Asia media stocks show resilience
Markets drop with Wall Street, could slow project financeAsian media stocks bent but didn't break Tuesday in the wake of Monday's Wall Street crash, its worst day since 1987.
General sentiment in Asia suggested that regional companies -- including media and enterainment firms -- would not hit the floor as fast as U.S. and European stocks were hammered by traders after the U.S. Congress rejected a $700 billion banking sector bailout.
In Hong Kong, sector analyst Vivek Couto, managing director of Media Partners Asia, expects Asian markets to rebound stronger and sooner than those in other regions. Next year will be tough, though, Couto warned, and could include some media sector casualties.
Up-and-coming operators, particularly those seeking new rounds of funding in boom markets such as India and China, are likely to be worst hit, Couto said.
"The stock market falls will impact companies looking for funding, and that's a big issue," he said. "The biggest (investment) that people are seeing in this environment is $50 million."
Media funds say they may not even be prepared to go that far.
Banking insiders say that investment will dry up because interest rates are high and no one can see the bottom of the market. "There is so much uncertainty, no one is doing anything," said one Asia banker in Singapore who did not wished to be named.
Television advertising spending on Asian pay channels stood at about $220 million in 2007. Now it's under pressure, which Couto said will limit the activities of major international media brands operating in Asia such as Discovery and CNN.
Although stocks slid as Asian markets opened Tuesday, market closes across the region showed the region's resilience to Wall Street gloom.
In Singapore, where markets hit their lowest level since 2005 on Monday, telecom and media stocks closed sharply higher Tuesday. StarHub, which operates Singapore's dominant pay TV platform, ended the day up 5.7% and was one of the Singapore Stock Exchange's top 20 gainers. Telco SingTel, which operates the year-old Mio TV IPTV platform, closed up 3.5%.
Australia's media stocks weren't immune to the overall market's 4.3% fall to its lowest level in three years Monday. But media stocks fell less sharply, restricting losses on Tuesday to about 2.5%.
News Corp. suffered the largest fall Tuesday, dropping 4.7% to AUS$15.30 ($12.25). Two of Australia's three commercial TV operators, the Seven and Ten networks, issued profit downgrades in recent weeks in a tightening advertising market.
In India, the Bombay Stock Exchange index Sensex saw a mild recovery Tuesday from its lowest point in 18 months, reached on a 3.87% loss Monday. Entertainment stocks, such as diversified broadcasting group Zee Entertainment ended Tuesday up 2.7% at $4.30 (201.45 rupees). UTV -- which is 32.2% owned by Disney -- scraped by with a loss of 0.26%, closing Tuesday at $15.54, well below its 52-week high of $24.60.
New Delhi Television (one-quarter owned by NBC Universal) gained just over 1%. Adlabs Films also managed a gain of just over 1%. Adlabs is owned by Reliance Big Entertainment, recently the backer of DreamWorks' $550 million exit from Paramount.
One major gainer was leading Indian TV production company Balaji Telefilms, which recently ended its joint venture with News Corp.'s Star India. Balaji gained just over 4%, closing at $3.
Janine Stein reported from Singapore. Nyay Bhushan in New Delhi and Pip Bulbeck in Sydney contributed to this report.