Analyst Predicts How Disney May Respond To Time Warner's Direct-To-Streaming 2021 Movie Schedule

WarnerMedia may have caught investors off guard last week when it said its entire movie slate for 2021 will go straight to both streaming and movie theaters. BofA Securities analysts say this could benefit other studios.

The Thesis: WarnerMedia, the media and entertainment unit of AT&T Inc. (NYSE: T), is unlikely to be the first company to forego a traditional theatrical launch, BofA's Jessica Reif Ehrlich wrote in a note. But as the first one to do so, WarnerMedia's decision will have "significant implications" for studios, theaters, streaming video providers, and networks in 2021 and beyond.

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Walt Disney Co (NYSE: DIS) was singled out as being more likely to embrace a hybrid theater and streaming release model. Disney could potentially release mid-budget films directly to its streaming platform Disney+ while large budget content like Marvel will go straight to the theaters.

WarnerMedia's move could prove to be advantageous for Disney in 2021 by default of less competition at the big screen, according to Reif Ehrlich. There is also likely large pent-up demand to return to the theaters, especially for more "experiential" companies like Imax Corp (NYSE: IMAX).

In addition, WarnerMedia could face a backlash including potential lawsuits from movie theater chains along with reduced international and U.S. distribution splits.

Bottom line, Reif Ehrlich said the movie industry is not a "one size fits all" marketplace, and different content makers will implement different models.

Price Action: Shares of Disney were trading lower by 0.4% at $153.53. Movie theater stocks AMC (NYSE: AMC) and Cinemark (CNK) closed down about 20% last Thursday following the news from WarnerMedia.