This Day On The Street
Continue to site
This account is pending registration confirmation. Please click on the link within the confirmation email previously sent you to complete registration.
Need a new registration confirmation email? Click here

Showbiz Beats the Stock Market

By Hal M. Bundrick

NEW YORK (MainStreet) The media and entertainment industry is expected to outperform the major stock market indices in 2013, according to a new report just released by Ernst & Young. Overall revenue and earnings have continued to improve in the entertainment industry, while less-glamorous businesses are still struggling to recover. EY says cable operators will likely be the most lucrative showbiz segment with a 41% profit margin.

The report compares overall media and entertainment business performance to major stock market indices, as well as ranks 10 showbiz industry sectors on their profitability and growth rate.

Interactive media is expected to see earnings growth of 22%. Meanwhile, film and television production costs are falling, as studios distribute fewer releases in favor of streaming, resulting in an 11% return.

Must Read: 401(k) Savers Go Deeper in Debt

The 10 sectors of the media and entertainment industry measured by EY are expected to produce a 2013 profit margin of 26%, compared to the S&P 500's expected annual return this year of 24%. It is the first time in five years that the entertainment industry as a whole will outperform the major stock market benchmarks.

"Media and entertainment companies are maintaining and growing their businesses primarily by growing their digital revenues and scaling back overhead associated with traditional media," says John Nendick, Global Media and Entertainment Leader at EY. "In emerging markets, increases in advertising, as well as rising incomes and media consumption, have also helped drive revenue and fuel long-term growth as consumers in mature markets continue to migrate toward digital."

The estimated 2013 profitability for the 10 showbiz sectors are: cable operators earning 41%; cable networks, 38%; interactive media, 33%; electronic games, 26%; satellite television, 25%; conglomerates, 25%; television broadcast, 19%; content and information services, 19%; film and television production, 12%; and music, 10%.

The EY report also notes:

  • Interactive media companies are seeing strong growth from an increase in online advertising.
  • Earnings for electronic gaming companies are increasing due to rising consumption on social and casual gaming platforms.
  • Despite rising programming costs, satellite television companies show steady growth from cost controls and increasing revenue.
  • Advertisers still value the ability of television broadcast to reach large audiences despite the rise of competing platforms.
  • In 2012, global music revenues increased for the first time since 1999 due to the growth of licensed digital music services and paid digital downloads.
  • Newspaper and magazine companies continue to face challenging times from declining advertising and subscription revenues. However, business information services companies are reporting stable revenues and margins.

--Written by Hal M. Bundrick for MainStreet

Check Out Our Best Services for Investors

Action Alerts PLUS

Portfolio Manager Jim Cramer and Director of Research Jack Mohr reveal their investment tactics while giving advanced notice before every trade.

Product Features:
  • $2.5+ million portfolio
  • Large-cap and dividend focus
  • Intraday trade alerts from Cramer
Quant Ratings

Access the tool that DOMINATES the Russell 2000 and the S&P 500.

Product Features:
  • Buy, hold, or sell recommendations for over 4,300 stocks
  • Unlimited research reports on your favorite stocks
  • A custom stock screener
Stocks Under $10

David Peltier uncovers low dollar stocks with serious upside potential that are flying under Wall Street's radar.

Product Features:
  • Model portfolio
  • Stocks trading below $10
  • Intraday trade alerts
14-Days Free
Only $9.95
14-Days Free
Dividend Stock Advisor

David Peltier identifies the best of breed dividend stocks that will pay a reliable AND significant income stream.

Product Features:
  • Diversified model portfolio of dividend stocks
  • Updates with exact steps to take - BUY, HOLD, SELL
Trifecta Stocks

Every recommendation goes through 3 layers of intense scrutiny—quantitative, fundamental and technical analysis—to maximize profit potential and minimize risk.

Product Features:
  • Model Portfolio
  • Intra Day Trade alerts
  • Access to Quant Ratings
Real Money

More than 30 investing pros with skin in the game give you actionable insight and investment ideas.

Product Features:
  • Access to Jim Cramer's daily blog
  • Intraday commentary and news
  • Real-time trading forums
Only $49.95
14-Days Free
14-Days Free
AAPL $94.02 0.00%
FB $104.07 0.00%
GOOG $683.57 0.00%
TSLA $162.60 0.00%
YHOO $27.97 0.00%


Chart of I:DJI
DOW 16,204.97 -211.61 -1.29%
S&P 500 1,880.05 -35.40 -1.85%
NASDAQ 4,363.1440 -146.4150 -3.25%

Free Reports

Top Rated Stocks Top Rated Funds Top Rated ETFs