Investors Are Having A Hard Time Valuing Media Stocks
This past Monday, ViacomCBS’s stock price reached $100.43, giving it a market valuation that was nearly 25 times what analysts had estimated for 2021 when adjusted for earnings. On Friday, the stock closed at $48.23.
Discovery stock on March 19 was trading at an all-time high of $77.27 per share; by Friday, the stock had dropped to $41.90 per share.
Why the sharp rise and drop of these media stocks?
Both these companies recently launched streaming services — ViacomCBS launched Paramount Plus earlier this month, and Discovery launched Discovery Plus in January, and so investors may have been bullish with regards to what these companies were doing by launching direct-to-consumer (DTC) products.
But they were joining an already crowded field of DTC products available to consumers, and so why would these particular companies attract this type of attention? One plausible reason could be the GameStop effect.
ViacomCBS and Discovery, when compared to its DTC rivals like Comcast, Netflix, Disney, AT&T, Apple, and Amazon, are small in valuation size and make them ripe for a takeover and because of that, it’s possible their stock value was inflated as investors were hedging on such an outcome.
ViacomCBS saw what happened with its rising share price and used that opportunity to sell about $3 billion worth of stock, money it says will be used to fund programming for Paramount Plus. This caused its stock to start trending downwards.
Investors also became cleary-eyed and began downgrading both companies' stocks, which led to dramatic drops in their prices.
The true stock price of these two companies, as well as the other media companies at this time, is still unknown. Media companies are banking on their DTC products' successes, hoping they offset the rapid rise in cord-cutting, but those rewards will not be maturing any time soon.
In the meantime, the rollercoaster behavior of media stocks will continue to be the norm.
(Variety and CNBC)
RECAP
After The NFL Deal, The NBA Is Looking To Cash In On Its Media Rights
Now that the NFL got its 11-year, $100 billion deal from its TV broadcast partners and Amazon, the NBA is looking to see if it can also make out with a huge payday of its own. Currently, the NBA has a $24 billion deal with Turner Sports and ESPN, which runs through 2024-25 season, but it’s angling to see if it can hike that up to $75 billion when the next negotiation window opens up. Working in its favor is its global appeal. Younger demographics, particularly Generation Z and Generation Alpha, are also engaging more with its products when compared to other major US sports. (CNBC)
Dominion Voting Systems Sues Fox News For $1.6 Billion
This past Friday, Dominion Voting System filed a $1.6 billion defamation lawsuit against Fox News saying that the network falsely claimed that the voting company had helped in rigging the outcome of the 2020 election. Dominion argued that Fox News amplified reports that its voting machines were used to alter votes, thus costing Donald Trump the presidency. Dominion believes Fox News did this for commercial purposes as a way to improve its ratings during the post-election period. Fox News responded by saying it’s proud of its election coverage and that they’ll vigorously defend themselves against this baseless lawsuit. (TVNewsCheck & David Folkenflik/Twitter)
Jim Nantz Re-signs With CBS Sports
Hey may not be getting “Tony Romo money,” but the voice and face of CBS Sports has decided to remain with the network after signing a new long-term deal. No financial terms or length of the deal details were revealed, but it’s safe to say Nantz will be finishing his career with CBS Sports calling golf, NFL, and college basketball games. It was rumored that Nantz was looking to make the same amount of money as Tony Romo, who makes $17 million per year, but his agent, Sandy Montag, strongly refuted those claims. (Variety and Sports Business Journal)
QUICK RECAP
Eric Spinato, a Fox News and Fox Business producer, dies from COVID-19 complications. (The Hill)
Paula Reid jumps from CBS News to CNN. (CNN Public Relations/Twitter)
Legendary sports broadcaster Dick Stockton is retiring. (New York Post)
Warner Media names Katrina Cukaj head of ad sales. (MediaPost)
News anchor Simon McCoy retires from the BBC. (Scott Bryan/Twitter)
Meredith Bennett-Smith has been named managing editor of MSNBC Digital. (TVNewser)
AT&T and WarnerMedia pledge $7 million to fight Asian hate. (Variety)
Univision’s Despierta América! is expanding to Sundays. (TVNewser)
ABC, ESPN, ESPN Plus to carry close to 400 MLS games. (ESPN Press Room)
CBS Sports secures rights for Italy’s Serie A soccer league, Argentina’s Liga Profesional De Football, and CONCACAF Men’s World Cup Qualifiers. (ViacomCBS Press Express)
Tucker Carlson’s show on Fox Nation launches this week. (TVNewser)
News outlets are getting ready to cover the Derek Chauvin trial. (Variety)
Disney Plus announces a one-dollar price hike. (CNN Business)
Governor Andrew Cuomo gave preferential treatment to his family, including CNN’s Chris Cuomo, when it came to Covid testing. (New York Times)
ESPN and ABC announce NFL Draft coverage plans. (Front Office Sports)
CNN’s Don Lemon’s book debuts at number one on the New York Times nonfiction best seller’s list. (Brian Stelter/Twitter)
Jemele Hill and Mike Schur join Dan LeBatard and John Skipper’s Meadowlark Media. (Awful Announcing)
Black Widow and Cruella to debut on Disney Plus and theaters at the same time. (NBC News)
Fox News’ Janice Dean has been Governor Cuomo’s fiercest critic. (Associated Press)
UK’s FA Women’s Super League signs a deal with BBC and Sky Sports. (Front Office Sports)
Ratings: CNN loses 45% of its audience in the past five weeks. (Washington Post)
BBC News announces its election coverage plans. (BBC Media Centre)
During Biden’s first press conference, no questions were asked about the ongoing pandemic. (Associated Press)
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A MarkHenry Media LLC publication - issue #52 - 2021