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“The themes of 2025 will in many ways be continuations of the themes of 2024, and for several media companies, that is exactly the problem,” notes MoffettNathanson analyst Robert Fishman.
By Georg Szalai
Global Business Editor
As Wall Street experts continue to assess the outlook for Hollywood stocks in 2025, Warner Bros. Discovery (WBD) received an upgrade from MoffettNathanson analyst Robert Fishman on Tuesday, but the expert in turn also downgraded his rating on shares of Fox Corp.
Why? “The themes of 2025 will in many ways be continuations of the themes of 2024, and for several media companies, that is exactly the problem,” he explained in a report entitled “Clock Is Ticking.” 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,” Fishman continued. “Linear seems set to continue moving in the same direction it has, and meaningful direct-to-consumer profitability for second- and third-tier players still seems a few years out of reach.”
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He concluded with a warning: “After years of operating under these conditions, the room to maneuver for several of these companies is growing perilously thin.”
Dealmaking could be the result. “If fundamentals deteriorate at a faster-than-expected rate this year, we expect pressure to grow to explore consolidation and other strategic alternatives,” said Fishman. “The most likely consolidation targets include film studios, streaming services, and, of course, cable networks.”
That backdrop also is the driver behind his stock updates, unveiled in the report, namely an upgrade of WBD from “neutral” to “buy” and a Fox downgrade from “buy” to “neutral.”
To date, “WBD’s financial performance and elevated debt levels have kept us on the sidelines,” Fishman noted about the conglomerate led by CEO David Zaslav. “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.”
At the same time, “WBD’s long-term positioning remains unclear,” he added. “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.”
The situation is, to some degree, inverted at Fox, the MoffettNathanson analyst suggested. “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,” Fishman highlighted. “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.”
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