Just as with results at the theatrical box office, the fortunes of major media company stocks in 2023 were decidedly mixed.
Among the streamers, Netflix was the biggest winner on Wall Street this year, with its share price rising by 65% over the last 12 months, with its shares currently trading at $486 and an astounding market capitalization of $213 billion.
The biggest drivers of its growth were the success of its campaign to crack down on unauthorized password sharing and the launch of a new, low-cost, ad-supported tier of service. Both initiatives have had the effect of increasing the overall number of known and named subscribers. Many users who had previously accessed Netflix using the credentials of another paying subscriber chose to create their account at the low-cost, ad-supported tier.
Among the traditional Hollywood studios, both NBCUniversal and Sony enjoyed a positive year with their share prices rising 25% and 24% respectively. Each studio saw success with their theatrical releases over the year.
NBCUniversal did a better job than others in holding down costs related to streaming, while Sony does not operate directly in that space, instead acting as an “arms dealer” who licenses its content to other streaming platforms.
NBCUniversal will also benefit from the expected sale of its stake in Hulu to Disney, which is estimated to bring in a cool $9-11 billion. While investors are leery of big media companies loading up on debt, both these studios were rewarded for their savvy, cost-conscious moves.
Exhibitors had mixed results this year. AMC shares ended the year down 83% from December 2022. Any remaining glow from AMC’s “Reddit Rally” among retail investors has cooled off completely. This is due in large part to the enormous debt that the exhibitor still has on its books coupled with the unpredictability of the theatrical market.
There were some successes during the year, notably the industry-wide bonanza produced last summer by the dual “Barbenheimer” releases and a smart move to partner with Taylor Swift on the distribution of the concert film from her wildly popular ERAS tour.
On the bright side, the country’s third largest exhibitor Cinemark had a bumper year, with shares closing the year 63% higher than 12 months ago. A key factor in this success is a much cleaner balance sheet, echoing the reason Netflix outperformed its rivals. As the interest rates increased over the years making debt much more costly, investors rewarded companies with profitable operations and limited debt.