MediaWatch – What now?

Geopolitics is dominating the discussion and, at time of writing, there can be no certainty on how this will play out for the Media sector. It looks as if GDP growth levels in the US will be lower than previously anticipated and, as media spend is broadly aligned, we expect to see forecasts reined in. Household budgets are clearly going to remain under pressure. Underlying uncertainty, coupled with a lack of clarity over how AI will affect business models and practices, may continue to delay the implementation of larger digital transformation projects. So where are the bright spots? For those corporates able to raise their eyes to a farther horizon, there are ample prospects for M&A, with undervalued assets and teams, particularly in the UK and European markets. In our analysis, we highlight stocks trading below their long-term average ratings in the UK, Continental Europe and North America. We include a further screen that gives some indication of relative value, by comparing prospective EV/sales multiples (including leases) with EBITDA margins. The clear majority of stocks covered here look attractive on this basis and, when sentiment finally shows more robust improvement, we expect these discounts to narrow relatively quickly.