Media Investors Sought Safety In Size In 2016 As Stocks Outpaced The Market


Wall Street had a simple message for media companies in 2016: Get big, or get lost.

With the end of trading for 2016, the sector’s three best performing stocks —  not factoring in dividends — each were involved in major consolidation deals: Charter Communications, which bought Time Warner Cable, was +57.2%. Time Warner, which agreed to sell to AT&T, was +49.5%. And Dalian Wanda Group-controlled AMC Entertainment — which became the world’s biggest exhibition chain with its acquisitions of Carmike Cinemas and UK-based Odeon & UCI Cinemas — was +40.2%.

The year’s worst media performers were Cinedigm (-44.6% adjusting for its 1-for-10 reverse stock split), Gannett (-40.3%), and Gray Television (-33.1%).

The public markets also lost several media companies that struggled to find their place as the TV and movie businesses continued to weaken, and became less forgiving of those who lack scale and secure access to customers. They include Time Warner Cable, Cablevision, DreamWorks Animation, Starz, Carmike Cinemas, RealD, Outerwall (parent of Redbox), Rentrak, Crown Media, and Rovi (actually it lost Tivo when Rovi bought it; the company decided to adopt Tivo’s name).

The sector generally made up for the losses from the Great Cord Cutting Scare of 2015: The Dow Jones U.S Media Index was up 11.6%, ahead of the Standard & Poors’ 500 which was +9.6%.

Several companies benefited from a broad belief that the Trump administration will tip the regulatory scales in favor traditional media companies. The Media Index was up 7.1% since the election while the S&P was +4.7%. Broadcasters in particular are eager to see the FCC eliminate cross-ownership restrictions designed to protect independent speech by barring them from controlling a major TV station and newspaper in the same market.

Six of the Big Media companies we track improved from 2015. Following Time Warner were CBS (+35.1%), Comcast (+22.5%), Sony (+13.8%), Discovery (+6.5%), and Fox (+3.2%). Disney was basically flat at -0.8%.

Viacom, down 14.7%, stood out from the pack — although it was a big improvement from last year when shares fell 45.3%. It recently installed Bob Bakish as CEO. He has the challenging assignment to revive advertising and movie ticket sales which collapsed under long time CEO Philippe Dauman, who made headlines this year with his bitter, but fruitless, legal battle to retain power.

Here’s how the year looked for individual companies. We show performance for the year leading up to the election, the period since then, and the full year results:


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