Does winning the best picture Oscar boost a film studio’s share price?

26th February 2014

Shares in the movie studio behind the best picture winner at the Oscars will generally outperform their peers according to an analysis by Colin Cieszynski a market analyst with CMC Markets

The uplift is relatively small averaging 1.7%. In a note issued this week, Cieszynski also notes that movie related stocks in general also tend to suffer a post awards lull in performance.

The note says movie related stocks have on average tended to start out the year very strong outperforming the Dow in January and February. It suggests that March has seen a bit of a letdown after the awards season wraps up, suggesting a post-Oscar flop and that returns then ramp up ahead of the summer blockbuster season.

“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”, he says. 

Average Return 25 years                                                         

 

Dow

S&P

Sector

Index

Sector

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 boost argues Cieszynski.

Average Return 25 years

Time Disney 21stCenturyFox Viacom(Paramount) Sony US(Columbia) Comcast(Universal) Lions Gate MGMHoldings
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.

Cieszynski says it is 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.

“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 Oscar winning studio 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%

Average  

0.80%

1.94%

1.72%

Source: CMC Markets, Bloomberg L.P.

Who could benefit from an Oscar win this year?

The note considers who could benefit from an Oscar win this year. Of the 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) have one.

This year’s best picture nominees 

Film Associated 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

 

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