trending Market Intelligence /marketintelligence/en/news-insights/trending/syBUFG2o1x6mrTYHJfjHPg2 content esgSubNav
In This List

Twitter M&A rumors, political ad revisions rock media stocks

Blog

Corporate Credit Risk Trends in Developing Markets An Expected Credit Loss ECL Perspective

Blog

Highlighting the Top Regional Aftermarket Research Brokers by Sector Coverage

Blog

TMT Digital Newsletter: May 2021

Blog

Fintech Intelligence Digital Newsletter: May 2021


Twitter M&A rumors, political ad revisions rock media stocks

A fresh rumor about a potential sale sparked someinvestor excitement late in the week ended Sept. 23, which also saw some turmoilin network operator shares following a downward revision of politicaladvertising forecasts.

The newest run of M&A chatter involves , which many have citedas a good parent for the slow-growth social network, and enterprise cloudcompany Salesforce. Both were namedin a Sept. 23 CNBC.com report suggesting Twitter is seriously consideringinterest from several potential bidders.

While Twitter M&A rumors are hardly new, the reportssuggest that the company's board is more open to such strategic alternativesthan in the past.

"It would make sense for Twitter to be a part of alarger organization like Google, potentially Facebook [Inc.], and others given its recent engagementand monetization challenges," JMP Securities analyst Ronald Josey said ina same-day note.

Just hours before the latest deal rumor news broke, RBCCapital Markets analyst Mark Mahaney downgradedTwitter on its "engagement and monetization challenges." That analystpointed to a recent survey that suggested Twitter's appeal to some advertisersis waning.

But with fresh speculation as to potential buyers for themicroblogging company, shares of Twitter catapulted up 21.4% to close at $22.62on heavier-than-average volume on Sept. 23.

Looking at TV stocks, a move on political ad forecasts byGray Television Inc.and Sinclair Broadcast Group Inc.prompted some raised eyebrows among entertainment investors.

With Republican presidential candidate Donald Trump's TVadvertising campaign yet to shift into high gear and lower-than-expectedspending on other races in key states, those companies officially their politicalguidance for the year. In turn, President and CEO of the Television Bureau ofAdvertising also scaled back his forecasts for political ad spending across theindustry, noting that "many scenarios remain in play."

The commentary rippled through the television markets.Through the first four trading days of the week Gray Television shed 11.8% ofits market cap and Sinclair's stock dropped 8.6%; however, both regained someground on Sept. 23, with Sinclair closing up nearly 4% and Gray Television upby almost 2% for the day.

CBS Corp.also seemed to feel some of the negative sentiment, with its stock beingpressured downward throughout the week.

Viacom Inc.was back under the microscope after reports surfaced that Viacom would nolonger actively seek a saleof its stake in Paramount Pictures.

Further, Viacom said its interim CEO — who replaced PhilippeDauman after an exhaustive corporate feud between the executive and ViacomChairman Emeritus Sumner Redstone that resulted in Dauman's resignation — willnot continue at the helm beyond mid-November. The company also lowered itsearnings guidance and will be reducing its dividend.

"While Dooley's departure is far from surprising givenall that has happened recently, it is nonetheless negative that the departureis occurring so quickly after his appointment," Pivotal Capital Marketsanalyst Brian Wieser said in a Sept. 22 note. "A comprehensive CEO searchwould typically take much longer than two months to complete, which suggestseither a less-than-comprehensive CEO search to come, the placement of anothercaretaker in the CEO role for an interim period or that there will be someeffort to force a merger through with CBS."

CBS CEO Les Moonves has denied recent speculation aboutdiscussions to recombine Viacom and the broadcaster. Those companies from each other in 2006.Redstone still controls 80% of the voting shares in Viacom and CBS through aholding company.

Both Wieser and Jefferies analyst John Janedis their price targets forViacom.

The stocks of Viacom and CBS shed 2.1% and 1.6%,respectively, for the five-day period that closed Sept. 23.

With all the dour sentiment in the television space, onenetwork name managed to entice investment. Discovery Communications Inc. shares climbed steadilythrough Sept. 22 and into Sept. 23 after CEO David Zaslav said at an investorconference that its Eurosport media networks may chargefans to watch the 2018 Olympic Games in Europe. The stockended the week up by 6.8% on the five-day chart.

Turning to new media, Internet radio company got a boostfrom investors as they digested the company's new subscription streamingservice, which it intends to launch later in the year. CFO Mike Herring saidduring a Sept. 21 investor event that its on-demand music service into a $1.3 billionbusiness by 2020, and that is just one component of a projected increase to $4billion in revenue from just $1.4 billion expected in 2016. Sharesof Pandora climbed 4.7% over the five days ended Sept. 23.

Lastly, shares of online dating giant launched upward afterits CEO, Gregory Blatt, reporteda sizable 10% stake in the company. That company added 11.3% to its market capon the five-day chart.