While social media IPOs like LinkedIn (LNKD), Pandora (P), and Zynga (ZNGA) grabbed all the attention this year, traditional media stocks will likely be the headliners of 2012. The stars are aligning for Big Media, at least according to well-known analyst Chris Dixon.
Dixon of course points to the November presidential election as the primary bullish driver.
"The (advertising) spending we saw the last go-round was approximately $3 billion," says Dixon. "So that means we could see maybe $4.5, certainly as much as $5 billion spent (this time around)."
Presidential contenders can thank the Supreme Court for that. A recent ruling now allows corporations to contribute to political action committees (PACs) without limit.
Comcast (CMCSA), who now owns NBC Universal, is just one of the companies Dixon believes will benefit immensely from increased ad revenue, even though much of their focus is on their struggling primetime slate. Enter the 2012 Summer Olympics which, according to Dixon, "can all of a sudden allow them to perhaps promote certain shows" in hopes of climbing out of that pit of evening viewership despair.
The other big media story, one that has been evolving for several years, will be the further emergence of new ways to digest content. A possible game-changer expected out sometime next year is Apple (AAPL) TV.
"The first knee jerk reaction is this is gonna be terrible for cable operators because all of a sudden people are gonna bypass cable distribution," says Dixon. "What we tend to forget is, though cable operators are seeing a decline in video, they're seeing increases in broadband subscribers and most folks who are gonna use these devices are gonna require broadband."
So how would Dixon play it? "If we see Time Warner Cable (TWC) or Comcast trade down in the expectation (of Apple TV), I'm a buyer," he says.
As for print media, Dixon's thesis that, "big media actually gets better" holds. He cites new leadership at Time Inc. (TWX) forging a path towards digital reliance and that he says should translate into stock gains.
Even with the positive outlook, Dixon cautions that success depends heavily on the economy. "If in fact the consumer comes back, I think we'll look back and realize that these stocks have been trading at some pretty historically low levels and can really benefit if we get any kind of improvement in the economy," he concludes.
Are you buying Big Media, watching for more bullish evidence to emerge, or do you believe investors already missed the boat? Let us know in the comment section below.
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- Chris Dixon