Entertainment stocks were mixed during a second day of volatile, but more upbeat, trading Wednesday with cable the biggest loser.
Cox Communications and Cablevision Systems Corp. were both downgraded by influential Morgan Stanley Dean Witter analyst Richard Bilotti. While he likes the underlying business, he said the stocks have all but hit his price targets without much room for significant upside. And the specter of rising interest rates is certainly not a plus for the highly leveraged sector, which has seen many players spend billions of dollars in a consolidation frenzy of recent months and years.
Unplugging cable growth
This merger mania, as well as promising new technology, has generally sent cable stocks soaring sky high.
Cox shares plunged 9% to close at $44.50 and Cablevision fell 4% to $72.50 after Bilotti cut his investment rating on both to “neutral.” Cablevision, which is expected to issue a tracking stock for its Rainbow Media TV programming assets, had been ranked “outperform” and Cox “strong buy.” These two dragged the rest of the sector lower. Comcast dipped 2.6% to 42.13 and Paul Allen’s Charter Communications fell nearly 6% to 20.13.
The increasing rollout of digital cable, local telephony and other advances are seen as significant positives for the cable industry going forward.
Overall, the Dow Jones industrial average rose 124 points to close at 11,122.65, although the Nasdaq ended the day down 24 points at 3877.54. Both markets were decimated Tuesday on interest-rate jitters and profit taking.
Mouse paces field
Elsewhere in showbiz, the picture was less grim. Disney, one of the few companies in entertainment or elsewhere to buck Tuesday’s downturn, was up again, rising 4.2% to 32.94. The company, whose stock and some of its business units have been struggling, continued to benefit from some bullish reports on Wall Street as well as positive comments by chairman-CEO Michael Eisner in the company’s annual report.
Seagram advanced 5.3% to $47.56 and News Corp. rose 2.7%, closing at $37.88. On the downside, both Viacom and Time Warner lost ground, down 4.3% to $51.69 and 3.7% to $66.13, respectively.