Michael M. Santiago/Getty Images

Roku was a champ. Lionsgate surged and Netflix jumped. Tech shares went bananas in 2023. Big media stocks had a blended 12 months of transition dominated by Hollywood strikes with linear tv declines and streaming losses.

Paramount fell. Disney and Fox had been principally flat on the 12 months. Giants Comcast and Sony, which each produce other companies like broadband or video games and music, each had good runs. Warner Bros Discovery gained a bit. All are pushing for profitability in streaming and progress there’ll affect how the shares carry out in 2024.

Relatively talking, 2023 was an actual bonanza in contrast with a very dismal 2022 when solely two – that’s two – media shares rose for the 12 months: WWE (now a part of TKO Group) and Nexstar.

It was a surprisingly good 2023 for shares total with the S&P 500 closing up greater than 24% for the 12 months. Investors shrugged off excessive rates of interest and inflation, recession fears, threats of a authorities shutdown, a quick banking disaster and worldwide strife, turning round a 12 months initially anticipated to be relatively glum for markets.

Tech specifically introduced the warmth, fueled largely by an AI frenzy. The well-known FAANG group of shares — Facebook (now Meta), Amazon, Apple, Netflix and Google (now Alphabet) — has morphed into The Magnificent Seven. Newly coined this 12 months by an analyst (from the film), it’s Alphabet, Amazon, Apple, Meta, Microsoft, Invidia and Tesla. This gang contributed considerably to total features. Shares of adjoining tech from Snap to Spotify additionally rallied.

Exhibitors had been break up to decrease amid angst at 2024’s box office prospects. Broadcast shares fell, with promoting gentle however set for a political tsunami.

And the 12 months 12 months wrapped with a flourish of M&A chatter that hasn’t but however may additionally buoy shares in 2024. It doesn’t damage that the Federal Reserve indicated it could lastly lower rates of interest in 2024 after 11 hikes over the past two years.

A Closer Look

Roku was king of media in 2023, up 119%.

Remember again in March when the corporate worriedly introduced that it had 1 / 4 of its money at Silicon Valley Bank, which worn out within the greatest financial institution collapse since 2008. Disaster was averted when the FDIC agreed to completely assure all deposits and Roku took it from there. The enterprise is benefitting as tv advert {dollars} shift from linear to digital, because it expands abroad and because it sells a number of branded Smart TVs. May be a possible takeover goal.

Disney, the one showbiz inventory within the 30-member DJIA, nosed up barely for the 12 months. That’s nicely off its excessive for the 12 months of $110 in January, when the market was flushed with enthusiasm at CEO Bob Iger’s return. But these are sophisticated occasions with linear tv in regular decline, streaming nonetheless within the purple and Disney going through a string of field workplace underachievers.

Iger notably acquired the remainder of Hulu from Comcast, paying a beforehand agreed upon $8.6 billion minimal. It might owe extra as either side have groups working to determine a valuation. He’s waffled a bit on entertaining affords for ABC and linear networks and is on the lookout for a strategic accomplice for ESPN forward of an eventual streaming launch. Disney is reportedly doing a take care of Reliance for its property in India.

Wall Streeters hope the brand new 12 months will convey an replace on succession planning, and maybe on an NBA contract renewal. One analyst says he’s been getting a number of shopper calls on Disney just lately. “They’ll say things like, ‘I used to own Disney. I just feel like it could be an interesting stock. There are so many moving parts right now, could you just get me up to speed?’”

It appears to be like like the corporate will enter 2024 going through a proxy combat with activist investor Nelson Peltz, who needs two seats on the board — for himself and former Disney CFO Jay Rasulo. Peltz launched an analogous adversarial marketing campaign final 12 months however backed off in February earlier than a showdown on the annual assembly.

Warner Bros Discovery is up about 10% however off its excessive and from the $24 it traded at when Discovery and Warner Media merged in April 2022. CEO David Zaslav is targeted on boosting money movement and paying down the corporate’s large debt, which stood at $45.3 billion on the finish of the September quarter. Investors didn’t love that quarter, spooked in particular by a glum advertising outlook.

The advert market appears to have entered a brand new part not useful for legacy media, which is the lack of pricing energy, says one analyst. “Historically, as linear TV audiences shrunk, big companies could offset that by raising the prices they charged advertisers for the remaining viewers. In the last year, that game seems to have failed,” until it’s sports activities.

With the April 8 two-year anniversary of the Discovery-Warner Media merger, WBD can discover offers with no huge tax penalty. Zaslav has had conversations with Paramount’s controlling shareholder Shari Redstone and CEO Bob Bakish a couple of potential deal. Warners is also a vendor however that’s laborious too, partly on account of its enormous secure of legacy cable networks.

Warner Bros Studio and HBO “are good businesses with solid creative trajectories, and, to us, the heart of the company,” stated one analyst.

Paramount Global, in the meantime, fell 17%. It’s financially squeezed so seen as likeliest to do a deal sooner rather than later. Conversations with Zaslav in addition to with Skydance Media CEO David Ellison have touched on each an outright sale in addition to the opportunity of Redstone promoting her curiosity in NAI, the household holding firm that homes her Paramount inventory. Regular Paramount shareholders wouldn’t be getting any premium for his or her shares in that situation, possibly one motive deal discuss has not moved the needle on the inventory. Skydance wouldn’t face regulatory hurdles.

Among huge cap leisure shares, Netflix gained 63%. Studios are newly prepared to license exhibits. It has stronger stability sheet than most of huge media and a bigger backlog of unreleased content material of anybody however Disney, all of it devoted to streaming. It has added an promoting tier and is seeing upside from a crackdown on password sharing.

Smaller Lionsgate had a implausible run, up a whopping 88% because it ended the 12 months closing the acquisition of eOne from Hasbro and asserting plans to mix the studio with a SPAC early subsequent 12 months in a separation from Starz that it hopes will unlock worth.

Fox continues to be nicely favored by some analysts — no streaming losses and a deal with reside sports activities and information. But buyers like progress and a few marvel in regards to the finish sport. “It just is what it is,” stated one. With linear tv shrinking and the price of sports activities rights rising, “What’s the narrative?”

Fox is going through a $2.7 billion defamation lawsuit by a second voting machine company, Smartmatic. Earlier this 12 months, it agreed to an $800 million settlement simply earlier than trial in a primary swimsuit introduced by Dominion Voting Systems.

In exhibition, the movie show gig continues to be a troublesome one and the strikes disrupted manufacturing, pushing some huge movies again, which can gradual the tempo of latest launch in 2024. Cinema shares ended the 12 months blended, with Cinemark – the No. 3 chain — displaying sharp features. The worlds’ greatest exhibitor AMC Entertainment plunged, however analysts don’t thoughts. It’s “finally trading roughly in line with its pre-meme historical multiple,” stated one.