Although the calendar year is not quite over for the year-to-date, investors in a number of media stocks have significantly outperformed the wider market. Having said that, as shareholders in QBE Insurance (ASX: QBE) have unfortunately found out bad news can strike at any time and send the share price of a company plummeting so judging an investment over an arbitrary period only holds so much benefit!
Since January the S&P/ASX 200 Index (Index: ^AXJO) (ASX: XJO) has climbed just over 10% while newspaper and website businesses APN News and Media (ASX: APN) and Fairfax Media (ASX: FXJ) are up 82% and 25.5% respectively. Meanwhile Seven West Media (ASX: SWM) that among other media assets owns the Seven Network has seen its share price rise close to 30% and pay-television and film production company Twenty-First Century Fox (ASX: FOX) has rallied 44%.
With the exception of Seven West Media that is 22% below its 2013 year high, each stock is now trading reasonably close to its respective year-to-date high. While this might be off-putting for some value investors who would perhaps think the opportunity had now passed them by, it's possible that the market is rightly positive on the potential to improve earnings in the case of APN, Fairfax and Fox, while being hesitant about the outlook for Seven in 2014.
Last week's announcement by Fairfax that it had sold the Stayz business for $220 million, shows that it still owns some appealing, sought-after and valuable assets. APN similarly has some appealing assets for which it could likely realise significant value. As we enter 2014 the market may become increasingly positive about the value of some of these assets.
Meanwhile Fox undoubtedly has a powerful suite of assets. The company will likely continue to further its reach and penetration of markets in 2014, which should allow the firm to continue to post earnings growth in the year ahead.
Foolish takeaway
Of these four media companies, Seven Group may continue to struggle in 2014 from a lacklustre free-to-air television market. It would appear that the market is likely discounting Seven for this very reason. Should investors see a pick-up in advertising revenue then Seven Group could be well positioned to benefit, and be worth a closer look for investors.
