Market Overview

This Media Analyst Makes The Case For Buying Nielsen And Selling Viacom

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Todd Juenger, a media analyst with Bernstein, was a guest on CNBC Thursday to share his outlook on the sector.

Juenger pointed out that majority of media companies under his coverage make most of their money through TV and operating television networks. Unfortunately, his view of the sector is "fairly bleak" and the risk-to-reward profile is skewed to the downside.

He said television networks have made "extraordinary financial returns" over the past few decades, but now the conditions which made these returns possible are not there anymore and this isn't accurately reflected in the group's valuation.

Related Link: Cramer: CBS Has 'Upper Hand' In Any Merger Talks With Viacom

Juenger does recommend a specific stock, although it isn't a media company. Rather, he likes Nielsen N.V. Ordinary Shares (NYSE: NLSN) which is "central to the business of media." Specifically, a company like Nielsen provides information about what consumers are watching and its services is "more valuable and urgently needed than ever."

He added Nielsen "isn't perfect but they do what they do far better than anyone else."

The Case Against Viacom

Even though Viacom, Inc. (NASDAQ: VIAB) could benefit from a merger with CBS Corporation (NYSE: CBS), Juenger isn't going to change his Sell rating on Viacom.

The analyst suggested that Viacom is one of "the worst victims of the overall sector change." Moreover, he thinks it's "impossible" for Viacom to fix its woes and no company, even CBS, can "compel kids and teenagers to put down their iPads" and watch Viacom's content instead.

Even if CBS is successful in revitalizing Viacom's brands, the economic returns CBS would generate are "far inferior to the returns that Viacom used to be able to enjoy when 100 million households used to pay $3 or $4 a month every month for Viacom's networks whether they wanted them or not."

Posted-In: CBS CNBC media stocks nielsen Sanford Bernstein Ssquawk Box Todd JuengerMedia

 

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