Major media stocks crash at the end of the first half of 2024

As always, the numbers speak for themselves. The first half of 2024 saw double-digit share price declines for traditional media giants, with the exception of Disney and Fox Corp. Big tech companies and Netflix, on the other hand, have posted double-digit gains since the beginning of the year.

So why aren't wealthy Silicon Valley and Seattle finally getting around to swallowing up vulnerable media companies? It seems like the natural order of things for industries that have been meddling in each other's ways for three decades.

Apple, Meta, Alphabet, and most recently Netflix have yet to show any sign of wanting to buy a piece of old Hollywood. Amazon made a move with its purchase of MGM (a relatively small studio and large library without massive overhead commitments) in 2022, but has stayed away (so far) from the two biggest targets, Paramount Global (down 22.5% year-to-date as of July 3) and Warner Bros. Discovery (down 36.5%). Paramount’s cliff was even steeper 48 hours ago, before the stock started to climb on news that merger talks with Skydance Media had resumed and a possible sale of BET was imminent.

Those companies and cable-based Comcast (down 13% year-to-date) have struggled with losses as it repositions production operations and channel platforms for the streaming era. Disney shares have rebounded year-to-date (up 9%) on the strength of its theme parks and improving financial results from Disney+ and Hulu. Fox Corp. has rebounded 17% year-to-date on the strength of its cable news and sports assets.

The tech sector, on the other hand, is booming. Facebook parent Meta is up 44% year-to-date, followed closely by Netflix, up 40%. Alphabet, Google parent, is up 33%; Amazon is up 30%. Apple is up a more modest 15%. Microsoft, which absorbed gaming giant Activision Blizzard in October, is up 22.5%.

Media heavyweights are likely to face more challenges as the year progresses. The political and regulatory environment for M&A is so volatile that there is little hope that any form of horizontal merger between Paramount, WBD or Comcast/NBCUniversal will be approved by the Biden administration’s Justice Department and Federal Trade Commission.

On Tuesday, the FTC strengthened its anti-consolidation stance by filing a lawsuit to block Tempur mattress maker Sealy International’s proposed $4 billion acquisition of retailer Mattress Firm. The FTC, which has tried to block consolidation efforts across many industries, said the retail giant’s merger with the world’s largest mattress maker would ultimately “remove competition and raise mattress prices for millions of consumers.”

The chaotic swings of the 2024 presidential campaign haven’t helped the fortunes of media laggards, which also include AMC Networks (down 49%) and Lionsgate (down 19%). If President Joe Biden is reelected, the administration’s hard line against M&A activity in mature industries like media (and mattresses) could continue. If Donald Trump returns to the White House, anything is possible given his threats to settle scores and punish his perceived enemies, who are numerous in media and entertainment.

With only bad and worse options on the horizon, most major media stocks are likely to remain underwater for the remainder of 2024.

THE GREAT DILEMMA OF THE MAJOR MEDIA

Industry headwinds, M&A hurdles weigh on showbiz stocks

CLOSING PRICE ON JULY 3:

AMC Networks: $9.63

Comcast: $38.05

Disney: $98.61

Fox Corp.: $32.44

Lionsgate: $8.48

Netflix: $682.51

Paramount Global: $11.46

Warner Bros. Discovery: $7.23

Source: Yahoo Finance