KFT occupies a tried-and-true, steady-as-she-goes one-third of the portfolio. We could have gone with a whole host of consumer names here, but chose Kraft because of the dividend, my daughter's familiarity with their products, our belief that they have staying power, and my endorsement of their decision to split into two companies.
We chose not to diversify the remaining two-thirds, going with two media companies. Within the space, however, we selected two somewhat different firms.
I have written quite a bit about MSG and VIAB.
In a nutshell, as a largely regional entity, MSG could not be better positioned. It has prime sports teams, prime venues, a stable of solid sports networks and a music channel on cable that actually plays music. It is enhancing the experience at Madison Square Garden Arena, which will drive some revenue. It just purchased the old Forum in Southern California (I think MSG has big, long-term synergistic plans here). And it's ready to put some cash into driving Fuse, the music channel, hard.
In some respects, Viacom is everything MSG is not. It has no sports programming, which is a killer in this day and age of on-demand, time-no-longer-matters IP streaming. Its music channels that rarely play music. A Viacom-MSG marriage makes all the sense in the world.
I love owning both as standalones. And as a purist, prefer to see MSG remain independent. However, I expect an increasing amount of partnership and consolidation in the media space.
MSG represents a juicy target for bigger companies. Viacom needs to do something to fill its gaping holes. That said, in their present forms, both companies still have ample room to grow. M&A or some type of collaboration only sweetens the deal of being long these two stocks.
At the time of publication, the author was long P. He is long KFT, MSG and VIAB in a custodial account he manages for his minor child
This article is commentary by an independent contributor, separate from TheStreet's regular news coverage.