Media stocks look set to rise Wednesday as the Senate and then, late Tuesday, the House of Representatives voted with bipartisan support for a package of new taxes and cost cuts to avert the fiscal cliff.
Media shares rose sharply Monday, the day the Senate approved a bill on which the House was voting on Tuesday night.
Media congloms were particularly sensitive to the negotiations since they’re vulnerable if advertisers contemplating a downturn in business consider cutting back, or if consumers fret about discretionary spending. Top media execs lobbied Congress to reach a deal fast, and the House voted on the Senate bill without amending it, as was first discussed.
By not reaching a deal by midnight on Dec. 31 Congress technically sent the nation over the cliff, which is a series of heftier across-the-board taxes and spending cuts that economists feared could push the still-fragile U.S. economy into recession. But as Tuesday was a holiday, the impact of the delay should be lessened since the House passed the deal before the complex effects hit Wall Street on Wednesday.
On Monday, when a deal seemed to be in sight, CBS was up $1.20, or 3.3%, to close at $38.05. News Corp. was up 90¢, 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 Senate voted 89 to 8 on Monday 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 will be extended for a year.
“Happy New Year to all. May the coming 12 months bring you happiness, health and success … and a less dysfunctional Congress,” wrote Mohamed El-Erian CEO of giant bond fund Pimco in a blog on CNBC.
