As respected Wall Street investment house MoffettNathanson sees it, the themes of 2025 will in many ways be continuations of the themes of 2024. “For several media companies, that is exactly the problem,” says the firm’s Senior Analyst, Robert Fishman. “Last year was one many eagerly sought to turn a page on, but this new chapter ahead may well throw more of the same at weakened players.”
That’s not-so-great news for traditional “linear” media companies
“For several media companies, that is exactly the problem,” says the firm’s Senior Analyst, Robert Fishman. “Last year was one many eagerly sought to turn a page on, but this new chapter ahead may well throw more of the same at weakened players.”
That’s not-so-great news for traditional “linear” media
, while meaningful direct-to-consumer profitability for “second and third tier players” still seems a few years out of reach.
With that backdrop, FOX Corporation as gotten a downgrade, while Warner Bros. Discovery has received an upgrade.
In a newly released investor report, Fishman says, “If fundamentals deteriorate at a faster than expected rate this year, we expect pressure to grow to explore consolidation and other strategic alternatives.”
The most likely consolidation targets? They include film studios, streaming services, and, of course, cable networks.
To that point, MoffettNathanson is upgrading WBD from “Neutral” to “Buy.” Fishman explains, “To date, WBD’s financial performance and elevated debt levels have kept us on the sidelines. In 2025, the company has the relative stability afforded by its latest recent round of significant affiliate fee renewals, as well as continued growth at Max and reduced Studio headwinds. For the equity story, we expect this to lead to continued de-levering into the medium term. At the same time, WBD’s long-term positioning remains unclear. This greater stability sweetens the desirability of the company’s assets and mounting pressure on management to take transformative action could mean WBD will do more than its part to keep M&A bankers busy. For both reasons, we now see significant upside to current equity values.”
In contrast, Fishman concludes that the situation is, in ways, “inverted” at FOX Corporation. Thus, MoffettNathanson is downgrading “FOXA” from “Buy” to “Neutral.”
Fishman writes, “Fox continues to sit in a unique position despite the challenges of the ecosystem around it, and the company’s fundamental strength along with some M&A speculation has led to a re-rating in the stock price. However, we expect investor questions around the sustainability of Fox’s current strong cash flows to likely limit the stock’s upside from these elevated levels.”
What is MoffettNathanson’s view on “new media” as 2025 begins with new leadership in Washington? “Traditional media executives found themselves besieged on yet another front last year with Netflix’s entry into live sports/events and Amazon’s destabilizing rollout of ads on Prime Video,” Fishman says.
That has led Fishman to update his numbers on Netflix ahead of the release of its results after U.S. financial markets closed on January 21. Regarding the OTT Goliath, MoffettNathanson expects “to hear much more about the company’s plans for advertising, sports and events.”
For the networks and broadcast TV station ownership groups, Fishman asks, “How much more can traditional media handle before they are pushed to alternative solutions? The clock is ticking to define what role they have in this new, post-Streaming Wars world. If they can’t do it alone, then they will be forced to do it together … After years of operating under these conditions, the room to maneuver for several of these companies is growing perilously thin.”
