Within the entertainment sector, owners of cable television networks, as well as of heavily visited subscription-based networks, appear to have the most profit upside. As the number of media alternatives available to consumers continues to grow, these businesses are gaining a greater proportion of advertising dollars, while print publishers, broadcast TV network owners, and traditional radio broadcasters’ market shares are narrowing. If you are seeking to reap the rewards of this trend, here are several stocks that may be suitable for you.
Formerly a broadcaster of classic films, AMC Networks Inc (NASDAQ:AMCX) is making strides with the production of first-run dramatic series, all growing their audiences at double-digit annual rates. For one, the 1960’s ad-firm based Mad Men, first introduced in 2007, is still drawing new viewers at a solid rate. Moreover, it has received acclaim as an Emmy-award nominated and winning program. Secondly, Breaking Bad, about a troubled high school teacher on the lam, is gaining heightened attention. Finally, AMC Networks Inc (NASDAQ:AMCX)’s most recent hit, The Walking Dead, turned in a 50% ratings jump in its third season.
AMC Networks Inc (NASDAQ:AMCX)’s ratings boom has allowed it to generate increased ad rates, boosting ad revenues more than 20% year over year. Plus, distribution revenues are climbing behind distribution, licensing and home video demand. On that note, AMC Networks Inc (NASDAQ:AMCX) also owns the WE and IFC networks, as well as the Sundance Channel.
In sum, AMC Networks Inc (NASDAQ:AMCX) persists in investing in programming. It should have at least several more solid years of growth subsequent to this one. AMC is appealing as a growth investment or long-term holding.
The company’s search engines Ask.com, About.com (acquired September, 2012) and Dictionary.com, are driving top-line gains. Certainly those, along with its “Match” sites, are also supporting margin expansion by way of increased subscriber bases. Despite IAC/InterActiveCorp (NASDAQ:IACI)’s Local, Media, and Other categories operating in the red, the profit margins look impressive, at about 7.9% in the March quarter.
With a solid base of core revenue-expansion units, whether or not it decides to shed the unprofitable units, IAC/InterActiveCorp (NASDAQ:IACI) should be well positioned. The company is putting cash to good use, acquiring search and dating properties, as well as repurchasing shares. Its share-earnings expansion prospects are outstanding for the coming year. Based on better-than-30% share-net expansion this year, the forward P/E is just over 10x, rendering the stock a good value for those seeking an investment in this industry.