REFILE-PREVIEW-Big media stocks rally; will business follow?
(Clarifies Cablevision assets in paragraph 19)
* News Corp, Time Warner, Viacom post earnings next week
* Media stocks up 71 pct; 'easy money' may be over
* CBS CEO Moonves sees "growth" in ad market
* Market rally creates currency for deal making
By Paul Thomasch and Yinka Adegoke
NEW YORK, Oct 30 (Reuters) - When it comes to the media business, the script reads that advertising will soon bounce back, a rush of deal making is around the corner and a smart investor should scoop up cheap stocks straight away.
Certainly, anyone who bought shares of News Corp (NWSA.O) Time Warner Inc (TWX.N) or Viacom Inc (VIAb.N) three months ago looks smart today: those stocks have risen at least 35 percent. CBS Corp's (CBS.N) shares have done even better, doubling in the last three months.
Next week should help determine whether the run can be sustained, or whether all the good news is already priced in. After promising that ad spending has steadied, or even increased, media executives will be under pressure to show progress on the earnings front in their quarterly reports.
Among them is CBS Chief Executive Les Moonves, who has been particularly upbeat about recovery prospects. He remains so.
"No question," he said, when asked in an interview this week whether business has improved. "It is clear that there is some growth in the advertising market.
"I said the second quarter would be better than the first, the third quarter better than the second. Without giving too much away, that's exactly the case."
There is already some evidence that ad spending is bouncing back. Google Inc's (GOOG.O) revenue rose 8.5 percent in the third quarter, for instance.
But there is also plenty of evidence to the contrary. Omnicom Group Inc (OMC.N) and Interpublic Group of Cos Inc (IPG.N), which own some of the top ad and media agencies, showed revenue declines of 14 percent and 18 percent, respectively.
Wall Street expects Walt Disney Co (DIS.N) quarterly sales to fall 2 percent, Viacom to fall 4 percent and CBS and News Corp to fall 5 percent, according to Thomson Reuters I/B/E/S.
Beyond third quarter results, said Standard & Poor equity analyst Tuna Amobi, investors will be keen to hear what executives have to say about 2010. Continued...
