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Bank looks at Covid winners & losers

November 30, 2021

A timely note to clients from investment bank BNPP/Exane looks at the potential media-related winners and losers impacted by the latest Covid variant.

The bank says that while there are justifiable fears from the new variant, there will inevitably be media businesses that are impacted, some with good news, and others not so likely to benefit.


· Prosus/Tencent – Prosus was the standout performer during 2020 as Tencent prospered via its strong videogames and consumer internet portfolio and China successfully managed the crisis. The regulatory overhaul is a new dynamic but the bank would expect Prosus to outperform.
· UMG/music – a part of Vivendi during lhe first lockdown, it demonstrated its resilience via the streaming model. The bank sees UMG as very defensive.
· Professional information – Wolters Kluwer and RELX both have defensive, heavily subscription revenue profiles although RELX has some Events portfolios
· Video Games – risk of lockdown means a greater likelihood of improving player engagement which enables superior secondary monetisation (but: see note below)


· Events – very exposed to new restrictions on travel and group gatherings
· Outdoor – high operating leverage and exposed to travel/ad momentum
· TV – highly cyclical, structurally challenged
· Agencies – cyclical, overweight legacy media

Specifically addressing the Video Games sector, the bank says: “The video game sector has been particularly weak since the beginning of 2021 (-19 per cent in absolute, -45 per cent vs S&P 500) on fear of player engagement normalisation/collapse, games delay (WFH challenges), increase regulation in China, IDFA [Identifier for Advertisers] change impact, working condition issues (notably at Activision-Blizzard) and increase competition for talent / wage inflation.”

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