Media Holdings Looking Good

This CNNMoney.com article discusses two media stocks I own, Comcast (CMCSK/NASDAQ) and CBS (CBS/NYSE). It reminds me that for the most part, the media-related portion of the portfolio has been performing well lately.

Here's what the piece says about Comcast:

Speaking at Merrill Lynch's Media and Entertainment Conference in Pasadena, Calif., John Alchin, the co-chief financial officer of cable giant Comcast, said the company expects to see strong revenue growth in the latter half of the year as Comcast continues to sign up customers for the so-called "triple play" of cable, phone and Internet access products.

"Not only are we providing the best products and best value proposition to customers but in the course of doing this, it is driving financial results," Alchin said. Along those lines, Wall Street currently expects Comcast to report an 11 percent increase in third-quarter sales from a year ago and 12 percent jump in the fourth quarter.

Alchin said that Comcast would invest more in new technology, including its joint venture with wireless firm Sprint Nextel, as the company hopes to fend off competition for subscribers from phone companies AT&T and Verizon, which are both rolling out video offerings for their customers. He added that Comcast would probably not make any major acquisitions though.

Comcast has been one of the better performing media stocks this year. Its shares have soared nearly 35 percent in 2006 as the company has racked up strong subscriber gains for newer products such as digital phone and high-speed Internet services.

Comcast was recommended here last November at $26.73. The Special Class A shares owned closed Tuesday at $34.87.

Here's what the piece says about CBS:

CBS' chief executive officer Leslie Moonves said it was encouraging to see the ratings increases at its CBS Evening News telecast since Katie Couric took over last week and that he expected more healthy results from its primetime lineup this season as well as from its thriving outdoor advertising business.

"No one can accuse us of being off the radar," said Moonves. "We are alive and well and thriving on every front."

Shares of CBS, which split from former parent Viacom in January, are up 17 percent this year thanks to strong ratings at the CBS TV network. Wall Street has also applauded the company's decision to sell some underperforming radio stations and its theme park business.

Despite this, Moonves said at the conference that he felt CBS's stock was still undervalued. In addition, he stressed that CBS would be a big player in "new media" going forward and that the company should be able to generate strong sales and profits from ads tied to its online and mobile shows as well as from video-on-demand fees.

"No mater where the programs go, the programs are ours and we're going to get paid for them," he said.

CBS was recommended here last January at $25.61. The Class B shares owned closed Tuesday at $29.35.

One company not mentioned in the CNNMoney.com article is The DirecTV Group (DTV/NYSE). That might be because of the "old media" thrust of the piece. Plus, DirecTV is controlled by News Corp. (which is mentioned).

DirecTV Group was recommended here in July 2005 at $15.50. The stock closed Tuesday at $19.77.

These are overall decent results -- though I think Comcast is doing pretty darn good. And as I repeatedly state, possibly to the point of annoyance, we're still in early innings with ALL these holdings.

Also, I'll quickly point out that the Media General (MEG/NYSE) position is underwater. The company publishes newspapers, owns TV stations and has internet operations primarily in the Southeastern US. I'm still optimistic it will eventually prove a profitable investment, though I could always be wrong.
 

Comments

[jr]

One week after Katie's touted inaugural newscast, CBS evening news is back to being #3 in the ratings. This is not much of a surprise as her audience at the morning show is likely different from evening news watchers, and her performance so far has been lackluster (although I'm sure she will improve her delivery with time). This is more of a "state of the news" comment than a reflection of CBS, which I agree is headed the right way with Moonves. Nevertheless, should ratings still lag at some point in this crucial time slot (drug companies make great advertising clients), what might be Katie Couric's fate?

[John]

jr: The whole Katie thing really won't make much difference in CBS realizing shareholder value, IMO.

That said, I think the job is hers for a good long while. I heard that she regained the top spot, but even if she sinks back to #3, they'd go back to the old format (I understand now her show is more of a news magazine) and try that before letting her go. Again, just my hunch.

[seb]

Still a big fan of CBS even at this price.
My wife said "The View" got so much better since Kouric was replaced by Vieira on Today and Vieira by O'Donnell at the View. Will ABC be the biggest winner of the Kouric story :-) ??

[John]

seb: We'll just have to wait and see. This is all getting a lot of press and broadcast time. I doubt if any of it will impact CBS or Disney's or GE's stock price in any big way. Yet I could always be wrong.