After media stocks broke even for the year in June, Barron’s brings even more good news for media investors. According to a recent article in the magazine, the pendulum has swung too far against media companies, and it looks poised to swing back:
[I]t is courageous to argue that traditional media largely control their destiny, that consumer eyeballs still have value and that businesses will continue spending money to reach those eyeballs, even if they spend in different, more targeted ways in the digital era. But the reality is that the best-managed media and advertising stocks are unwarrantedly cheap.
The article is a bit ambiguous in so far as it sometimes lumps media interests together: As The Economist asked in 2006, what is a media company? Disney, Ticketmaster, and Viacom might all be unfairly beaten down, but so are a lot of stocks right now. The real sick men of Wall Street, the newspaper companies, aren’t given much face time in the Barron’s article, except as a “traditional” model that seems increasingly quaint. Buried a few paragraphs in is the killer line, “while print, broadcast networks and radio are fading, it could be decades before they truly become irrelevant.” News Corp. looks poised for big things, it says — but it was “hurt by its purchase of print-publication and wire-service-heavy Dow Jones in late 2007.” Reading between the lines, Barron’s is saying that things seem to be looking up for media, just not that far up, and certainly not for print and radio.
Still, the article poses good news for online media doomsayers: online ads have been growing 5-6 times as fast as traditional advertising, and though they’re a lot cheaper, they present an almost infinitely wide pool of opportunity. Civony fans, rejoice!
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