In 2022, Netflix and most Hollywood studio stocks have fallen to the ground. And in 2023, trust in streaming took another hit, with major media and technology companies having a rough year for investors. But in 2024, signs of improving streaming profitability and new M&A negotiations supported stock prices in some major sectors.
And looking ahead to 2025, some on Wall Street are striking a surprisingly optimistic tone. “We’re generally bullish on media for 2025,” Bank of America analyst Jessica Reiff Ehrlich said in a New Year’s preview on Dec. 19.
“Can we say we’re optimistic?” Wells Fargo analyst Stephen Cahall wrote the same day in a preview of 2025. “This is the best we’ve felt about the larger space since ’21.”
why is that? “Going into 2025, the media is in a more constructive situation,” he explained. “Although linear risk to advertising and affiliate revenue has not yet been mitigated, we are seeing strategically meaningful improvements in direct-to-consumer (DTC) performance. Sports will shift to streaming with ESPN and likely Fox.” “We expect M&A to support broadcast television, Warner Bros. Discovery, and possibly Lionsgate’s valuation, at least for a while.”
Media investor sentiment is that the most recent downturn actually began in early 2022, as DTC fundamentals have slumped in line with traditional fundamentals, and the above trends indicate that this has been a potential “This represents the best we felt about outperformance,” Cahall concluded. “We believe the advertising market is also strong.”
Morgan Stanley analyst Benjamin Swinburne said in a Dec. 18 report that 2024 will see “stocks with long-term growth tailwinds, such as the media and entertainment ‘winner circle,’ and more pure-play stocks.” There was a noticeable discrepancy in the performance (of sector stocks) between stocks that had a tailwind.” Non-cyclical or facing long-term headwinds. ”
But he is also more cautious than others. “Despite the improving outlook for the streaming industry and the potential for industry-wide consolidation, we see no reason to be bullish on these stocks today,” he added. “Headwinds to traditional TV remain significant, TV licensing demand may not fully recover to pre-pandemic levels, and M&A often takes longer to execute than the market expects.”
Netflix soared 90% to $891.32, making it one of the year’s biggest category winners, but outperformed Cinemark, which soared 121%. Fox Inc. rose 60% and IMAX rose 71%, among the media and entertainment sector stocks, easily outpacing the broader S&P 500’s 23% rise.
Despite Netflix’s strong performance amid hit content and competitors cutting spending, many Wall Street bulls remain optimistic. “Our view remains that Netflix has won the global streaming race, as evidenced by our year-to-date results and increased guidance, especially when compared to the performance of our streaming peers. Here’s what a win looks like, in our opinion,” Pivotal Research Group analyst Jeff Brodarczak wrote in late November, with a price target of the highest on the street. Increased to $1,100.
But some are being more cautious. For example, Loop Capital analyst Alan Gould downgraded Netflix’s stock from “buy” to “hold” in mid-December, citing high valuation. “Competitors are raising prices and cutting spending, making Netflix even more competitive, and Netflix has the largest pipeline of unreleased content and is on strike around the world. “We upgraded NFLX almost 16 months ago based on our claims that we have been successful in introducing paid sharing and are also optimistic about advertising,” he explained. “These issues are largely priced into the stock price, and we believe the stock is now approaching fair value.”
Most traditional Hollywood companies fell short of Netflix’s performance, and quite a few actually underperformed as Wall Street continued to focus on the traditional linear TV network sector as a difficult business amid cord-cutting and digital competition. Ta. Still, moves that suggest Comcast and Warner Bros. Discovery (WBD) are prepared to exit the cable network business could be a deal avenue for further consolidation in the industry, leading some analysts to believe that Comcast and Warner Bros. There were cheers, but other analysts expressed doubts.
Walt Disney’s rejuvenated stock has risen 23% since the beginning of the year to $111.35, roughly in line with the broader market since Bob Iger returned as CEO. CFRA Research analyst Kenneth Leung said, “In 2025, we expect Disney to deliver improved financial performance in its direct-to-consumer (DTC) division and better-than-expected results in its experiences (theme parks and cruise lines). We are confident,” wrote CFRA Research analyst Kenneth Leung. On December 26, he raised his price target by $8 to $128, and also revised upward his earnings forecast for the current and next fiscal year. “In our view, DTC is on the cusp of profitable growth with healthy subscriber growth. Sports is a core franchise of live entertainment, and advertising is on the rise to offset sports rights. We need sponsors.”
Paramount Global has finally reached an agreement in 2024, with Chairman Shari Redstone agreeing to relinquish control of the company in a deal with Redbird Capital and a consortium led by David Ellison and Skydance Media. The merger is expected to close in September, and Ellison and his team have outlined their case as a growth story for Paramount. However, Paramount stock fell 27% to $10.46.
Comcast, owner of NBCUniversal and led by Chairman and CEO Brian Roberts, became the first entertainment giant to announce in late November that it would spin off most of its cable networks into separate companies. The new company, led by Mark Lazarus as CEO, did not have an immediate name and will instead be called SpinCo, with Comcast promising a “new growth trajectory” for all of its assets.
Bank of America analyst Jessica Reiff Ehrlich was bullish on the move. “SpinCo could be used as an industry-wide cable network integration vehicle,” she wrote in the report. “Comcast’s move could also alleviate regulatory concerns about new merger attempts with major cable peers.”
However, some observers have doubts about the separation of assets. Macquarie analyst Tim Nolen wrote that after Comcast management first mentioned the potential changes, “Without ties to NBCU’s studios and streaming capabilities, and without advertising partnerships, the cable network It is questionable how valuable it is on its own.”
Comcast stock fell 14.4% to end the year at $37.53.
WBD, led by CEO David Zaslav, made a similar move on December 12, announcing that it would reorganize its corporate structure into a global linear TV division separated from its streaming and studio divisions. The new corporate structure is intended to “enhance strategic flexibility and create potential opportunities to unlock further shareholder value.” Or, as Macquarie analyst Tim Nolen highlighted, “The signs seem clear: the sale of the linear network, in line with Comcast’s recently announced plan to separate most of its cable networks from NBCU. may be under consideration.”
Zaslav also recently mentioned WBD’s previously stated goal of posting more than $1 billion in direct-to-consumer profits in 2025, and that his team now expects to significantly exceed that. He highlighted the “obvious results” of the company’s focus, investment and perseverance. Maximum streamer. WBD stock ended the year down 9% at $10.57.
Lionsgate, one of Hollywood’s biggest gainers in 2023, also stalled, dropping 26% to $7.55.
On the other hand, Mr. Fox. The Co-op, led by Lachlan Murdoch after his father Rupert Murdoch became honorary chairman, has benefited from optimism for news and sports properties, including Fox News, which have enjoyed a major election year. I received it. Fox is up 60% this year, ending the year at $48.58.
Among smaller entertainment companies, AMC Networks lost about half its value in its second year under CEO Christine Dolan, dropping 48% to end the year at $9.90.
In contrast, TKO Group, the owner of UFC and WWE, has seen its stock soar over the year since its founding in September 2023, rising 74% to close at $142.11, while Endeavor has traded at $142.11 since its founding in September 2023. % to close at $31.29.
2024 was another mixed year for movie theater operating stocks. Shares of AMC Entertainment Holdings, parent company of AMC Theaters, fell 35% to end the year at $3.97, while Cinemark’s stock soared 121% to $30.98. IMAX Corporation also rode on the recovery in Hollywood studio box office revenues, with its stock up 70% to $25.59.
Music and audio entertainment stocks mostly stalled in 2024. Warner Music Group stock fell 13.3% to $31.00, Universal Music Group’s Amsterdam-listed stock fell 4.2% to end the year at $24.72, and iHeartMedia ended the year at $24.72. Shares of satellite radio giant SiriusXM fell 58% to close at $22.80, at $1.98.
