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Thursday, March 28, 2024
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WWE, Nexstar emerge from tough year – Deadline

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U.S. stocks just wrapped up their worst year since 2008, with media and technology stocks leading losses. Streaming has become a mess, linear TV has declined, theatrical recovery has faltered, inflation, interest rates, unemployment and geopolitics have turned ugly, recession scares have hammered advertising, and mergers and acquisitions have mostly ground to a halt. When it doesn’t, it probably should (ie, Elon Musk’s $44 billion acquisition of Twitter).

“This is a very complex environment and largely unprecedented,” said Neil Begley, a Moody’s senior vice president.

SmackDown does have a winner: the sports entertainment engine wwe The gain at the end of the year was 38%.Runner Up – Big Broadcaster and The CW’s New Boss Nestarup 16%.

These are rare exceptions in a year of carnage for players big and small across all fields of entertainment. disneythe only media stock in the Dow Jones Industrial Average, is down 44%, not only having a poor year but its worst year since 1974.

See the industry chart below.

Other lows: Shares of Forbes plummeted nearly 90%. Shares of Roku, Snap and AMC Entertainment fell more than 80%. Shares of Warner Bros. Discovery and Lionsgate fell more than 60%.from Netflix From chartered flights to chicken soup for the soul, from Apple and Meta to Spotify and Cinemark, there is a sea of ​​red. China Film Media has become a low-priced stock and faces the risk of delisting. On the back of the storm, a painful reassessment of streaming priorities has led to a host of economic concerns and industry-specific woes, even as cord-cutting continues to accelerate.

“This has been the worst year for the media industry in living memory,” lamented one senior analyst.

As of Friday’s close, the S&P 500 2022 was down 19.4%. The S&P’s communications services, one of 11 sectors in the index that includes most media and telecommunications companies, was the worst performer, down nearly 40 percent. (The only sector up in 2022 — energy.)

The Dow fell 8.8%. The Nasdaq fell 33%, the biggest drop among the large indexes, which was not surprising given the wild swings in technology stocks.

Bucking the trend, WWE engineered a surprisingly smooth transition of management CEO Vince McMahon resigns amid scandal. An internal investigation determined that he made improper payments to some women in exchange for their silence about their sexual relationships. The company, which has a hugely popular program that is about to be renewed amid rapidly rising sports rights costs, is now run by co-CEO Stephanie McMahon and former CAA top sports agent Nick Caan and former wrestler Triple H. Operations (Paul Michael Levesque) as Chief Content Officer.weekly program monday night raw with NXT aired on NBCUniversal’s US network, and Friday Night SmackDown On Fox, there’s a five-year deal that ends in 2024. Peacock retains streaming rights through 2026.

Wall Street sees more bidders (according to other movements) and higher prices for the next round.Negotiations for the first two common terminus deals will take place at Wrestlemania 39WWE’s annual pay-per-view and live event.

It could also sell itself, with Comcast a likely buyer. People have been speculating for years. Vince McMahon remains the controlling shareholder, and some analysts wonder if he’ll be less interested in owning the company when he can’t run it. Meanwhile, as flashy as the product may be, WWE’s financial management is conservative and ended the September quarter with a strong balance sheet of $450 million in cash and about $235 million in debt.

As for Nexstar, the big broadcaster benefits from scale, including having multiple stations in some politically competitive markets; it could generate more than $500 million in political ad revenue by 2022. It has also reduced advertising exposure, with more than half of sales coming from distribution or transshipment, a business that has historically been recession-resistant.

“This is a broadcaster that really influences the political numbers. It’s relatively lightly leveraged, pays a good dividend and has been buying back a lot of stock,” one analyst noted.

Net leverage is a measure of a company’s financial health and refers to net debt as a percentage of EBITDA (earnings before interest, taxes, depreciation, and amortization). In a world of high interest rates and still rising, debt is once again a big problem for companies. Factors such as Covid and the Russia-Ukraine war have disrupted supply chains and sent inflation soaring to 40-year highs, prompting the Federal Reserve to raise interest rates seven times in 2022.

Another broadcaster, Tegna, also rose 14%, likely due in large part to Standard General’s pending acquisition of it at $24 a share. Advertising giant Omnicom also ended the year with a higher close. But it’s an unusual situation when you can count all the winners in media and tech on one hand.

Among the losers, Fox lost only 17%, which was lower than most.it’s still a bit wall street The Favorite, which is also fiscally conservative, is big on sports and news, and has less exposure to the streaming wars than its competitors. Investors don’t like the proposed restructuring of Fox and News Corp that Rupert Murdoch wants. This will work next year.

As media enters 2023, Wall Street understands a huge existential dilemma: The streaming genie is busted. But it is now demanding a clearer path to monetization. No quick fixes in sight. However, as the industry evolves, there is a learning curve. Streaming is still brand new to everyone but Netflix, and even pioneers are struggling to adapt.

“Stocks have had a bad year, but to turn things around, one could argue that they’ve started to reflect” most of the bad news, one investor said — or at least that’s the hope.



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