Stanford Bullish on Big Media's Future
An 85-page report from Stanford Group released this week is generally bullish on big entertainment companies. "Large-capitalization media companies will weather the storm better than most," despite a 6% decline in U.S. advertising spending this year, says the report.
Stanford asserts that cable and satellite TV will remain resilient, as will films and entertainment. As proof, the report notes that U.S. box office results changed little in 2008 compared with 2007, despite last year's weaker economy. Stanford analysts also see opportunity in video games from the conglomerates. Time Warner and CBS are among analysts' stock picks for 2009.
Among the stocks panned is anything related to radio, with "sell" recommendations on Entercom Communications, Emmis Communications, Cox Radio and Cumulus Media. While 90% of Americans listen to radio, they are listening to less of it, and advertisers are retreating, says the report. "The combination of pressured cash flow and heavy debt burdens could render the equity value of many radio stocks worthless."