Commentary: Showbiz 50 bids good riddance to 2008
EmptyHoward Stern is no superhero. On Wall Street, it's quite the opposite.
Stock in Stern's professional home, Sirius XM Radio, is the worst performer of the year on The Hollywood Reporter Showbiz 50 index, while stock in Marvel Entertainment, home to Spider-Man, Iron Man and the Incredible Hulk, is tops.
With one day left to trade in 2008, Sirius XM is down 96% to 12 cents, and Marvel is up 14% to $30.55.
Marvel's feat is more impressive than it might seem at first blush; it's one of only two stocks from the index of 50 entertainment and media companies to notch an increase for the year, and it's the only one to boast a double-digit gain.
Netflix, up 8%, is the other 2008 gainer. Rounding out the list of the top 10 Showbiz 50 stocks are DirecTV (down 3%), DreamWorks Animation (off 5%), Comcast (down 12%), TiVo (off 18%), Time Warner Cable (down 21%), Apple (off 24%), Disney (down 29%) and Imax (off 31%).
Imax cracked the top 10 only by staging a 58% rally the past eight trading days.
On Dec. 15 -- good timing! -- Merriman Curhan Ford analyst Eric Wold reiterated his "buy" recommendation on Imax, noting how well it has done with its giant-screen version of the Fox movie "The Day the Earth Stood Still."
"In an economic environment where most consumers are struggling," the analyst writes, "it may seem counterintuitive that consumers would be willing to pay 30%-40% more for an Imax ticket."
Nevertheless, he continues, "consumers are still willing to pay a premium price for a better moviegoing experience -- whether that is seeing a movie on Imax screens or in digital 3-D."
Digital 3-D, of course, also is the playground of DreamWorks Animation, and it will be more so in the future. Some analysts recommend DWA for that reason, as well as because like Marvel it's a near pure-play on great entertainment content -- a safe haven, perhaps, during a recession.
Other Showbiz 50 performers getting some love from analysts this month are DirecTV, Time Warner Cable and TiVo.
Banc of America analyst Bryan Kraft calls DirecTV and Time Warner Cable his top picks in the cable and satellite realm, and Kaufman Bros. analyst Todd Mitchell reiterates his "buy" rating on TiVo.
With $225 million in cash and no debt, and more money possibly to come once a legal dispute with Dish/EchoStar is settled, TiVo shares appear "over-discounted," Mitchell says. The analyst figures TiVo is good for about a 17% rise next year.
Over at BofA, Kraft sees even more one-year upside potential for his two picks: 29% for Time Warner Cable and 34% for DirecTV.
"Economic resilience, rational competition, predictable free-cash-flow growth and attractive valuations make the sector an attractive investment opportunity," he says.
But enough about the good (relatively speaking). Mostly, it's been all bad for media and entertainment in 2008, especially for video games, newspapers and radio -- or anything involving advertising.
The THR Showbiz 50 sunk 43% on the year, while the Dow Jones industrial average shed 35%.
The biggest losers in the THR Showbiz 50 after Sirius XM are Entercom Communications (off 90%), THQ (down 87%), E.W. Scripps (off 80%) and Electronic Arts (down 74%).
Sirius XM's problems stem from its $3.3 billion in debt, especially the $1 billion due in 2009. Although to be fair, the company's hard times aren't so different from the rest of radio, judging from Wall Street's view of the sector.
Beyond Entercom and Sirius XM, the other two companies primarily in the radio business included in the THR Showbiz 50 are Cox Radio, down 50% for the year, and Cumulus Media, off 68%. Their competitors, though, have fared much worse: Westwood One is off 98% in 2008, Citadel is off 92%, and Salem Communications is down 90%.