Feb 12, 2024
S&P 5,000, sports streaming, and blockbuster music deal
Technology stocks drove the S&P 500 past another milestone and to a fresh record on Friday, with the broad index closing above 5,000 points for the first time. Investors have been weary of a recession since the Fed began raising interest rates but a blockbuster jobs report last week showed persistent strength in the labor market and corporate earnings have continued to grow.
The fresh highs have reignited a perennial debate among investors about whether stocks are too expensive. Based on trailing earnings, the S&P 500’s multiple is 24.18, above its 10-year average of 20.36. The index’s forward multiple, at 20.38, recently rose above 20 for the first time in two years – its longer-term average is 17.96. Although this market may be expensive according to these metrics, it has a whole lot of momentum.
Days before the Super Bowl, the sports landscape fundamentally changed as Disney’s ESPN, Fox, and Warner Bros. Discovery announced plans to create a new streaming service that would offer all of their live sports programming. The service will carry 14 networks, including ESPN, ABC, TNT and TBS, and Fox’s broadcast network and sports cable channel. The platform will feature sports including the NFL, NBA, Major League Baseball, college football and basketball, golf and Nascar.
For many years, media companies resisted offering such a sports-specific package, fearing it could cannibalize the old-school cable bundle but it appears that they’ve reached a tipping point that could further accelerate cable’s collapse. The companies are hoping that by narrowing the scope of the service and bundling content together, they can bring in enough sports-first customers to make the economics work. Early reports suggest a break even of 6 million subscribers at ~$40 dollars a month.
Sony is acquiring a 50% interest in pop star Michael Jackson’s music catalog from the late singer’s estate for at least $600 million, Billboard reported. That includes not only the estate’s share of mega hits like “Beat It” and “Bad,” but also the music publishing assets that are part of Jackson’s Mijac catalog, among them songs written by Sly Stone and tracks made famous by artists like Ray Charles and Jerry Lee Lewis.
Investing in music has become an increasingly popular investment lately as private credit and equity funds have been purchasing the life works of artists to reap the benefits of royalties, licensing, and streaming profits. Demand is obviously hot and the recent purchase by Sony certainly puts a high water mark in the market – whether it drives prices higher, remains to be seen.
Disclosures:
As of writing, DIS is a holding in Titan's Flagship strategy.
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