Warner, Live Nation shares up as music outlook improves
NEW YORK (Reuters) - Warner Music Group (WMG.N) and Live Nation Inc (LYV.N) shares rose significantly on Wednesday as investors' views of the music industry appeared to improve for the first time in months.
Shares of Warner Music, the world's third-largest music company, rose more than 10 percent, before easing back to trade up 5 percent, after The New York Post highlighted the company as the best-performing media stock to date in 2008.
But Warner Music's recent strong performance comes after it hit an all-time low of $4.58 in January, when investors sold off on concerns about future growth of the music industry in light of rampant piracy and tumbling CD sales.
"On any given day it is tough to tell what Wall Street hates more -- radio, newspapers or the music business -- and these days it hates the music business least," said Bishop Cheen, an analyst at Wachovia.
Cheen said it was positive for the music industry in general that more legal digital platforms are offering consumers access to music with sites such as News Corp's NWSa.N MySpace, Viacom's (VIAb.N) MTV.com and RealNetworks Inc's (RNWK.O) Rhapsody.
Shares of Live Nation, the world's largest concert promoter, rose as much as 9 percent on Wednesday, building on several weeks of steady growth.
Investors had been concerned that Live Nation was paying too much to sign big-name artists such as Madonna and Jay-Z, but the company recently spent time explaining to Wall Street that such comprehensive deals are paid over the term of the contracts -- typically 10 years -- rather than huge upfront cash payments.
"They're part of the music industry that is profitable for the artists -- touring," said David Joyce, an analyst at Miller Tabak. "What's fundamentally important is they're continuing to say they're not seeing any effects of the economic downturn on concert ticket sales."
Other music-related stocks have also risen on renewed speculation that the music sector has hit bottom after long-held fears that a solution for the industry's various problems was not in sight.
While shares in digital music services Napster Inc NAPS.O and RealNetworks were flat on Wednesday, both have seen significant boosts this year.
Napster jumped more than 30 percent in the last week on speculation that investors may see the cheaply priced stock and cash-rich company as a potential buyout target. It shares gained 2 cents to $1.40.
RealNetworks, which launched its Rhapsody joint venture with MTV Networks this month, has seen its stock rise more than 16 percent since the start of the year. It shares were also 2 cents higher at $7.12 on Nasdaq.
(Reporting by Yinka Adegoke, editing by Maureen Bavdek)
