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EN 2139 - Media Management (Byruch)

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Terms and Definitions

Stock: A type of security that signifies ownership in a corporation and represents a claim on part of the corporation's assets and earnings.There are two main types of stock: common and preferred. 

Common stock: Usually entitles the owner to vote at shareholders' meetings and to receive dividends. 

Preferred stock: Generally does not have voting rights, but has a higher claim on assets and earnings than the common shares.

Outstanding: Used in the context of general equities. Stock held by shareholders (verses the company's treasury stock).

Market capitalization: The total dollar value of all outstanding shares. Computed as shares times current market price. Capitalization is a measure of corporate size.

Market value: (1) The price at which a security is trading and could presumably be purchased or sold. (2) What investors believe a firm is worth; calculated by multiplying the number of shares outstanding by the current market price of a firm's shares.

Value stocks: Stocks with low price/book ratios or price/earnings ratios. Historically, value stocks have enjoyed higher average returns than growth stocks (stocks with high price/book or P/E ratios) in a variety of countries.

Earnings per share (EPS): A company's profit divided by its number of common outstanding shares. If a company earning $2 million in one year had 2 million common shares of stock outstanding, its EPS would be $1 per share. In calculating EPS, the company often uses a weighted average of shares outstanding over the reporting term. The one-year (historical or trailing) EPS growth rate is calculated as the percentage change in earnings per share. The prospective EPS growth rate is calculated as the percentage change in this year's earnings and the consensus forecast earnings for next year.

Price earning ratio: Ratio for valuing a company that measures its current share price relative to its per-share earnings. For example, suppose that a company is currently trading at $43 a share and its earnings over the last 12 months were $1.95 per share.

What is a media company?

Selecting Conglomerates

In order to tell what part of a conglomerate is involved in media, use Hoovers. 

  1. Look up the company profile
  2. Select the "Product and Operations" tab.
  3. Scroll down to the Sales area
  4. Aim for companies that are 20% or more involved in media sales

Disney as a Test Case

Public
Traded as NYSEDIS
Dow Jones Industrial Average Component
S&P 500 Component
Industry Mass media
Entertainment
Predecessors Laugh-O-Gram Studio
Founded October 16, 1923; 92 years ago
Los AngelesCaliforniaUnited States[1]
Founders Walt Disney and Roy O. Disney
Headquarters 500 South Buena Vista Street,
Burbank, California
United States
Area served
Worldwide
Key people
Bob Iger (Chairman and CEO)
Products Cable televisionpublishingfilms,musicvideo gamestheme parks,broadcastingradioweb portals
Services Licensing
Revenue Increase US$ 48.813 billion (2014)[2]:25
Increase US$ 12.246 billion (2014)[2]:26
Increase US$ 8.004 billion (2014)[2]:26
Total assets Increase US$ 84.186 billion (2014)[2]:66
Total equity Decrease US$ 44.958 billion (2014)[2]:66
Number of employees
180,000 (2014)[2]:1
Divisions
Subsidiaries
Website thewaltdisneycompany.com

How to select a media company?

Potential Sectors:

  • Internet publishing, broadcasting & search portals 
  • TV broadcasting 
  • Advertising and marketing services 
  • Internet music distribution and downloads 
  • Music production and distribution 
  • Radio broadcasting 
  • Newspaper publishers 
  • Motion picture production and distribution 
  • Digital advertising services 
  • Film and video 
  • Magazine publishers 
  • Book publishing

Avoid:

  • software companies
  • computer hardware manufacturers
  • phone companies

How to choose stocks?

Disney as a Test Case

Now that we've identified Disney as a media company, we want to look at its financial viability and its stocks historically. 

2015 Sales $52.47B
1-Year Sales Growth 7.48%
2015 Net Income $8.38B
1-Year Net Income Growth 11.75%
Total Assets $88.18B
Market Value $152.99B
Prescreen Score Low Risk

Disney grew this year and is projected to continue growth at about the same rate.

As of January 21, stocks were down in comparison to 6 months ago. However, if we take into account the global instability in the financial markets, we can say this isn't a Disney-specific problem. To confirm this, we want to look at other comperable stocks and confirm that their prices were down also.

Keeping a eye on the news

Stay on top of global financial trends by reading the Wall Street Journal and other financial publications.

Tip: Try a search for your company's name, or for the name of an executive.
Example: Search for facebook or "mark zuckerberg".  (Use quotes to keep words together.)

If you can't find company-specific information, try searching for your company's areas of focus. 
Example: Search for "search engine optimization" and marketing.

Small Cap Stocks

You are also going to need to purchase some small cap stocks. You are likely to find less information about these stocks and will have to use industry trends to inform your purchasing decisions.

Try signing up for a newsletter like that from Penny Pick Alerts to learn about good small cap stock options.

Setting up alerts for current Information

Setting Up a Google Alert

Google Alerts are email updates of the latest relevant Google results (web, news, etc.) based on your choice of query or topic. You must have a gmail account to use this service.   Read more....

Seeking Alpha

Image result for seeking alpha

  

Seeking Alpha is a free service that will send users alerts on stocks, investment strategies, etc.  Must register to access. 

Getting Help

Meet with a Librarian

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