Some may be surprised to learn that the ongoing strikes by Hollywood writers and actors could actually be positive for streaming companies and their stocks. 

MoffetNathanson analyst Luke Landis explained in May that, as a result of the writers' strike, large streaming firms will spend less on content, lifting their bottom lines and pleasing the Street.

Indeed, in 2020, when the production of many shows shut down due to the coronavirus pandemic, the streaming companies' free cash flow increased. 

Among the owners of large streaming channels are Netflix (US:NFLX), Disney (US:DIS), Warner Bros. Discovery (US:WBD), Comcast (US:CMCSA), and Paramount Global (US:PARA). Since the writers hit the picket lines in early May, PARA stock’s been the hardest hit, down more than 35%.

NFLX stock has so far seemed to avoid any fallout, up almost 39%, which has no doubt been a factor in the shares’ momentum, with a score of 87.23 on Fintel’s proprietary scoring model that ranks companies on their six-month momentum.

Duration of the Strikes Will Be Important

However, MoffetNathanson’s Landis did indicate that the amount of time the strike lasts will determine whether it helps the internet video companies. Presumably, he believes that if the channels cannot add new content for many months, their subscriber bases will start to decline in meaningful numbers.

Since the actors' strike just started recently and no end appears to be in sight for the writers' strike, which has already lasted for over two months, subscriber losses due to content shortages could start to become an issue for the streaming channels in the not-too-distant future.

Weighing in on the potential negative impact of long-term strikes recently was IAC (US:IAC) and Expedia (US:EXPE) Chairman Barry Diller. He warned that the work stoppages "will potentially produce an absolute collapse of (the) entire (streaming) industry,” 

Specifically, a failure to reach deals by the fall could cause consumers to cancel subscriptions, depriving studios of the funds they need to produce new shows, he explained.

A former CEO of Paramount Pictures, Diller does not expect the strikes to end in the near term.

Three studio chiefs, told The New York Times that a work stoppage that stretches beyond Labor Day “could force studios to delay big projects for next year by six months, making 2024 resemble the ghost town of recent memory set off by the Covid-19 pandemic,” according to the newspaper’s July 17 report.

Meta and Amazon Could Also Be Helped by the Strikes

Amazon (US:AMZN) and Meta's (US:META) Facebook could be boosted by the strikes because, in the absence of new content on conventional TV, more consumers will turn to those outlets for content, theorized Barclays analysts Ross Sandler and Kannan Venkateshwar. 

The analysts also believe that Netflix could be lifted by the same trend, and they added that NFLX and AMZN "also have the ability to source content globally, as evidenced by the number of British shows on Netflix."

Others Likely Hurt by Stoppages

As Barclays suggested, the owners of legacy or conventional TV networks will likely be hurt by the work stoppages. That category includes names like Fox Corporation (US:FOXA), AMC Networks (US:AMCX), Sinclair (US:SBGI), Nexstar Media Group (US:NXST), Gray Television (US:GTN), and the E.W. Scripps Company (US:SSP).

Fox, of course, is the owner of the Fox TV network, while AMC has cable networks. Sinclair, Nexstar, Gray, and E.W. Scripps own local TV stations. Disney, Comcast, and Paramount, in addition to owning streaming services, have conventional TV networks. 

Of this group, AMCX stock has been hardest hit, down almost 62% since early May. Only NXST stock has shown a gain, at 8%.

Beyond the networks, producers and streamers, a hodge-podge of other stocks could feel the heat of a prolonged strike. The super agents at Endeavor Group Holdings (US:EDR) are one group. The global sports and entertainment group is due to release second-quarter earnings on Aug. 8. Shares of EDR stock are up almost 9% for the year to date, gains which have no doubt contributed to the name’s Fintel Fund Sentiment Score of 78.36.

One stock that has already plunged as a result of the strikes is Zoo Digital (UK:ZOO, US:ZDGGF), which provides subtitles to content developers. ZOO recently reported that cost cutting by streaming companies and the writers' strike was hurting its top line.