Legacy media is booming
Add Axios as your preferred source to
see more of our stories on Google.
Stocks for traditional media networks are hitting record highs, thanks in large part to streaming.
Why it matters: The COVID-19 crisis has taken a toll on the pay-TV industry, but investors feel optimistic that traditional content companies have value in launching their own streaming services, or producing content for others.
The big picture: Companies like ViacomCBS and Discovery that were once showing little or modest signs of growth have hit new highs on Wall Street.
- ViacomCBS stock has been one of the fastest-growing stocks this year, gaining roughly 146% since Jan. 1. Its stock was plateauing since it started trading on the Nasdaq as a combined company on Dec. 5, 2019. It has experienced big gains since launching its new streaming service Paramount+ in early March.
- Discovery's stock has grown 156% since it launched its streaming service Discovery+ last December. Prior to its streaming foray, its stock price was also plateauing.
Be smart: Investors in legacy media companies may also be showing some signs of optimism in response to theaters beginning to reopen.
- Lionsgate, ViacomCBS, Disney and other companies that rely on theater revenue are rallying in response to reports that movie theaters and parks are beginning to open across the country.
Yes, but: Most stocks have experienced unprecedented growth during this crisis, and the gains aren't expected to last forever.
- Of note, shares in ViacomCBS and Discovery fell Wednesday in response to analyst downgrades after months-long rallies that have carried both companies' stocks to unprecedented highs.
What to watch: There's no question that for now, streaming is so buzzy that Wall Street is willing to reward any company investing in direct-to-consumer services. In time, it will be interesting to see whether investor optimism remains despite the fact that many of these services aren't profitable yet.
