Media stocks post gains Wednesday

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It was more of the same for media stocks Wednesday, as they rose during the session's healthy rally but again underperformed broader markets.

While the S&P 500 on Wednesday surged 2.3%, The Hollywood Reporter Showbiz 50 stock index rose a slightly more modest 2.2%.

With just six stocks down on the day, the Showbiz 50 managed to outpace the 2.1% gain on the Dow Jones but fell short of the Nasdaq's 2.8% rise.

The entertainment stock index, struggling all year on worries that an economic downturn will evenutally weigh heavily on advertising, remains 15.9% off year-to-date, lagging the S&P 500 (off 7.1%), the Dow (down 4.9%) and the Nasdaq (off 11.4%).

Wednesday's rally was sparked by better-than-expected earnings reports from bellwether tech company Intel, as well as from financial concerns JPMorgan Chase and Wells Fargo. The gains came despite so-called Beige Book data released Wednesday that indicated "weaker economic conditions" in real estate and consumer spending.

Leading the Showbiz 50 on Wednesday were a couple of stocks that have been performing well much of the year: Netflix and Warner Music Group. The former was up 6.8% on Wednesday and is 46.4% higher so far this year, while the latter was up 8%, leaving it 20.1% higher on the year.

Netflix was boosted a day after Jefferies & Co. analyst Youssef Squali told clients that it was poised to benefit from rival Blockbuster's intended takeover of Circuit City. He even posited that Blockbuster could eventually sell its DVD-by-mail service to Netflix.

Meanwhile, analyst Daniel Binder of Jefferies & Co. said Wednesday that he doubts that Blockbuster's purchase of Circuit City for up to $1.3 billion will happen.

Shares of Google rose 1.8% on Wednesday ahead of its scheduled first-quarter earnings report due Thursday. Investors will be eyeing Google's advertising click-through rate, which comScore predicts will be weak.

"We remain concerned abouth the lack of leverage in the model and prefer to stay on the sidelines," Squali said of Google, citing comScore data.

Among the conglomerates Wednesday, Sony fared best, rising 5.1%, but the stock is down 22.9% this year. Viacom was the laggard, rising fractionally, and the stock is down 10.4% this year.
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