Some television stocks proved winners last week as Wall Street embraced the Federal Communication Commission’s decision to relax its stance on TV station ownership.
The FCC said Thursday that it will permit one company to own two television stations in a single market if the second station is not among that area’s four top-rated stations, making smaller station groups ripe for takeover.
Station owners gain
The gain benefited station operators, with Young Broadcasting jumping $2.75 to close at $51.25, a 6% boost. The owner of 12 stations, Young holds a cash cow in Los Angeles indie KCAL.
“KCAL is now worth more to another operator,” said Peter Markham, VP of the broadcast and media group at Daniels and Associates. “And that company was on the block last year. I think that’s why you’re seeing a pop.”
Bear Stearns analyst Victor Miller upgraded Young to “buy” from “attractive,” also citing the increased value of KCAL.
CBS was up $1.75 to close at a 52-week high of $47.06, a gain of 4%, which pushes its market cap to $33.5 billion. The FCC ruling enables CBS to continue operating radio stations in markets where it also owns TV stations.
Paxson Communications rose 10% or $1.31, to close at a 52-week-high of $14.06. Paxson, the nation’s third-largest TV group based on household coverage and the owner of Pax TV, owns stations in New York, Los Angeles, Chicago, Boston and Philadelphia, as well as in more than 35 other markets.
Sinclair Broadcast Group surged $1.25 to close at $20.31, a gain of 7%.
Barry Diller’s USA Networks rose 69¢ to end the week at $45.75. Bear Stearns analyst Victor Miller said USA, which owns more than a dozen TV stations, is now able to make significant additions to its broadcast holdings.
Among the losers on Friday, Tribune Co. was down 81¢, Gannett lost 69¢, Disney was down 38¢ and Univision and Fox both lost 6¢.