NEW YORK (TheStreet) -- For well over a year now, I've beat the drum on big media stocks.
I recently took profits on three names:
I am about to sell the shares of
I hold long in my daughter's custodial account for a, presumably, double-digit profit.
More than simple profit taking drives the VIAB decision. I'm concerned about the company.
We know ratings at
have been hurting for a while. Some blame SpongeBob; others the convenience of KidsTV on
While it's likely a mix of both, something bigger looms. A larger-than-the-sum-of-its-parts trend.
comes word that it's not just Nick. Numbers at
are down as well.
In fairness, the WSJ reports that Time Warner and
have seen similar ratings' declines at
Chalk these decreases up to several very real reasons -- warm weather late in the year in much of the country, impact of streaming/on-demand, the home stretch of the baseball season and the start of football. These things all play a role, however, as I see it, it's the final two sports-related explanations that tell the tale at Viacom.
Simply stated, Viacom doesn't have meaningful sports programming to speak of. It's not like it's filmed entertainment division (Paramount) has been picking up the slack for lackluster network performance.
We'll see how the most recent quarter plays out (Viacom reports on Nov. 15), but for the third quarter of 2012, global revenue tanked 14%. The company
a strong third quarter in 2011, fueled by beneficial timing of programming and new releases, for the shortfall. I'm not quite sure I buy it.
A stock I am now accumulating,
, performed well and appears set to move higher if you dig deeper into its wimpy 1% year-over-year revenue increase for the fiscal fourth quarter, which ended in June.
First, News Corp
26% growth in its cable networks division. This offset weakness in its other businesses, particularly publishing, which was off nearly 49% year-over-year.
News Corp plans to spin off its publishing segment, which should help unlock value in its core television and film areas. Don't be surprised if the company eventually disposes of publishing altogether (or completely retools it). That's a move I hope Time Warner considers as well.
I remain bullish NWSA and TWX because of their relative outperformance on the cable side, but also because they currently air and recently inked long-term major professional sports contracts. For example, earlier this month News Corp's
and Time Warner's
locked up Major League Baseball for the next 8-9 years.
That's something Viacom does not have: Appointment viewing, particularly sports. And this becomes more of a liability every day.
Consider the moves Comcast has made. It controls and owns a 51% stake in
It raised the stakes when it introduced
NBC Sports Network
on New Year's Day 2012.
Now, NBCUniversal secures multi-year U.S. rights to English Premier League (EPL) soccer. NBCUniversal will use
, NBC Sports Network, NBCSports.com as well as the Spanish-language
to air the games. (I first saw this story via Ed Shermna's excellent
This is a major coup for CMCSA. The company snags a sport with a growing U.S. following and dings News Corp's Fox and
in the process.
EPL is valuable across the globe. Earlier this year, rumors indicated that
led the bidding for EPL rights in the United Kingdom.
From a long-term standpoint, big media that embraces multi-platform delivery
controls key sports -- RCI, BCE, TWX, DIS, NWSA, CMCSA -- remain strong buys.
In the near term, I expect NWSA to show strength as the spinoff nears. The company reports earnings on 11/6. CMCSA hit a 52-week high, intraday, Friday. I'll wait for a pullback and start a position.
I'm selling VIAB. They need to produce too many hits across too many properties to win without sports. More focused niche brands such as
can do this. But there's just no way Viacom can win across the board. In this environment, it pretty much has to.
At the time of publication, the author had positions in NWSA and VIAB. He intends to sell VIAB this week after the market reopens and consider a long position in CMCSA
Rocco Pendola is
Director of Social Media. Pendola's daily contributions to
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