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Dare to Compare: How Do Media Firms Stack Up?

If audience reach, users, or subscribers all boil down to eyeballs and pocketbooks, how come Gannett, which through its TV and newspaper units reaches about 23 million, is an $18.5 billion market capitalization firm, while Excite, with a reach of about 20 million via the Web, sits at $1.3 billion?

Of course, revenue and earnings are key factors to the difference, but let's consider the end game: garnering your time.

Whether it's the silver screen, tube, dead trees and ink, coaxial cowboys or the Web getting everyone's attention, media is a continuum and the race for your time looks like it's starting to converge into the one thing everyone wants more of: your eyeballs and pocketbook.

This means that the platform may become less of a point and the outlet that can add the most value to get you to spend time becomes increasingly important with advertisers, merchandisers, marketers and more saying look here.

What are these "time-demanding" firms worth? On average our number crunching reveals that the group of media companies here trade at 3.4x latest fiscal year revenue.

Let's see how these companies compare:

Mecklermedia's Internet Stock Report - Media Valuation Snapshot

Media

Users

Market

Mkt cap/

Latest annual

Revenue

company

customers

capitalization

users

revenue

multiple

(millions)

(millions)

(millions)

Comcast

…cable

4.3

$ 2,657

…cellular

8.2

$ 1,393

total / weighted average

12.5

$ 11,425

$ 914

$ 4,913

2.3

Gannett

…newspapers

6.7

$ 2,770

…broadcasting

16.6

$ 1,118

total / weighted average

23.3

$ 18,559

$ 797

$ 4,700

3.9

Disney

…movies

 

…broadcasting

100.0

…theme parks

 

total / weighted average

100.0

$ 74,692

$ 747

$ 22,473

3.3

Yahoo

…Web

32.9

$ 4,750

$ 144

$ 67

70.5

Excite

…Web

19.2

$ 1,312

$ 68

$ 50

26.2

AOL

...AOL Online

13.5

$ 1,297

 

…AOL.com

19.2

$ 912

total / weighted average

32.7

$ 17,512

$ 536

$ 1,690

10.4

Weighted Average

$ 22,148

$ 937

$ 6,441

Total

$ 110,738

$ 6,558

$ 32,204

3.4

(c) 1998 Mecklermedia, The Internet Media Company (NASDAQ:MECK)

Granted, our analysis shows only a glimpse of the depth of operations at the larger media firms. For example, Disney commands a global presence in parks, cruise lines, resorts and has one of the world's best libraries of film and animation with a value that cannot be reflected in its stock price in our book. The mediums it encompasses range from riding a rollercoaster to watching a film. In broadcast it reaches 100 million households in the U.S. through its ABC subsidiary. We estimate that represents about 240 million people. It's still the same game, eyeballs and pocketbooks.

Comcast owns cellular, cable and high-speed Internet access units, some of which trade in its common stock, while others trade in separate securities.

One of the more notable nuggets to come out of this scenario is AOL with a (NYSE:AOL) market cap per subscriber of $1,297 and AOL.com Web site per user value of $912 vs. AOL's latest annual revenue (6/97). We estimate that if AOL backed out its access revenue and showed only commerce/advertising, then the revenue multiple starts to look awfully close to what many Web media firms trade at, north of 50x.

Yahoo! (NASDAQ:YHOO) trades at more than 70x trailing year revenue while Excite (NASDAQ:XCIT) is at 26x. Said another way, Yahoo!, Excite, Lycos (NASDAQ:LCOS), Infoseek (NASDAQ:SEEK) and AOL (without access revenues) may be in the same neighborhood in revenue multiples.

On the horizon we expect high-speed services to emerge and battle it out for the hybrid TV, Web, print, radio arena. Already radio stations broadcast on the Web, albeit at sound quality that would make Radio Shack smile.

But what happens when CD-quality sound flies to your TV or PC via whatever method and suddenly any radio station in the world (or home-based hero) becomes a global broadcaster?

That's part of the hidden value in something like RealNetworks (NASDAQ:RNWK) which aggregates stations around its software platform. Real can steer the entire world's broadcast franchise through its doorway. RNWK market cap was $589 million on June 4. One TV station in a major metro market sells for more than that. An AM station in New York City could fetch that.

The multiple services, such as Comcast now offering Internet access, doing cable programming and cell services, Gannett in mixed media including the popular usatoday.com, and Time Warner (NYSE:TWX) all over the map and more, means that in a digital media environment values may become extremely volatile. Focusing on users becomes that much more important.

"Eyeballs and pocketbooks, eyeballs and pocketbooks." That's the media mantra Wall Street will be chanting for all these stocks as time blurs the lines.