Among the early investor and Hollywood debates was management’s decision to scrap a nearly finished Batgirl movie for HBO Max and other projects, leading to multiple content writedowns. Discovery was only created in early April, when Discovery closed a deal for AT&T’s WarnerMedia, and the merged company’s stock had a tough start, falling 63.5 percent since then and ending the year with a preoccupation on cost-cutting and a profit push.
Disney’s shares wrapped 2022 down 46 percent at $87.20 on Dec. But with the ultimate box office performance for Avatar: The Way of Water still unclear after underperformance in the early days, there was some investor debate (although the sequel made up ground over Christmas weekend and this week). The Walt Disney Co., for example, marked its biggest stock drop in decades after it struggled with the likes of bigger-than-expected streaming losses - $1.47 billion in Q4, more than double the $630 million reported in the comparable period of 2021 - and political missteps before surprising Wall Street late in the year by bringing back Bob Iger as CEO to replace Bob Chapek. In addition, various Hollywood giants also had to deal with company-specific issues and themes in 2022. “As a result, 75 percent of the 27 companies in our M&E coverage group underperformed the S&P 500.” “In the past year, media and entertainment (M&E) stocks saw streaming growth suddenly moderate, advertising and reopening tailwinds turn to recessionary headwinds, cord-cutting accelerate and rising interest rates drive down multiples,” wrote Morgan Stanley’s Benjamin Swinburne in a Dec. Ultimately, sector biggies giant saw their stocks finish 2022 down sharply, often underperforming the drop in the broad-based S&P 500 stock index, which fell 19.5 percent as of Dec. That closer scrutiny was compounded by weakening advertising trends amid recession fears in 2022. And more broadly, companies have ended the year reviewing their organizations to find restructuring, optimization and cost-cutting opportunities.
That left Wall Street running its ruler more closely over content and other spending decisions in streaming. Investors asked when big content spends to drive subscriber growth would lead to streaming profitability. The industry also faced questions about its ability to reverse declines with a pivot to streaming.
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Cord-cutting, while nothing new for traditional pay TV providers, accelerated in 2022 and wreaked havoc on subscribers and cable networks units, which have been the traditional profit centers of sector giants. It was also a rough year elsewhere for entertainment conglomerates and their stocks. Those initiatives, and the fact that the streamer returned to subscriber growth in the third quarter - adding 2.4 million subscribers for a total of 223 million globally - has made some analysts more optimistic, while others remain in wait-and-see mode. How Netflix's 'Spirit Rangers' Is Rewriting Animation's Native and Indigenous Representation
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