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3 share ideas to thrive in the changing world of media

Lead Equity Analyst, Sophie Lund-Yates, explores 3 share ideas that could benefit from the changing world of Media.

Important notes

This article isn’t personal advice. If you’re not sure whether an investment is right for you please seek advice. If you choose to invest the value of your investment will rise and fall, so you could get back less than you put in.

This article is more than 6 months old

It was correct at the time of publishing. Our views and any references to tax, investment and pension rules may have changed since then.

Netflix's dramatic fall from grace after a pandemic-fuelled boom has many questioning the merits of media companies. But whether we like it or not, streaming is the future.

Some of the world’s biggest companies are in the business of media, and not all are equipped to ride the changing tide. But where there’s change afoot, there’s opportunity.

Here are three share ideas with the potential to thrive in these changing times.

This article isn’t personal advice, if you’re unsure whether an investment is right for you, seek advice. All investments can fall as well as rise in value, so you could make a loss.

Investing in individual companies isn’t right for everyone – it’s higher risk as your investment is dependent on the fate of that company. If a company fails, you risk losing your whole investment. You should make sure you understand the companies you’re investing in, their specific risks, and make sure any shares you own are held as part of a diversified portfolio.


Comcast is a media giant. Its three main businesses are: Comcast Cable, NBC Universal and Sky. It offers cable and broadband alongside entertainment, including films and television. It even has something for theme park enthusiasts, with Universal Studios parks part of the Comcast family too.

Comcast’s huge traditional telecoms footprint means a certain amount of demand is guaranteed. Most US homes can receive fixed-line internet access service from only two providers – traditional cable or phone companies. Comcast is that cable provider for nearly 50% of the US.

Building the infrastructure that goes into being one of the biggest in this sector is astronomically expensive and time consuming. That puts space between Comcast and potential competitors.

This helps feed into stickier revenue – which rose 14% to $31bn in the first quarter - underpinning a prospective yield of 2.8%. In fact, in the period Comcast completed a mammoth shareholder return plan, including a $3bn buyback. Comcast has held or raised the full year dividend every year since 2008. Remember, no income is ever guaranteed and yields are variable and are not a reliable indicator of future income.

One reason Comcast felt able to raise the dividend was its streaming business, Peacock, which has 28m subscribers, up from 24.5m at the end of the previous year. 13m of these are paying for the ad-free version. This growth is no mean feat in the competitive streaming world. Peacock is small compared to other platforms, but we view it as a relatively well-placed name. It’s poised for growth, especially because of the multi-fee tier system already in place.

One thing to keep in mind is debt. At $85.7bn it’s higher than ideal, and while we aren’t overly worried, we’d like to see it come down.

We happen to think the recent pressure on Comcast’s valuation has been overly harsh. A steady media stalwart with exciting streaming prospects could demand more than the price to earnings ratio of 10 currently on offer. As ever though, there are no guarantees, and investments can go down as well as up in value.

View Comcast’s latest share price and how to deal


Disney's streaming platform enticed 10m subscribers on its launch day back in 2019, and there are now over 205m across its various streaming products (more on that later).

A big reason for Disney’s streaming success is its unrivalled stable of pre-existing content. The classic fairy tales and Pixar adventures are complimented by different titles too, across the likes of Hulu and ESPN.

More than a third of worldwide subscribers come from Disney+ Hotstar, the Indian and South-Asian product. We view this as an exciting growth lever. Markets like the US are mature. Growth is to be had in developing nations instead. In the short-term, subscriber growth might come under pressure though. Disney has recently been outbid for the streaming rights to Indian Premier League cricket matches, which is a major source of business in these geographies.

More broadly, we can’t rule out Disney seeing some blips in growth forecasts. Netflix’s shock disappointment on subscriber losses raised questions for the whole market and the speed of growth from here.

We think Disney’s brand means over the long-term, it’s in a strong position. The other major bonus is the re-watchable nature of its content. Marvel films and Beauty and the Beast aren’t watched just once. That means the cash demands for continually stumping up for new content isn’t nearly as much of a headache as it is for others. That said, getting a young streaming platform off the ground doesn’t come cheap, Disney+ is still generating quarterly operating losses of $887m.

Of course, the other way Disney squeezes repeated revenue from existing intellectual property is its theme parks. These have staged a remarkable rebound since the pandemic, and we can’t see the appeal of Disney parks fading any time soon – they’re a classic and aspirational location for lots of us. Soaring inflation and demands on household budgets might mean ticket sales are a bit hit and miss in the short term though.

We view Disney as a very interesting long-term option for those who want to invest in the rapidly evolving world of media, especially when the price to earnings ratio of 18.9 is considered. Investors should keep in mind there are a couple of broader points that could cause some ups and downs in the shorter term.

View Disney’s latest share price and how to deal


We won’t beat around the bush. ITV is a higher risk option. This is reflected in a price to earnings ratio of 5.4, which is significantly lower than the longer-term average, indicating the market has priced in a higher degree of uncertainty.

For those prepared to accept the external risk, we think ITV has some interesting prospects.

The group's in phase two of its strategy to be “more than TV”. The emphasis is on beefing up its digital presence, through video on demand and streaming products. This includes ad free and ad versions. Making a digital shift is crucial, since ITV still relies heavily on advertising revenue. Traditional advertising slots on live broadcast have been falling out of favour for years, and this is an irreversible trend in our view.

We must admit the jury’s still out on whether or not ITV will be able to meaningfully compete in the world of streaming. On one hand, its core UK audience of Coronation Street and Love Island fans will follow the service anywhere. But we happen to be more intrigued by ITV Studios.

This now makes up £1.8bn of annual group revenue compared to £2.3bn from the traditional business. ITV Studios produces content for ITV as well as third parties. They were behind big hitters including Line of Duty. We think this is a great position to be in. As streaming balloons, platforms need to continue plugging the holes left in the content cupboards when we binge watch shows and films. Outsourcing is also a classic move when economic conditions are tough, so ITV might well be in a resilient position in the medium term.

Content production is never going to shoot the lights out when it comes to profitability – running a set is a clunky and costly endeavour. But we feel quietly confident about demand for ITV Studios.

ITV offers a prospective yield of 8.3%, and the dividend looks well covered for now. As already mentioned, no dividend is ever guaranteed and yields are not a reliable indication of future income. We think it’s likely ITV could re-examine dividend payments as and when it decides cash needs to be funnelled to other areas of the business.

Ultimately, we think ITV could have something to offer thanks to its unique position in the world of content production. Of course, it would be wrong to dismiss the challenges. ITV still relies on traditional advertising for now, where the outlook is uncertain.

View ITV’s latest share price and how to deal

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Unless otherwise stated estimates, including prospective yields, are a consensus of analyst forecasts provided by Refinitiv. These estimates are not a reliable indicator of future performance. Yields are variable and not guaranteed. Past performance is not a guide to the future. Investments rise and fall in value so investors could make a loss.

This article is not advice or a recommendation to buy, sell or hold any investment. No view is given on the present or future value or price of any investment, and investors should form their own view on any proposed investment. This article has not been prepared in accordance with legal requirements designed to promote the independence of investment research and is considered a marketing communication. Non-independent research is not subject to FCA rules prohibiting dealing ahead of research, however HL has put controls in place (including dealing restrictions, physical and information barriers) to manage potential conflicts of interest presented by such dealing. Please see our full non-independent research disclosure for more information.

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