Goldman Sachs assessed the US media landscape in a note Tuesday, initiating coverage on several major players.
Their ratings prioritize companies with strong "competitive moats" that can navigate the industry's current transition.
These moats include reduced reliance on general entertainment TV networks, a focus on sports and news, a strong brand portfolio, and direct-to-consumer (DTC) profitability.
Goldman assigns Buy ratings to Walt Disney (NYSE:DIS) and Fox Corporation (FOXA). The bank says Disney's content and sports rights portfolio provides durability in Disney's Entertainment & Sports segments, while its significant theme park investments provide unique growth potential.
Fox's focus on news and sports through channels like Fox News and FS1 helps it stand out in an increasingly crowded streaming landscape.
Comcast (NASDAQ:CMCSA) also receives a Buy rating, despite challenges in its cable and broadband segments. Analysts acknowledge these headwinds but believe they're priced into the stock. They highlight Comcast's strong free cash flow generation and commitment to shareholder returns.
Paramount Global (PARA) receives a Sell rating due to its heavy reliance on general entertainment and a less clear path to profitability for its Paramount+ streaming service. Additionally, analysts see fewer "tentpole brands" that Paramount can leverage across different revenue streams compared to its peers.
Warner Bros. Discovery (NASDAQ:WBD) earns a Neutral rating. While WBD boasts a strong content library and sports rights, upcoming NBA rights negotiations and exposure to general entertainment television create uncertainty.
Stagwell Inc (STGW) also receives a Neutral rating. This advertising agency benefits from its focus on technology clients, leading to faster growth. However, analysts anticipate increased competition in the digital advertising space, potentially impacting Stagwell's long-term organic growth.