With dual Hollywood strikes stretching into the closing months of the year, investors are throwing their weight behind newer entrants into the entertainment sector, leaving legacy media companies behind. 

Since the industry shutdown, shares of old-guard entertainment companies such as Paramount, Disney, and Warner Bros. Discovery have declined an average of 26% from the first half of the year, underperforming the NASDAQ index. In that same period, Netflix has gained 22%, while Amazon, which produces content through its in-house streaming service Amazon Prime, has surged 27%.  

Legacy media studios, juggling both network television channels and newly established streaming services, have seen stock prices drop as the strikes have threatened their reliance on a continuous supply of scripted content. Newer media companies–whose financial performances are not as closely tied to domestic content production, and who have a larger global footprint than their legacy counterparts–have benefited from the strikes. The divide has been exacerbated by a perceived lack of competent executive leadership at legacy media companies on Wall Street. 

“You’ve got legacy players whose apple cart has been upended,” said Doug Arthur, an equity analyst covering media at Huber Research Group. “And then you’ve got these tech companies, apart from Netflix, where this sort of production stuff is not central to what they’re doing.”

Older media companies are dependent on a constant stream of domestically produced content to feed both their network television channels and streaming platforms, leaving them doubly exposed to the effects of a Hollywood shutdown. Among these companies, Paramount has seen the biggest plunge in stock performance, falling 45% since the strikes began. 

Warner Bros. Discovery, still indebted following an expensive merger in 2022, has also been badly affected by the strikes because of its dependence on content for revenue. According to a research report by Tim Nollen, a media tech analyst at Macquerie Equity Research, while WBD’s close media competitors “only generate 10-12% of their overall revenue from their studio business, WBD’s content segment accounts for a third of its total revenue.”

On Sept. 5, Warner Bros. Discovery reported reduced projected earnings of $10.5–$11 billion in its second quarter, down from a previously projected $11–$11.5 billion, which company executives have blamed directly on the strikes. At the same time, Warner Bros. Discovery has attempted to grow subscribers and stabilize its stock performance by mining the non-scripted space for content and ramping up production capacity outside of the United States. 

For newer media companies such as Amazon and Apple, which premieres original programming through its streaming service AppleTV+, financial performance has been protected from the strikes because they do not rely on streaming services as a main driver of profits and possess a more global reach compared to their legacy counterparts. 

Netflix occupies a somewhat rarified position within the entertainment sector as the lone new media company reliant on content that has seen its stock price rise in the wake of the strikes. 

With a deep international production capacity and subscriber base, the company has been able to shield shareholders from the worst damages from the strikes. To do this, they have relied on a well-stocked library of existing titles and non-scripted shows while loading up on scripted content produced outside the United States. 

Even prior to the strikes, Netflix saw outsized success by sourcing and producing international content for a global audience. Following the debut of the South Korean show Squid Game in October 2021, Netflix reported that viewers across the globe had spent a combined total of 1.65 billion hours consuming the dystopian drama, making it the top Netflix original production to date. 

Netflix’s positive financial performance within the entertainment sector has been boosted by its established dominance over its streaming rivals, said Thomas Swift, a portfolio manager with Financial Avengers, a California-based brokerage firm. 

“Netflix [was] first to market on streaming,” said Swift. “Everyone else is following them, so the market gives Netflix much greater [room to] play.” 

In addition to the lack of new scripted offerings, international productions, and consumers, Swift attributes the contrasting financial performances of old and new media brands to the conduct of company executives. 

Since the merger, Warner Bros. Discovery CEO David Zaslav has made a series of public errors, such as bungling the selection of Jeff Zucker’s successor as CEO of CNN following Zucker’s resignation in 2022. At Disney, once-lauded CEO Bob Iger provoked widespread outrage on picket lines and with the general public in July for referring to WGA and SAG demands as “unrealistic” while drawing a multimillion-dollar salary. 

By contrast, Ted Sarandos, Netflix’s similarly well-compensated CEO, has largely managed to frame himself through a less provacative lens, appearing sympathetic to the needs and frustrations of writers and performers in his public remarks.

“Wall Street has lost confidence in the management of the old-line entertainment companies,” Swift said. “They have not lost confidence in the management of Netflix.”