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2023 was a tricky year for entertainment stocks. Between the need for restructuring and cost-cutting measures as streamers seek profitability, the continued decline of pay TV, a soft ad market, and the turbulent labor environment, it was a tough one to predict. However, between the New Year and the renewed M&A talk we’ve seen for 2024, there’s a rising current of optimism to unpack in 2024, too. Our industry expert, entertainment lawyer Brandon Blake of Blake & Wang P.A., examines some of the better-placed and bullish possibilities for 2024.

Brandon Blake

What is Expected in 2024?

Overall, Wall Street experts expect 2024 to be a year of consolidation and changing focus. While the issues of cord-cutting and streaming profitability are far from off the menu, they are worries that are beginning to become part of the Wall Street landscape and will hopefully not be the flashpoints for roller coaster stock movements this year.

There is still growing interest in non-studio media stocks, too, with music and live entertainment gaining some attention. Consumer demand for fresh entertainment content across the board, and ‘novel’ and premium experiences are seen as a growth area. If 2024 continues with an overall softer economic climate, as is expected, investors will likely reward services that have attractive pricing power and the ability to be durable in the face of that demand for ‘experiences’.

Where are Wall Street Pundits Looking in 2024?

For many, larger-scale companies with the balance sheets and mobility to adapt are looking like strong 2024 choices. From the streaming stable, that means a lot of attention on Disney and Netflix, which will be welcome news for Netflix after the rocky start of last year. Sports and live events programming continues to be seen as a growth area, with consistently high levels of revenue guaranteed by contract. It’s seen as a solid mid-term growth area currently. Intriguingly, some also feel that the market is currently undervaluing companies that have shown improved asset utilization, especially where US media rights are under-monetized. Some attention was also given to streamers who have shown a willingness to embrace the shifting strategies Wall Street demanded through 2023 and that have growth potential, even if slow. Especially those that have focused on free cash flow expansion and keeping costs in check throughout 2023.

On the flip side, they are currently steering away from companies where there is a high direct-to-consumer risk, debt and litigation risk, or where market share is lacking. Unfortunately, concerns around a slim 2024 release slate may have knock-on effects on the theatrical/exhibition industry. Attention was given to the IMAX model, however, as audience attention has turned to premium screens and experiences. IMAX has taken pains in 2023 to position itself to exploit that and the theatrical rebound, also growing its geographic footprint through partnerships.

And there you have it. While nothing is ever set in stone in the stock market, it’s a fresh year with new opportunities ahead. It’s time to shelve 2023’s concerns for good and look ahead to a better year for entertainment companies. Provided they can demonstrate smart leadership and budget utilization while still keeping their audiences interested and engaged, this should be a far steadier year on Wall Street.