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5 Takeaways From The 'Future Of Media Summit'

5 Takeaways From The 'Future Of Media Summit'

Bernstein recently hosted its Future of Media Summit, which focused on the future of media, how the landscape is changing and the implications that those changes will have for investors. Analyst Todd Juenger attended the summit and summarized the key themes from the event in a new note.

The traditional U.S. television business is in the middle of a long-term secular decline, Juenger said, but some media companies won't be hit as hard as others. Here’s a look at Bernstein’s takeaways from the summit:

  • 1. The flow of viewers out of traditional TV and into digital, on-demand services is no longer up for debate; it has been repeatedly verified and is now considered a fact.
  • 2. Alphabet Inc (NASDAQ: GOOGL)(NASDAQ: GOOGL)’s YouTube has emerged as a major revenue generator for original content producers, with, Inc (NASDAQ: AMZN) lurking as a major wildcard.
  • 3. Presenters who argued that the TV advertising business could be on the upswing centered their arguments on what they consider to be mispriced inventory.
  • 4. Cross-platform measurement capabilities are increasing, but there's a lack of consensus about how close companies such as Nielson N.V. Ordinary Shares (NYSE: NLSN) and comScore are to accurately measuring audience sizes.
  • 5. A focus group of cord-cutters showed no interest in OTT/VMVPD services, including the hypothetical “$15 Entertainment Bundle” that Viacom, Inc. (NASDAQ: VIAB), Discovery Communications Inc. (NASDAQ: DISCA) and AMC Networks Inc (NASDAQ: AMCX) have reportedly been working on.

Instead of looking at legacy television providers, Juenger said investors should focus on the new wave of on-demand video content providers.

“Among core large cap media companies (which derive most of their cash flow and value from TV networks), we favor companies that have the least number of superfluous networks, the lowest affiliate fees relative to their importance, unique advertising propositions, and meaningful brands,” he said.

Bernstein’s top three media stock picks are Outperform-rated Lions Gate Entertainment Corporation Class B Non-Voting Shares (NYSE: LGF.B), Netflix Inc. (NASDAQ: NFLX) and Nielsen.

Related Link: How Will Charter's 'Sports-Free' Cable Bundle Affect Disney's ESPN?


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