The Zacks Media Conglomerates industry is flourishing, driven by the consumer shift toward over-the-top (OTT) content. Major players like Disney DIS, Sphere Entertainment Co. SPHR, Lionsgate Studios Corp. LION and Reservoir Media RSVR are aggressively investing in developing original music, shows and fresh content to captivate and retain Gen Z and millennial subscribers. Moreover, the industry's prospects are bolstered by the availability of cost-effective alternative packages, such as skinny bundles, designed to entice consumers with lower prices compared to traditional offerings. Conversely, the industry grapples with waning broadcast television ratings and diminishing demand for home entertainment sales of theatrical content. Furthermore, advertisers' tepid spending amid rampant inflation and elevated interest rates poses a formidable concern for industry players.
Industry Description
The Zacks Media Conglomerates industry encompasses companies engaged in creating and distributing various content forms, from entertainment to educational materials. These firms also offer travel and consumer products. The industry is adapting to the shift toward OTT content, both subscription-based and ad-supported. Advertising remains a key revenue source, while the metaverse presents new opportunities. Subscription price increases, driven by growing subscriber numbers, offer potential revenue growth. However, the industry faces challenges that include declining broadcast TV ratings, reduced demand for home entertainment versions of theatrical releases, and increasing cord-cutting trends. Despite these obstacles, media conglomerates continue to evolve, leveraging new technologies and consumer preferences to maintain their market position.
3 Trends Shaping the Future of the Media Industry
Original Content Driving Growth: Media companies' capacity to generate advertising revenues beyond traditional TV platforms, such as websites and other digitally consumed channels, unlocks increased opportunities for targeted advertising. The growing consumer preference for subscription services over linear pay-TV and rental or outright purchases has compelled industry players to adapt their business models. Media companies are innovating with original content to attract and retain subscribers.
High-Speed Internet Demand Acting as a Key Catalyst: The burgeoning demand for high-speed Internet, including broadband, has benefited the media industry participants. Improving Internet speed has fueled the demand for high-quality videos and the trend of binge-watching. Furthermore, a strengthening broadband ecosystem in international markets, coupled with the proliferation of smart TVs, is expected to drive growth.
Cord-Cutting and Matured PayTV Industry Hurting Prospects: The media television industry is undergoing a rapid evolution of distribution platforms, embracing new players and advanced technologies. The declining profitability of residential video services due to rising programming costs and retransmission fees has made survival challenging for traditional companies. Additionally, the heightened demand for on-demand content has led to the mushrooming of streaming service providers, making it increasingly difficult for traditional media television companies to maintain their viewer base.
Zacks Industry Rank Indicates Bright Prospects
The Zacks Media Conglomerates industry is housed within the broader Zacks Consumer Discretionary sector. It carries a Zacks Industry Rank #74, which places it in the top 30% of more than 245 Zacks industries.
The group’s Zacks Industry Rank, which is basically the average of the Zacks Rank of all the member stocks, indicates continued outperformance in the near term. 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.
Industry Underperforms the Sector, S&P 500
The Zacks Media Conglomerates industry has underperformed the broader Zacks Consumer Discretionary sector and the S&P 500 composite over the past year.
The industry has declined 23.3% in the abovementioned period compared with a 15.5% drop in the broader sector. The S&P 500 has risen 24.2% during the same time frame.
One-Year Price Performance
Industry's Current Valuation
On the basis of the trailing 12-month P/S, a commonly used multiple for valuing media companies, we see that the industry is currently trading at 1.24X compared with the S&P 500’s 6.13X and the sector’s 1.56X.
Over the past five years, the industry has traded as high as 3.45X and as low as 1.15X, with a median of 1.5X, as the charts below show.
Trailing 12-Month Price-to-Sales (P/S) Ratio
4 Media Stocks to Buy
Lionsgate Studios is well-positioned heading into fiscal 2027, with momentum building across both segments. Three tentpole motion pictures — Michael, The Hunger Games: Sunrise on the Reaping, and Resurrection of the Christ — anchor a franchise-heavy theatrical slate poised to generate substantial box office and ancillary revenues. The Television Production segment is set to nearly double scripted episodic deliveries after renewing 12 of 13 current series. The 20,000-plus title library sustains more than $1 billion in the trailing 12-month revenues, while a $1.3 billion contractual backlog — with 90% converting in 24 months — provides near-term visibility. Management has guided for significant adjusted OIBDA and free cash flow growth in fiscal 2027. This Zacks Rank #1 (Strong Buy) company's July-September 2026 corporate fact sheet signals continued confidence in this trajectory. You can see the complete list of today’s Zacks #1 Rank stocks here.
The Zacks Consensus Estimate for the company’s fiscal 2027 earnings has moved north by 69.2% to 44 cents per share over the past 60 days. LION shares have returned 50% in the past six-month period.
Price and Consensus: LION
The Walt Disney Company offers a favorable near-term setup, underpinned by management guidance and content-driven catalysts. For fiscal 2026, Disney targets approximately 12% adjusted EPS growth excluding the 53rd week, rising to 16% when included, alongside at least $8 billion in share repurchases. Entertainment SVOD margins are on track for 10%, with double-digit segment OI growth skewed to the second half. Experiences target high-single-digit OI growth with Walt Disney World bookings up 5%. Fiscal 2027 guidance adds another double-digit EPS target. In July 2026, Toy Story 5 claimed the biggest global opening of 2026 and the second-biggest domestic animated debut ever. The June 2026 Disney Celebrates America initiative integrates parks, streaming and broadcast, widening near-term revenue and earnings visibility for this Zacks Rank #2 (Buy) stock.
The Zacks Consensus Estimate for the company’s fiscal 2026 earnings has moved north by 0.9% to $6.86 per share over the past 60 days. DIS shares have lost 15.8% in the past six-month period.
Price and Consensus: DIS
Sphere Entertainment is building momentum across multiple growth pillars. The Wizard of Oz at Sphere crossed $400 million in ticket sales with more than three million tickets sold since its August 2025 debut, confirming sustained audience demand. Sphere Studios' June 2026 announcement of The Rocky Horror Picture Show, slated for 2027, deepens the original content pipeline. A five-year F1 Las Vegas Grand Prix partnership extension through 2030, announced in July 2026, ensures multi-year revenue visibility through Exosphere activations. Metallica's 24-concert residency beginning in October 2026 and the Backstreet Boys' 56-night run further densify the event calendar. With Sphere Abu Dhabi confirmed at Yas Island and National Harbor in development, the global rollout adds a structural growth layer underpinning investor sentiment.
The Zacks Consensus Estimate for this Zacks Rank #2 company’s 2026 bottom line is pegged at a loss of $2.52 per share, steady over the past 60 days. SPHR shares have risen 50.8% in the past six-month period.
Price and Consensus: SPHR
Reservoir Media's fiscal 2027 guidance of $186-$191 million in revenues and $75-$79 million in adjusted EBITDA signals continued momentum, underpinned by a diversified and expanding catalog. The company's fiscal 2026 operating cash flow of $50.1 million, up $4.9 million year over year, and total available liquidity of $117.1 million provide meaningful flexibility for further acquisitions. Recent strategic moves reinforce the growth trajectory: in June 2026, Reservoir launched a joint venture with Latin music publisher TU Publishing, extending its presence in a high-growth market segment. That same month, the company signed Jady frontman Jarrett Doherty through a newly established joint venture with Tinman. In July 2026, a publishing deal with Grammy-winning hip-hop icon T.I. — spanning back catalog and future works — further diversifies the company's portfolio and expands its commercial reach.
The Zacks Consensus Estimate for this Zacks Rank #2 company’s fiscal 2027 earnings has moved north by 18.2% to 13 cents per share over the past 60 days. RSVR shares have returned 36.2% in the past six-month period.
Price and Consensus: RSVR
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The Walt Disney Company (DIS): Free Stock Analysis Report
Lionsgate Studios Corp. (LION): Free Stock Analysis Report
Reservoir Media, Inc. (RSVR): Free Stock Analysis Report
Sphere Entertainment Co. (SPHR): Free Stock Analysis Report
This article originally published on Zacks Investment Research (zacks.com).