While the major stock indexes showed modest gains in 2004 — the S&P is up 9.1%, the Dow 3.6% — investors who picked the right entertainment stocks this year can party like it’s 1999.
Companies that relied on computers were the big winners, with Apple stock, powered by iTunes and music player iPod, more than tripling in price during the year. Apple opened the year at $21.28 on Jan. 2. On Wednesday, it closed at $64.44.
Continuing the computer theme, videogame publishers posted big gains. Activision was up more than 65%, Electronic Arts 33% and THQ nearly 37%.
Yahoo!, which is moving into production of original online content, saw its stock rise more than 68% for the year.
Investors in the exhibition biz were well rewarded. AMC was up 28% on the year before it was sold to private investors just before Christmas. Industry leader Regal was up 31%. Carmike was the laggard of the publicly traded loops, up only 5.7%.
Watching movies at home was another story, however. The intensely competitive video rental biz took its toll on stockholders, with once high-flying Netflix down 54% this year. Industry leader Blockbuster took its lumps, with its stock falling nearly 13%. Smaller Hollywood Entertainment, the subject of yearlong takeover speculation, was down more than 5%. Movie Gallery, which focuses on rural and secondary markets, managed a 3.3% gain, most of it at the end of the year and likely on speculation that it may become the subject of a takeover.
Making movies proved a reasonably successful activity for investors. Lions Gate, among the last of the indies, saw its stock rise 142%, partly on speculation that it’s a takeover target. It also garnered press attention and a financial boost from releasing Michael Moore’s “Fahrenheit 9/11.” Toon titan Pixar was up 23% during the year.
The last pure-play major moviemaker, MGM, agreed to be bought by Sony and returned more than 15% to its shareholders for the year. Acquirer Sony was up 11%.
Disney, which endured a tumultuous year of stockholder revolt and a failed takeover attempt by Comcast, nonetheless rewarded its stockholders with an 20% gain in its share price. Likewise, General Electric, parent company of NBC and Universal Studios, was up 18%.
Time Warner, the world’s largest media company, gave its investors a market-middling 7.9% improvement, while Fox Entertainment was up 7.5%.
Alone among the studio congloms, Viacom, parent to CBS and Paramount Studios, dropped more than18% for the year on investor concerns over a variety of factors, including the sluggish Infinity radio unit.
Owning the stock of TV or radio broadcasters or cable operators was downright hazardous to the portfolios of shareholders, who saw their investments decimated in companies such as Charter (down 44.5%), Emmis (30%), Paxson (63%), Sinclair (40%) and Clear Channel (28%).
The satellite television companies were marginally down, with DirecTV dropping 0.4% and EchoStar dipping a little more than 2%.
But satellite radio (XM up 43%, Sirius up 130%) really brought back the ’90s, as investors pumped up companies with no earnings to price levels that left fundamentals-oriented analysts shaking their heads and mumbling something about irrational exuberance.