Media, Agency Shares Dive as Panic Selling Hits Markets

18 September 2001

The New York stock markets reopened yesterday after last week’s terrorist catastrophe in that city and Washington DC. It was not a happy comeback, shares plummeting in a wave of panic selling.

Among those hit were Hughes Electronics, the owner of takeover target DirecTV, which ended 8% down; NewsCorp, one of two suitors for DirecTV, saw its shares fall 10% in early trading; while rival Romeo Echostar fell 8%.

Owners of the major TV networks also felt the icy blast. CBS parent Viacom slumped 12.93%; Walt Disney, which owns ABC sank 18.26%; while General Electric, parent of NBC was down 10.85% and AOL Time Warner fell 12.82% to a 52-week low.

On Nasdaq, number one UK cable operator NTL sagged 10% as investors ran scared of its massive $12 billion debt.

Agency stocks fared no better, several hitting new 52-week lows. Among these were Interpublic Group ($23.05, down 8.17%) and Omnicom Group ($67.01, down 8.88%). WPP Group’s America Depository Receipt Shares fell to $41.94, down 11.72%), Havas Advertising ($6.08, down 20.31%), Publicis Groupe ($17.50, down 17.45%) and Cordiant Communications Group ($9.20, down 19.30%).

Alone among the large agency groups – and the only one to trade over its low – Grey Global Group was relatively immune to the panic, perhaps because it is a rumoured to be a takeover target. Its shares fell a mere 4.53% to $600.50.

Media analysts counselled caution amid the frenzy, stressing that it was as yet premature to gauge the effect of last week’s events: “It is too soon to tell. Anything that happens now will be a knee-jerk reaction,” said one analyst. “But clearly the fall-out will not be positive, as anything advertising related will suffer from a fall in consumer confidence.”

News sources: Financial Times; MediaGuardian; Advertising Age - Daily Deadline