Several TV-broadcast stocks got hammered Wednesday on Wall Street as investors began anguishing over the increasingly gloomy advertising market.
CBS plunged 8%, closing at $ 214, down $ 18.63 per share. That followed a $ 5 .13 a share decline the previous day.
CapCities/ABC stock, after falling $ 7.75 a share Tuesday, skidded $ 24 per share, nearly 5%, to close Wednesday at $ 503.
Although NBC parent General Electric was up $ 1 to $ 96 a share, the vast majority of broadcast stocks were down modestly. By contrast, declining issues topped advances by only 5 to 4 on the New York Stock Exchange. The entire market was lower Wednesday, with the Dow Jones industrials off 30.72 points, or 1%.
The CapCities downdraft also may have been touched off by an Alex. Brown & Sons brokerage report Wednesday that downgraded its recommendation on the shares of CapCities to a “hold” from a “buy.”
Alex. Brown broadcast analyst Drew Marcus said he downgraded the stock because “the current weak scatter market is affecting near-term results, and there is building concern about the upfront market.”
“Nobody is in any hurry to do any business,” Western Media national broadcast prexy Bill Croasdale told Variety early this month.
Still sickly this year is the “upfront”– the annual network bazaar when advertisers traditionally purchase the bulk of their commercial time, at a discounted price, for the coming season.
But during the last two years, cheaper prices often could be found later in the so-called scatter market, the commercial time left over from unsold upfront. Even the ABC sales department has estimated a scant growth in upfront this year — 3% to 6%. According to agency media mavens who’ve been testing their network counterparts, NBC will look for little or no increase, CBS and ABC look for 4% to 8%. Fox would aim slightly lower (Variety, June 23).
Doubts about the economy may be part of the problem. More bedeviling are basic changes in the way big advertisers, such as car manufacturers, are doing business. Many are keeping inventories low and delaying buy decisions to the last minute.
Analyst Marcus lowered his earnings-per-share estimate for CapCities in 1993 to $ 28 from $ 29.50. For 1994, Marcus lowered his 1994 earnings-per-share estimate to $ 32 from $ 34.60. Marcus had put a “buy” recommendation on CapCities stock last October when it was trading at $ 425 per share.
“Long term, CapCities will remain a company with a very attractive group of assets, especially a dominant station group,” Marcus said. “But for the next three to six months, with building concerns over the cyclic recovery and the upfront advertising market, I just feel it’s better to be on the sidelines short term.”
In other stocks, Multimedia was down 50 cents to $ 35 a share, and Granite Broadcasting was down 50 cents, or 10%, to $ 4.75 a share.