Media Stocks Hit 52-Week Highs

Disney and Cablevision stock not hurt by retrans row

By Claire Atkinson -- Broadcasting & Cable, 3/5/2010 4:25:00 PM

Media stocks recorded big gains March 5 as Wall Street finished the day up on news that jobless claims have declined. News Corp and Disney both closed on 52-week highs, while CBS also recorded a new high before falling back just slightly at the close.

The big gains come as Wall Street digested some positive news, consumers are borrowing more than expected and jobless claims declined. News Corp. rose 3.7% to close at $16.81 a new high, as did Disney which closed at $33.22 up 2% on the previous day's finish. CBS meanwhile recorded a 2.46% jump to $14.57; its high is just slightly higher at $14.71. Shares in Scripps Networks Interactive was one of the biggest gains of the day, rising 3.53% to $40.82.

CBS, News Corp., and Disney are all expected to be big beneficiaries of new cash rolling in from cable operators which are being asked to pay retransmission fees for the right to carry the broadcast signals of each of the separate companies.

The battle between Cablevision and Walt Disney Co. over retransmission dollars is having little negative affect on their respective stock prices.  David Joyce, media analyst at Miller Tabak + Co., reiterated his buy rating on Cablevision today and said in a note:  "We continue to like CVC shares due to the high penetration of advanced services in its network that can generate various incremental revenue streams (VOD, HD, DVR.)"

Barclays Capital entertainment analyst, Anthony DiClemente, thinks that the retransmission brawls will do little to increase the possibility of a la carte programming options in cable, a potential threat to the cable operator's existing economic model.  "While such public disputes appear troubling, we are of the view that "the bundle" is not at heightened risk," he wrote in a note out March 5. DiClemente argues that unbundling would be fought by cable network owners and that the simplicity of the bundle appeals to the consumer. He also suggests that unbundling cable content is of low priority to the current Federal Communications Commission Chairman Julius Genachowski.