From a valuation standpoint, Comcast Corporation (NASDAQ:CMCSA) is the cheapest among the major media companies:
Comcast 1.7 times sales
News Corp. 1.9 times sales
CBS 2.2 times sales
Viacom 2.3 times sales
Simon Property Group, Inc (NYSE:SPG) was a 50% increase in shares by Griffin during the fourth quarter and is now his fifth largest holding. Simon is the largest publicly traded real estate company in North America. Fourth quarter results showed that funds from operations came in at $2.29 per share, versus $1.91 from the same quarter last year, and above consensus of $2.15. Occupancy in the U.S. operational portfolio also rose to 95.3% from 94.6% at the end of 4Q 2011.
Simon announced a 21% year over year hike in its dividend payment, now having a dividend yield of 2.9%. One big advantage to Simon’s earnings and cash flow is that the company usually enters into only long-term leases, which insulates it from short term market swings that have weighed on other players in the industry.
Time Warner Inc (NYSE:TWX), a 59% increase in shares, is now sixth in Griffin’s portfolio. This media company has a relatively diverse steam of revenues, with three major segments: networks making up 48% of revenue, film and TV is 40% and publishing 12%. The recent news for Time Warner shows that much like its fellow media conglomerates it plans on spinning off its publishing unit. This comes after previous talks of selling the unit to Meredith. Either way, the divesture of its publishing unit will allow the company to focus solely on its cable and film business. Its publishing unit saw revenue fall 7% last quarter on a year over year basis.
As far as its cable focus, Time Warner has recent agreements with Time Warner Cable and Cablevision to bring HBO GO and MAX GO to HBO’s entire domestic subscriber base. HBO GO is now available on the Xbox, Samsung TV, the Kindle Fire and Android tablets. Much like Griffin’s other picks above, Time Warner has a solid history of returning cash to shareholders. The Board recently approved a share buyback of $4 billion, after the company bought back some $3.5 billion worth of shares during 2012. Meanwhile, earlier this year the company upped its dividend payment by 11%, now paying a dividend that yields 2%.
Don’t be fooled
Griffin is making some bets on the cable industry by adding Comcast and Time Warner to his top five. Meanwhile, although Apple Inc. (NASDAQ:AAPL) is one of the more controversial stocks of late, Griffin put the stock as his number one pick during the fourth quarter. I like the McDonald’s Corporation (NYSE:MCD) investment given its solid dividend and growth potential, and the company is the fast food leader. Simon Property is also a solid bet given its robust real estate portfolio and customer diversity.
The article Billionaire Ken Griffin’s Top Five Shakeups originally appeared on Fool.com and is written by Marshall Hargrave.
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