The Media Year on Wall St. 2011 - 1-6

2011 was a pretty good year for media stocks The ContentNext Media Index ended the year up almost 5 compared to mostly flat for the SampampP 500 But the path to eking out mid single digit gains took investors through highs and lows of 10 In a very tough year for global markets many down double digits media stocks held their ownOpening amp8212 and expansion amp8212 for new media competitorsNew media firms used 2011 to land grab their way into becoming strong competitors in the media space Amazoncom AMZN made big moves to get into the publishing space landing Tim Ferriss in addition to controlling both physical distribution Amazoncom and virtual Kindle Amazon39s huge launch of the next generation Kindle the Fire really a tablet shows the firm39s commitment to owning distribution At one point Amazon was up over 30 It ended the year amp87224Apple AAPL continued its push into the media space expanding its dominance of consumer media devices with strong iPad tablet sales The stock performance shows the market39s confidence in the devicetocontent approach Apple has taken In spite of losing its iconic leader Steve Jobs to his battle with cancer the stock still rose 25 in 2011Google GOOG has been quietly bolstering its media offerings to compete against newfound rivals Amazon and Apple Overall 2011 was a good year for the search firm YouTube went on a hiring binge ramping up its growth expanding its workforce by 30 New video uploads and time on the site exploded in 2011 An average 35 hours of video are uploaded to YouTube each minute and two billion videos are watched daily at the website Those eyeballs and new advertising revenues the longawaited launch of Google Music and now expectations of an upcoming Google tablet plus anticipation of an expanded Google TV initiative drove Google stock up about 11 this past yearAdoption of new technologies Some future technologies made a huge step closer to mass adoption this year If the next frontier for television is Internet Protocol TV IPTV it39s not being lost on the industry Amazon has acquired content from CBS CBS and Apple AAPL is toying with a bid for Hulu According to Janney Capital Markets Amazon Apple and Google GOOG will be the ones to keep an eye on in this space from here on outAs collaborative interactive technologies are converging with traditional television some participants used 2011 as a year of tremendously successful experiments in Social TV As we showcased in our 2011 Social TV Summit Report this is the first year in more than a decade that networks like ABC CBS Fox TV Univision and Telemundo are all showing ratings growth amp8212 and it39s coming in no small part from Social TV initiatives Using Facebook Twitter Shazam Get Glue ClipSync and several other VC funded social TV resources most networks are engaging those 76 of college age people who are using a second screen while watching TV Social TV is well on its way to attracting 10B in incremental advertising dollars of which 70 will go to the legacy broadcast and cable networksDecline in subscriber growthIn fact this past year was one of firsts perhaps the first time satellite TV saw negative subscriber growth According to MediaBiz the second quarter of this past year was just dismal for pay TV Comcast CMCSA performed well up about 9 while Time Warner Cable TWC dropped 4 through the course of 2011 Satellite provider DISH Networks DISH had a roller coaster year at one point it had risen over 50 only to drop 30 In spite of this wild ride the stock still returned almost 50Netflix NFLX also announced major changes to its movie subscription business only to back down later after seeing tremendous customer defections In a move that looks silly in retrospect Netflix announced it would be splitting its mailorder DVD rental business out from its streaming offering While the stock is up 16 over the past month it39s still down over 50 over the past yearAdvertising good 2011 questions about 20122011 saw a further rebound in advertising revenues and many of the stocks that play in this space saw positive results like Disney DIS which was up 5 on the year and boosted its dividend by 50 from strong cash flow Analysts question the impact a sluggish economy will have on the media business this year and many research firms recently revised their projections downwards Jack Myers Media Business Report will issue our 20112014 forecasts for 62 media and marketing categories in two weeksFresh blood new profits2011 was a year of horsetrading top execs at a few of the leading media firms Scandalridden News Corp NWS decided to distance itself from the phone hacking scandal by removing various Murdoch39s from powerful posts in the firm The company seems to be weathering the changes well amp8212 the stock is up 14 over the last 12 monthsThough Yahoo39s announcement this week that it would hire Scott Thompson as its new CEO didn39t technically occur in 2011 a management change has been long in the works Investors were less impressed with the media firm39s new leader stock down 2 this week than they were about news that the firm was attempting to divest certain assets 7Sony SNE Apple AAPL Google GOOG and IBM IBM have all seen changes in their senior corporate ranks this past yearNewly minted IPOsInvestors saw their investment options increase in 2011 as some of the leading Internet media firms made their way to public markets Among others we saw IPOs of Groupon GRPN LinkedIn LNKD Pandora P and Zynga Z Many of the Internet IPOs were initially excitedly received by media investors but were for the most part sold off as the year wore on Regardless these new media companies are now flush with cash raising billions to be used for new product development and marketing New players are also getting into the game NorWesTech NWTH isn39t IPO39ing but it just acquired the Grandparentscom domain name as it39s making a move into the AARPbenefits type model by targeting an aging population onlineZombies Vampires still coolAMC Networks AMCX has hit the jackpot with its Walking Dead franchise about zombies AMC distributed a press release announcing the news this week that the company39s runaway hit was just signed on for a third season Two weeks into The Walking Dead39s second season an episode drew an audience of 67 million viewers for an early airing and another 21 million viewers for a samenight repeat2011 also saw the third installment of the Twilight Saga with Breaking Dawn Part 1 Its 100 million opening weekend answered any questions about the continuing fascination with teenage vampires The film has already grossed over 240 millionSummary2011 was a great year for the media industry and while the economic future is a bit cloudy new technologies distribution platforms and enlivened competition will make for a very interesting next couple of years

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The Media Year on Wall St. 2011 - 1-6

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Jack Myers

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