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5 Media Stocks Worth a Look in 2011

Stocks in this article: ARB NWSA VIA.B CVC TWC SIRI

BOSTON ( TheStreet) -- Media industry stocks put in the second-best performance of any industry sector in 2010 with a 29% average return, and that pace of growth -- along with the industry's unpredictable evolution -- is expected to continue in 2011.

An improving economy and the prospect of more advertising revenue for broadcasters bodes well for a continuation of 2010's rebound.

"The sector seems poised to weather lingering challenges and turn in another strong year in 2011," said S&P Equity analyst Tuna Amobi, in a research note Tuesday.

But there is a huge divide between the sector's winners, which tend to be cable operators or content providers, and the losers, which have mainly been print-focused media companies.

For example, the diversified and content-rich Liberty Media Corp. (LCAPB) and satellite radio provider Sirius XM Radio (SIRI), each had share price returns of more than 150% in 2010, while shares of The Washington Post (WPO) were flat and The New York Times' stock (NYT) lost 20.7%.

Small investors who want to hold a stake in the industry without buying individual stocks can buy exchange traded funds. One example is PowerShares Dynamic Media (PBS), an $85 million ETF with a 71% allocation to media stocks as well as to companies in contiguous industries, such as telecommunications and business services. Its shares rose 17.6% in 2010, and are up 2.6% this year.

The ETF's top-five holdings, which are each at about 5% of the assets of the fund, are: Omnicom (OMC), up 17% in 2010; Time Warner Cable (TWC), up 60%, Viacom (VIA.B), up 33%; Walt Disney (DIS), up 16% and Directv (DTV), up 20% on the year.

The S&P 500 index was up 13% in 2010, excluding reinvested dividends.

The following is a synopsis of the investment fundamentals of five major media companies:

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