What are the various sources of revenue for a media/communications company? Most of the revenues of these companies are driven by consumer spend and corporate ad spend. They can fall in one of the following categories:
a) Subscription: Magazine subscription, pay channel (HBO, Cinemax, Showtime) etc, cable tv - satellite - telephone subscription.
b) Single-item purchase: Consumers buying (a) books (b) park entrance tickets, say to Disneyworld (c) Movie tickets (d) DVDs (e) Music sales (f) Other consumer product purchases, like kids buying Mickie mouse toys or sports apparel from ESPN.
c) Advertising (corporate): Biggest source of media revenues - on television, radio, magazines, outdoor advertising
d) Affiliate fees and other content fees: Fees charged by content companies from distributors (cable companies and satellite companies) to make their fare available. Cable networks charge affiliate fees, while programmers (and Hollywood) charges various networks for making their content available.
The movie and television business would be amongst the most complex businesses of all, with bizzare value flows amongst lot of players. The hit-driven nature of the business make it all the more difficuult to predict. Pixar and Dreamworks are prime examples. With just one movie release per year, their entire share price is based on expectations of how their next movie will do - which as any moviegoer in the world knows - is difficult to predict till one has seen the movie. Analysts for these companies are really throwing random darts in the air - but then, so are the investors in these companies.