by Traders Reserve | August 15, 2012 8:00 am
The summer heat generated by the presidential election just got way hotter. On Saturday, presumptive Republican nominee Mitt Romney announced that Wisconsin Rep. Paul Ryan would be his running mate. Ryan is an unabashed conservative, and his selection has energized that party’s conservative base—a base that wasn’t exactly gung ho over Mitt Romney during the primary process. On the flipside, the prospect of a conservative intellectual leader like Ryan as VP also has energized the Democrat base. The Dems are poised to paint Ryan’s budget cutting proposals as “extreme,” and dangerous for the country.
The selection of Ryan has kicked the presidential race into the next gear, and the process is only going to rev higher from here, as both parties hold their conventions in the next two to three weeks. Both camps also will be ramping up advertising campaigns from now until Election Day, and that means mega bucks into the coffers of media companies selling advertising time and space.
Thanks to the landmark 2010 Supreme Court decision in Citizens United v. Federal Election Commission, which essentially ruled that freedom of speech (particularly political speech) also applies to corporations, companies and wealthy individuals can give unlimited money to so-called super PACs to buy as much advertising as they want.
According to a recent study by the research firm Borrell Associates, total election spending in 2012 is projected to come in at $9.8 billion. By comparison, total spending on the 2008 election came in at a record $7 billion. Spending by political action committees, or PACs, national political party committees and those super PACs is projected to be about $4.76 billion.
For investors, taking advantage of this impending spending binge could be as easy as buying the stocks likely to get the lion’s share of these big political bucks.
Here are 5 companies for the coming election spending binge.
Storied network television giant CBS (NYSE:CBS) has consistently delivered the highest ratings for many of its primetime television shows, and as we all know, the better the ratings, the more advertisers will want to buy spots on those shows. The company’s ratings-capturing television lineup should lure in a big chunk of this cycle’s election spending, and that’s likely going to boost the company’s revenues in the coming quarter, and throughout the second half of 2012.
Another media giant destined to claim a huge chunk of the presidential advertising largess is Dow component Disney (NYSE:DIS). The company owns the ABC television network, which includes the heavily watched ESPN. Shares of Disney have been among the best performers in the Dow this year, and they’ve also been the best performer in terms of media stocks. DIS shares are up more than 30% year to date, and that gain could be even bigger as election dollars pour into Disney owned media.
When it comes to media giants, there is perhaps no more polarizing company than News Corp. (NASDAQ:NWS). The company owns the Fox News Channel, the most-watched cable TV news outlet.
Fox News Channel’s political coverage is likely to capture a lot of advertising dollars, especially in the so-called swing states. News Corp.’s television segment operates 27 broadcast stations in the United States, and those channels are expected pull in whole lot of election cash.
Cable TV behemoth Comcast (NASDAQ:CMCSA) is the parent company of broadcast television network NBC. NBC is coming off a high from its better-than-expected Olympic Games ratings, and the company hopes to parlay those better ratings into the collection of advertising dollars from the 2012 presidential race.
The company’s various properties, such as Spanish language network Telemundo, and various local television and cable, and digital media sites also will likely be big beneficiaries of swelling election dollar vaults.
Pioneer cable TV news network CNN has fallen from grace over the past decade. Still, the network remains a sizeable player on the political scene, and it’s likely to take its fair share of the presidential advertising pie. That’s good for parent company Time Warner (NYSE:TWX), which also owns cable networks TNT and TBS. The company’s publishing segments includes political stalwart Time magazine, still a widely read publication for political coverage. There’s no way super PACs won’t make Time Warner part of their targeted spending plans, and that’s going to be good for TWX’s top line.
Source URL: http://investorplace.com/2012/08/5-stocks-for-the-coming-election-media-spending-binge-dis-cbs-twx-nws-cmcsa/
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