NEW YORK — Showbiz stocks were mixed as the market roared higher Thursday, with the Dow Jones Industrial Average jumping an unprecedented 499 points in a single session to close at 10,630.
News Corp. and its Fox Entertainment spin-off, USA Networks and Viacom led entertainment, keeping that sector in the game. Time Warner, Walt Disney and Seagram barely budged and Sony was lower. Cable shares fell and movie theater stocks continued to be dead in the water. However, the spotty performance is typical of an industry that tends to dance to its own tune, often shrugging off the peaks and valleys of the Dow.A number of entertainment companies, for instance, didn’t participate wholeheartedly in the market’s giant selloff last week, so they had less ground to make up. On the bright side, that makes these stocks “wonderful harbors of safety,” said Paine Webber analyst Christopher Dixon. He said fundamentals, like a strong ad market, continue to underpin the group.
News Corp. rose 4.5% to $58.44; Fox was up 5.7% to $25.38. Viacom gained 4.8% to close at $54.38 and USA surged 12% to $22.69.
Some say the frantic merger activity in the industry has also thrown some investors off balance since they’re not sure just yet what some of the newly formed media giants like AOL/Time Warner or Viacom/CBS will look like. “Sometimes they trade with the tech group, sometimes with the consumer cyclicals. The market has a hard time knowing what basket to put them in,” said Kathy Stymponias of Prudential Securities.
The combinations also have a lot more media stocks linked to one another than ever before. There’s Viacom-CBS-Infinity-Westwood One all linked up. You’ve got Time Warner and America Online, Tribune and Times Mirror and a number of others’ shares that will trade in tandem as deals are pending.
Lastly, entertainment stocks are largely news driven, not market driven.
Seagram shares have run up dramatically in recent months on takeover speculation that has eased up since management met with financial analysts last week in Orlando, Fla.
As for Disney, it’s got its own story as investors love and hate the stock, depending on the week. After disappointing numbers for fiscal 1999, the stock had a strong run recently as disillusioned investors started to see the first inklings of a turnaround at its ailing consumer products business.