The economy is showing signs of strength outside of the weak employment gains. Consumers are spending and advertisers are taking notice. To attract these new purchases, advertisers are spending more in many different local media. And given that the outlook looks a promising, the values of the public media companies are showing strong growth.
Since the launch of our index in January 2011, the BIA/Kelsey Local Media Index has grown nearly 3 percent slightly behind the 5 percent growth in the S&P 500. However, recent public announcements of fourth quarter earnings of some local media companies have led to strong growth in the past few days. For example, the local television index increased more than 15 percent since the beginning of the year, with much of that growth in just the past few days. Online local companies have also seen a 10.6 percent increase since the beginning of the year, with those values growing substantially in the past few trading sessions.
Why the strong increase in the overall index and with many of the specific local media? Given the downturn in the economy and the resulting cut back on advertising spending during that past two years, this new glimpse of hope for the economy appears to be encouraging investors that local media will benefit from this recovery. After all, to capture the dollars consumers seem to be starting to spend again, advertisers will need to promote their products, and they will use a host of different local media to accomplish this goal. Investors see this uptick in activity and their interest is bidding up the prices of these local media companies.
Click now to see the full Local Media Index, as well as the individual local media segment indices. BIA/Kelsey updates the Local Media Index every Thursday by 10 a.m. EST.