5 Best News and Digital Media Stocks To Buy

In this article, we discuss 5 best news and digital media stocks to buy. If you want to see more stocks in this selection, check out 13 Best News and Digital Media Stocks To Buy. 

5. The New York Times Company (NYSE:NYT)

Number of Hedge Fund Holders: 38

The New York Times Company (NYSE:NYT) and its affiliated entities supply news and information to audiences worldwide using various platforms. The company provides The New York Times, a daily and Sunday newspaper in the US, as well as an international edition of The Times. In addition, it operates the website NYTimes.com. It is one of the best news and entertainment stocks to invest in. On February 9, The New York Times Company (NYSE:NYT) declared a $0.11 per share quarterly dividend, a 22.2% increase from its prior dividend of $0.09. The dividend is payable on April 20, to shareholders of record on April 5.

On March 15, JPMorgan increased its price target on The New York Times Company (NYSE:NYT) from $38 to $41 and maintained an Overweight rating on the stock. The analyst explained that the company’s bundle strategy is leading to advantageous outcomes.

According to Insider Monkey’s fourth quarter database, 38 hedge funds were bullish on The New York Times Company (NYSE:NYT), compared to 34 funds in the prior quarter. ValueAct Capital is the biggest stakeholder of the company, with 13.6 million shares worth approximately $443 million.

4. News Corporation (NASDAQ:NWSA)

Number of Hedge Fund Holders: 40

News Corporation (NASDAQ:NWSA) is a global company that provides media and information services, distributing content and data products, including The Wall Street Journal, Barron’s, MarketWatch, Investor’s Business Daily, Factiva, Dow Jones Risk & Compliance, Dow Jones Newswires, and OPIS. The company uses diverse media channels such as newspapers, newswires, websites, mobile applications, newsletters, magazines, proprietary databases, live journalism, video, and podcasts. News Corporation (NASDAQ:NWSA) is one of the best news and digital media stocks to watch. The company paid $0.10 per share semi-annual dividend on April 12.

According to Insider Monkey’s fourth quarter database, 40 hedge funds were long News Corporation (NASDAQ:NWSA), compared to 31 funds in the earlier quarter. Donald Yacktman’s Yacktman Asset Management is the biggest stakeholder of the company, with 16.80 million shares worth $305.8 million.

Here is what L1 Capital specifically said about News Corporation (NASDAQ:NWS)  in its Q2 2022 investor letter:

“News Corporation (NASDAQ:NWS) (Long -26%) shares fell over the quarter despite reporting third quarter results in line with consensus expectations. The decline was primarily driven by a softening in investor sentiment towards News Corp’s Digital Real Estate assets against a backdrop of rising interest rates in both Australia and the U.S., with REA Group shares down 17% during the quarter. While concerns over property market drivers are likely to continue in the near term, we see both REA Group and Move as being well positioned to structurally improve their businesses through this period. We continue to believe the News Corp assets are materially under-valued and remain supportive of ongoing initiatives to unlock value across the Group.”

3. Warner Bros. Discovery, Inc. (NASDAQ:WBD)

Number of Hedge Fund Holders: 60

Warner Bros. Discovery, Inc. (NASDAQ:WBD) is a media and entertainment company worldwide. It operates through three segments – Studios, Network, and DTC. Wells Fargo has noticed that the shares of Warner Bros. Discovery, Inc. (NASDAQ:WBD) have dropped by 11% in the three sessions following the launch event of their “Max” streaming service. This is in contrast to the media group being down by only 3% and the S&P 500 remaining flat during the same period. Wells Fargo attributed the decline to “churn anxieties” as some HBO Max subscribers will have to download the new app. Despite this, Wells Fargo believes that the negative sentiment towards Max is an overreaction, and the firm’s long-term thesis of deleveraging remains intact. Although the firm has lowered its Q1 DTC net ads forecast from 2M to 1M, with 1.5M domestic ads and 500,000 international losses, Wells Fargo maintains an Overweight rating and a $20 price target on the shares as of April 14, ahead of Warner Bros. Discovery, Inc. (NASDAQ:WBD)’s upcoming Q1 report.

According to Insider Monkey’s fourth quarter database, 60 hedge funds were bullish on Warner Bros. Discovery, Inc. (NASDAQ:WBD), compared to 61 funds in the prior quarter. 

Artisan Value Fund made the following comment about Warner Bros. Discovery, Inc. (NASDAQ:WBD) in its Q4 2022 investor letter:

“Warner Bros. Discovery, Inc. (NASDAQ:WBD) is a global media and entertainment company that is the result of the 2022 merger of Discovery and WarnerMedia. Warner is known for its theatrical releases, networks (CNN, TNT, TBS) and pay television network HBO and related over-the-top streaming service HBO Max. The legacy Discovery business distributes content across US and international networks—such as HGTV, Discovery, TLC, Food Network and Animal Planet—as well as its own streaming service Discovery+. We believe the total portfolio of content and entertainment assets should provide a compelling direct-to-consumer offering to attract viewers and the scale to invest in original content. There is a lot of opportunity, but there’s also uncertainty related to the merger’s integration and realized cost synergies. These questions, in addition to a challenging macro environment for advertising and foreign exchange headwinds, have been overhangs on the stock price.

Further, media and entertainment stocks have come under pressure due to skepticism about the industry’s long-term economics. Our view is streaming is a scale and intellectual property business that will result in a few large winners, and we believe HBO Max will be among this group. WBD looks like a bargain, selling at a double-digit FCF yield.”

2. The Walt Disney Company (NYSE:DIS)

Number of Hedge Fund Holders: 99

The Walt Disney Company (NYSE:DIS), together with its subsidiaries, operates as an entertainment company worldwide. The company produces and distributes film and TV content, and operates television networks and studios under multiple brands, including ABC, Disney, ESPN, Freeform, FX, Fox, National Geographic, and Star. Additionally, The Walt Disney Company (NYSE:DIS) offers several direct-to-consumer streaming services such as Disney+, Disney+ Hotstar, ESPN+, Hulu, and Star+. It is one of the best entertainment stocks to consider. 

On April 11, Guggenheim reiterated a Buy recommendation on The Walt Disney Company (NYSE:DIS) but trimmed the price target on the shares from $140 to $130. The firm’s evaluation of the visitation trends for Disney’s parks and resorts indicates that there is a slowdown in growth. Based on this information, Guggenheim has adjusted its projection for the company’s near-term trends and subsequently lowered its target on Disney shares.

According to Insider Monkey’s fourth quarter database, 99 hedge funds were bullish on The Walt Disney Company (NYSE:DIS), compared to 112 funds in the prior quarter. Nelson Peltz’s Trian Partners held a significant stake in the company, comprising over 9 million shares worth $784.5 million. 

VGI Partners made the following comment about The Walt Disney Company (NYSE:DIS) in its 2022 annual investor letter:

“The Walt Disney Company (NYSE:DIS) is a diversified media conglomerate operating media networks, theme parks, film and TV studios and direct-to-consumer streaming services. It is the global leader in theme parks with hotels and cruise lines aimed at families. Key assets within Disney are the instantly recognisable entertainment franchises that have multiple avenues of monetisation such as Mickey Mouse, Star Wars, ABC and Marvel’s Avengers.

Disney’s share price declined due to a number of factors in 2022, presenting us the chance to purchase a long-admired business and its unique collection of valuable intellectual property assets at what we consider to be a very attractive valuation. Summarily, the EPS of Disney has declined from US$7 in 2018 to ~US$2.60 in 2022 but we believe that the earnings power of the assets has not diminished to anywhere near this extent.

Disney is currently undergoing a business transition within the Media and Entertainment Distribution division (DMED) from traditional media property distribution via third parties (i.e. cinemas and broadcast networks) to a Direct-To-Consumer (DTC) model via the Disney+ streaming service. A key element of our thesis is that the earnings power of the company is currently being masked by the marketing and content investments within Disney+ and that this will normalize over the next several years. To put this in perspective, Disney+ (DTC sub-segment) currently generates operating losses of over US$3.3bn (a negative 14% operating margin) compared to operating margins at its nearest streaming competitor, Netflix, of +15.5%…” (Click here to read the full text)

1. Netflix, Inc. (NASDAQ:NFLX)

Number of Hedge Fund Holders: 117

Netflix, Inc. (NASDAQ:NFLX) is one of the best entertainment stocks to watch. In the fourth quarter of 2022, Netflix, Inc. (NASDAQ:NFLX) gained 7.66 million new subscribers, bringing its total number of paid memberships worldwide to 230.75 million. 

On April 14, Dan Salmon, an analyst at New Street, increased the firm’s price target on Netflix, Inc. (NASDAQ:NFLX) from $320 to $333, while maintaining a Neutral rating on the shares. The firm surveyed 942 U.S. Netflix users to understand their payment and cancellation habits, the popularity of the new Basic with Ads tier, and their potential response to password sharing restrictions. According to the survey, 54% of non-payers would be willing to pay for their own membership if their access was canceled, and 70% would choose a non-ad supported tier. The analyst believes that these results indicate a positive outcome for Netflix, Inc. (NASDAQ:NFLX)’s password restrictions when they are introduced to the market and could be successful globally.

According to Insider Monkey’s fourth quarter database, 117 hedge funds were bullish on Netflix, Inc. (NASDAQ:NFLX), compared to 115 funds in the prior quarter. Boykin Curry’s Eagle Capital Management is a prominent stakeholder of the company, with 5.15 million shares worth $1.5 billion. 

LVS Advisory made the following comment about Netflix, Inc. (NASDAQ:NFLX) in its Q1 2023 investor letter:

“We initiated our investment in Netflix, Inc. (NASDAQ:NFLX) during the summer of 2022 (discussed in our Q3 2022 letter). Netflix was a baby thrown out with the bath water by the market last year. We found Netflix attractive because the company signaled that it would hold expenses flat while better monetizing its account base via an advertising tier and paid sharing. Despite an impeccable track record of execution, the market didn’t believe Netflix could navigate this transition. While the market now appears to buy into the expense story the market doesn’t fully appreciate the revenue growth story that will play out from the new monetization initiatives. Furthermore, the stock’s pullback during the banking crisis provided an attractive entry point for us to make Netflix an overweight position.”

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