Big media stocks still lifeless

From corporate splits to major mergers and management shuffles, big media are making big headlines.

But for long-suffering showbiz investors, all the frenetic activity in the boardroom hasn’t resounded on the trading floor.

Big media stocks are still lifeless — despite the fact that the latest round of quarterly earnings were decent, and that companies are aggressively snapping up their own shares in a show of confidence in the future.

“It’s a zero sum game. Either management who’s buying back the stock is right and institutions who are saying there’s too much uncertainty are wrong. Or, the managers who are saying ‘true, but we’re not worried’ are delusional,” says one frustrated Wall Streeter.

Big investors like Capital Research and Management have dumped lots of Viacom stock. Fidelity’s unloaded Time Warner. And no one, except the companies themselves, are buying.

Time Warner’s been buying 5 million shares a day, but the stock won’t budge, gripes a media fund manager. “It’s like for every share they buy, someone is selling one,” he adds.

Viacom and CBS are both down post-split, defying rosier expectations.

“Investors have mostly opted to play new media. And, mostly, they’ve been right,” says Alan Gould of Natexis Bleichroder. “If I bought Google at $200, yes, I’d be bummed that it fell from $450 to $300,” but it’s relative, he adds.

We’re talking a five-year slump. Only Disney has gained recently. News Corp. stock is up a buck so far this year. But both are well below where they sat at the same time in 2001.

DreamWorks Animation never recovered from its DVD debacle last year. Cable shares have been decimated by competish from satellite and telcos. And once-buoyant satellite radio stocks are on the skids.

If the idea of investing is to make money, what’s there to do?

Try smaller media plays.

World Wrestling Entertainment is a favorite as the sport enjoys a rebound after bottoming out about a year and a half ago. “There’s a lot of continued upside. They create content, sell it on DVD and VOD. They’re strong in international,” says Chris Marangi of Gabelli & Co.

And Rupert Murdoch holding NDS is “a terrific little story,” says Gould. He calls it “the arms dealer of the digital wars” between cable, satcos and telcos, providing the bells and whistles they’re using to one-up each other. It’s had a nice run and Wall Streeters see continued upside.

Gould also likes Rentrak, which may be evolving from a middleman in revenue sharing to an information management company, tracking box office data, video-on-demand transactions and other stats for a wide range of clients. Down the road, it “could evolve into a Nielsen-type business,” Gould thinks.

One fund manager suggests Gemstar, 45%-owned by News Corp. whose stock and image has been trashed by accounting and management scandals. Former chairman Henry Yuen was found guilty of fraud last week, wiping the slate clean and freeing up reserve cash. Gemstar owns assets include TV Guide Magazine, a few cable networks and widely used IPG (programming guide) technology. Many think the pieces should be split. But not all.

“I always thought it was worth more dead than alive. But now I’m seeing the alive scenario for the first time. In a year, this could be a real company,” says the fund manager. The shares are only $3.

Dennis McAlpine, one of the analysts who was onto Netflix when the $28 stock (which used to be $40) was at $3, is eyeing Rick’s Cabaret, a chain of strip clubs in Houston.

National Lampoon is publicly traded, too. And it’s going for $2.65 a share.

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