Media, entertainment stocks continue to outperform
EmptyNoticing it might require investors to squint a little, but media stocks in July continued a trend that has been evident much of the year: outperformance.
In July, The Hollywood Reporter Showbiz 50 index rose 8.7%, besting the 7.4% gain on the S&P 500, the 7.8% gain on the Nasdaq and the 8.6% gain on the Dow. The THR Showbiz 50 has also outperformed the broader markets year-to-date.
Only 13 of the 50 media and entertainment stocks that make up the Showbiz 50 index were lower during July.
Leading the index higher was beaten-down TV station owner Belo, a company that reported Friday a 61% drop in quarterly profit. Belo shares rose 60% in July to $2.87, which is still 64% down from the 52-week high.
In general, companies heavily reliant on TV advertising and subscriptions did well in July. Liberty Media notched a 35% gain in July and was the second best performer, followed by Crown Media (22%) and British Sky Broadcasting (21%).
CBS rose 18% and was sixth best while Scripps Networks Interactive was up 16%, good for eighth place. Among other TV-centric companies, Martha Stewart Living Omnimedia rose 12% and Discovery Communications was up 9%.
Grupo Televisa and Cablevision Systems each climbed 6% and DirecTV and Dish Network both rose nearly 5%. Time Warner Cable -- the newest member of the Showbiz 50 -- was up 4%.
Not keeping pace in the TV sector were Sinclair Broadcast and Comcast, down 4% and 1%, respectively.
At the opposite end of the Showbiz 50 was battered -- is there any other kind? -- radio company Cumulus Media, which fell 32% in July to 63 cents. The plunging stock price leaves Cumulus, which boasts 315 radio stations but $682 million in debt, with just a $26 million market cap.
Video game companies also took a relative beating in July. Activision Blizzard was the second worst performer on the showbiz 50, falling 9%. THQ was sixth worst and fell 6% while Electronic Arts was down 1%.
Lazard Capital Markets analyst Colin Sebastian told clients on Friday to buy shares of Activision Blizzard, in part because he's bullish on its online "World of Warcraft" game that boasts more than 11 million subscribers. Sebastian has a $14 target on the stock, which closed Friday at $11.45.
Electronic Arts is set to report quarterly earnings on Tuesday, and Wedbush analyst Michael Pachter expects the company to beat Wall Street's expectations, in part due to the latest iterations of Harry Potter and The Sims games. Pachter has a $27 target on shares, which closed Friday at $21.47.
Beyond CBS, News Corp. fared best among the conglomerates in July, rising 14%. It was followed by Sony (up 8%), Disney (8%), Time Warner (6%) and Viacom (2%).
The Showbiz 50 will see action in the coming week when a dozen of its members report quarterly earnings, including Discovery on Tuesday and News Corp. on Wednesday. On Thursday quarterly results are expected from Sirius XM Satellite, Comcast, DirecTV, CBS and Live Nation.