Stox slip showing

Despite slide, most are ahead of last year

NEW YORK — Showbiz stocks’ dramatic rally of the past few months has come to a halt in the past couple of weeks, as the broader stock market has slumped, bringing down all the entertainment majors as much as 20% in price.

The slump continued Wednesday, when the Dow Jones industrial average fell 86.94 points to 8804.30. The Dow is now down 5% since it hit an all-time high of 9,261.91 in early May.

Showbiz stocks have fallen even further than the Dow. Walt Disney Co., for example, the only showbiz stock in the Dow basket of 30 stocks, is off 15% since it hit a high of $128.37 several weeks ago. Disney fell 56¢ to $109.56 Wednesday.

News Corp. hard hit

Rupert Murdoch’s News Corp. has been hit even harder, sliding 20% from a high of $29.87 to Wednesday’s close of $23.93. Likewise Time Warner Inc. has come down 8% from its high of $82.87 to $75.93 (down $1.06 on the day), while Viacom has also fallen 8% to Wednesday’s close of $54.37.

Despite the slump, most of the stocks are still well ahead of where they were last year. Time Warner is up from $45.12 in the past year while News Corp. rose from $17 and Disney from $73.81, so profit-taking by investors is to be expected, Wall Streeters say.

Viacom surprise

Of the group, Viacom’s slide is, in some ways, the most surprising as several events in the past month suggest the conglom will have a strong year in 1998. While the stock doubled in price from December to May, most of that run-up was in anticipation of good news.

In some ways the news has been even better since the stock peaked at $59.37 two weeks ago. Wall Street analysts were promoting Viacom stock in February partly on the prediction that Simon & Schuster might fetch as much as $4.1 billion in a sale — late last month Viacom announced sale of the book publisher for $4.6 billion.

Viacom’s Paramount Pictures unit has had a banner year, with first “Titanic” and subsequently “Deep Impact” doing strong business. Friday’s opening of “The Truman Show” has created plenty of positive buzz as well, which usually sets a stock moving — but not this time.

Blockbuster year

“I think the stock should be quite a bit higher,” said Montgomery Securities analyst John Tinker. “Paramount is having a great year and Blockbuster is turning well and Nickelodeon is running away with the whole kids’ TV business.

“I think it’s part of the market’s malaise. Nothing is really trading at the high,” Tinker added.

“(Viacom) is really hitting on all cylinders,” agreed Schroders analyst David Londoner. He said some of the sell-off in Viacom stock was investors selling on the Simon & Schuster sale, with no other positive news drawing people into the stock.

Additionally, “the whole group softened,” he added.

The sell-off has hurt the broadcasting sector, as well as cablers. CBS, for instance, fell 19% from its high to a low this week of $29.75 although it recovered 81¢ Wednesday to $30.56.

Cowen & Co. analyst Harold Vogel said the slowdown in media stocks is a “yellow flag” about the softness in advertising growth. “These are, after all, media companies which are subject to downward revision in advertising revenues,” Vogel noted.

The overall market slump is particularly evident in smaller stocks, heavily represented on the Nasdaq market which is down 10% from its highs.

“This is a correction. It’s not a bear market but a correction off the highs, no question,” said one trader.