Can’t fake it: Trump sparks U.S. media rally
NEW YORK The media under Donald Trump: fake, dishonest — and on fire.
At least in the stock market, where purveyors of newspapers, cable television and websites are some of the best performers in a broad market rally that itself is already front-page news. Deal making and speculation that the new president will dismantle regulation is blotting out the group’s bad press — among investors, anyway. Even short sellers are evacuating.
The S&P 500 Media Index has surged 17 per cent since Nov. 8, the fourth-best return out of 24 industries, while short interest on an exchange-traded fund tracking the stocks sits at the lowest since September 2015, IHS Markit Ltd. data show. Many of the best-performing individual stocks, such as Tegna Inc. and Scripps Networks Interactive Inc. — both up more than 20 per cent — have seen bears retreat.
Media bulls got good news Wednesday when newly designated FCC Chairman and net neutrality opponent Ajit Pai said in Senate testimony that approval of the pending merger between Time Warner Inc. and AT&T Inc. probably falls outside his jurisdiction. This lines up with Pai’s previous call for “light-touch regulation,” just one part of a rollback investors see spurring further industry consolidation.
“The biggest driver in the media rally since the election has been greater regulatory openness to value creation though potential M&A,” Paul Gallant, a Washington-based analyst at Cowen & Co., said in a phone interview.
Companies regulated by the FCC share investor enthusiasm for Pai’s nomination. AT&T said Pai already has worked to remove “outdated and unnecessary regulations,” while Charter Communications Inc. said he “understands that reg- ulatory stability allows businesses to grow and create jobs.”
Pai, who has been on the commission since 2012 and the agency’s chairman since being designated by Trump in January, has also spoken out against TV station ownership restrictions and privacy requirements for broadband providers.