Television's Popularity Continues to Lift Media Stocks, Says UBS
NEW YORK (TheStreet) -- Television is all the rage these days, and while many take pride in following their favorite shows ("Breaking Bad" is still a favorite from this desk), others have been investing in companies that own TV stations and produce their content.
Second-quarter earnings for media companies start in earnest next week, and as long as television operators continue to show increases for advertising sales and retransmission fees, share prices are likely to continue to "react positively," said UBS in an investor report published on Monday; the report was led by John Janedis, a U.S. entertainment stocks analyst.
That media stocks have further upside from an already impressive start to 2013 is testament to television's enduring popularity, and the ease by which shows are accessed through mobile devices.
The S&P 500 Media Index has gained 29% this year compared to the broader S&P 500, which has advanced a formidable 18%, its best start to a year since 1998.
Shares of CBS
Cable-TV advertising growth "should remain strong" in the third quarter, further boosting stock prices, said the UBS analysts. CBS and Time Warner were Janedis top picks. Arguably, valuations remain attractive with large-cap media stocks trading at 9.9 times forward 12-month estimated earnings adjusting for some costs, according to UBS.
The potential for further mergers and acquisitions among television and cable-TV owners has also helped boost stock prices, UBS said. Gannett
Written by Leon Lazaroff in New York
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