Big media struggles in Q1
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The stocks of major media and entertainment companies tumbled during the first quarter, with all sector biggies except for Viacom hitting new 52-week lows amid weaker overall markets and concerns about the advertising market outlook fueled by fear of a recession.
The Hollywood Reporter Showbiz 50 stock index lost 17.8% in value in the first three months of the year compared with its 2007 closing price. At the end of Monday, the first quarter's final trading day, it stood at $1,082.73, a far cry from a high of $1,375.53 set in early November. By comparison, the broad-based S&P 500 stock index ended the first quarter at 1,322.70, marking a 9.9% decline.
Among the few outperformers and highlights on the Showbiz 50 year-to-date is Netflix. Its stock ended 2007 at $26.62 but closed Monday at $34.65, a whopping gain of 30.2% over the past three months. Netflix shares were one of the big new-media gainers in February, and Piper Jaffray analyst Michael Olson recently predicted the firm will continue to exceed financial expectations this year. He moved his price target on the stock from $36 to $40.
American depository shares of Sony Corp. finished Monday at $40.07, down 26.2% from their 2007 closing price. This made Sony the entertainment giant with the biggest decrease in market value in the opening period of 2008. The company's stock had in recent years often outperformed its peers.
Sony shares set a new 52-week low of $39.91 in intraday trading Monday.
Class B shares of CBS Corp. and News Corp., as well as Time Warner's stock, also set new lows in the first three months of 2008 and ended the quarter down in double-digit percentage figures. CBS lost 19% of its value and hit a new low of $21, TW shares fell 15.1% and established a low of $13.65 and News Corp.'s stock was down 10.4% after going as low as $17.84 during the quarter.
Viacom managed to avoid a new 52-week low for its shares and outperformed the Showbiz 50 and its sector biggie peers with a 9.8% decline in the first quarter, helped in part by strong fourth-quarter earnings that earned positive reviews from analysts.
Disney showed more resilience than its peers by losing only 2.8% in market value from Dec. 31-March 31 despite hitting a new 52-week low of $26.30 in between. One positive in the quarter came in the form of a Barron's article arguing that Disney hasn't been this cheap in years.
Meanwhile, some smaller film studios have been receiving accolades from Wall Street. Their shares managed a small gain in the tough opening quarter of 2008.
Shares of DreamWorks Animation gained 0.9% to end March at $25.78. "Our 'buy' rating remains for catalyst-oriented investors," SMH Capital analyst David Miller said in a report Monday. For DWA, 2008 should be "an exemplary year at the boxoffice, led by 'Kung Fu Panda' and 'Madagascar 2,' " he argued.
Lionsgate also weathered a tough first-quarter trading environment, with its shares rising 3.5% from $9.42 on Dec. 31 to $9.75 on Monday.
Ahead of its release of "Iron Man," Marvel Entertainment also reported some strong quarterly results and managed to eke out a minimal share-price gain. The stock edged up to $26.79 as of Monday's close, compared with its 2007 close of $26.71.