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Value of media groups down $527bn

21 December 2022
2 min.
Value of media groups down $527bn

The value of media groups

The combined market value of the largest media and entertainment conglomerates has fallen by more than $0.5 trillion this year as a result of falling share prices. This was reported by the Financial Times (FT).

Media, which for investors ranges from film production to advertising to cable TV, was one of the worst-hit sectors in what has to be the worst year for global equities since the financial crisis.

Shares in Walt Disney (NYSE: DIS), down about 45 per cent, are heading for their biggest annual drop since at least 1974. The stock has come under a lot of pressure in recent days as the results of Disney's much-anticipated sequel Avatar fell short of some estimates in the opening weekend.

Michael Nathanson, senior research analyst at MoffettNathanson, said: "It's been a perfect storm of bad news. I've been covering this sector for a long time and I've never seen such bad data collection before."

Paramount Global (NASDAQ: PARA) is down 42% this year and Netflix (NASDAQ: NFLX) is down 52%, while Warner Brothers Discovery (NASDAQ: WBD) is down 63% since its creation this year by the combination of Discovery and AT&T WarnerMedia.

Executives at the conglomerate are trying to integrate the two largest media operations at a time of upheaval in the industry, and last week warned they were facing a $5.3 billion restructuring and other merger-related costs.

Streaming companies did well at the start of the pandemic as lockdown restrictions boosted audiences, pushing stocks across the sector higher in the stock market boom from March 2020.

But while executives have spent tens of billions of dollars on streaming content, viewing options have proliferated while the cost of living has soared, encouraging financially strapped households to "churn" or switch between subscriptions.

The Dow Jones Media Titans index, which tracks the performance of the world's top 30 media companies, has lost 40% this year, and its total market value has fallen from $1.35 trillion to $808 billion.

Experts point to rising costs, declining consumer demand and declining advertising revenue as the main reasons for this. As a result, investors increasingly consider investments in media holdings to be unprofitable.

Persons1 and Companies9 in the news

Senior Research Analyst at MoffettNathanson
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Dow Jones
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Rating companies
JP Morgan Chase
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Walt Disney Company
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Ford Motor Company
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X (Twitter)
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