Media Stocks Look Ready To Start Climbing

Things Looking Up

After making it halfway through one of their worst years ever, media stocks are now starting to score double-digit gains for a promising comeback, writes THE NEW YORK POST. "Analysts say a new optimism for a strong fall TV season has combined with hopes for more summer blockbusters to help big media and entertainment companies vastly outperform the broader stock market.

"What's helping even more is that many advertisers believe they're finally touching bottom in the year's historic advertising washout. 'Many are seeing a bottom and there's some optimism that cable upfront will be better,' said ED ATORINO, a media analyst and managing director of BENCHMARK CO., referring to the advertiser interest in shows due on cable TV.

Some companies have outperformed the meek 2% gain in the Standard & Poor's 500 by more than a 40-fold rate, such as Warner Music Group, up 85% this year.

"Some companies have outperformed the meek 2% gain in the STANDARD & POOR'S 500 by more than a 40-fold rate, such as WARNER MUSIC GROUP, up 85% this year. Of course, WMG's stock was trading at $1.50 just four months ago.

"ATORINO noted that while he's pleased with the gains, he's not celebrating just yet. 'They're coming up from what I call a 'going-out-of-business' basis," he said. He said the run-up that began around MARCH 6th has been a traders' romp in technical maneuvers. 'It's all about day-to-day trading,' said ATORINO. 

Auto Budgets Have Hit Bottom, Dealership Closing Fears Easing

"Some analysts say ad budgets, such as those at bankrupt automaker GENERAL MOTORS, have already reached bare-bone levels and can only start rising. What's more, imported brands are expected to step up their U.S. marketing efforts to grab more market share from down-and-out GM and CHRYSLER, ad experts say.

"Meanwhile, one nagging fear may have eased over the demise of auto dealerships -- another huge independent source of ad dollars that was in danger of disappearing altogether due to the collapse of DETROIT."

What Will GM Spend In Advertising?

GENERAL MOTORS has been tight-lipped about what it's planning to spend while in bankruptcy, but AD AGE has the answer: "$40 million to $50 million per month, which comes out to about same dollars-per-vehicle rate as before it filed for Chapter 11. That translates to between $80 million and $150 million, depending on how long it takes GM to dig itself out."

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