Media companies booming

ViacomCBS has launched its Paramount+ streaming service, which draws on the library of the historic Paramount Pictures in Hollywood.

One year ago, investors took a grim view of legacy media companies.

The economic toll of the COVID-19 pandemic was coming into focus: Theme parks and movie theaters were shuttered, sporting events were canceled, and TV and film production ground to a halt. Wall Street responded by bludgeoning shares of traditional media, including Walt Disney Co., ViacomCBS Inc. and Discovery Inc.

One year later, these stocks have not only regained their value, they have soared to stratospheric heights.

On Wednesday, Disney stock closed at $195.06 — an extraordinary rebound from a year ago when its shares traded around $85. Since March 23, 2020, Disney’s market value has increased nearly $200 billion. The Burbank entertainment behemoth now is worth $354 billion.

ViacomCBS, Discovery, Comcast Corp., Fox Corp. and AMC Networks Inc. also have benefited despite ongoing challenges, including consumer cord-cutting that has dimmed the prospects of their cash-cow cable TV channels.

There are several reasons for the boom, including the stock market’s overall strength and the reopening of an economy that has forced the shutdown of theaters, productions and live events and prompted massive layoffs. Investors also had been looking for undervalued stocks to diversify their holdings.

But perhaps the biggest factor, according to analysts, has been the runaway success of Disney+, the streaming service that launched in November 2019 with the “Star Wars,” Marvel Entertainment, classic Disney, National Geographic and Pixar properties.

“It was shocking to me, but the market last year easily overlooked the theme park and movie theater closures, and issues with sports ratings, and focused on the long-term opportunity that was Disney+,” media analyst Michael Nathanson said.

Disney Chief Executive Bob Chapek this week said Disney+ now has 100 million subscribers — surpassing the company’s and Wall Street’s early expectations. The popularity of Disney+ has convinced investors that consumers are willing to pay for more than one video streaming service. The view eased earlier concerns that the streaming market might have room for only two or three players.

“There is excitement that the streaming market is so big globally,” said Rich Greenfield, a co-founder of Lightshed Partners, a technology and media research firm in New York. “There is an ability for these companies to be much bigger in streaming than they ever were in the legacy TV world.”

In the last year, media companies have joined the streaming stampede. AT&T Inc. launched the HBO Max streaming service, Comcast/NBCUniversal trotted out the Peacock service, Discovery launched Discovery+ and this month, ViacomCBS unveiled Paramount+, which is bolstered by programming from the CBS broadcast network and fare from the Melrose Avenue movie studio as well as Nickelodeon, BET, MTV and Showtime.

ViacomCBS was suffering a year ago because of investors’ doubts that the company would be big enough to compete against Netflix and Disney. ViacomCBS’ shares tumbled to around $11 in March 2020. Since then, the stock has been on a tear — increasing more than sevenfold — closing Wednesday at $82.89 a share, up $3.23, or 4 percent.

Now, the New York media company, controlled by Shari Redstone and her family, is valued at $51 billion.