US stocks just wrapped up their worst year since 2008 with stocks and bonds leading a downward spiral. Streaming news has taken off, TV lineups have declined, theater recovery has fizzled, inflation, interest rates, unemployment and geopolitics have turned ugly, recession jitters are hitting advertising, and M&A is mostly on the ground. Since he couldn’t, he probably should have (that is, Elon Musk’s $44 billion takeover of Twitter is worth it).
“It’s a very complex environment, and largely unheard of,” said Moody’s SVP Neil Begley.
He had a winner on SmackDown: The WWE’s entertainment engine ended the year with a gain of 38%. The runner up — big broadcaster and new CW owner Nexstar, which rose 16%.
These were rare exceptions in a year of carnage of big and small games across all areas of entertainment. Disney, the only stock in the Dow Jones Industrial Average, down 44%, not only had a bad year, it had its worst since 1974.
See below on sector papers.
Other lowlights: Fubo parts are down nearly 90%. Roku, Snap and AMC Entertainment dropped more than 80%. Warner Bros. Discovery and Lionsgate fell over 60%. From Netflix to Cart and Chicken Soup for the Soul, from Apple and Meta to Spotify and Cinemark, it was a sea of red. CineMedia is a national penny stock and risk-free. After the storm, the brew of financial concerns and industry-specific pain was driven by the influence of a re-evaluation of priorities as cord-cutting continues to accelerate.
“This has been as bad a year as we can remember in the middle,” lamented one longtime analyst.
The S&P 500 ended 2022 down 19.4% as the closing bell hit Friday. The S&P’s communications services, one of 11 sectors on the list, which includes most media and telecom companies, was its worst performer, at nearly 40%. (The only sector to rise in 2022 — you want.)
The DJIA lost 8.8%. The Nasdaq dropped 33%, the worst hit among major stock market indexes that didn’t give an unexpected upset in the tech sector.
Bucking the downtrend, WWE engineered a surprisingly smooth management transition after CEO Vince McMahon stepped down amid scandal. An internal probe determined that he had engaged several women in a mutual exchange of silence about abusive relationships. The company, with a string of popular programming to renew prime time as the cost of sports rights rises rapidly, is now run by co-CEOs Stephanie McMahon and former top CAA sports agent Nick Khan, with former wrestler Triple H (Paul Michael Levesque) as chief content officer. . weekly shows Monday Night Raw and NXT to air on the NBCUniversal USA Network, and Friday Night SmackDown on Fox, runs for five years ending in 2024. Peacock retains streaming rights through 2026.
Wall Streeters put more prices in the mix (as in other games) and higher prices for the next round. Dealing with the first two co-terminus drives to start during WrestleMania 39WWE’s annual pay-per-view and live events.
He might even sell himself when he flatters a likely buyer. In those years there was speculation. Vince McMahon remains a controlling shareholder and some speculate that he might be less interested in owning the company when he can’t run it. In the meantime, perhaps, as may be the case, WWE management is financially conservative and has a strong balance sheet with $450 million in cash and about $235 million in debt at the end of the September quarter.
For Nexstar, large scale benefits from scale, including multiple stations in some markets with highly competitive political careers; $500 million in political sales by 2022. It exceeded and even dialed its exposure, with over half of sales coming from distribution, or returning, a business historically inconsistent with financial results.
“It was one radio station that really hit the political numbers. It’s relatively low-cost, it pays a healthy dividend and it’s traded a lot of stock,” one analyst noted.
Net leverage, an estimate of a company’s financial health, refers to the ratio of net debt to EBITDA – earnings before interest, taxes, depreciation and amortization. Debt is once again becoming a big issue for companies in a world of high and still rising interest rates. Supply-chain disruptions from Covid and the Russia-Ukraine war, among other things, have pushed inflation to 40-year highs, causing the Federal Reserve to raise rates seven times in 2022.
Tegna, another outlier, also rose, gaining 14% likely, largely due to the pending $24-a-share acquisition by Latin General. He ended up banning the giant Omnicom last year. But it is an unusual state of affairs when you can count all the winners by half and from one side.
Among the losers, Fox only lost 17%, less than most. It remains a favorite of Wall Street, even fiscally conservative, big on sports and news and with less exposure to streaming wars than rivals. Investors don’t like the re-connection of Fox and Corp. News wanted by Rupert Murdoch. He will play that next year.
As it enters the middle of 2023, Wall Street understands a great existential dilemma: the genie is out of the bottle. But now the gain required a clearer path. They are not quick fixes in sight. But there is a learning curve as the industry evolves. Streaming is still pretty new to everyone except Netflix and even the author is trying to adapt.
“They had a terrible year, but as a flip, it could be argued that they are now starting to think,” said one investor, mostly bad news – or at least that’s the hope.