What will 2018 bring for entertainment stocks? The key buzz phrase you’ll hear for all these companies is “global scale.” Here are some predictions:
2017 Closing Price %: $107.51
change vs. 2016: 3.2%
The deal with Fox should easily pass through domestic regulatory approval in 2018. As the sale gets closer to reality, expect Disney’s stock to rise as analysts count the cost savings of the combined company. It’s my favorite media stock going into 2018 because of its library of IP and because the “ESPN is dead” narrative is likely to recede in investors’ minds. The remaining parts of 21st Century Fox should also increase in value closer to the deal’s approval.
2017 Closing Price %: $191.96
change vs. 2016: +55%
Do you ever wonder why Netflix is so popular? Have you seen the video-on-
demand interfaces of most cable companies? The streamer looks to continue to grow its global brand and footprint now that it has surpassed 100 million subscribers. Disney’s planned 2019 entertainment OTT app launch won’t affect Netflix’s 2018 growth, which will power its stock higher. Netflix is on the march to 200 million global subs, showing primarily its own content moving forward, including a lot more first-run films like “Bright.” This will eventually pull other studios in the same direction.
2017 Closing Price %: $38.88
change vs. 2016: -8.6%
The deal with Time Warner should get government approval in 2018 but won’t be a panacea for AT&T’s stock price. The carrier will struggle with DirecTV cancellations and keeping up its big dividend payment. It needs to show it can sign up skinny-bundle subscribers in droves before investors will be interested.
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disc 2017 Closing Price: $22.38
% change vs. 2016: -18.3%
Although smaller, Discovery has a global footprint and a mix of low-cost reality content with sports rights (in Europe). The stock has bounced since the end of November after a brutal sell-off and could move up further. Charter is a well-run cable system that could be on a larger company’s shopping list.
2017 Closing Price: $52.93
% change vs. 2016: -0.8%
Like AT&T, Verizon is trying to remake itself as a company that controls the pipes and content to viewers’ homes. The AOL, Yahoo and Go90 content moves haven’t been compelling, and few are streaming NFL games in a big way on their Verizon phones. This stock should continue to spin its wheels in 2018. The company could also make a big acquisition that might weigh further on the stock.
2017 Closing Price: $1,169.47
% change vs. 2016: +54.5%
Amazon will fix its video management ranks after Roy Price’s messy departure, but the truth is that its success in media will have no impact on its stock price, which will hinge on its e-commerce and AWS cloud services growth. Those businesses remain very strong.
2017 Closing Price: $169.23
% change vs. 2016: +46.1%
Apple’s stock price is similarly not tethered to its success in media. It’s all about whether its users upgrade in big numbers to the higher-priced new iPhones.
Nevertheless, look for 2018 to be a bit of a coming-out party for announcements of new Apple shows that actually move the needle, unlike “Planet of the Apps” and “Carpool Karaoke.”
2017 Closing Price: $40.05
% change vs. 2016: +16%
After Disney, it’s probably the best-positioned “old” content company because of the pipes it owns. It needs to build up its international footprint through more acquisitions to be more globally diversified.
Eric Jackson is the founder and president of EMJ Capital, a tech and media investment firm. Affiliates controlled by Jackson have longpositions in Disney, Netflix and Apple.