Broadcasting stocks soared in 2009

RBR-TVBR Exclusive

What a difference a year makes! The advertising recession dragged radio and television stocks down in 2008, with what turned out to be the bottom of the trough coming in late November of ’08. 2009 did not bring a quick recovery from the recession, but as soon as Wall Street got the scent of a recovery, advertising-dependent stocks surged.

If you look at the graphs below, you will see that stock price recovery beginning in late summer and building to a powerful rally in Q4. The TVBR Television Index closed out its second year of existence by surging to an all-time high on the next to last day of 2009, then slipping back only slight to close the year with a gain of 414.8%. The 14-year-old RBR Radio Index is nowhere near its high of 289.72 set December 29, 2003, but it did rebound 570.5% in 2009 and closed December 31st at its high for the year.

Having been beaten down so badly, some of the best performing broadcasting stocks of 2009 were among the worst performers of 2008. Radio One (Class D), which had fallen 90.7% in ’08, bounced back with a gain of 1,222.7% in ’09. But while that’s an impressive percentage, it still put the stock as of the end of 2009 only 54 cents ahead of where it had started 2008.

On the TV side, Nexstar had been down 94.4% in ’08, but rose 694.1% in ’09. Even so, it was still $5.09 short of where it began 2008.

Our indices have only “pure play” stocks – companies whose primary business is either radio or television, to exclude the impact of developments in the newspaper, movie or other media industries which might be reflected in broader-based media stocks. Thus, with only nine component stocks, the TVBR Television Index was greatly impacted by that huge Nexstar gain and comes in near the top of the list, rather than its usual place somewhere in the middle.

The RBR Radio Index had 11 components at the end of 2009 and has since grown to 12 with the return of Westwood One. Six of the component stocks were up by triple digit or better percentages in 2009, so the index trailed only three of its component stocks in the final tally.

Only eight of the stocks tracked daily by RBR-TVBR posted price declines in 2009, including Fisher Communications, which is on both lists. The stocks at the bottom of each list were in Chapter 11 bankruptcy reorganization.

Young Broadcasting filed Chapter 11 in February. Its stock is worthless under the pending reorganization plan and has pretty much stopped trading.

Citadel Broadcasting filed Chapter 11 in late December. Its stock still trades for a penny or two per share, although the pre-packed reorganization plan will wipe out all shareholder value if approved by the court.

The “back from the dead” story of 2009 was Sirius XM Satellite Radio. Its stock had fallen 96% in 2008 as it headed toward a likely Chapter 11 filing in February 2009 as a big chunk of debt came due. Instead, CEO Mel Karmazin struck a deal with John Malone’s Liberty Media to refinance Sirius XM and clean up its balance sheet. By the time 2009 came to an end, Sirius XM had seen its stock rise 400% for the year.

The long-awaited advertising recovery is finally showing signs of having begun, which is good news for many broadcasters, not the least of which is CC Media Holdings, the private equity-backed parent company of Clear Channel Communications. It spent much of 2009 in financial wheeling and dealing to avoid any technical default under its credit agreements which could have landed it in the clutches of vulture capital funds who are bent on seeing it have to file Chapter 11 so they can grab assets on the cheap from their investments in deeply discounted Clear Channel debt. In the most recent chapter of that drama, a Clear Channel Outdoor subsidiary sold $2.5 billion of new bonds and helped its parent company spruce up its balance sheet. At the same time, Clear Channel Radio reported that December revenues were pacing up from a year ago, so it appears the recovery is real and the vultures will have to go away hungry.

Radio stock performance 2009

*adjusted for 1 for 4 reverse split 1/28
**adjusted for 1 for 200 reverse split 8/10

Television stock performance 2009

*adjusted for 1 for 4 reverse split 1/28
**adjusted for 1 for 3 reverse split 3/27

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