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Fox and Amazon Rock, Lionsgate and Facebook Sink in Topsy Turvy Year for Media Stocks

A year of consolidation and consternation for traditional media giants took a toll on showbiz stock prices during 2018.

Most major entertainment players saw share prices decline over the course of the year — from Jan. 2 through Dec. 28 — with the exception of Discovery and 21st Century Fox, the latter of which is about to be swallowed up by Disney.

Media companies were not immune to the gyrations of the equities markets, particularly in the last few months as fears of an economic slowdown, upheaval in Washington and the Trump administration’s unpredictable trade policies spurred heavy selling and talk of a bear market after an 11-year expansion.

Lionsgate was the biggest loser among the studios, dropping some 52% during the year amid a perfect storm of box office disappointments and unrealized investor expectations that the smallest of Hollywood’s major studios would be an M&A target this year.

Disney and AMC Networks ended the year in flat territory. Fox was the beneficiary of a bidding war between Disney and Comcast, which also made for a choppy year in the share prices of Fox’s suitors. Discovery had a slow start to the year but the completion of its $14 billion acquisition of Scripps Networks Interactive boosted investor confidence. In fact, Discovery shares were up more than 40% this year until the broader market downturn took root in the fall.

The biggest cloud hanging over the media sector overall is the competitive threat posed by the digital disruptors that have become known as the FAANG companies: Facebook, Amazon, Apple, Netflix and Google. Amazon had such a strong year that it (briefly) busted through the $2,000 per share benchmark in August and again in September, before cooling off amid the overall market slump.

But it wasn’t all go-go-growth across the FAANG spectrum. Netflix and Amazon posted double-digit gains for the year. Apple ended the year down 8% while Google was off just 1%. Facebook shares plunged 25% as the social media behemoth found itself in the crosshairs of Russian efforts to manipulate public sentiment during the 2016 presidential election and growing concerns about consumer privacy protections.

The outrage over Facebook’s handling of user data could lead to tighter regulation of its operations in countries around the world. It has also fueled tougher investor scrutiny of how its management is handling both the PR crisis and the ability to leverage its enormous user base – 2.27 billion monthly active users as of September, per Facebook — to generate profits.

The emergence of global platforms like Facebook, Netflix and Amazon has shaken the traditional media business its core, driving AT&T’s acquisition of Time Warner, Disney’s deal for 21st Century Fox and Comcast’s $40 billion bet on Euro satcaster Sky. Content-rich companies have embraced the “direct to consumer” mantra of the moment, which is forcing companies to take a leap of faith and make big changes to decades-old business models.

“The speed of change has forced every executive to acknowledge that the future of media is uncertain, adding a high level of worry to many different parts of the ecosystem,” veteran media analyst Michael Nathanson wrote earlier this month. “Every incumbent studio and network is facing the new reality of a Direct-to-Consumer world and figuring out their place within it.”

The process of getting there won’t be easy or cheap. Disney and AT&T in particular are looking at investing big in the launch of subscription streaming platforms by the end of next year. The uncertainty about the path that both companies are pursuing in the direct to consumer arena has been a drag on share prices. AT&T has also been weighed down by investor concern about its ability to manage the $170 billion debt load it has amassed since acquiring DirecTV in 2015 and Time Warner in June after a hard-fought anti-trust battle with the Justice Department, which is now on appeal.

2018 was another rough year for the two halves of Sumner Redstone’s empire. CBS shares were battered by upheaval throughout the year, from the ouster of longtime CEO Leslie Moonves in September to the legal battle for control of the company that Moonves launched in May against controlling shareholder Shari Redstone. CBS posted a bigger drop for the year than Viacom, which began to show signs of a turnaround after four years of steady declines for the share price.

Lionsgate, meanwhile, is looking to rebound from a year to forget. The stock showed some uptick in the last weeks of the year despite the general volatility in the equities markets. Company chairman Mark Rachesky voted with his pocketbook as he went bargain shopping for nearly 800,000 shares this month according to Securities and Exchange Commission filings.

Here’s a rundown of how traditional media and FAANG companies fared on Wall Street in 2018.

TRADITIONAL MEDIA

21st CENTURY FOX
Closing price Jan. 2: $35.36
Closing price Dec. 28: $47.62
% gain/loss: +40%
52-week range: $33.75-$49.65

DISCOVERY
Closing price Jan. 2: $23.11
Closing price Dec. 28: $24.64
% gain/loss: +10%
52-week range: $20.60-$34.89

AMC NETWORKS
Closing price Jan. 2: $54.13
Closing price Dec. 28: $54.72
% gain/loss: +1%
52-week range:$48.00-$69.02

DISNEY
Closing price Jan. 2: $111.80
Closing price Dec. 28: $107.28
% gain/loss: flat
52-week range: $97.68-$120.20

COMCAST
Closing price Jan. 2: $41.07
Closing price Dec. 28: $34.35
% gain/loss: -14%
52-week range: $30.44-$44.00

AT&T
Closing price Jan. 2: $38.54
Closing price Dec. 28: $28.45
% gain/loss: -27%
52-week range: $26.80-$39.32

VIACOM
Closing price Jan. 2: $31.19
Closing price Dec. 28: $25.89
% gain/loss: -16%
52-week range: $23.31-$35.55

CBS CORP.
Closing price Jan. 2: $59.17
Closing price Dec. 28: $43.42
% gain/loss: -26%
52-week range: $41.38-$61.59

LIONSGATE
Closing price Jan. 2: $33.01
Closing price Dec. 28: $16.16
% gain/loss: -52%
52-week range: $13.63-$36.48

FAANGs

NETFLIX
Closing price Jan. 2: $201.07
Closing price Dec. 28: $256.08
% gain/loss: +33%
52-week range: $191.22-$423.21

AMAZON
Closing price Jan. 2: $1189.01
Closing price Dec. 28: $1,478.02
% gain/loss: +26%
52-week range: $1,167.50-$2,050.50

GOOGLE
Closing price Jan. 2: $1,065
Closing price Dec. 28: 1,037.08
% gain/loss: -1%
52-week range: $970.11-$1,273.89

APPLE
Closing price Jan. 2: $172.26
Closing price Dec. 28: $156.23
% gain/loss: -8%
52-week range: $146.59-$233.47

FACEBOOK
Closing price Jan. 2: $181.42
Closing price Dec. 28: $133.20
% gain/loss: -25%
52-week range: $123.02-$218.62

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