UK media company performances bounce back
Listed media companies witnessed a dramatic upturn last quarter
where they saw their valuations rise by 33.5% in Q3
2009, its highest quarterly growth this year, according to the
Media Watch index from accountants and business advisers, Grant
Thornton UK LLP.
Media Watch tracks the performance of 100 UK listed
media-related companies (excluding those on the FTSE 100 and Micro
Cap companies). It reveals a steady improvement in the performance
of media stocks and may signal a re-bound to a more consistently
positive sentiment for the media industry as a whole after over two
years out of favour with the market.
The majority (70%) of listed media companies were in positive
territory in Q3 and media stocks outperformed the FTSE 100,
(which saw an 18% growth in the period) as well as all other broad
indices including the FTSE All Share and FTSE AIM All
share.
The performance of media stocks on the Media Watch index
followed a rise of 20% in Q2 after falling 18% in the first quarter
of this year. Media stocks had seen annual falls of 58%
and 46% in 2007 and 2008 respectively and was one of the hardest
hit sectors when the overall market was in decline. Last year, the
performance of media companies were also more than double that seen
by the FTSE All Share (21%) and the FTSE 100 (18%).
Leading the charge of Q3's index is an increase in the performance
of some of the UK's larger and more well established media
companies such as Yell, Trinity Mirror and Johnston Press. Yell
announced in Q3, plans to completely re-finance the group,
received well by investors and Trinity Mirror saw its share price
rally largely due to a review of production of a regional title, as
well as the prospect of cheaper newsprint in 2010. Johnston
Press recently announced the successful negotiation of a three-year
GBP 485million financing facility under a plan to restructure its
debt.
There were some notable exceptions to the index's positive
sentiment however, which include the performance of Rambler Media,
which experienced weak advertising demand and Phorm, which received
negative news from BT and Talk Talk on its Webwise product. Both
saw their performance dip by over 30%.
Mark Henshaw, Head of Media and Entertainment at Grant Thornton
said: "Media stocks are re-bounding well from the market downturn.
Whereas the larger listed companies are leading the way, smaller
media stocks have also picked up in value this year.
As well as responding to the general current pick-up from the
economic downturn, media companies are now heavily focusing on
cutting expenses. They are also adopting new strategies to innovate
and differentiate to meet customer demands such as focusing on
digital platforms to reach audiences, and for publishers, switching
from daily to weekly editions. By demonstrating their ability to
adapt to market conditions, this has helped instill more confidence
in media stocks with investors now seeing more attraction in listed
media companies."
"The worry is however, that as one of the hardest hit sectors
when the market dropped, a fragile UK Plc means that the
current rally in share prices could reverse and once again we
may well see media shares at the forefront of stocks being
sold."