Media Stocks Break Out On AT&T-Time Warner Go-Ahead – Update

UPDATED with closing prices: The first day of trading for media stocks since yesterday’s landmark approval of AT&T’s merger with Time Warner saw large gains for 21st Century Fox, CBS, Discovery and, of course, Time Warner.

Meanwhile, while Netflix is not taking part in the M&A roundelay, it saw a 4.5% increase in its stock to a new 52-week high of $379.93 after Goldman Sachs upped its price target to $490 a share, up from $390.

Shares in Comcast, which made a $65 billion offer for Fox at the close of trading, aiming to trump Disney’s pending deal for the suite of studio and network assets, closed virtually flat for the day at $32.32 after languishing in red figures through most of the session. Some investors have expressed some angst about the debt required to finance its offers for both Fox and European pay-TV giant Sky, which would see the company hit a debt level that is four times earnings, an unusually high level.

As a company being acquired, Time Warner received the customary boost, with its shares rising 2% to $97.95. Volume was 12 times the normal level as 20 months of pent-up anticipation from investors was finally released. AT&T, on the other hand, faced the usual headwinds that hit the company doing the acquiring. Its shares are down nearly 6%, to $32.22. They have slumped more than 12% since the $85 billion merger was announced in October 2016.

Fox rose sharply from the opening bell, climbing nearly 8% to finish at $43.36, in expectation of Comcast’s offer. Disney stock, which took a big hit after hours yesterday on news of the judge’s decision in the AT&T-DOJ lawsuit (with investors fearing for the security of its $52.4 billion bid for Fox), has rebounded today. Shares rose about 2% to $106.31.

The likely M&A free-for-all set in motion by the AT&T ruling will make attractive targets out of companies like CBS, though it remains in a legal fight with controlling shareholder National Amusements over merger talks with Viacom. CBS shares were up more than 3.5% to $54.26, though trading volume was much lighter than average. Lionsgate, another of the so-called “free radicals” floating around the media space, tacked on 3% today to close at $24.86.

Discovery, which just digested its purchase of Scripps Networks Interactive, was another notable gainer today, up 2% to $24.41.