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5 Media Stocks Worth Tuning In For

Stocks in the media sector have lagged of late; we found five compelling bargains amid the sell-off.

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The market has grown increasingly skeptical of media stocks lately. After March-quarter earnings failed to impress in many cases, the median stock in the diversified media industry has shed 5.2% for the trailing one-month period through May 12. By contrast, the median stock in the Morningstar US Market Index has managed to eke out a 0.9% gain over the same period.

What's ailing these companies? Though many issues are company-specific, there are also general concerns contributing to media stocks' malaise. Subscription revenue is one: The emergence of entertainment options such as Netflix, Amazon Prime Instant Video, Hulu, and short-form online video has led to increased cord-cutting and is challenging the pay-television model. In addition, advertising revenue continues to be an issue among many media players. If advertisers continue to shift money away from television, profitability at many media companies will suffer. 

Karen Wallace does not own (actual or beneficial) shares in any of the securities mentioned above. Find out about Morningstar’s editorial policies.