Sep 252014
 

With the recent pull back in the stock market I thought it would be a good time to add a couple of new stocks to my portfolio 🙂 So earlier today I bought 13 shares of Time Warner Inc, (TWX) at $75.69/share, as well as 26 shares of Twenty-First Century Fox (FOXA) at $34.06/share. Both are U.S. companies so I purchased them inside my RRSP using Canadian currency.

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The part I enjoy most about investing is learning how businesses work. By looking through the financial statements and analyst’s reports on large media conglomerates I’ve learned how television programs get funded, how much actors and writers are paid, how advertising works, and many other interesting titbits.

Why Invest in Time Warner Inc

I wanted to invest more money into media and entertainment because this is a relatively stable sector with predictable earnings growth. After some thorough research I have decided to go with Time Warner Inc. Check out the impressive earnings per share (EPS) growth on this bad boy.

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Those are some pretty good numbers eh 🙂 Time Warner is most well known by consumers to be the parent company of Warner Bros. Entertainment. But to investors Time Warner represents a collection of highly valued multimedia businesses and brands, not the least of which is HBO 😀

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…Which includes HBO on Demand, HBO Entertainment, Cinemax, HBO International (Asia, Europe, Latin America,) etc. About 30% of all households in the U.S. with television service receive an HBO channel. HBO broadcasts in over 150 countries, covering about 114 million subscribers worldwide, wow 😯

Time Warner also owns Turner Broadcasting System which includes Turner Sports, NASCAR Races, websites like NCAA.com, NBA.com, and other television channels like Cartoon Network, and Adult Swim. It also owns the CNN News Group, which includes CNN.com, CNN Money, and a bunch of other media outlets.

TWX’s total market capitalization is $64 billion, which is about twice as big as BCE (Bell Canada.) Below are some brands, tv shows, and logos that you may already know about, but perhaps didn’t know they belong to Time Warner, or was premiered through one of Time Warner’s distribution channels.

14-09-time-warner-brands-shows New Line Cinema fronted the money to produce the Lord of the Rings movies by Peter Jackson. DC comics, the publisher behind the creation of Superman, Batman, and the entire DC universe, is a company of Warner Bros. Entertainment, which itself is of course owned by Time Warner (TWX) which I’m a shareholder of now 😀 Any super hero movie or tv series involving DC characters, which there seems to be a lot of these days, will have to pay my company licensing fees or royalties. I invested in Marvel Comics last year through my Disney shares so I pretty much have a monopoly in the super heroes comic book space now heh 🙂

 

Why Invest in Twenty-First Century Fox Inc

The second stock I bought is Twenty First Century Fox, Inc. and I did it for the same reasons as Time Warner. FOXA has a large market cap of $74 billion and a history of strong earnings growth. Current Price to Earnings (P/E) ratio is about 20, but the 5 year EPS growth forecast is 11% a year so I think the stock is still fairly valued 🙂 Similar to Time Warner, 21st Century Fox owns a smorgasbord of high quality shows and popular brands. Below is a list of intellectual properties that Fox has either produced (like How I Met Your Mother,) or owns, or has distribution rights to (like Avatar, where Fox heavily funded the creation of the film.) How many brands or icons do you recognize?

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As usual, both stocks are long term holds for me. Even if you don’t watch Game of Thrones yourself, it’s hard not to hear your friends or coworkers talk about it. The best advertisement is word-of-mouth. And HBO is basically getting free word-of-mouth marketing because it found the right combination of plot, action, and sex to include in all its programming that somehow makes viewers want to talk about the shows they’re watching 🙂

I already own Disney and Comcast shares, which hold the ownership rights to anything produced by Pixar, Lucasfilm, ILM, ESPN, NBC, Universal Studio, etc. I blogged about buying Disney last year and now the stock is up 58%! Comcast is up 13% since my purchase 9 months ago. And now I own Time Warner, 21st Century Fox, and all of their brands as well. I’m slowly becoming a media baron!

Maybe one day I will own all of Hollywood haha 😀 Just kidding. But buying stocks is so much fun! As someone who is entitled to future profits from these media corporations, I literally make money when my friends watch TV. It doesn’t get much better than that 🙂

My friend who blogs at debtdebs.com recently read my article today and Tweeted to me a cool composite she put together. I think it wraps ups this post nicely. Thanks debster 🙂

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Brian
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Brian

Did the fact that comcast is in the process of buying Time Warner factor into your decision at all?

debt debs
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I’m star-struck with this post. Will this increase your satisfaction with every TV show or movie you watch that comes from these companies?

Investing Pursuits
Guest

Good buys here Liquid. I believe these will be great stocks to own going forward. As prices of everything continues to go up people TV will be a source of entertainment for most people. TV is a lot cheaper entertaining then going to pubs, concerts, professional sporting events etc.

Kapitalust
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Kapitalust

I almost feel like you will end up with the equivalent of an index fund by the time you are finished with all your investments 😀

More related, good call on Fox. Man do they make good entertainment!

Finance Journey
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Hey,

I thought you are currently focusing to pay down your debts (cold-turkey – article – Aug 11) – I would like to remind you this as a loyal reader 😀 .

Great purchase man! You mentioned the you purchased the stocks using Canadian currency. I guess it should have cost you lot more you mentioned because of the exchange rate. I guess you should open a US currency RRSP account in some other bank.

I heard TD direct investing is planning to introduce US currency RRSP and TFSA by end the year.

Best Regards,

PC
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PC

I second that! I knew you’d break, Liquid.

I would buy Time Warner for HBO 🙂 Good choices.

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[…] is to buy companies that own those characters. Personally I have shares of Cineplex, Disney, Time Warner, and Fox. Cineplex owns movie theatres. Disney owns Marvel. Time Warner owns DC Comics and Warner Bros. And […]