Media Stocks Are Booming

What a difference a year make. One year ago, investors took a grim view of legacy media companies, reports The L-A Times.

The economic toll of the COVID-19 pandemic was coming into focus: Theme parks and movie theaters were shuttered, sporting events were canceled, and TV and film production ground to a halt. Wall Street responded by bludgeoning shares of traditional media, including Walt Disney Co., ViacomCBS Inc. and Discovery Inc.

One year later, these stocks have not only regained their value, they have soared to stratospheric heights.

On Wednesday, Disney stock closed at $195.06 — an extraordinary rebound from a year ago when its shares traded around $85. Since March 23, 2020, Disney’s market value has increased nearly $200 billion. The Burbank entertainment behemoth now is worth $354 billion.

ViacomCBS, Discovery, Comcast Corp., Fox Corp. and AMC Networks Inc. also have benefited despite ongoing challenges, including consumer cord-cutting that has dimmed the prospects of their cash-cow cable TV channels.

There are several reasons for the boom, including the stock market’s overall strength and the reopening of an economy that has forced the shutdown of theaters, productions and live events and prompted massive layoffs. Investors also had been looking for undervalued stocks to diversify their holdings.

But perhaps the biggest factor, according to analysts, has been the runaway success of Disney+, the streaming service that launched in November 2019 with the “Star Wars,” Marvel Entertainment, classic Disney, National Geographic and Pixar properties.

In the last year, media companies have joined the streaming stampede. AT&T Inc. launched the HBO Max streaming service, Comcast/NBCUniversal trotted out the Peacock service, Discovery launched Discovery+ and this month, ViacomCBS unveiled Paramount+, which is bolstered by programming from the CBS broadcast network and fare from the Melrose Avenue movie studio as well as Nickelodeon, BET, MTV and Showtime.

Discovery was struggling a year ago because the bulk of its business had long been selling its domestic cable channels — including Animal Planet, Discovery, TLC, HGTV, Food Network and Investigation Discovery — to pay-TV distributors such as DirecTV and Charter.

But with millions of consumers dropping their pay-TV subscriptions, Discovery had to adapt. It rolled out its $4.99-a-month Discovery+ this year and has grown faster than expected to more than 11 million subscribers. Discovery shares have tripled in value since last spring, closing up 4.5% to $65.82 on Wednesday.