Media and Telecom Industry Analysis

1
Media and Telecom Industry Analysis
2
Traditional Print Media

• Companies like the New York Times (NYT), are in a
  transitional state between paper and electronic
  newspapers.
• Newspaper advertising revenue
• 2005 2.1 billion
• 2006 2.08 billion
• 2007 (estimate) 2.01 billion (Source Bear
  Stearns)

3
NYT continued

• About.com advertising revenues
• 2005 43 million
• 2006 77.8 million
• 2007 (estimate) 105 million (Source Bear
  Stearns)
• As indicated, there is potential, but it is very
  risky since this type of company is still
  undergoing a transition.

4
Satellite Radio

• XM-Sirius (SIRI) merger not approved
• Worldspace (WRSP, based in US but provides sat.
  radio outside US) has trouble recovering fixed
  costs due to necessarily lower subscription fees.
• XM and SIRI also have high fixed costs, but once
  those are recovered, they may be a good deal

5
Satellite TV

• Direct TV (DTV) and Echostar (DISH) are only two
  providers in US.
• Good market growth, current and possible
• Overpriced wait for market correction

6
Movies and Entertainment

• Disney (DIS) looks good
• Steve Jobs can definitely turn things around for
  Disney as board member
• Stock is currently overpriced, again wait for
  market correction

7
Movies and Entertainment

• Sony (SNE) looks great!
• Movies are successful, games are great!
• Movies and games make up less than 25 of Sonys
  business activities
• http//www.sony.net/SonyInfo/IR/financial/ar/2006/
  qfhh7c00000akslc-att/qfhh7c00000aksmr.pdf

8
Movies and Entertainment

• The economy is slowing
• Movies and other entertainment are costly leisure
  activities

9
Telecom

• Market is overvalued!
• One potential play. ATT (T)
• Apple signed a deal with Cingular so that
  Cingular would be the only provider of the
  iPhone, at least for a while

10
ATT (T)

• Cingular is part of the new ATT
• Cingular represents about 37 of ATTs revenue,
  about 36 of ATTs total assets, about 21 of
  income
• ATT is only plausible telecom stock to invest
  in, depending on how much risk you are willing to
  take

11
Summary

• Media industry is overpriced
• Telecom industry is overpriced
• ATT (T) may be a possible derivative play off
  iPhone
• Overall, wait for market correction of prices!