Media stocks turned higher Monday after President Obama said a deal is near on the fiscal cliff package of tax and spending issues.
Showbiz congloms mostly held their gains in after-hours trading even as House leaders announced there would be no vote on the prospective deal by the Monday midnight deadline, triggering a series of tax hikes and spending cuts, at least temporarily.
CBS was up $1.20, or 3.3%, to close at $38.05. News Corp. was up 90 cents, or 3.7%, to $25.51 and Discovery rose $1.59, or 2.8%, to $63.48. Comcast, Scripps Networks, Time Warner, Time Warner Cable and other showbiz shares were also strong, outperforming the overall market.
The encouraging words from Washington were a boon to media congloms, which are vulnerable if advertisers contemplating a downturn in business consider cutting back spending and consumers fret about discretionary spending.
On Monday afternoon, President Obama said a pact was “within sight” but not yet done. Vice President Joseph Biden and Senate minority leader Mitch McConnell are said to be hammering out an eleventh-hour deal to raise taxes on household incomes above $450,000. Dividends and capital gains taxes for high-income households would rise to 23.8% from 15%. Unemployment benefits would be extended for a year.
News that Congress would not hold a vote by the midnight deadline emerged just as the markets closed.