The Zacks Film and Television Production and Distribution industry is witnessing a surge in demand for digital entertainment due to operational constraints faced by movie theaters, theme parks and cruise lines. This increased consumption of online media, music and news, driven by the work-and-learn-from-home trend, has been a boon for industry players like TKO Group Holdings, Inc. (TKO Quick QuoteTKO - Free Report) , Warner Music Group (WMG Quick QuoteWMG - Free Report) and IMAX (IMAX Quick QuoteIMAX - Free Report) . However, as more players enter the field, content costs are skyrocketing, putting pressure on profitability. This trend is forcing companies to spend heavily on original programming and exclusive rights to attract and retain viewers, which can strain financial resources and impact stock performance.

Industry Description

The Zacks Film and Television Production and Distribution industry encompasses companies engaged in the creation, distribution and exhibition of film and television content. The core activities revolve around producing entertainment for theaters, television networks, video-on-demand platforms, streaming services and other outlets that showcase such works. A notable company like IMAX specializes in advanced motion picture technologies and immersive presentation experiences. Industry participants are involved in the production and dissemination of movies destined for theatrical releases and direct-to-video markets, as well as television programming. The financial performance of these entities hinges greatly on the global box office success of their films, coupled with the number of new releases and the viewership ratings garnered by their television shows.

3 Film and Television Production Industry Trends in Focus

Over-the-Top Services Gain Prominence: Content creators are increasingly distributing through over-the-top streaming services to capitalize on the popularity of their franchises. Their aim is to provide exclusive content and a differentiated viewing experience. However, streaming companies themselves are producing more original, award-winning programming to reduce licensing costs and reliance on third-party providers, which could undermine traditional content distribution strategies.

Binge-Watching Drives Consumption: Phenomena like binge-watching, wider Internet adoption, and advancements in mobile, video and wireless technologies have led consumers to frequently view content on smaller screens. To adapt to these new viewing patterns, industry players are pivoting to digital content distribution. The rise of digital capabilities provides easier access to consumer data, allowing production companies to leverage AI tools for a better understanding of audience preferences and to create resonant content. However, intense competition from streamers is forcing increased spending on content and marketing, hurting profitability.

Technological Advancement Aids Prospects: Exhibitors are adopting highly efficient, cost-effective laser projection systems to enhance image quality and the overall movie experience. Technologies like motion seating, immersive audio, interactive movies, AR and VR are expected to further elevate the viewing experience. Conversely, the growth of alternative distribution channels like home video, pay-per-view, streaming, VOD, Internet and broadcast TV is challenging traditional exhibitors.

Zacks Industry Rank Indicates Dull Prospects

The Zacks Film and Television Production and Distribution industry is housed within the broader Zacks Consumer Discretionary sector. It carries a Zacks Industry Rank #208, which places it in the bottom 15% of more than 246 Zacks industries.

The group’s Zacks Industry Rank, which is the average of the Zacks Rank of all the member stocks, indicates encouraging near-term prospects. 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 bottom 50% of the Zacks-ranked industries is a result of a negative earnings outlook for the constituent companies in aggregate. Looking at the aggregate earnings estimate revisions, it appears that analysts are pessimistic about this group’s earnings growth potential. Since Jan. 31, 2025, the industry’s earnings estimate for 2026 has moved down 36.4%.

Despite the gloomy industry outlook, a few stocks are worth watching based on a strong earnings outlook. 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 Outperforms the Sector, Lags S&P 500

The Zacks Film and Television Production and Distribution industry has outperformed the broader Zacks Consumer Discretionary sector and the S&P 500 composite over the past year.

The industry has returned 12% in the abovementioned period compared with the broader sector’s decline of 2.7%. The S&P 500 has risen 14.1% during the same time frame.

One-Year Price Performance

Industry's Current Valuation

On the basis of the trailing 12-month price-to-sales (P/S), a commonly used multiple for valuing Film and Television Production and Distribution stocks, the industry is currently trading at 2.8X compared with the S&P 500’s 5.96X and the sector’s 2.35X.

Over the past five years, the industry has traded as high as 3.2X and as low as 1.35X, recording a median of 2.25X, as the chart below shows.

Trailing 12-Month P/S Ratio

3 Film & Television Stocks to Watch Right Now

IMAX enters 2026 with exceptional momentum following record 2025 box office results of $1.28 billion, representing 40% year-over-year growth. This Zacks Rank #2 (Buy) company achieved record performances across all key geographies — North America, China, and international markets — while capturing 3.8% global market share from just 1,800 locations. The transformational local language strategy delivered $405 million, surging 65% above the previous record, demonstrating successful diversification beyond Hollywood tentpoles.

The 2026 outlook strengthens further with guided $1.4 billion box office receipts, supported by an unprecedented slate featuring at least 12 films for IMAX releases, including Christopher Nolan's The Odyssey — the first theatrical feature shot entirely with IMAX film cameras — and major franchises like Star Wars: The Mandalorian and Grogu. The December partnership with GKIDS for Studio Ghibli 4K restorations expands alternative content opportunities, while Avatar: Fire and Ash's $140 million performance demonstrates sustained premium format demand. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

The Zacks Consensus Estimate for IMAX’s 2026 earnings has moved north by 4.1% to $1.54 per share over the past 60 days. IMAX shares have increased 26.2% in the past six-month period.

Price and Consensus: IMAX

Warner Music Group enters 2026 positioned for accelerated growth through strategic initiatives announced in recent months. The groundbreaking November 2025 partnership with Suno establishes the company as a pioneer in licensed AI music generation, creating entirely new revenue streams from next-generation interactive music experiences while maintaining artist protections. This settlement eliminates litigation overhang and positions Warner to monetize AI innovation alongside traditional streaming.

This Zacks Rank #2 company's $300 million cost restructuring program, targeting completion by calendar year 2026, should drive 150-200 basis points of margin expansion while freeing capital for reinvestment in artist development. The $1.2 billion Bain Capital catalog acquisition venture provides strategic firepower to expand high-margin music rights ownership without balance sheet strain. Combined with strengthening streaming subscription economics and expanding international markets, these fundamental catalysts support sustained revenue and profitability growth throughout 2026.

The Zacks Consensus Estimate for WMG’s fiscal 2026 earnings has moved south by 4% to $1.55 per share over the past 30 days. WMG shares have lost 5.7% in the past six-month period.

Price and Consensus: WMG

TKO Group Holdings enters 2026 with transformative momentum driven by landmark media rights agreements and strategic partnerships. The recent Paramount deal secures UFC's domestic streaming rights through a seven-year, $7.7 billion agreement while expanding internationally across Latin America and Australia. WWE's five-year, $1.625 billion ESPN arrangement adds significant recurring revenues. January 2026 marks Zuffa Boxing's launch on Paramount+, diversifying content offerings into a fragmented market ripe for disruption.

December 2025 partnerships with Ram and DoorDash enhance brand integration across UFC, WWE, and PBR properties, accelerating the path toward $1 billion in annual partnership revenues by 2030. The completed IMG, On Location, and PBR acquisitions create vertical integration across live events, hospitality, and sports marketing. Management's innovative "TKO Takeover" model maximizes event economics by co-locating multiple properties. With more than 500 annual live events reaching one billion households globally, TKO's content ecosystem positions the company for sustained operating leverage expansion throughout 2026.

The Zacks Consensus Estimate for this Zacks Rank #3 (Hold) company’s 2026 earnings has moved south by 1.2% to $5.89s per share over the past 30 days. TKO shares have surged 21.9% in the past six-month period.

Price and Consensus: TKO