×

Media stox strut on Street

Media investors remained confident

Even as worries about the economy grew, media investors remained confident in the first half of this year: Returns on media stocks were almost three times greater than those for the larger market.

Giving media stocks a boost: continuing gains in advertising, new digital deals, perceptions of a looser regulatory climate and diminished fears over cord-cutting in the first two quarters of 2011.

Media stocks returned 11% to shareholders, according to the Bloomberg Media Index, vs. 4% for the Standard & Poor’s Index. The Bloomberg Index measures 36 stocks across all sectors of the biz.

The big winner was CBS, with a 42% return. Topper Leslie Moonves’ loud championing of the Eye’s new revenue stream through retransmission fees appears to have been heard loud and clear on Wall Street. Moonves has said those fees could top $2.5 billion in the next several years. In addition, CBS saw the largest dollar commitment from advertisers during the spring’s upfront sales, north of $2.5 billion.

Netflix matched CBS with a 42% return, as the streaming service announced it had more than 23 million subscribers, putting it on par with Comcast, the nation’s largest cable company. CEO Reed Hastings continued to preach that he is an ally of Hollywood, not a competitor, even as Netflix moves into its own original programming.

Not surprisingly, Sony Corp. posted the worst performance, with its shares falling 29% in the first half, largely on the hit it took from the devastation of the Japanese tsunami and earthquake in March. The company was forced to close several plants. Sony shares were not helped by a scandal that involved hackers stealing personal information from its PlayStation Network in April.

DreamWorks Animation continued to see its stock plummet, dropping 27% in the first half. Tepid sales of “Megamind” (not to mention a disappointing box office) and the fourth “Shrek” installment on DVD soured investors on the company. Still, DWA is counting on “Kung Fu Panda 2” and “Puss in Boots” to trigger a rally in shares in the second half.

But Sony and DreamWorks were the rare laggards among media giants. “What you are seeing is companies harvesting gains from the steps they have taken in the past several years coming out of the recession,” said Tuna Amobi, an analyst with Standard & Poor’s. “That’s everything from restructurings to striking new digital deals.” He did point out that in the last several weeks, as more ominous macro-economic data was released, media stocks were a bit more “choppy,” but he believes they will continue to outperform the broader market in the second half. “You will see some speed bumps,” he said.

One of the companies that could be in for a rougher second half is Disney, as rising oil prices deter travelers from heading off to theme parks. Disney’s shares were up 2.5% in the first half.

In terms of big deals making investors nervous, Comcast put that notion to rest, as it won regulatory approval that some thought it might not gain under a Democrat-dominated FCC. Its shares were up 11% in the first half, after closing its joint venture with NBCUniversal in January and despite spending big to retain the rights for hockey and the Olympics.

The prize for the best comeback in the first half of the year goes to Discovery Communications, whose shares ended up essentially flat after a 5% decline in the first quarter on worries that its joint venture with Oprah Winfrey, cable net OWN, is not living up to expectations. Investors are obviously anxious for Oprah herself to debut on her own network later this year and to see if viewership spikes.

The big test for many media outfits in the second half will be convincing advertisers to keep spending as talk of a double-dip recession grows louder — sending jitters through Madison Avenue and up the spines of more than few moguls.

More Film

  • Empty movie theater

    Theater Owners Create $2.4 Million Fund for Cinema Workers

    The National Association of Theatre Owners and the Pioneers Assistance Fund have created an initial $2.4 million fund to provide financial assistance to movie theater employees who need help due to the coronavirus pandemic. The organizations said Monday that the first part of the initiative is a grant program that will provide a stipend to [...]

  • Bob Chapek Bob Iger Disney

    Bob Iger to Give Up Salary, Other Senior Disney Executives to Take Pay Cuts

    Disney has joined the list of companies implementing sizable pay cuts for senior executives amid the upheaval caused by the coronavirus crisis. Bob Iger, who shifted from chairman-CEO to executive chairman last month, has opted to forgo his salary for the year. Bob Chapek, who succeeded Iger as CEO, has taken a 50% pay cut. [...]

  • Sundance Horror Movie 'Relic' Picked Up

    Sundance Horror Movie 'Relic,' Starring Emily Mortimer, Picked Up By Film Constellation

    London-based production, finance and sales company Film Constellation has boarded the critically-lauded “Relic,” the debut feature from Natalie Erika James. The film, which stars Emily Mortimer (“Shutter Island”), Robyn Nevin (“The Matrix Trilogy”) and Bella Heathcote (“The Neon Demon”), had its world premiere at the Sundance Film Festival in the Midnight section. The film, which [...]

  • Judy Movie 2019 renee zellweger

    Korea Box Office: ‘Judy’ Debuts on Top as Cinemas Slump to Historic Lows

    The South Korean box office, which has been widely affected by coronavirus and has fallen to historic lows, was further hit by leading exhibitor CJ-CGV’s recent decision to shut 35 complexes nationwide, and to reduce screenings at those theaters remaining in operation. Opening on Wednesday (Mar. 25), Oscar-winning drama “Judy” debuted on top of the [...]

  • 'Elephant' Review: Less Majestic Than the

    'Elephant,' Narrated by Meghan Markle: Film Review

    Of all the members of the animal kingdom we think of as akin to humans — chimps, dolphins, whales, perhaps (if we’re being honest about it) our dogs — elephants may be the most movingly and preternaturally aware. Because you can see how intelligent they are. You see it in a chimp’s face, too, of [...]

  • Ken Shimura

    Japanese Comedian Ken Shimura Dies of Coronavirus at 70

    Ken Shimura, a comedian who was a fixture on Japanese television for decades, died on Sunday evening from the coronavirus, the Japanese media reported Monday. He was 70, and immediately before his illness had been set for his first starring role in a feature film. Shimura entered a Tokyo hospital on March 20 with fever [...]

More From Our Brands

Access exclusive content