Dead Money Moneymaker

Forbes Article by BetterTrades

02-05-09 01:15 PM EST

Viacom shares are treading water, but options players have a good chance to make some money anyway.

Media companies have been slammed by a storm of declining advertising spend. Iconic news sources, like the New York Times and Wall Street Journal, are being faced with the reality of retooling or going out of business. Media companies are being faced with a clear shift in behavior as consumers turn to the internet sources for news and mobile electronics sources of entertainment like iPods and hand-held video game systems.

The new paradigm of consumer behavior has put the clamps on earnings growth and revenue streams of traditional media sources like print media and television. Viacom is one of the largest media conglomerates with operations in print, online, television, and film.

We put other media stocks in the spotlight including DreamWorks Animation, Time Warner, News Corp, and The Walt Disney Company.

Any rebound in discretionary spending would likely be reflected strongly in a media brand as large and extensive as Viacom. Revenues at Viacom's movie studios and distribution divisions has remained strong as Hollywood manages to resist a downturn in its businesses even while consumers are cutting back on their spending. Wall Street has made shares of media names very cheap, reflecting a lack of confidence in traditional sources of revenue that are falling by the wayside as the economy worsens and consumer behavior changes.