DreamWorks is also diversifying into television production to offset the company’s reliance on blockbuster films. The company expects to generate $100 million in TV production revenue this year and $200 million by 2015. This is key considering that last year’s revenues were $749 million. The plan is to have 1,200 television episodes within five years. DreamWorks just signed a deal with Netflix to provide 300 hours of new programming.
The studio giant
Time Warner Inc (NYSE:TWX) is a multinational media conglomerate that owns the Warner Bros. film studio. Even though Time Warner isn’t a pure-play studio, it has been working in that direction by spinning off divisions and will spin-off its Time publishing assets later this year. Time Warner Inc (NYSE:TWX) also owns HBO and Turner Broadcasting System. Time Warner just released the blockbuster Man of Steel.
According to Time Warner Inc (NYSE:TWX) CEO Jeffrey Bewkes on the spin-off of Time:
After the spin, Time Warner will be the leading pure-play video content company in the world, operating the largest cable networks business, the largest TV production company and the largest film studio with the largest library. We’ll derive 80% of our profits from our cable networks.
Time Warner Inc (NYSE:TWX) is unique compared to the other companies in that it seeks to develop programming and content for its own cable networks. The company has its own outlets for distribution, but realizes that it needs to continue developing compelling content to compete with the other outlets. Netflix is a key competitor to Time Warner Inc (NYSE:TWX)’s HBO division. HBO has launched HBO GO to allow subscribers to watch HBO programs anywhere.
Going forward, Time Warner is looking to leverage its characters like Superman from its DC Comics division. The latest Man of Steel was a success for Time Warner and now it can focus on continuing the Superman franchise. Later this year the next installment of The Hobbit will be released.
The best news for shareholders, though, will be the spin-off of Time later this year. The magazine division has been a drag on the company and the separation will allow Time Warner to focus on its content business. The slow-growing publishing business will be separate and Time Warner can trade more in-line with its chief competitor The Walt Disney Company (NYSE:DIS). Time Warner has a P/E of 17 compared to The Walt Disney Company (NYSE:DIS)’s 19.
Foolish assessment
Content remains the place to be in the media business. As more digital platforms emerge, content is only going to become more valuable. International markets have a strong desire for entertainment, and American movies remain one of our best exports. I see continued growth for these three companies as revenues grow as the demand for content continues.
Mark Yagalla has no position in any stocks mentioned. The Motley Fool recommends DreamWorks Animation.
The article Content Is King With These Companies originally appeared on Fool.com and is written by Mark Yagalla.
Mark is a member of The Motley Fool Blog Network — entries represent the personal opinion of the blogger and are not formally edited.
Copyright © 1995 – 2013 The Motley Fool, LLC. All rights reserved. The Motley Fool has a disclosure policy.
