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Cable television broadcasting industry

Stocks Rally on Media Mergers and Technology Shares

Strategic Insights

— 2 min read

Investors were optimistic yesterday as Time Warner Inc. offered to buy Turner Broadcasting System for $8.5 billion, fueling a rally in media shares. The merger deal, worth $35 a share, was seen as a sign of the media industry's continued consolidation, with analysts speculating that other deals could follow. Despite losses in shares of Alcoa, IBM, and International Paper, the broader market remained resilient, driven by gains in technology and long-distance stocks.

Key Takeaways:

  • Time Warner's $8.5 billion offer for Turner Broadcasting System sparked a rally in media shares, with Turner Broadcasting's class A shares surging 6 7/8 to 30 1/2.
  • The proposed deal, worth $35 a share, added to a string of big merger agreements, including a move by Chase Manhattan and Chemical Banking to create the largest US bank and Walt Disney Company's purchase of Capital Cities/ABC Inc.
  • Technology shares rebounded, with Microsoft's stock rising 1 3/8 to 93 1/4 after reporting one million copies of Windows 95 sold in North America in the first four days of its release.
  • The Nasdaq Composite Index ended its four-day losing streak, rising 8.97 to 1,012.61, as tech stocks recouped losses amid concerns over Microsoft's new operating system.
  • The Russell 2000 Index of small companies gained 1.76 to reach 303.26, recouping almost all of yesterday's losses.
  • Liberty Media, a Tele-Communications Inc. spinoff, was up 2 1/8 to 26 7/8, driven by speculation of continued consolidation within the media industry.
  • Shares of savings and loans, including Glendale Federal Bank, rose after a Federal appeals court handed savings institutions what may be a multibillion-dollar victory against the US government.

Statistics:

  • The Dow Jones industrial average slipped 3.87 to 4,604.57, driven by losses in shares of Alcoa, IBM, and International Paper.
  • The broader Standard & Poor's 500 Index climbed 0.92 to 560.92, driven by gains in technology and long-distance stocks.
  • The Nasdaq Composite Index rose 8.97 to 1,012.61, ending its four-day losing streak.
  • The Russell 2000 Index of small companies gained 1.76 to reach 303.26, recouping almost all of yesterday's losses.
  • The American Stock Exchange Market Value Index jumped 5.82 to a record 534.01, fueled largely by gains in Turner Broadcasting.
  • The New York Stock Exchange saw 1,254 shares rise and 977 decline, with 329.9 million shares changing hands, the heaviest trading since July 17.

Sources:

  • Time Warner Inc.
  • Turner Broadcasting System
  • Bond Procope Capital Management
  • Time (article title not specified)
  • The New York Times (article title not specified)
  • Bloomberg (article title not specified)
  • Reuters (article title not specified)

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