Institutional Investor All America Media Equity Analyst Doug Mitchelson from Deutsche Bank Securities Inc. Reveals His Top Entertainment Industry Stock Picks

Wall Street Transcript

67 WALL STREET, New York - November 9, 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: Walt Disney Co. (DIS), Time Warner Inc. (TWX), Comcast Corporation (CMCSA), Time Warner Cable Inc. (TWC), DIRECTV Group, Inc. (DTV), Dish Network Corp. (DISH), CBS Corporation (CBS), Discovery Communications, Inc. (DISCA), Scripps Networks Interactive, (SNI), Netflix, Inc. (NFLX), General Electric Co. (GE) and many others.

In the following excerpt from the Entertainment, Toys and Games Report, the expert analyst from Deutsche Bank discusses the outlook for the sector for investors:

TWST: Please begin with a brief overview of your coverage, including some of the specific names you follow.

Mr. Mitchelson: We cover both U.S. large-cap media as well as the cable and satellite TV sector. That includes companies like, on the media side, Disney (DIS), Time Warner (TWX), and News Corp. (NWS); and on the cable and satellite side, Comcast (CMCSA), Time Warner Cable (TWC), DIRECTV (DTV) and Dish (DISH) - all in about $500 billion of equity market cap, and over $600 billion of enterprise value within our coverage.

TWST: Are you more bullish at the moment about the media or the cable and satellite sector?

Mr. Mitchelson: We have been quite constructive on cable, where all the stocks have done well, but valuations are still quite attractive and the companies can carry a fair amount of debt leverage, allowing return of capital to also be quite favorable, driving pretty strong bottom-line growth with a fair degree of visibility given the lesser cyclicality that those businesses have. And so I would say, certainly cable is a business that stands out right now as the most attractive value, even though we continue to remain broadly overweight both sectors.

TWST: How has broadcast advertising trended so far this year, and what is your outlook for Q4?

Mr. Mitchelson: National television advertising has shown only modest growth so far this year. While the year started strong with around 6% growth, 2Q weakened to only 1% growth; 3Q is impacted by the Olympics broadcast on NBC, where NBC takes significant share from all the other networks, of course, which disrupts the flow. And so far, for the fourth quarter, scatter pricing is OK at up high-single digits to low double digits over the upfront, but volumes have been soft as advertisers hold back due to uncertainty in the economy, both concerns around consumer spending, as well as what the fiscal cliff could mean and whether or not that will get sorted out. And so the visibility on 4Q actually still remains lower than we typically would have at this point, but for the year, you saw advertising still growing despite what was a pretty soft underlying economy.

TWST: Which networks are experiencing viewership growth, and which are more challenged right now? And what are some of the top shows driving growth for the networks that are enjoying growth at the moment?

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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