After EBITDA, New Yardsticks for Media Firms

Burned by EBITDA accounting, the Street is looking for new ways to value big media firms.

"Over the last two weeks, investors have been grappling with a revaluation of the media sector brought in part by the manipulation of reported EBITDA at Adelphia and WorldCom," said Jordan Rohan, an analyst at SoundView Technology Group, in a research note.

In the late 1990s, EBITDA, or earnings before interest, taxes, depreciation and amortization, became the standard for media and other communications companies, such as cable, which typically did not have earnings that could be used for valuation. Such companies had a lot of depreciation, amortization, and other charges, which left them with negative net income. ...