The upcoming earnings season is also likely to have its share of disappointments, which investors should be appropriately wary of. Our view is that a basket of the smaller high quality media companies, over the longer term, is likely to generate solid profits as M&A activity heats up over the course of this next year.
We believe the recent acquisition of AOL and Youku is just the tip of a very large wave of consolidation that is coming between content providers and content distributors. The merger between AOL and Time Warner in 2000 may not have succeeded, but it looks like it is time to fire up the DeLorean and go "Back to the Future."
Commentary by Dan Niles, founding partner of AlphaOne Capital Partners and senior portfolio manager of the AlphaOne Satori Fund. Previously, he was a managing director at Neuberger Berman, a subsidiary of Lehman Brothers.
Disclosure: AlphaOne and Dan Niles have an investment position (either long and short or through options or other derivatives) in the following names that were mention in the article: FOXA, FB, DIS, VIAB, DISCA, SNI, LGF, STRZA and DWA.
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