Your 4 Oscar-Winning Movie Studio Stocks Are…

by Traders Reserve | February 28, 2014 10:00 am

Your 4 Oscar-Winning Movie Studio Stocks Are…

The film studios that produced this year’s movies nominated for Best Picture of the Year at Sunday’s 84th Academy Awards treated audiences around the globe to some great entertainment.

However, would their parent companies earn the same respect in the investment arena?

A total of nine movies are vying for the best picture award, split among six studios.  Among them are Paramount Studios, which gave us Nebraska and The Wolf of Wall Street, and The Weinstein Company with  Philomena. Those films wowed critics, but because the companies are privately held, they don’t do investors much good.

That leaves us four companies to critique; their films received a total of 76 nominations: Sony (SNE); Warner Brothers, owned by Time Warner (TWX); 21st Century Fox, owned by Fox (FOXA); and Universal Pictures, owned by Comcast (CMCSA).

Here are the nominees and the companies behind them:

Sony

sony 185x185 Your 4 Oscar Winning Movie Studio Stocks Are…Although movies by Sony Pictures, a unit of Tokyo-based Sony, won seven Golden Globes, making it the frontrunner on Oscar Sunday, the stock has not been a stellar performer. The company has only reported a net profit in one of its past six fiscal years.

The only reason it did so in fiscal third quarter was due to income derived from the sale of property in New York and Tokyo. At least the $231 million profit was an improvement from the previous quarter, when it lost $181 million. Sony is also in the middle of a major cost-cutting rampage to the tune of $350 million. Profits for film and TV dropped 4.2% from the same quarter a year ago, but revenue grew 7.1% to $2.13 billion.

The financial results could have been much worse had it not been for Captain Phillips and Cloudy with a Chance of Meatballs. Each film grossed more than $200 million. Third-quarter revenue was also buoyed by video-on-demand requests for television show Breaking Bad.

The big picture for Sony does not win any awards. As part of Sony’s third-quarter earnings release, Sony forecast a $1.1 billion annual loss due to restructuring and announced the future sale of the personal computer division, Vaio. Sales of PlayStation 4 have been brisk, one bright spot for the struggling company.

Time Warner Inc.timeWarner Your 4 Oscar Winning Movie Studio Stocks Are…

Everything is looking up for Time Warner Inc. as Turner Broadcasting System, HBO and Warner Bros. all posted record profits in fourth-quarter 2013. Revenue jumped 5% year-over-year to $8.6 billion and 4% for full-year revenues to $29.8 billion.

Warner Bros. delivered its best year on record. It led both domestic and international box offices, and its films received an industry-leading 21 Academy Award nominations. Sales at Warner Bros. rose 7% to $4 billion in the fourth quarter, boosted by Gravity and The Hobbit: The Desolation of Smaug. Warner Bros. also has over 60 programs airing on broadcast and cable during the 2013-2014 television season, including three No. 1 shows: The Big Bang Theory, The Voice and The Following.

In the second quarter of 2014, Time Warner plans to separate Time Inc. into an independent publicly traded company, a move designed to consolidate and improve company efficiency. Investors can also expect a new $5 billion buyback program and a double-digit increase in its dividend for the fifth straight year.

Comcast

Comcast185 150x150 Your 4 Oscar Winning Movie Studio Stocks Are…Looming large in Comcast’s universe right now is its $45 billion deal to  buy Time-Warner Cable (TWC). If the two companies ink a deal, it will create a massive 30-million subscriber base, six times the size of Cox Communications. Merger  is described as an industry “game changer.”

Both companies have a lot of subscribers and revenue to gain, but the merger will have to face scrutiny by regulators due to antitrust concerns.  It’s estimated that the Comcast-Time Warner union would create $15 billion in annual free cash flow.

The Time-Warner Cable Comcast deal hasn’t even been sealed and along comes yet another opportunity for Comcast. Netflix (NFLX), which accounts for 30% of all Internet traffic, wants to pay Comcast to stream its entertainment content at higher speeds.

In the meantime, Comcast has performed admirably without help from either Netflix or Time-Warner. Profits rose 28.6% during fourth quarter of 2013 due to its NBC TV lineup and higher attendance at Universal Studios theme park. Revenue also rose 6.2% to $16.9 billion compared to $15.9 billion a year ago.

What’s in store for Comcast in 2014? It looks like the sky might be the limit.

21st Century Fox

21st Century Fox 150x150 Your 4 Oscar Winning Movie Studio Stocks Are…[1]There’s both good and bad news on the Fox front. On one hand, the broadcasting and cable television giant reported a jump in revenue in the fourth quarter, mainly due to satellite TV business.  Its profit of $1.25 billion, or 54 cents a share was a drop from the  $2.23 billion, or 94 cents a share it earned a year earlier, pared by expenses for cable business startups.

Investors are tuned in to the company’s long-term prospects in its lucrative sports and cable network shows. Advertising revenue rose 7% in the fourth-quarter to beat out rivals Viacom (VIAB[2]) and Time Warner thanks to double-digit growth at FX networks, Fox Sports 1 and regional networks.

Fox recently boosted its sports presence further by taking an 80% stake in the YES Network, a regional sports channel focused on the New York Yankees baseball team.

While 12 Years as a Slave earned rave reviews, it wasn’t a huge money-maker. Overall, Fox’s filmed entertainment segment saw a 21% drop in revenue for the fourth quarter.

Written by Karen Ricci

Endnotes:
  1. [Image]: http://investorplace.com/wp-content/uploads/2014/02/21st-Century-Fox.jpg
  2. VIAB: http://studio-5.financialcontent.com/investplace/quote?Symbol=VIAB

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