Barclays Initiates Coverage On Media Sector, Does Not See Much Upside

Barclays initiated coverage across the media industry with mixed ratings.

Regarding the industry as a whole, analyst Kannan Venkateshwar wrote, “the underlying theme which we believe investors and even industry participants are overlooking, is that relative leverage in the media value chain is changing as new layers of intermediation get added to content distribution.”

Venkateshwar continued by noting that a higher amount of intermediaries has led to market share loss. However, investors are currently pricing stocks as if market share were not to be eroded.

Fox (NYSE: FOXA) and Discovery Communications (NASDAQ: DISCA) were started with an Overweight rating. The note stated that the main source of growth for most content owners is price inflation, but this is not the case for these two best-in-industry stocks who can grow by adding subscribers.

Venkateshwar continued, “Subscriber growth for both companies has been driven domestically, by the success of new networks created by these companies, and internationally, reflecting strong execution by both managements over many years.”

Other stocks initiated at Barclays include:
CBS (NYSE: CBS) at Equal-weight with a $68 price target.

Viacom (NASDAQ: VIAB) at Underweight with a $84 price target.

Time Warner (NYSE: TWX) at Equal-weight with a $78 price target.

Walt Disney (NYSE: DIS) at Equal-weight with a $85 price target.