Robert Marich writes: "What happens when self proclaimed "growth stocks" no longer show impressive growth? That appears to be the case for share prices of traditional media giants. Over the past five years, Disney, Comcast, News Corp., Time Warner, Viacom and other big names have underperformed the broad stock market, and their organic revenue gains are nothing special. ¶ Growth stocks reflect companies with above-average prospects. Typically, these companies – as in the technology sector – don't pay cash dividends, but instead re-invest profits (if any) and cash in their businesses where they say returns for their investors will be high.
Internet media is a growth sector these days, but traditional media companies are mostly anchored in adjacent media sectors with only moderate prospects. According to soon-to-be-published Kagan Research databook "Media Trends 2006" (12th Edition), traditional media companies have a few hot businesses in their portfolios – particularly basic cable TV networks. But the 1% compound annual growth rate from 2005-2015 forecast for daily newspapers is anemic, and the 2% for premium pay TV channels and 3.9% for movies are lackluster, notes Kagan newsletter "Kagan Media Money." ¶ Would traditional media companies be better served by simply acknowledging they are middle-of-the-pack performers? It's not necessarily bad being relatively mature. ..." Link: Kagan Insights.