Chicago, IL – February 20, 2025 – Today, Zacks Equity Research discusses Live Nation Entertainment LYV, TKO Group Holdings, Inc. TKO and News Corp. NWSA.
Link: https://www.zacks.com/commentary/2417700/3-film-television-production-stocks-to-buy-on-solid-industry-trends
The Zacks Film and Television Production and Distribution industry is witnessing a surge in demand for digital entertainment due to operational constraints faced by movie theaters, theme parks and cruise lines. This increased consumption of online media, music and news, driven by the work-and-learn-from-home trend, has been a boon for industry players like Live Nation Entertainment, TKO Group Holdings, Inc. and News Corp. However, as more players enter the field, content costs are skyrocketing, putting pressure on profitability. This trend is forcing companies to spend heavily on original programming and exclusive rights to attract and retain viewers, which can strain financial resources and impact stock performance.
The Zacks Film and Television Production and Distribution industry encompasses companies engaged in the creation, distribution and exhibition of film and television content. The core activities revolve around producing entertainment for theaters, television networks, video-on-demand platforms, streaming services and other outlets that showcase such works. A notable company like Imax specializes in advanced motion picture technologies and immersive presentation experiences.
Industry participants are involved in the production and dissemination of movies destined for theatrical releases and direct-to-video markets, as well as television programming. The financial performance of these entities hinges greatly on the global box office success of their films, coupled with the number of new releases and the viewership ratings garnered by their television shows.
Technological Advancement Aids Prospects: Exhibitors are adopting highly efficient, cost-effective laser projection systems to enhance image quality and the overall movie experience. Technologies like motion seating, immersive audio, interactive movies, AR and VR are expected to further elevate the viewing experience. Conversely, the growth of alternative distribution channels like home video, pay-per-view, streaming, VOD, Internet and broadcast TV is challenging traditional exhibitors.
The Zacks Film and Television Production and Distribution industry is housed within the broader Zacks Consumer Discretionary sector. It carries a Zacks Industry Rank #32, which places it in the top 13% of more than 246 Zacks industries.
The group’s Zacks Industry Rank, which is the average of the Zacks Rank of all the member stocks, indicates encouraging near-term prospects. Our research shows that the top 50% of the Zacks-ranked industries outperform the bottom 50% by a factor of more than 2 to 1.
The industry’s position in the top 50% of the Zacks-ranked industries is a result of a positive earnings outlook for the constituent companies in aggregate. Looking at the aggregate earnings estimate revisions, it appears that analysts are optimistic about this group’s earnings growth potential.
Before we present a few stocks that you may want to consider for your portfolio, let’s take a look at the industry’s recent stock-market performance and valuation picture.
The Zacks Film and Television Production and Distribution industry has outperformed the broader Zacks Consumer Discretionary sector and the S&P 500 composite over the past year.
The industry has returned 42.7% in the above-mentioned period compared with the broader sector’s growth of 19.2%. The S&P 500 has risen 24% during the same time frame.
On the basis of the trailing 12-month price-to-sales (P/S), a commonly used multiple for valuing Film and Television Production and Distribution stocks, the industry is currently trading at 2.36X compared with the S&P 500’s 6.02X and the sector’s 2.4X.
Over the past five years, the industry has traded as high as 2.53X and as low as 0.6X, recording a median of 1.62X.
Live Nation Entertainment: This Zacks Rank #2 (Buy) company continues to demonstrate robust growth fundamentals across its ecosystem, making it an attractive buy opportunity for 2025. Following record concert profitability in 2024 with third-quarter AOI reaching $474 million (up 39% year over year) and margins expanding to an impressive 7.2%, the company is well-positioned for continued growth.
Leading indicators are exceedingly positive with the 2025 large venue pipeline up double-digits versus 2024, including stadiums, arenas and amphitheaters. With more than 20 million tickets already sold for 2025 events (pacing up double-digits) and recent stadium shows delivering double-digit growth in gross revenues, Live Nation's core business is accelerating post-pandemic. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
The company is strategically expanding its venue footprint, planning to add or refurbish 14 venues through 2025, increasing capacity by eight million fans. Ticket demand remains robust with global ticket sales in September/October up 20% year over year, while sponsorship commitments are pacing up double-digits for 2025.
Management demonstrated prudent capital management with $5.5B billion in cash equivalents and $1.7 billion in free cash as of third-quarter 2024. With strong pricing power evidenced by premium offerings (VIP ticket revenue up 20%+ at major festivals), Live Nation has positioned itself to capture significant value from the continued growth in experiential entertainment spending.
Live Nation Entertainment shares have gained 65.9% in the past year. The Zacks Consensus Estimate for the company’s 2025 earnings has moved north by a penny to $2.45 per share over the past 30 days.
TKO Group Holdings: This Zacks Rank #2 company holds bright prospects in 2025 demonstrated by robust financial performance and strategic growth initiatives. In third-quarter 2024, the company reported $681.2 million in revenues (up 52% year over year) and adjusted EBITDA of $310 million (up 29%), prompting management to raise full-year guidance to the upper end of their $2.670-$2.745 billion revenue range.
The company maintains strong cash generation with $457.4 million in cash and cash equivalents while demonstrating financial discipline through its Free Cash Flow Conversion target exceeding 40%. TKO's recently announced capital return program, including a $2 billion share repurchase plan and quarterly dividend program beginning March 2025, signals management's confidence and commitment to shareholder returns.
Looking ahead, TKO is excellently positioned for sustained growth through its pending acquisition of Professional Bull Riders, On Location, and IMG in an all-equity transaction valued at $3.25 billion. This strategic expansion will enhance TKO's sports marketplace position, increase scale and accelerate shareholder returns.
The combination of UFC and WWE continues to demonstrate synergistic benefits through cost reduction initiatives, evidenced by WWE's Adjusted EBITDA margin expanding to 54% from 36% year over year. With strong brands reaching over one billion households globally and organizing more than 300 live events annually, TKO represents an attractive investment in the premium sports entertainment sector.
The Zacks Consensus Estimate for TKO’s 2025 earnings has moved north by 1% to $3.15 per share over the past 30 days. TKO shares have surged 100.9% in the past year.
News Corp.: This Zacks Rank #2 company is a compelling investment opportunity in 2025, demonstrating robust financial performance and strategic execution. The company’s second-quarter fiscal 2025 results showcase its strength with a 5% revenue increase to $2.24 billion, a remarkable 58% surge in net income from continuing operations to $306 million, and 20% growth in Total Segment EBITDA to $478 million.
The company is successfully executing its digital transformation strategy, with its three core growth pillars — Digital Real Estate Services, Dow Jones, and Book Publishing — collectively expanding Segment EBITDA by 16%. The strategic sale of Foxtel to DAZN for A$3.4 billion (7x Foxtel's FY2024 EBITDA) strengthens the balance sheet while allowing management to focus on high-growth, high-margin businesses.
News Corporation is exceptionally well-positioned in the evolving AI landscape, having secured valuable content partnerships with companies like OpenAI while vigorously protecting its intellectual property. With credit rating upgrades to investment grade from both S&P Global and Moody's, the company maintains financial flexibility for both shareholder returns and strategic investments.
Digital revenues now constitute 81% of Dow Jones revenues, while both REA Group and realtor.com demonstrate strong performance despite challenging housing markets. The company's diversified portfolio, deliberate simplification strategy, and increasing digital penetration make NWSA an attractive growth investment with significant upside potential through 2025.
News Corporation shares have gained 15.1% in the past year. The Zacks Consensus Estimate for the company’s fiscal 2025 earnings has moved north by 9.3% to 94 cents per share over the past 30 days.
Since 2000, our top stock-picking strategies have blown away the S&P's +7.7% average gain per year. Amazingly, they soared with average gains of +48.4%, +50.2% and +56.7% per year.
Today you can access their live picks without cost or obligation.
See Stocks Free >>
Media Contact
Zacks Investment Research
800-767-3771 ext. 9339
support@zacks.com
https://www.zacks.com
Past performance is no guarantee of future results. Inherent in any investment is the potential for loss. This material is being provided for informational purposes only and nothing herein constitutes investment, legal, accounting or tax advice, or a recommendation to buy, sell or hold a security. No recommendation or advice is being given as to whether any investment is suitable for a particular investor. It should not be assumed that any investments in securities, companies, sectors or markets identified and described were or will be profitable. All information is current as of the date of herein and is subject to change without notice. Any views or opinions expressed may not reflect those of the firm as a whole. Zacks Investment Research does not engage in investment banking, market making or asset management activities of any securities. These returns are from hypothetical portfolios consisting of stocks with Zacks Rank = 1 that were rebalanced monthly with zero transaction costs. These are not the returns of actual portfolios of stocks. The S&P 500 is an unmanaged index. Visit https://www.zacks.com/performance for information about the performance numbers displayed in this press release.
Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report
News Corporation (NWSA) : Free Stock Analysis Report
Live Nation Entertainment, Inc. (LYV) : Free Stock Analysis Report
TKO Group Holdings, Inc. (TKO) : Free Stock Analysis Report
To read this article on Zacks.com click here.
Zacks Investment Research
