Serial investments: how to earn on a popular TV series

Serial investments: how to earn on a popular TV series

30 APR started showing the first season of “American gods” series, based on the novel by Neil Gaiman. That book became interested in HBO, it became known in 2011, Neil Gaiman later confirmed the rumors. The premiere was scheduled for the end of 2013, but in the end, the channel abandoned the project. In 2014 to start work on the series, said channel Starz, which in 2016 is owned by the company Lionsgate. Premiere of “American gods” on the TV channel gathered an audience of 975 million people, surpassing the debut other popular projects Starz — “Power in the night city” (original Power) and “Black sails”.

The new seasons of the famous TV series may affect the quotes of the companies producing or broadcasting television shows, noted by the interviewed experts. “For example, the announcement of new seasons of “house of cards” has a positive impact on quotes of Netflix that this show produces and shows,” says managing partner United Traders Anatoly Radchenko. Following the announcement about the renewal of the series for a fifth season Netflix shares rose last week by more than 5%, to $87,4. And after the announcement of a fourth season in 2015, the growth in the value of securities streaming service exceeded 25%.

The success of a particular movie or a TV series can influence the dynamics of the shares of large media conglomerates, for whom the production or broadcast of the video content is just one of the lines of business, says head of Department of trading operations IK “freedom Finance” Igor Kleshnev. An example of such giant companies are CBS Corporation, Time Warner, 21st Century Fox and Lionsgate. So, after the premiere of “the hunger games” in 2012, shares of Lionsgate showed a sharp increase of almost 10%. If successful premiere of the film will benefit the Studio that took the picture I in the case of the TV series will benefit them rather a channel, the financier. “Channel a successful series will attract a large audience, which gives reason to raise the price of advertising,” explains Clusnet.

However, the market is not so many public companies whose business is closely linked with the production of TV series, so the long term impact on their quotes the success of the series will not have, warns asset Manager of UK BKS Nikita’yanov. “If you take the revenues of large companies, the production of TV series have a fraction of a percent,” he says. The only exception is Netflix, which has production and broadcast series is a significant part of the business, he said.

How to choose stocks

For investors looking to capitalize on the cericlamine, is primarily to monitor the schedule of the Prime Minister, said Emelyanov from the BCS. It often happens that the company removes a potentially successful TV series, one episode of which costs tens of millions of dollars. When the company is expected to be of such Prime, then the background of its shares can rise in price, he says. There are, however, exceptions: a few years ago CBS announced the restart of the series “Star trek”, but the hype among investors, this news did not cause, gives an example from the public.

Anatoly Radchenko from United Traders, investors are advised not to limit the paper of one manufacturer series — better make a portfolio of these shares. You can include as a risky (but high yielding) securities and shares with a stable dynamics and a more modest yield.

“In this sector there is a very reliable paper, and has more risky so that you can make a portfolio of shares with fixed dividend payments and riskier, but potentially profitable,” he explains. For example, 90% of the portfolio can take on stock prices of major media corporations like Time Warner, The Walt Disney Company, Comcast Corporation and CBS Corporation, and the remaining money to buy paper Netflix.

Investors who are eyeing this sector, you also need to follow mergers and acquisitions, said the financier. Some time ago there were rumors that the Disney Corporation is going to buy Netflix. “The company is currently unprofitable and it continues to spend a lot of money. If this continues, Netflix will not be enough money for expansion and on the production of expensive content,” he says. According to Radchenko, if you have Netflix there are real problems in this moment and it will be absorbed by the company Disney. It should definitely be considered when purchasing Netflix stock.

Another option, which is to follow investors — this is the number of subscribers. The company that owns the cable channels or streaming services, you can always publish these data together with the report, said Radchenko. “Companies are trying to connect people from all over the world, so they paid for a subscription, is the most important income for those who broadcast video content,” he says. The head of the analytical center of the St. Petersburg stock exchange Pavel Pakhomov, in turn, is convinced that for such companies the number of subscribers even more important than revenue or earnings per share. Therefore, if, in its reporting, the media reports on the reduction of the audience or slowing its growth — for the investor this is a serious reason to be suspicious.

The main risks

On stock quotes of the companies-producers of TV shows particularly strong influence on the number of spectators or that TV show, warn the experts interviewed . From Netflix, for example, investors are always waiting for surprises, says Radchenko from United Traders. When their expectations are not met, prices for video service show a sharp correction.

Also one of the main risks for producers of TV shows and channels is the failure to hire, says Nikita Emelyanov of UK BKS. However bad the series is unlikely to put the company on the brink of bankruptcy, as is the case with the studios whose films do not collect cash, he adds. The risk will be greater if the Studio will continue to remove costly and not popular among the audience series. While such stories in the market, said Emelyanov.

In General, the selection of investors is not very large, concluded the financier. Opportunities to find interesting and undervalued securities is becoming less over the past few years, competition in the market has increased significantly since the production of the expensive series put on stream. In addition, cable networks are losing viewers — people increasingly go to the Internet. “And companies that develop this direction quite a bit: Netflix, Amazon and Disney,” concludes Emelyanov.