Media Stocks Soar as Dow Pulls Out of Death Spiral

CBS, Viacom enjoy big gains in Tuesday trading

The day after a 635-point plunge in the Dow Jones Industrial Average saw share prices take a pounding, the market seesawed back Tuesday, closing up 429 points. As Wall Street rebounded, media and entertainment companies followed suit.

At the closing bell, the Dow Jones U.S. Broadcasting & Entertainment Total Stock Market Index was up $161.59, or 4.82 percent, to $3,517.49.

CBS Corp. shares were up 15.02 percent to $24.51 after Argus Research raised its rating on the stock to buy from hold. The rally came just a day after an absolute rout, in which CBS closed down 9 percent.

Last week, CBS kicked off earnings season for the sector, posting a second-quarter profit of $395 million, or 58 cents a share, up 163 percent from $150 million, or 22 cents a share, in the prior-year period. Analysts had anticipated a profit of 45 cents per share.

Consolidated revenue grew 8 percent to $3.59 billion, half of which ($1.84 billion) was generated by the entertainment unit, which includes CBS’ broadcast and studio business. 

Scripps Networks Interactive on Tuesday also enjoyed a turnaround, as shares were up 12.17 percent to $42.20. The company’s Lifestyle Media segment, which includes the cable channels Food Network, HGTV, and Travel Channel, this morning reported a Q2 profit of $288.9 million, up 21.9 percernt from a year ago.

Ad sales totaled $372.9 million, an improvement of 13 percent versus the year-ago $331.5 million.

After shares began to fall precipitously at around 2:40 p.m. EDT, Viacom rallied, ending the day up 7.45 percent to $44.01. The MTV parent company lifted its FY Q3 ad sales revenue by 12 percent, thanks to solid increases in scatter and year-over-year spending growth in 20 key categories.

Discovery Communications also improved, with shares gaining 7.05 percent to $37.20. On Aug. 4, the parent company of the cable networks Discovery Channel, TLC, Animal Planet, and OWN: The Oprah Winfrey Network announced it had beaten expectations with a net profit of $254 million, up 20 percent from Q2 2010.

Ad sales revenues at Discovery’s U.S. networks were up 10 percent to $361 million.

Also gaining ground was Time Warner, which wrapped up trading up 2.07 percent to $30.51. On Aug. 3, the media conglomerate reported a profit of $638 million, or 59 cents a share, up from $562 million, or 49 cents a share, a year earlier.

At Time Warner’s cable networks division, which includes TNT, TBS, CNN, and HBO, revenue was up 8.9 percent to $3.45 billion, on ad sales that were up 11 percent to $1.11 billion.

Other companies in the media/entertainment space demonstrated more moderate gains. Shares of Walt Disney Co., which is slated to announce its quarterly earnings at 5 p.m. EDT, jumped 5.21 percent to $34.75, while News Corp. bounced back 6.42 percent to $14.91.

News Corp. will report its earnings for the last three months after Wednesday’s market close.

A week after NBC Universal helped Comcast put up some impressive numbers, the media giant saw some gains in Tuesday trading. Shares of Comcast finished up 1.35 percent to $20.71.

NBC Universal boosted its Q2 revenue by 17.1 percent, with the cable networks unit (USA, Bravo, Syfy, Oxygen, E!, Golf Channel, etc.) generating $2.2 billion in revenue, an increase of 12.6 percent.

The NBC broadcast flagship also enjoyed a hot quarter, boosting revenue 18.5 percent to $1.7 billion.

The morning after Monday’s bloodbath, Cablevision had the misfortune of reporting disappointing results. The operator said it earned $87.8 million, or 31 cents a share, on $1.69 billion in revenue, well short of expectations (42 cents a share on sales of $1.83 billion).

Cablevision’s results made it one of the worst performing stocks Tuesday, and the only media/entertainment player to lose ground, as shares closed down 12.81 percent to $17.02.