Earnings, Wall Street plaudits and deal speculation buffeted media and tech stocks Monday, with CBS and Yahoo out on top and Netflix by far the biggest loser.
Broader market indicators hit their highest point since August on investor hopes that final plans for a European bailout are close.
CBS shares bounded higher, closing up 2.53% at $25.54 as Morgan Stanley analyst Benjamin Swinburne named the company a top pick among showbiz shares. The Eye has become the stock to beat this fall. Swinburne predicted prolific deals like ones with Netflix and Amazon can offset softer ad markets anticipated in 2012. “Still more gain than pain,” he wrote in a note to clients.
The stock jumped more than 4% early in the day to $29.96, far outpacing the overall market. CBS has had a major run-up this month, with the shares starting October at under $20.
Swinburne predicted CBS will grow its earnings per share by 25% annually through 2010-15, the highest growth rate in the group. It’s the most cyclical but also has the greatest exposure to monetizing content through emerging distribution platforms. International licensing and domestic retransmission fees will also cushion the company going forward.
A four-year deal this month that gives Netflix the rights to air current and future CW series provides a pool of cash for the network and a major financial buffer against falling ad revenue.
Netflix had a less auspicious month and a much worse day. Its stock plunged $25, or close to 30%, in late trading after an earnings report and predictions of a messy fourth quarter.
Yahoo shares jumped 3.7% to $16.71 on reports that Google is considering a bid with private equity partners. That could pit the search giant against Microsoft with likely positive results for Yahoo’s potential sale price. Yahoo’s market value stood at just over $21 billion Monday.
While Yahoo may be struggling, it seems neither Microsoft nor Google want to cede such prime online real estate to the other. Each is looking at bids as part of larger investor groups but would become a key strategic partner.
News Corp. rose 1.61% to $17.67 after a major Fox coup late last week, when the company won rights to the soccer World Cup broadcasts for 2021 and 2022, beating out ESPN and NBC.
Shares of Viacom rose 0.89% to $53.39, shrugging off stunning box office numbers for Paramount’s low-budget “Paranormal Activity 3,” which took in a record $54 million at the domestic box office over the weekend.
Separately, in testimony in front of a U.K. Parliamentary committee, former News Corp. exec Les Hinton defended James Murdoch, the mogul’s son, would-be heir apparent and head of international operations when the U.K. phone hacking scandal exploded this summer.
“I see no reason why James Murdoch should resign,” Hinton, the former CEO of Dow Jones and executive chairman of News Intl., told the House of Commons Culture Media and Sports Committee.
James Murdoch is set to testify before the committee for a second time on Nov. 10.