KUALA LUMPUR (Sept 22): CGS-CIMB Research has maintained its “overweight” rating of the media sector, and said news reports last week indicated that US media giants are looking to further consolidate their streaming services — and the industry as well.

In a note on Wednesday (Sept 21), the research house said that while the consolidation of streaming services is inevitable, it would be negative for more mergers and acquisitions in the US media industry.

CGS-CIMB said it fears Astro Malaysia Holdings Bhd’s streaming integration proposition could be blunted if there are fewer services.

Meanwhile, it said Media Prima Bhd’s content sales growth may be capped as well.

“We stay 'overweight' on the media sector; excluding Astro, as media stocks are trading at only 0.3 to 0.7 times calendar year 2022-23 (CY22-23) price-to-book value.

“These are undemanding valuations for stocks that are in net cash positions and hold choice real estate assets.

“The sector also offers [estimated] CY22-23 yields of 4.9% to 10.4%. Downside risks include advertising sales slumping and rising newsprint prices further choking margins," the research house said.