What Wall Street wants to see from Hollywood in 2024

It’s the third act of the streaming wars. That’s the time a hero, seemingly beaten and broken, rises up and saves the day. But Wall Street is worried that hero may never come for Hollywood.

Legacy media companies including Disney, Warner Bros. Discovery, Comcast and Paramount Global are trying to figure out the solution to self-inflicted financial wounds, particularly big spending as they chased streaming subscribers to compete with Netflix.

Companies have since slashed their budgets and adjusted their strategy for licensing homegrown movies and shows. Several streamers have added services supported by ad revenue, cracked down on password-sharing and raised prices.

Yet, Wall Street still isn’t satisfied. Warner Bros. Discovery and Comcast outperformed the S&P 500 in 2023, though just barely. Disney and Paramount underperformed. Netflix, on the other hand, overperformed significantly, with shares up 65%.

“We’re looking for someone to put forward a credible vision of how this industry is going to have a sustainable business model,” said Doug Creutz, managing director and senior research analyst at Cowen.

The answer might seem simple: a cable-style bundle, only with streaming. But, getting all these rivals to collaborate is almost as difficult as navigating increasing regulatory scrutiny, Creutz said. Similarly, prospects for mergers and acquisitions are uncertain, as several companies hold massive debt loads already and regulators are wary of limiting competition in the industry.

Wall Street wants a solution, or, at the very least, a company to set the stage for a potential solution. It was clear how to make money from linear TV, but so far it’s unclear how investors can cash in on streaming beyond investing in Netflix.

“The only thing that gets people back into the media investing has to be some type of hope that they can build an economic position in the streaming world,” said Michael Nathanson, MoffettNathanson…