Ahead of the Academy Awards, Colin Cieszynski looks at how the awards season impacts stocks in the movies and entertainment sector. Within the report Colin discusses: • Whether award ceremonies such as The Oscars and BAFTAs positively impact share prices of movie studios • The key points in the year for movies and entertainment stocks • Which companies may see a post-Oscar bounce, with Time Warner seeing an average 5.4% return in March in the past 25 years • How Oscar winning studios have historically bounced, and who may see an award winning bounce this year It’s long been thought in the movie industry that wins at the big winter awards shows like the Golden Globes or BAFTAs can help to boost box office and DVD revenues for winning films. With the granddaddy of them all, the Academy Awards aka The Oscars, coming this weekend, we ask whether award ceremonies have any impact on the share prices of movie studios. Seasonality in the stock market and the movies and entertainment sector Stock markets over the long-term have tended to perform better or worse at different times of the year. Over the last quarter-century, on average, the Dow has started out slow, rallied in March through May, having a correction between June and mid-October (except for a July bounce), and then finishing the year strong. The movie business also has its peak periods at different times of the year with the summer blockbuster season running from May through August and the holiday blockbuster season running from November through January. The sector also tends to attract a lot of media attention in January and February during awards season. Results show that movie related stocks have on average tended to start out the year very strong outperforming the Dow in January and February. March has seen a bit of a letdown after the awards season wraps up, suggesting a post-Oscar flop. Returns then ramp up ahead of the summer blockbuster season. Interestingly the biggest time of the year for the movie box office, has historically been the worst time of the year for movie stocks which even manage to underperform a low broad market benchmark. This summer swoon could be due a combination of factors, including the stocks having run up on anticipation of the summer releases seeing profit taking, selloffs on concerns over the impact summer flops could have on earnings and traders looking ahead to the traditionally slower fall season. Movie stocks then tend to outperform in an October rebound ahead of the holiday releases and perform pretty much in line with overall market performance to finish the year. Average Return 25 years
DowS&P Sector IndexSector Versus Dow
January 0.03% 1.70% 1.67%
February 0.10% 2.01% 1.91%
March 1.34% 0.50% (0.84%)
April 2.50% 2.72% 0.22%
May 0.97% 1.61% 0.63%
June (0.97%) (2.17%) (1.20%)
July 1.67% (1.20%) (2.87%)
August (1.13%) (2.06%) (0.94%)
September (0.84%) (0.89%) (0.05%)
October 1.39% 2.76% 1.37%
November 1.79% 2.19% 0.40%
How have individual studios performed relative to the sector historically in March? Although the overall sector has historically underperformed the market in March, individual studios have acted differently and some of them do appear to experience a post-Oscar pop. Average Return 25 years
TimeDisney21st Century FoxViacom (Paramount)Sony US (Columbia)Comcast (Universal)Lions GateMGM Holdings
January 0.89% 4.64% 0.65% (1.68%) 2.11% 1.12% 4.53% 6.92%
February 3.07% 3.63% 2.10% 0.86% 1.43% 0.52% 4.95% 0.00%
March 5.44% (0.12%) 1.68% 4.97% 1.26% (0.33%) 5.53% 3.59%
April 3.82% 2.90% 3.26% 3.16% (0.56%) 0.74% (4.31%) 4.36%
May 0.87% 2.17% 1.24% 1.45% 1.17% 2.91% 2.58% 22.47%
June 0.17% (2.98%) 1.33% (3.56%) (1.28%) 0.92% 0.26% (4.13%)
July (0.06%) (0.51%) (2.15%) (1.19%) 0.03% (0.32%) 1.89% (1.97%)
August 1.76% (2.68%) (0.68%) 3.83% (2.72%) 0.11% 3.40% 3.18%
September 3.70% (1.69%) 0.13% 0.64% (1.92%) 2.28% 3.00% 14.00%
October 3.89% 3.50% 1.46% 0.71% (0.74%) 2.15% 1.68% 2.39%
November 5.47% 3.78% 1.07% (2.35%) (0.10%) 1.71% (1.78%) 4.50%
December 7.98% 0.65% 3.67% 5.92% 5.92% 4.82% 1.59% 9.92%
Source: CMC Markets, Bloomberg L.P. It’s important to note that some of the studios are buried in larger conglomerates with the film business return mixed in with broadcasting, cable, consumer electronics and other operations. However, March has historically seen significant improvement in results from Time Warner, Viacom, and MGM, suggesting a post-Oscar pop. For Lions Gate, March represents the peak month within a strong seasonal period. Disney, 21st Century Fox, Sony and Comcast have historically seen a post-Oscar slump. Heading into the spring, some of the companies that outperform in March have then retreated in April on average like Lions Gate while some of the weaker March performers have then rebounded into April and May, particularly Disney. A summer swoon then has historically started for most Studios in June and continuing through July and even longer in several cases. By September after the Toronto International Film Festival kicks off the run-up into the holiday season most of the studios have started another advance that has carried through the end of the year and into award season once again. Oscar winning studios have historically bounced Looking at the performance of Best Picture winning studios shows that Oscar winners do get a halo effect in the market. On average the studio most closely associated with the Oscar winning film has outperformed the sector by 1.7% over 15 years studied in the table below, with the winner outperforming the group in 9 of the 15 years. Some years were not included where either the winner was a private company or data is not available for the current public parent. Best Picture winner
March Return
Year Winning Studio Sector Studio Winner vs Sector
1990 Warner 0.17%
1991 MGM (2.50%)
1992 MGM (2.42%)
1993 Warner 0.29% 12.82% 12.53%
1994 Universal (7.56%) (11.05%) (3.48%)
1995 Paramount (0.36%)
1996 Paramount (1.37%)
1997 Disney (0.39%) (1.88%) (1.49%)
1998 Paramount 0.92%
1999 Disney 0.04% (11.52%) (11.56%)
2000 Dreamworks 13.60%
2001 Universal (9.27%) (3.24%) 6.03%
2002 Universal (0.71%) (3.71%) (3.00%)
2003 Disney (2.17%) (0.24%) 1.93%
2004 Warner (1.77%) (2.25%) (0.47%)
2005 Warner 1.56% 1.86% 0.30%
2006 Lions Gate (1.31%) 12.40% 13.72%
2007 Warner 0.29% (3.05%) (3.34%)
2008 Disney (3.73%) (3.18%) (0.55%)
2009 Fox 12.07% 19.18% 7.12%
2010 Universal 10.49% 14.54% 4.05%
2011 Weinstein (1.29%)
2012 Weinstein 1.82%
2013 Warner 5.61% 8.47% 2.86%
Source: CMC Markets, Bloomberg L.P.Who could benefit from an Oscar win this year? This year, five studios associated with public companies are in the running for best picture. Warner Brothers (Time Warner), Columba (Sony), and Paramount (Viacom) each have two entries while 21st Century Fox and Universal (Comcast). This year’s best picture nominees
FilmAssociated Studio
12 Years a Slave Fox
American Hustle Columbia
Captain Phillips Columbia
Dallas Buyers Club Universal
Gravity Warner
Her Warner
Nebraska Paramount
Philomena Weinstein
Wolf of Wall Street Paramount
Source: Oscar.go.com/nominees And the potential for an Oscar bounce goes to…… CMC Markets is an execution only service provider. The material (whether or not it states any opinions) is for general information purposes only, and does not take into account your personal circumstances or objectives. Nothing in this material is (or should be considered to be) financial, investment or other advice on which reliance should be placed. No opinion given in the material constitutes a recommendation by CMC Markets or the author that any particular investment, security, transaction or investment strategy is suitable for any specific person. Please remember any information relating to past performance does not necessarily guarantee future performance.