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May 02, 2007

Media Madness

Time for some mid-week media madness:

• Everyone is talking Dow Jones (DJ) so I don't believe there is a lot left to say. I think a deal will occur and that News Corp. will be the buyer but I don’t see upside of more than upper single digits in percentage terms (the stock is trading close to $58 as I type this) which is only enough for nimble traders.

• Comcast announced that it has a deal in place with Yahoo (YHOO) to provide display advertising at Comcast.net, a top ten website. The deal is expected to enhanced in a few weeks when YHOO takes over search on Comcast.net from Google (GOOG). I think the combined search and display EBITDA upside for Comcast from these deals is likely in the $50-100 million range annually. Comcast is looking at $12 billion in EBITDA this year so further monetizing Comcast.net is nice but not enough to boost the stock. I'm not complaining....

• Comcast also held an analyst meeting yesterday at which it provided three year guidance for revenue, EBITDA and subscriber growth. The 2008 and 2009 growth guidance is clearly above analyst estimates so this should be good news. I do think that analysts had built some conservatism into their 2008 and 2009 estimates. Comcast bulls, like myself, assumed that 2007 growth rates would be sustained for at least 2008.

• While DJ is the news, the newspaper industry as a whole received more bad news from the latest industry circulation report. Overall circulation in the latest six month period fell 2.1% with Sunday circulation falling by 3.1%. These trends aren’t any worse that prior reports but with the industry focused on cleaning up its circulation numbers over the past year I might have expected some moderation in the decline. This report just reinforces that the DJ news does not easily flow to the rest of the newspaper industry. I'd be a seller of newspapers stock that rose sharply yesterday.

• Does anyone else think it is odd watching CNBC report on DJ and the Fox Business Channel while it seems logical to assume that at least some of the on-air personalities are talking the Fox Business Channel about new jobs? I am not saying anything unethical is going on. Just an observation.

Posted by Steve Birenberg at May 2, 2007 09:44 AM in Media