Some of the biggest ad agencies, including Publicis (+9.3%), Omnicom (+7.7%) and WPP (+7.1%), led the media sector higher in week 16. Also, some of the heaviest constituents had a positive week, including Comcast (+2.7%), Netflix (+2.6%), Walt Disney (+1.8%) and Alphabet (+1.5%). The week's poorest performances were delivered by McClatchy (-13%) and Salem Media (-12%). Earnings season was kicked off by Omnicom, Vivendi and Netflix.
Several segments were confronted with external developments, not all of them positive.
- The EU cleared a directive making it easier for broadcasters to offer their programming through Europe. Most European broadcasters ended the week up, especially ITV (+7.2%) and Mediaset (+5.2%). This may also be linked to Pier Silvio Berlusconi's proposal to create an international broadcaster, around the likes of Mediaset (which counts Vivendi among its shareholders), TF1 (+4.3%, controlled by Bouygues) and ProSiebenSat.1 Media (+2.6%).
- The EU also approved a copyright reform, meant to provide better copyright protection for rights owners. Either Alphabet (+1.5%) and Facebook (-0.5%) could potentially be hit, or the rights owners, depending on your view. In unrelated news, Facebook was reported to be developing a voice assistant.
- It was reported that the US box office revenues in Q1 of 2019 were down 16 percent from Q1 2018. Obviously, these results ought to be discounted in today's share prices. Companies impacted include theatre chains AMC Entertainment (-2.3%) and Cinemark (+0.2%).
- According to press reports, Amazon will be adding a free ad-supported stand-alone music service to its portfolio. All music shares ended the week down: Tencent Music (-0.4%), Sirius XM (-1.0%), Vivendi (-1.5%) and Spotify (-3.7%). In other news, Spotify appealed a ruling that would see songwriters receive higher pay-outs.
M&A
Publicis (+9.3%) benefitted from the takeover of Epsilon, despite Moody's worries and downgrade of the company's outlook. Twitter acquired a quotes-sharing app, while News Corp appeared to be in the running to buy the Sports Illustrated magazine from TPG.
The last words haven't been spoken about Walt Disney's (+1.8%) takeover of Fox assets and the planned Disney+ streaming service. In the wake of all this, Disney acquired AT&T's (-0.5%) 10 percent Hulu stake. And the sale of Fox's regional sports networks, an obligation related to the approval of the Fox deal, seems to be getting closer, with Sinclair Broadcast (+2.3%) among the potential acquirers.
YTD
So far this year, media stocks are doing better than the general market, as the telecompaper Stock Index Global Consumer Media (+19.3%) is ahead of the S&P 500 (+15.9%). The best shares to own have proven to be Snap (+112%), Sinclair Broadcast (+69%) and the New York Times Company (+51%). McClatchy (-55%) is the biggest laggard.
