Morningstar had an interesting article on The Next Game Changers this morning. It presented a number of intriguing points, but missed the boat on several others.
For example, in the “game changing” event that is the shift away from traditional media companies, the article claims that the losers will be media companies themselves – which to a point we agree with.
Unfortunately, they picked the wrong two examples of losers: The Walt Disney Co (NYSE: DIS) and General Electric (NYSE: GE). We’ve already touched on the fact that GE is closer to a mutual fund, but the author seems not to get that Disney isn’t a typical media company.
Disney is a different kind of content creator. Unlike a pure news outlet that relies on advertising as its revenue source, content creators that provide entertainment should do just fine. And a unique one like Disney should do even better.
Take “Up” for example; it’s grossed 137.3 million in just ten days. The creatives at Pixar continue to crank out gold for Disney – And consumers will continue to gladly pay it, for years to come. It’s why Disney is hardly a media loser.
If you want media companies on their deathbeds, consider newspapers like Sun – Times Media Group (OTC: SUTMQ) that is already in bankruptcy, Lee Enterprises (NYSE: LEE), McClatchy (NYSE: MNI) or even the venerated New York Times (NYSE: NYT).
Much like many newspapers, all face significant challenges as they struggle with the loss of ad revenue and shift to web models.
Symbols mentioned in this article: DIS, GE, SUTMQ, LEE, MNI and NYT.
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