3 Media Stocks Gearing Up For Blockbuster Q4 Earnings
Zacks Investment Research | Jan 21, 2019 08:56PM ET
Media companies’ fourth-quarter results are expected to benefit from strong spending on political advertising in the United States related to mid-term elections.
Moreover, growing demand for virtual multichannel video programming distributor (vMVPD) services or “skinny bundles” is a key catalyst. These services, which are available through the Internet, often contain fewer channels than a traditional subscription, and therefore are cheaper than traditional offerings.
Further, the “skinny bundles” well supported by quality content are expected to improve churn rates of media companies, thereby driving top-line growth.
However, increasing programming costs and retransmission fees are expected to drag down profits.
Industry Trends to Drive Growth
Media companies are expected to gain from a number of favorable industry trends. The industry is witnessing rapid evolution in alternative distribution channels for broadcast and cable programming. Growing preference for digital and subscription services in place of linear pay television and rental or outright purchase has compelled media companies to alter their business models.
Furthermore, industry participants are investing heavily to develop original and fresh content to keep pace with streaming service providers like Netflix (NASDAQ:NFLX) . They are now offering a variety of alternative packages at lower cost than traditional offerings to gain subscribers.
Additionally, growing demand for high-speed Internet is a major positive. Improving Internet speed is driving demand for high-quality video and the trend of binge viewing is spreading fast.
How to Make the Right Pick?
The existence of a number of industry players makes it difficult to decide on the right media stocks that have the potential to beat earnings. Our proprietary methodology, however, makes it fairly simple.
You could narrow down the list of choices by looking at stocks that have the combination of a favorable Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) and a positive Zacks Investment Research
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