Mass Media Industry

Analyst Report on the Mass Media Industry

The mass media industry is a collection of companies that produce and supply television, radio and printed media to a large audience of customers. In this report, I will analyze a diverse collection of mass media firms composed of The Walt Disney Corporation (DIS), Viacom Inc. (VIAB), Time Warner Corporation (TWX) and Regal Entertainment Group (RGC). The mass media industry is growing immensely and the average annual growth rate for the worldwide broadcasting and cable TV is showing a growth of 27% annually, and an industry wide 5.6% annual growth rate over the next five years . However, due to a global shift towards digital media, the mass media industry faces many obstacles that certain corporations must overcome.

The Walt Disney Corporation is a large growth firm that we at Deutsche Bank believe to be a keystone company in the industry, where DIS is the world’s largest media corporation and has large upside potential. DIS is a diversified corporation containing different product segments such as media networks, parks, resorts, consumer products and studio entertainment. As Walt Disney Corporation’s first quarter reports of 2014 have been released, we are surprised by a higher than expected revenue and earnings per share, and we recommend that the common stock of Disney is a BUY for investors.

Their 1Q14 report shows an increase in earnings per share reaching $1.04, which is up 27% year to year and 15% above first quarter estimates. Disney also reported revenue of $12.3B, which is up 9% year to year and also 1% above our estimates . Disney has repurchased $1.7B of common stock in the first quarter of 2014, which is up from the $1B of repurchased stock in 1Q2013. Park bookings in 1...

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...panies face other obstacles such as the Federal Communications Commission and in the Time Warner and Comcast example; the anti-trust regulators become another obstacle that the industry may face. The bargaining power of customers is at a high, due to the growing low cost of Internet streaming media. The mass media faces many obstacles with the growing Netflix and Hulu users, and views these types of media’s as a substitute threat. However, as mass media reaches over 70 million homes in the United States, mass media companies have an advantage over Internet media companies in overall customers reached. The mass media industry continues to be one of the largest industries worldwide, and with the growing population and television users, the investment in mass media industry companies is sound, and are predicted to rise in revenue and profits over the next five years.