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) - Get Invesco Dynamic Media ETF Report. 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,
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,
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,
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
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
, 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,
will report its earnings. TWX also accounts for roughly 5% of PBS.
Scripps Networks Interactive
, a smaller component of PBS, will also report before the market opens. SNI accounts for 2.7% of PBS.
Looking ahead to next week,
, a 5.1% component of PBS, will be reporting their earnings on Tuesday at the market's close.
Since PBS is a well-balanced fund, the performance of any one of these stocks on a single day will not sway the entire fund. PBS selects its components on the basis of a range of investment criteria, rather than just relying on market cap, which is why no single holding accounts for much more than 5% of the fund.
Even though no single company's fluctuations will alter the fund significantly, a trend is building as these firms all report rising advertising revenue. The flurry of big reports should help bring attention to the media sector and its strong performance this year, and this positive news will add to the attractiveness to a sector that has already performed well in the first four months of 2010.
Don Dion is president and founder of
, a fee-based investment advisory firm to affluent individuals, families and nonprofit organizations, where he is responsible for setting investment policy, creating custom portfolios and overseeing the performance of client accounts. Founded in 1996 and based in Williamstown, Mass., Dion Money Management manages assets for clients in 49 states and 11 countries. Dion is a licensed attorney in Massachusetts and Maine and has more than 25 years' experience working in the financial markets, having founded and run two publicly traded companies before establishing Dion Money Management.
Dion also is publisher of the Fidelity Independent Adviser family of newsletters, which provides to a broad range of investors his commentary on the financial markets, with a specific emphasis on mutual funds and exchange-traded funds. With more than 100,000 subscribers in the U.S. and 29 other countries, Fidelity Independent Adviser publishes six monthly newsletters and three weekly newsletters. Its flagship publication, Fidelity Independent Adviser, has been published monthly for 11 years and reaches 40,000 subscribers.