Media stocks warming

Showbiz 50 index up 10% for the year

Wall Street is holding its breath in anticipation of the Dow finally closing at a gain for the year. On Monday, it was still 12 points shy of positive territory.

Meanwhile, most big-media stocks are up year-to-date amid signs that the worst of the recession is over and the ad market is stabilizing, not to mention the booming film boxoffice. The Hollywood Reporter Showbiz 50 index is up 10% this year, compared with the Dow's less-than-flat performance.

Among the sector biggies, CBS shares are up 8% year-to-date, Disney is up 12%, Viacom is up 20% and News Corp. is up 24%. Sony's American depository shares are 26% higher so far.

Time Warner is the exception. When dividends and a separation from Time Warner Cable are factored in, the stock is down 4%, according to Yahoo Finance.

Unfortunately for shareholders, when the time frame is extended to the past 12 months, most big-media stocks are down.

On that criteria, Time Warner is the outperformer, still with a 4% decline. Disney is off 25%, Viacom is down 37% and News Corp. is off 42%. CBS has fared the worst, down 59% in the past 12 months.

"Interestingly, News Corp., Time Warner and Disney all have experienced minimal changes to their relative multiples on a year-over-year basis," Sanford Bernstein analyst Michael Nathanson said.

"Time Warner looks the cheapest on absolute valuation as it is valued lower than News Corp. and Disney despite the strong concentration of highly valued cable networks," he said. "Once AOL is disposed of later this year, we would expect a re-valuation of multiples, albeit on a lower earnings-per-share base."

Georg Szalai reported from New York; Paul Bond reported from Los Angeles.