Hit Content is King in Media Company Stock Valuations: a Wall Street Transcript Interview with Ben Mogil of Stifel Nicolaus

Wall Street Transcript

67 WALL STREET, New York - November 15, 2012 - The Wall Street Transcript has just published its Entertainment, Toys and Games Report offering a timely review of the sector to serious investors and industry executives. This special feature contains expert industry commentary through in-depth interviews with public company CEOs, Equity Analysts and Money Managers. The full issue is available by calling (212) 952-7433 or via The Wall Street Transcript Online.

Topics covered: Cable Subscription Rates - International Paid Television Growth - Digital Advertisement Trends - Mobile Device Gaming Prospects - Content Quality

Companies include: Lions Gate Entertainment Corp. (LGF), DreamWorks Animation SKG Inc. (DWA), Scripps Networks Interactive, (SNI), Cinemark Holdings Inc. (CNK), Live Nation, Inc. (LYV), Sony Corporation (SNE), Panasonic Corporation (PC), IMAX Corporation (IMAX) and many others.

In the following excerpt from the Entertainment, Toys and Games Report, an expert media company research analyst discusses the outlook for the sector for investors:

TWST: Of the different segments you cover within media and entertainment, about which one are you most bullish at the moment and why?

Mr. Mogil: I think, right now, the area that we're probably most bullish on is companies that have really strong content and they own the underlying I.P. So in that vein, we will put Lions Gate (LGF). We'd actually put Madison Square Garden (MSG), because they've got a bunch of very strong cable networks. These are the two MSG channels in New York that own the sports teams. They've got the broadcast rights and they certainly are very strong on the content side - that they own the underlying I.P. effectively around the games. Live sports continues to be a big, big driver for affiliate price increases.

Lions Gate is sort of a similar example. You've got a company that, for three years or four years, I had a "hold" on the stock, and then, we upgraded around $9.50. The stock now is $16. And it's interesting, while like obviously upgrading $9.50 to $16 has been a good call, the other part of the good call, to be honest, was having a "hold" on the stock for three years.

And I think one of the things around a company like that, which is interesting, that a bunch of sort of medium-size films here or there, from a portfolio perspective is a safer way to do it. But the problem around that is they all net to very little. Whereas, now with "Hunger Games" having purchased Summit, which owns the "Twilight" series, "Mad Men," and you have a company that's got a couple of really, really bona fide, strong content properties, and that makes you much more desirable, not only from a stock perspective, but from an operational perspective. Your ability to have conversations with the major exhibitors, the pay-TV services, the major networks is a lot better when you have a couple of things that people really want. You're better off with two properties that people really want than 10 that people are kind of indifferent to.

TWST: In your October report, you wrote the pendulum of power is swinging back to content. Would you elaborate on what you consider hot content right now, and which are the companies that have it?

Mr. Mogil: DreamWorks (DWA) is an example of a company that's got a lot of content. Today, DreamWorks' challenge is that their business model is still predicated on a significant portion of profitability being driven from DVD sales. And what's going on in the last couple of years is, not only is DVD being loaded toward digital, but what's also changed in the consumer environment is consumers have moved from being a buyer to being more of a renter...

For more of this interview and many others visit the Wall Street Transcript - a unique service for investors and industry researchers - providing fresh commentary and insight through verbatim interviews with CEOs, portfolio managers and research analysts. This special issue is available by calling (212) 952-7433 or via The Wall Street Transcript Online.

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