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The following commentary comes from an independent investor or market observer as part of TheStreet's guest contributor program, which is separate from the company's news coverage.
NEW YORK (
TheStreet) -- Over the last several days, I have been making my case for and against a handful of media stocks including, most recently,
Today I'll discuss what is likely the most undervalued stock in the bunch:
Time Warner(TWX - Get Report).
When I evaluate media stocks, I judge them with the following five criteria:
Massive and/or rapidly growing revenue
Multiple, diverse streams of revenue
Multiplatform delivery of premium content
Direct control over premium content
TWX pretty much nails it on every count. As an investor who looks for companies that operate from a position of strength in the media space, I salivate over Time Warner.
Consider Time Warner's massive reach and synergistic capabilities.
The company has three business segments: Networks, Filmed Entertainment and Publishing.
Within those three areas, you'll find myriad prime properties, many of which you probably wouldn't associate with Time Warner. They range from
And, of course, don't forget about Warner Brothers, which has its hands in movie, television and digital distribution as well as interactive entertainment. I like to call Time Warner's under-the-radar omnipresence "hidden ubiquity."
It's clear to see where the company scores high on my list of criteria, with one exception: multiplatform delivery. While it has dipped its toes in the area, Time Warner has not been quite as aggressive as
Disney(DIS), which includes its most valuable programming (e.g.,
ESPN) in several TV Everywhere initiatives.
Generally, I would see this relative lack of aggression as a problem. That's not the case, however, with Time Warner.
The company's HBO GO shows the world and its competitors that it "gets" the importance of multiplatform delivery. It is ready, willing and able to operate in an era where the old guard must embrace new and social media. But, given the truckload of premium content Time Warner controls, there's really no need for it to rush into anything. It can simply sit back, let the dust settle and call the shots when it decides the time is right.
If Time Warner considered
Netflix(NFLX) (NFLX) a legitimate threat, its executives would probably be offended that Reed Hastings thinks he can build an original programming powerhouse that resembles
Remember, it took Time Warner decades to construct the
Home Box Office empire. Time Warner CEO Jeff Bewkes has the luxury of sitting back and watching Netflix flip, flop and flounder, while he keeps an eye on the moves his more credible peers make.
If "cord-cutting" is indeed for real, Bewkes can turn on a dime. But why would he jump the gun when he certainly has old guard interests (cable, satellite, DVDs, etc.) to protect? This is not a company fighting for survival. There's no need to be rash.