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Winners and Losers in the Digital Disruption Wars: A Wall Street Transcript Interview with Richard Tullo, Director of Research at Albert Fried & Company, LLC

67 WALL STREET, New York - November 8, 2013 - 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: International Paid Television Growth - Digital Advertisement Trends - Mobile Device Gaming Prospects - Toy Company Competition

Companies include: MDC Partners Inc. (MDCA), Live Nation, Inc. (LYV), Netflix, Inc. (NFLX), Amazon.com Inc. (AMZN), Google Inc. (GOOG), Yahoo! Inc. (YHOO), Time Warner Cable Inc. (TWC), CBS Corporation (CBS), TiVo Inc. (TIVO), Boeing Co. (BA), Orbital Sciences Corp. (ORB), GenCorp Inc. (GY), Curtiss-Wright Corp. (CW), Walt Disney Co. (DIS), SIRIUS XM Radio Inc. (SIRI) and many others.

In the following excerpt from the Entertainment, Toys and Games Report, a successful activist investor turned research analyst discusses his outlook for the sector for investors:

TWST: What is your coverage in the entertainment space?

Mr. Tullo: We cover technology, media and telecommunications companies from the point of view that all media eventually transitions from traditional distribution to digital in the cloud. Media is a $1.4 trillion global industry. Digital affects industries in a lot of different ways. In some cases, it's disruptive; in other cases, it adds value to already existing means of distribution. For example, we see live events, ticket prices go up in large part because the digital creates the demand for the live entertainment.

TWST: How long have you covered entertainment from the cloud distribution perspective?

Mr. Tullo: Starting in 2007, we were at ground zero for the disruption and collapse of the newspaper, magazine and yellow pages industries. In a prior firm, I covered those stocks, and we saw all the mistakes made in the race for digital dollars, which turned into digital pennies at best. We saw all the opportunity and as a result, we said instead of covering stocks the way Wall Street usually covers stocks, perhaps it's better for investors and traders and portfolio managers to look at things from a different perspective, which is what we have done.

Some of our recommendations as compared to the S&P 500 have been up well in excess of the S&P 500. For example, over the last 12 months, we cover a stock called MDC Partners (MDCA), an advertising agency, and it is up about 170% versus the S&P, which is up 40%, and its competitors, which are up between 20% and 40%. Another example is Live Nation (LYV), another company that benefits from this transition, and that company is up in excess of 120% over the last 12 months, again versus about 40% for the S&P 500.

TWST: Do the companies themselves understand that they are in a transition in terms of the cloud?

Mr. Tullo: In general, they do not, so they either stumble upon success or stumble upon failure. For example, beginning in 2010, Viacom (VIA) had a distribution deal with Netflix (NFLX). Viacom looked at it as they made a lot of incremental high margin revenue, but beginning in 2011, you saw Viacom ad sales get sluggish as the rest of the economy was heating up. In part, that was due to low advertising as a result of the ratings. So in May of 2013, they canceled their partnership with Netflix, and they started to sell their content to more verifiable sources like Hulu and Amazon (AMZN), and lo and behold, their ad revenues expanded to a point where they recovered what they lost with Netflix.

The newspaper industry thought they understood what was going on and actually they didn't, because they chased incremental revenue gains on selling to digital. They didn't realize the level of cannibalization and disruption that occurs in other sources, and they didn't really think about the end game...

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.