“It’s hard to find a more compelling opportunity than Time Warner,” said Samantha Greenberg, chief investment officer at New York-based hedge fund Margate Capital at a Reuters event on Tuesday.
The U.S. Department of Justice has sued to block AT&T’s $85.4 billion deal to buy Time Warner, struck more than 15 months ago, on the grounds it would raise prices for consumers and rivals. A trial to decide the matter begins in March.
Time Warner shares are a good investment regardless of the outcome, Greenberg told attendees of Reuters Breakingviews’ “No Safe Spaces for Big Media” panel.
“They have been in deal hell and their stock has massively underperformed the S&P 500,” Greenberg said. Time Warner trades at about 11.5 times earnings projected for this year, she said, a touch over the sector average.
Even if AT&T does not win its case against the Justice Department, other buyers will likely emerge, including Apple Inc (AAPL.O), Greenberg said.
The panel focused on consolidation in the media sector as programmers and distributors try to prevent viewers cancelling their cable and satellite subscriptions to watch shows on online services provided by Netflix Inc (NFLX.O) and Amazon.com Inc (AMZN.O), which are spending billions of dollars on content.
“Linear TV is in trouble,” said James Murray, a partner at PJT partners, a New York-based investment bank.
Walt Disney Co (DIS.N) announced a $52.4 billion deal to buy the majority of Twenty-First Century Fox’s (FOXA.O)’s assets. But Comcast Corp, which had also bid for the Fox assets, is considering making a new bid for them, sources have told Reuters.
Panelists said they expect technology companies such as Apple and Amazon to acquire movie or TV studios this year.
“Technology companies will go for the small pure plays,” said Julius Genachowski, partner and managing director at The Carlyle Group.
Reporting By Jessica Toonkel