And there’s a very important metric to consider in all of this: the dividend yield. If there is one thing that has always bothered me about Disney, it’s the dividend yield. I’ve written about this subject a lot, even going back a long time. Granted, the company has come a long way since then, but I still think Disney could pay a higher yield. Right now, Time Warner pays about a 2% yield; Disney is at 1.2%. That disparity should be part of the selection process. Both companies, it should be noted, have been increasing dividend payments.
A third player?
Of course, there’s another issue to consider as far as superhero-film investing is concerned: the existential chances of another media company waking up and mounting an attack on both Disney and Time Warner Inc (NYSE:TWX). Doubtful though that may be, you’ve got to go through the due diligence on it. Sony certainly has Spider-Man, but that asset tends to benefit Disney. Would Viacom, Inc. (NASDAQ:VIAB) eventually break into this area? I do suspect that at some point Viacom, Inc. (NASDAQ:VIAB) will look at the loss of its Marvel deal and attempt to figure something out to counteract it (remember that Paramount used to distribute Marvel product).
You could make a case for Viacom, since it currently has a yield of 1.8%, it owns Disney-Channel-competitor Nickelodeon, and it counts MTV among its platforms. The company’s second-quarter release shows a 6% decline in revenue and a 2% decline in adjusted earnings per share. According to the annual report, operational cash flow has been relatively steady over the last two years, but it hasn’t seen growth — 2012 saw cash from operations come in at $2.5 billion, while 2011 delivered $2.6 billion. Viacom, Inc. (NASDAQ:VIAB) will be a major media concern for years to come, and its stock is worth a look, but considering everything in total, selecting a company like Time Warner might be the better bet.
The bottom line
Time Warner certainly might benefit greatly from an Avengers-style Justice League scenario. If, as Mr. Beyers suggests, the Man of Steel picture leads to Man of Steel2 and 3, and other superhero adventures that eventually culminate into Justice League The Movie, and if writer/producer Christopher Nolan turns out to be Time Warner Inc (NYSE:TWX)’s Joss Whedon – and isn’t this what this is really all about, the father of the Dark Knight vs. the father of the Avengers? – then perhaps investors had better start searching beyond Disney for exposure to the content industry.
The article Time to Jump on the Time Warner Bandwagon? originally appeared on Fool.com and is written by Steven Mallas.
Steven Mallas has no position in any stocks mentioned. The Motley Fool recommends Walt Disney (NYSE:DIS). The Motley Fool owns shares of Walt Disney. Steven is a member of The Motley Fool Blog Network — entries represent the personal opinion of the blogger and are not formally edited.
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