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Big Media Is Doing Just Fine, Thank You

NEW YORK (TheStreet) -- Old Media just keeps chugging along.

Facebook (FB), Twitter and Reddit, the young and sexy online platforms fast replacing traditional forms of communications (including talking to a friend while walking down the street together), continue to dominate media industry headlines. But the old line "content producers" have been the ones generating the profits.

Time Warner Inc. (TWX), which reports its first-quarter numbers before the market opens in New York on Wednesday, has gained 61% in the past 12 months, 26% since the beginning of the year. Viacom (VIAB), owner of Nickelodeon, MTV and Paramount Pictures, has gained 39% over the past year and 22% in 2013. Investors have liked what they've seen. Viacom also reports Wednesday morning.

Tuna Amobi, the media analyst at S&P Capital IQ, points out that Time Warner, Viacom and CBS (CBS), which reports at the end of trading on Wednesday, have thus far been able to make money selling access to their content to Netflix (NFLX), Amazon (AMZN) and Hulu while simultaneously winning increased retransmission fees from cable/satellite operators and regional television affiliates.

These companies, Amobi says, have been able to gradually mix traditional advertising with video-on-demand sales and digital advertising. CBS has trimmed its dependence on advertising revenue, which last year comprised 60% of the company's $14 billion in sales, a drop from 65% in 2010.

"The media sector has been on a tear coming out of the worst years of the recession," Amobi said. "The nascent revenue streams are starting to accelerate, and investors like that."

Time Warner has been enjoying the additional catalyst of its impending spin-off of Time Inc., the largest U.S. magazine publisher, a split that the company has said will take place toward the end of 2013. CBS, likewise, has been bolstered by CEO Leslie Moonves's plan to convert the company's U.S. outdoor advertising division into a real estate investment trust and sell the international parts of that business. CBS is expected to use the proceeds from those transactions to fund further stock repurchases.

As a result, analysts are expecting Time Warner and CBS to show double-digit earnings growth for the first quarter while Viacom, harder hit by the downturn in traditional advertising, is forecast to report a 3% drop in earnings, according to data compiled by Bloomberg. Time Warner is also growing its international sales, as evidenced by increasing sales from HBO Latin America, and Viacom's Paramount channels with pay-TV operators globally.

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