Media ETF Attracts Attention

NEW YORK (TheStreet) -- This will be an important week of earnings for companies in the media sector and the media ETF PowerShares Dynamic Media(PBS). Since advertising is highly cyclical, it will also shine a light on the health of the economic recovery.

Lately, things have been good for this media ETF. Performance has been strong all year, and earnings season has been positive as well. Last Thursday, Viacom(VIA) reported that profits increased in the latest quarter by 38% over the year ago period. Viacom accounts for 5.2% of PBS.

Although not a holdings in PBS, Discovery Communications(DISCA) confirmed the recovery in advertising when it reported last Friday. The owner of a suite of cable channels saw revenue increase 8%, in part due to a 9% increase in domestic ad revenue and a 44% increase in overseas ad revenue.

Beyond Viacom and Discovery's earnings, Comcast's (CMCSA) new stake in NBC Universal shows that there is interest in acquiring assets within the industry. Shares of Comcast rallied 6.3% on Thursday of last week, a day after the firm reported it beat earnings by a penny, helping to lift PBS by 2.3% on the day. The company doesn't generate the bulk of its revenue from advertising, but it said ad revenue is recovering, a positive sign for the holdings in PBS. CMCSA is the top holding of PBS and accounts for 5.2% of the fund.

PBS has taken advantage of the media industry's momentum and recovery this year by going up 17.7% in comparison to SPDR S&P 500's (SPY) year to date increase of 7.1% making it one of the best performing sector ETFs this year.

This week should be another repeat of last week in terms of solid earnings reports. Components of PBS reporting include News Corporation(NWSA), which will report tomorrow at the market's close. NWSA accounts for 5% of PBS.

Later in the week, before the market opens on Wednesday, Time Warner (TWX) will report its earnings. TWX also accounts for roughly 5% of PBS.

On Thursday, Scripps Networks Interactive(SNI), a smaller component of PBS, will also report before the market opens. SNI accounts for 2.7% of PBS.