TV Stocks Spike After Aereo Ruling
UPDATED: Shares of TV station group Sinclair Broadcast rose more than 14 percent and CBS Corp.'s stock gained more than 5 percent as analysts said the ruling should alleviate investor concerns.
TV industry stocks rose Wednesday, with some recording a big spike, following the Supreme Court's ruling in the Aereo case.
The highest court handed broadcasters a victory by ruling against the digital service in a 6-3 vote, with analysts lauding the decision as a positive for the TV sector and saying it should alleviate investor concerns.
TV station group Sinclair Broadcast Group saw its stock jump 14.2 percent to $33.38 as of 10:50 a.m. ET, while fellow station group Media General's stock was up 9.3 percent at $20.18.
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The stock of CBS Corp., owner of the CBS broadcast network, at that time was up 4.7 percent at $61.61 after earlier rising more than 5 percent.
ABC owner Walt Disney's stock was up 1 percent at $83.54. And shares of 21st Century Fox, home of the Fox networks, were up 1.4 percent at $33.84.
"We believe the decision validates CBS' investment in expensive and high-quality programming," Guggenheim Securities analyst Michael Morris said in a reaction entitled "Supreme Court Ruling Lifts Aereo Overhang." Others on Wall Street were also bullish.
"Although legally the case is now remanded to the lower courts, the ruling does not appear to leave Aereo much opportunity to 'maneuver,' " Wells Fargo analyst Marci Ryvicker said. Given that the Supreme Court's opinion "appears to be sweeping and definitive that Aereo is illegal," she said that "takes Aereo out of operation 'as we know it."
The analyst argued that retransmission consent is ''safe'' for broadcasters, "and we anticipate broadcast networks and affiliates conducting business 'as usual.' "
Overall, she said the Supreme Court ruling is "clearly a positive," adding. "We continue to like the broadcast group and diversifieds, with emphasis on CBS given near-term catalysts and inexpensive valuation relative to peers."
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