Media company boards will have to make some difficult choices soon when they decide how much to pay their CEOs for 2015. Will the ones that gave their chiefs credit — and extra compensation — when stock prices rose now blame them for this year’s declines?
If they do, then lots of execs can expect to take a haircut after a year when most media investors lost money.
The charts below illustrate what happened. Generally speaking, buyers are losing confidence in businesses that are vulnerable to pay TV cord cutting, advertiser defections, and box office sales that lopsidedly favor a few mega hits at everyone else’s expense.
The Dow Jones U.S. Media Index fell 5.5%, lagging the benchmark Standard & Poor’s 500 which was down 2.2%. Sony and Disney are the only companies on our Big Media list that the market considers more valuable now than they were a year ago based on the stock price (not factoring in dividends).
Netflix was the year’s big winner: With shares appreciating 134.4%, it was the top performer in the Standard & Poor’s 500.
Those losing most include Cinedigm (-84.0%), Redbox-owner Outerwall (-51.4%), and Viacom (-45.3%).
As for the quarter, the Dow Jones U.S. Media Index appreciated 2.6% since the end of September. That wasn’t nearly enough to make up for the Index’s 11% drop in Q3, and trailed the S&P 500, which was up 6.7% in Q4.
CBS recovered enough to lead the Big Media pack with shares up 18.1%. It was followed by Disney (+2.8%), Discovery (+2.5%), Fox (+0.7%), Sony (+0.4%), Comcast (-0.8%), and Viacom (-4.6%).
More broadly, the quarter’s biggest media winner was DreamWorks Animation: It’s shares were +47.7%, making up for its Q3 losses, as investors became more confident about its television production prospects. Others finishing the year strong include Alibaba Group (+37.8%), Amazon (+32.0%), Microsoft (+25.4%), and Activision Blizzard (+25.3%).
Laggards include Cinedigm (-53.6%), Pandora (-37.1%), Redbox-owner Outerwall (-35.8%), Time (-17.7%), and Twitter (-14.1%).
Other well-known companies in the sector that also struggled in the quarter include Lionsgate (-12.0%), Starz (-10.3%), and Apple (-4.6%). The technology is down 7.7% in 2015, making this the first year since 2008 when the technology company has lost value.
Here’s how the industry fared in 2015: