An aura of vulnerability and possibility always seems to undercut the unknown. Hence Wall Street's varying reaction to the news surrounding media stocks, writes
The Hollywood Reporter's Diane
Mermigas. Take Google's one-day $20 billlion loss in equity value last week due to lower-than-expected quarterly earnings based on higher-than-expected tax rate and increased capital spending. Never
mind the company's 105% full-year earnings growth. The point, she says, is that Google--as a swiftly emerging Internet stock--is not yet viewed as a company that can reinvest and show a few growing
pains. Meanwhile a company like Comcast posts a 69 percent drop in fourth quarter revenues on lower return on investment and higher-than-expected tax rates. This may become a way of life for cable
companies that have had to invest billions in going digital, leading investors away from cable stock. By contrast, News Corp., which has a controlling stake in satellite services DirecTV and British
Sky Broadcasting, holds enough stock to turn a profit from those digital businesses without being adversely affected by capital distribution costs. Disney, a more content-centric business, just posted
reasonably impressive fourth quarter numbers. It will focus on leveraging the creativity of its newest partner, Steve Jobs, and restoring the dominance of Disney's animation business rather than on
becoming an ISP. One thing about these companies that should be clear: in spite of the massive opportunity before them, each media player will hit plenty of speed bumps on the way to the digital media
future.
Read the whole story at The Hollywood Reporter »
