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Top 8 Media Stocks

Posted on Tuesday, Sep 9th 2008

It’s no secret that times have not been good for the media industry. Most stocks underwent a correction of 10%-40% last year, and current trends are no more promising. But not all players are down and out; here is a quick look at the top eight media stocks that I think are worth watching. There are also opportunities for making money by shorting some of the stocks in the immediate future.

1. Google

Google might be known more as a search engine, but it is also one of the greatest new media companies focused on providing people access to information. Recent economic turmoil has had little impact on Google’s performance, but the company still needs to fix its AdSense strategy to ensure that it doesn’t continue to monetize crap . It should also get into other verticals like travel, jobs, real estate, business and finance, before older, more traditional media companies race ahead of it.

1yr google

2. Yahoo!

If there is one company that has the still potential to overtake Google in the online media space, it still is Yahoo! It just needs to realign to the 4Cs of Web 3.0 and most of all, bring in much-needed able leadership. Short of that, the Web 3.0 jewel will very soon dwindle.

1yr yahoo

3. NewsCorp

The media and entertainment giant NewsCorp has diversified into various verticals through the acquisitions of Photobucket and MySpace to enhance its user base and merged with Dow Jones to ensure a strong presence in the online business and finance segment. I like NewsCorp’s longtime goal of being a pioneer in digital media. However, economic conditions are taking their toll on the overall industry, and NewsCorp has not been spared, as is evident in their latest results.

1yr nws

4. IAC

IAC’s mission is “to harness the power of interactivity to make daily life easier and more productive for people all over the world.” The company diversified into over 60 Internet sites and became embroiled in a legal battle, after which it finally managed to restructure its business into five independently managed entities. IAC has good vertical presence, but needs to figure out how to improve its monetization opportunities.

1yr IACI

5. Disney

The Walt Disney company has Media Networks as one of its four business segments. While entertainment remains its core business, it is still a strong contender in the media space, which includes sports network ESPN, domestic broadcast television networks and television stations, cable satellite networks and international broadcast operations. Disney has been innovative in its approach to online media through tie-ups with Apple’s iPhone and expansion into other geographies such as India and China. It has even hived off businesses such as the US Weekly’s 50% stake, which it did not see as core. Thanks to the mix of Studio entertainment, Parks and Resorts, and Consumer products, it has been able to successfully battle the recession in the last few quarters. Its Q108, Q208, Q308 results are representative of its strength.

1yr disney

6. Time Warner

Time Warner is into filmed entertainment, interactive services, cable systems, filmed entertainment, television networks, and publishing. It has big brands associated with it – CNN and Time to name just two – and a digital media strategy focused on taking advantage of strong and continuing secular online trends to grow its advertising revenues. The group needed to re-balance its business model and rapidly integrate of all the Web 3.0 attributes to be able to succeed in its strategy. The recent announcement of the restructuring of its business lines seems to indicate the company has realized the urgency of the strategic restructuring.

1yr twx

7. Viacom

Viacom probably has one of the most well-defined digital strategies of peers. In addition to strengthening its popular brands by acquiring complementary assets and improving content quality, it is growing its online/digital business rapidly through internal initiatives, strategic acquisitions, and partnerships. I like Viacom for its innovative character. It was the first major media company to launch a series of virtual worlds that seamlessly integrated television programming with emerging virtual world technology (e.g. Nicktropolis) and even launched catchy shorter groups of ads, called “pods”. As of now, the company seems to be on the right track.

1yr VIA

8. Comcast

Comcast Corporation is the largest cable operator in the United States and one of the leading communications and entertainment companies in the world focusing on broadband communications and content. Comcast wants, however, to be more than a cable operator or a broadband service provider. It is focusing on Triple Play (its phone, cable and Internet combination) to deliver more value to consumers and higher total revenue per subscriber and is increasing its spending in upgrading networks. It has recently got into controversy on the metered broadband issue. Our decision to include them in this list, however, is based on their interesting moves in new media.

1yr CMCSA

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Except for Disney and Comcast, these all seem to be trending downward (perhaps a good time to buy). Any comment on that… I’m not a stock picking expert. 🙂

Bob Kirk Wednesday, September 10, 2008 at 9:28 PM PT