Big Media: Big Yawn

The advertising market continues to be severely weak. Yet, the fact that we're not in freefall has caused some of the most beaten down and debt-laden companies to be bid up in the last 6 weeks.

Names such as Harley Davidson (HOG), Royal Carribbean (RCL), Cemex (CX) and Lamar Advertising (LAMR) are all up big since March 6th (65 - 167% vs. 25% for the S&P).

Comparatively speaking, Big Media's returns over that time period look more modest. Yes, CBS is up 70% since early March, but it's still trading at less than $6, giving it -- to put it in perspective -- only a little more than double the market cap of what it agreed to buy CNET for last year.

News Corp (NWS) and Viacom (VIA) are up 35% since early March but lag the S&P over the last 6 months. Disney's (DIS) return since March 6th is 2 points less than the S&P's. And Time Warner (TWX) stock price (not including the dividend from the spin-off of Time Warner Cable (TWC)) is only up +2% since the great Bull Run began 6 weeks ago. Memo to Jeff Bewkes: where did my rally go?

The truth is that, although Big Media has been pummeled since this bear market began, it was never really priced for extinction (except maybe CBS, which is why it has bounced back as much as it has) like some of the other consumer discretionary plays. This "rise from the dead" rally hasn't let them participate.

Big Media is left priced for a severe long-term painful future, which is probably accurate.
Therefore, it's a space I'm avoiding.

Position: None.

Originally published in RealMoney.com on 4/28/2009 11:30 AM EDT

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Yahoo is In Play

The word is out that the hedge funds are circling Yahoo and Terry Semel. Valleywag is reporting that several prominent hedge funds are smelling blood in the water. Fred Wilson and Eric Savitz picked up on this a couple of weeks ago too.

There are many reasons for this, including several suggestions we made a few weeks ago here about steps Semel needed to take immediately to turn the tide operationally and with the hearts and minds of Wall Street. We repeated many of these same comments today in this radio broadcast.

What's worse, Valleywag is now suggesting that Semel recently presented Yahoo's strategy to the Yahoos and was booed. Even Henry Blodget is saying it's time for Semel to go.

Whether he was or not, Yahoo is attractive for many strategic (read: GOOG, MSFT, Fox, Viacom, Comcast -- even Disney... and don't forget eBay), as well as financial (read: hedge funds), buyers. Great underlying assets + one of the best known brands in the world + well-meaning but ineffective management = great opportunity at $27.40.

Look for something to happen, potentially sooner rather than later.

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