What Are Media Stocks?
- Media stocks generate revenues in different ways, depending on the business model. A cable provider, for instance, relies heavily on subscription fees for sales. Cable giant Time Warner, for example, derives two-thirds of all sales from subscription fees, according to Business Week. Advertisements drive sales growth at television networks.
- Some media stocks merge two different business types together in hopes of creating a media giant. For instance, in 2000, Time Warner merged with Internet sensation AOL. The combination was unsuccessful, however, and in December 2009, AOL became independent once again when it was separated from Time Warner.
- Media companies rely heavily on solid consumer spending in order for business to grow. In 2009, a slowdown in consumer spending cut into the ability of consumer product companies to advertise on television and in print publications, forcing companies like Charter Communications into bankruptcy.
- One of the largest media companies to ever offer shares on the stock exchange is Internet giant Google. In 2004, on the day of its initial public offering, Google earned $1.2 billion and maintained its stock price in the years following.
- Technology advances quickly, and therefore some traditional media companies become obsolete. Newspaper stocks that did not change with changing trends in media, for instance, became takeover targets, which was the case in The McClatchy Company's 2006 acquisition of Knight Ridder.
