Radio stocks struggled this week as companies' second-quarter earnings revealed additional revenue losses.
Shares of SiriusXM fell 15.6% after the company's second-quarter earnings on Thursday (Aug. 1) showed a loss of 173,000 satellite radio subscribers and 41,000 Pandora subscribers. Revenue fell 3% to $2.18 billion, although net income improved 2% to $316 million. In the first quarter, SiriusXM lost 594,000 subscribers, although revenue improved 0.8% to $2.16 billion.
SiriusXM is trying to move the needle as it expands its product line and gives consumers more choices. The new $9.99 per month streaming service is intended to appeal to a wider audience than potential satellite radio subscribers. At the same time, the company is introducing new pricing tiers for satellite radio, including a $9.99 music-only subscription that can be expanded to news, talk and sports for additional fees. The trick is not to cannibalize the basic, higher-priced satellite offering. “The first results in our tests were encouraging,” CEO Jennifer Vitch he said during Thursday's earnings call. “It shows we're getting consumers into the right packages for them.”
Shares of radio company Cumulus Media fell 21% to $1.62 and fell as low as $1.29 on Friday (Aug 2) – a 52-week low – after the company's second-quarter earnings showed revenue fell 2.5 % and net losses increased to $27.7 million from $1.1 million a year earlier. iHeartMedia, which does not report earnings until Thursday (August 8), appeared to be a casualty of Cumulus Media's results as its shares fell 12.9% to $1.49.
Collectively, radio companies performed the worst of all music companies this year. Year to date, Cumulus Media is down 69.5%, iHeartMedia is down 44.2% and SiriusXM is down 42.6%. Only JYP Entertainment, which is down 44.3% year-to-date, has suffered a similar decline.
The Billboard Global Music Index (BGMI), a measure of the market capitalizations of 20 listed music companies, fell 1.1% to 1,739.18. Although 13 of the 20 stocks lost ground — five of them posted double-digit declines — gains from some of the index's most valuable companies more than offset the losses. HYBE improved 5.3% to 180,800 won ($139.01). Spotify gained 2.8% to $331.02. And Universal Music Group ( UMG ) rose 0.5 percent to 21.44 euros ($23.41).
Music stocks had a case of summer fatigue after surging through the winter and spring. The BGMI has fallen for four straight weeks and is 5.9% below the all-time high of 1,847.64 set on May 17. On Friday, the index hit its lowest point since April 19.
Music companies' losses were compounded by sharp declines in U.S. stock markets on Friday after news that the unemployment rate rose in July fueled fears that the economy could slip into recession. Tech heavyweight Nasdaq fell 3.4% this week and remains in “correction” territory, 10.1% below its all-time high set on July 11. Amazon fell 8.0% after missing revenue expectations and giving investors a disappointing forecast. Intel fell 31.5% after announcing broad layoffs, reporting a drop in quarterly revenue and issuing weak guidance.
The S&P 500 fell 2.1% to 5,346.56. In the UK, the FTSE 100 gained 2.3% to 8,474.71 points. South Korea's KOSPI composite index fell 2.0 percent to 2,676.19. China's Shanghai Composite index improved 0.5 percent to 2,905.34 points.
The week's biggest gainer was K-pop label JYP Entertainment, which rose 6 percent to 56,400 won ($41.53). JYP was added to BGMI this week after Hipgnosis Songs Fund was delisted from the London Stock Exchange following the completion of its acquisition by Blackstone. Three other K-pop companies were among the week's few gainers: HYBE improved 5.3%, YG Entertainment rose 2.1% and SM Entertainment rose 1.0%.
Reservoir Media fell 14.4% to $7.37 after releasing quarterly earnings on Wednesday (July 31). Tencent Music Entertainment, which will report earnings on Aug. 13, fell 10.5 percent to $12.62. Warner Music Group ( WMG ) fell 5.3% to $28.26. In the wake of UMG's latest earnings results, which showed a slowdown in subscription revenue, JP Morgan cut its price target on shares of WMG — which will report earnings on Aug. 7 — to $41.00 from $42.00 $.
