Companies can reward owners with their earnings power in two ways: pay cash dividends, or repurchase shares. Over time, companies that have consistently and aggressively paid cash dividends and bought back stock returned more to investors than the market average.
Some industries are better stewards of owner earnings than other industries. Let's look at some of the biggest media companies, and how they're enriching shareholders.
Media buyback binge
These companies have not only repurchased more than 5% of outstanding shares in the past year, but they have plans to buyback even more of their existing stock:
Viacom, Inc. (NASDAQ:VIAB)
When it comes to cable, Viacom, Inc. (NASDAQ:VIAB) simply gets it. The company owns a variety of cable networks, from which it generates substantial monthly subscription fees. The company's premier asset is its Nickelodeon network, which takes the cake for the largest child audience and consistently posts impressive ratings. Most of the company's revenue comes from cable channels targeting a younger audience. Viacom, Inc. (NASDAQ:VIAB) also owns MTV and Comedy Central.
Philippe Dauman is one of the most shareholder-friendly CEOs out there. In 2011, he laid out his plan, one which would return as much as $20 billion to shareholders in the form of dividends and repurchases. Viacom, Inc. (NASDAQ:VIAB) is delivering on that promise. As of January, the company had $3.3 billion remaining in its authorization. Since 2009, total diluted share count fell by nearly one-sixth from 608 million to 514 million shares.
Time Warner Inc. (NYSE:TWX)
One of the biggest names in media, Time Warner Inc. (NYSE:TWX) has a strong portfolio in the cable business with HBO, CNN, TBS, and TNT leading the charge for affiliate revenue.
Time Warner Inc. (NYSE:TWX)'s assets generate impressive earnings. The company owns Warner Bros., which gives it access to a large library of movies that can create residual income streams in licensing the rights to streaming companies, specifically Amazon.com, Inc. (NASDAQ:AMZN), which recently signed a deal to stream Warner Bros content in Europe.
Time Warner Inc. (NYSE:TWX)'s edge is in its globally-respected programming. CNN International is available in nearly 200 countries around the world. Cable without Time Warner programming would be a tough sell – Time Warner Inc. (NYSE:TWX) has pricing power.
Share count has dwindled as the company returns cash to owners. Total shares outstanding fell from 1.145 billion in 2010 to 960 million shares in 2013, after reporting that it had purchased 16 million shares between January 1 and April 26, 2013. The buybacks aren't over yet. A new repurchase authorization replacing previous programs allows for the company to buy back $3.132 billion in common stock.