Thrills! Chills! Spills!

Fasten your seatbelts: entertainment stocks can take investors on a roller-coaster ride

Bells-but not cable and Internet access. Singleton warns, however, that it will take some time for AT&T to digest TCI and for TCI to contribute to AT&T’s bottom line.

At this time Singleton says there is no single standard for providing Internet connections. They can be made through a cable line, through a phone modem or through a wireless digital subscriber line (DSL). But he says that’s irrelevant. “For the most part, the average consumer is going to take who shows up first” on their doorstep with cable and Internet services. “The key is bandwidth,” Singleton says. “It’s the ability to provide lots of content that’s accessible in an interactive fashion.”

Bridge Street’s Grannum certainly feels confident of his media-related stock picks. Although he’s owned stock in Disney since 1995, Grannum has wanted to own shares in the company since 1990. He feels that Time Warner’s extensive interests in movies, music and its growing Internet presence should make the stock a good long-term performer. Although the stock has dipped recently, Grannum says that as an investor with a long-term perspective, he doesn’t take action on market dips and doesn’t “put great weight on a stock’s current price.”

Grannum says he learned a lesson about patience and avoiding market timing the hard way after he dumped some stocks when their prices slumped. Last year, he sold his shares of electronic components and equipment manufacturer Motorola (NYSE: MOT). Then the stock recovered and he missed the run-up.

Although he prefers to invest in companies whose stories and products he knows, he took a chance on Comcast-“I knew nothing about it”-at the time partly on the recommendation of his brother, Dr. Charles Grannum, a dentist with a practice in Brooklyn. In fact, Colvin and Charles discuss their stock holdings regularly and swap information on companies they’re interested in.

Like Colvin, brother Charles based his decision to purchase Comcast and Time Warner on everyday observations. “Where I live, almost every person I know, when they moved into a new apartment, one of the first things they would do is get their cable service hooked up,” says Charles. It also helped that in researching the stocks, he found that Time Warner at the time was the second largest operator of cable systems in the country, while Comcast was the third biggest, so he felt sure the stocks would outperform over time.

Other investors, such as Abraham May Jr., also feel that cable and media stocks are good long-term investments because of their growth prospects. “Media and cable is the wave of the future,” maintains May, an executive director with the Equal Employment Practices Commission in New York City. He especially likes Time Warner’s investments in the African American community, particularly its stake in the Apollo Theatre in Harlem.

He also owns Univision Communicati
ons (NYSE: UVN), a Spanish-language broadcasting firm based in Los Angeles that provides first-run programming to its affiliates. May likes Univision’s growth prospects as a smart demographic play because of the growth of the Hispanic population.

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