on succession planning and perhaps NBA contract renewals. One analyst said he’s been getting a lot of calls from customers about Disney lately. “They’ll say, ‘I used to own Disney, and I think it’s going to be an interesting stock. There’s a lot of liquid in it right now, so let me explain the situation. mosquito?”
The company is likely to face a proxy fight in 2024 with activist investor Nelson Peltz, who is seeking two seats on the board between himself and former Disney chief financial officer Jay Laslo. Mr. Peltz launched a similar adversarial campaign last year, but withdrew in February ahead of the showdown at the annual meeting.
warner bros discovery The company’s stock is up about 10%, but is down from its high of $24 when Discovery and WarnerMedia merged in April 2022. CEO David Zaslav is focused on increasing cash flow and paying down the company’s then-$45.3 billion debt. End of September quarter. Investors didn’t like this quarter. I was particularly concerned about the bleak outlook for advertising.
According to one analyst, the advertising market appears to have entered a new phase of loss of pricing power that is detrimental to legacy media. “Historically, as terrestrial television viewership has declined, major companies have been able to compensate by increasing the prices they charge advertisers for the remaining viewers. seems to have failed.” Unless it’s a sport.
April 8 marks the two-year anniversary of the Discovery/Warner Media merger, allowing WBD to consider the deal without incurring a large tax bill. Zaslav has been discussing a potential deal with Paramount’s controlling shareholder Shari Redstone and CEO Bob Bakish. It’s possible Warner could be a seller, but that’s also difficult. One reason for this is that the company has a huge legacy cable network.
Warner Bros. Studios and HBO “are good companies with solid creative trajectories and are the heart of the company for us,” one analyst said.
paramount globalMeanwhile, it fell by 17%. Given the financial constraints, it seems most likely that an agreement will be reached sooner rather than later. Conversations with Zaslav and Skydance Media CEO David Ellison touched on both an outright sale and the possibility that Redstone would sell her stake in NAI, the family holding company that owns her Paramount stock. ing. Paramount’s regular shareholders would not get any premium for their stock in that scenario, which may be one reason why the deal talks don’t move the stock price. Skydance faces no regulatory hurdles.
Among large entertainment stocks, Netflix Increased by 63%. The studio has expressed interest in licensing new shows. The company has a stronger balance sheet than most major media outlets and a large backlog of unreleased non-Disney content, all of which is focused on streaming. With the addition of advertising space and a crackdown on password sharing, things are starting to turn around.
smaller than lions gate It ended the year up a whopping 88% after completing its acquisition of eOne from Hasbro and announcing plans to separate from Starz and combine the studio with a SPAC early next year in hopes of unlocking value.
Fox remains well-received by some analysts, with no streaming losses and a focus on live sports and news. But investors love growth, and some have questions about the endgame. “That’s exactly what it is,” said one. As terrestrial television shrinks and the cost of sports rights rises, the question is: What is the story?
Fox is facing a $2.7 billion defamation lawsuit by a second voting machine company, Smartmatic. Earlier this year, just before trial in the first lawsuit filed by Dominion Voting Systems, the company agreed to an $800 million settlement.
On the exhibition front, box office conditions at movie theaters remain difficult, with production halted due to strikes and some blockbuster films postponed, and the pace of new releases in 2024 likely to slow. Movie stocks ended the year mixed. Cinemark – No. 3 Chain – Rapidly profitable.world’s largest exhibitor AMC Entertainment Although the stock has fallen sharply, analysts are not concerned. One person said, “Finally, it’s trading almost in line with its historical multiple before the meme.”