2017: Traditional Media Stocks Underperform, Digital Media Soars

For 2017, traditional media companies underperformed all of the broader stock market indexes’ high double-digit percentage gains. But big digital media stocks sharply overperformed in the market.

For example, Dow Jones U.S. Broadcasting & Entertainment index market grew 7.8% in 2017 to 1,289, with the Dow Jones U.S. Media Index -- which includes a broader array of traditional media companies -- adding 7.1% to 867.22.

This compares with much higher gains from other indices representing the broader market: The Dow Jones Industrial Index added a massive 24.7% to close at 24,719.22, and the S&P 500 Index was also sharply higher -- 18.9% more to 2,673.61. The Nasdaq topped both with a big 27.1% gain to 6,903.39.

So-called FANG stocks -- big digital media companies including Facebook, Amazon, Netflix, and Google -- posted eye-opening 50% improvements, far outperforming many U.S. companies.  

Facebook was up 51.7% to $176.46, while Amazon gained 52.8% to $1,169.47, Netflix added 53.2% to $191.96 and Google (Alphabet), grew 31.2% to $1,053.40. Twitter increased 46.6% to $24.02.

Traditional media companies came in well under these numbers. Walt Disney gained 2.8% to $107.51, while CBS was down 8.5% to $59.00; AMC Networks was up 2.4% to $54.05; and Time Warner (with a potential AT&T still in progress), was down 5.4% to $91.47.

Larger, less diversified cable TV network performers suffered more, with Discovery Communications down 19.1% to $22.39 and Viacom losing 12.2% to $30.81.

Gaining much shareholder value at the end year -- given its announced deal to sell almost half it assets to Walt Disney -- 21st Century Fox grew 22.1% to end the year at $34.53. Just before news of the deal, Fox’s stock was down as much as 12% for the year.

Scripps Networks Interactive grew 18.9% to $85.38 — largely due to a deal to be bought by Discovery. Lions Gate Entertainment was up 24% to $33.80, while Sony Corp. was 54.1% higher to 5,083 yen.

Major U.S. cable operators/broadband providers had a good year. Comcast grew 14.3% to $40.05 with Charter Communications, up 15.0% to $336.96. Satellite TV network service provider Dish Network was down 18.2% to $47.75.

TV station groups also saw double-digit improvements, with Sinclair Broadcast Group adding 13.3% to $37.85; Tribune Media (which has an agreement to be bought by Sinclair) up by 21.6% to $42.47; Nexstar Media Group up 22.7% to $78.20; and Tegna 2% higher to $14.08.

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