Media stocks sink Monday
Economic growth seems unlikely until later this yearNEW YORK -- Big media stocks took a dive Monday amid market declines in the U.S. and Europe driven by renewed economic concerns and doubts that the recent market rally can continue.
U.S. markets have moved higher since a low point in early March, and media and entertainment stocks often have outpaced the overall gains amid recent signs that the worst of the economic downturn might be over.
Still, economic growth seems unlikely to return until later this year and likely will be anemic, raising questions about how sustainable the upward momentum in markets is. That has led to market stutters as of late as investors look for more direction. Media and entertainment investors also have waited for signs of a real improvement in advertising trends.
The Wall Street Journal on Monday highlighted the raging debate among investors over U.S. stock markets' outlook, pointing out technical indicators that are red flags for further gains.
Also, the World Bank cut its economic forecasts for most regions.
"The world is entering an era of slower growth," it said, predicting a global economic decline of 2.9% this year. This will turn into global growth of 2% in 2010 and 3.2% in 2011, it said. Many developing countries will lose their status as engines for the global economy over the near term, it suggested.
All this pressured stocks, as the broad-based S&P 500 index tanked 3.1%. It now is down about 10 points for the year-to-date period. The Dow fell 2.4%, and the Nasdaq lost 3.4% of its value.
Media and entertainment stocks got caught in the downdraft as the THR Showbiz 50 index decreased 3% to 725.49. Many big-media stocks suddenly are left behind their 2008 closing prices again despite their rally since March.
Amid sector biggies, CBS Corp. shed 6.8% to $6.84 and is now down 14.7% year-to-date, and News Corp. shares fell 5.2% to $10.11 (6.6% for the year). Time Warner and Walt Disney shares dropped 3.7% each to $24.22 (down 10.7% for the year) and $22.66 (down 0.1%), respectively. Viacom declined 5.3% to $23.22 (up 15.4% for the year).
The European picture wasn't pretty either. In London, the FTSE 100 lost 2.6%, and the German DAX fell 3%.
Shares of News Corp.-controlled U.K. satcaster BSkyB declined 2.9% to £4.31 ($7.04), while broadcaster ITV saw its stock fall 2.1% to £35.25 ($57.60). German pay TV firm Premiere, in which News Corp. has been raising its stake, gained 2.2% to €2.75 ($3.81) as Goldman Sachs raised its price target, but German broadcaster ProSiebenSat.1 lost 3.8% to €3.85 ($5.34).