Fox, Time Warner Furor Boosts Media ETF

July 17, 2014

PBS is the lone wolf when it comes to media funds.

PBS_YTD

Chart courtesy of StockCharts.com

News Monday of Rupert Murdoch-led Fox's $85 billion bid for Time Warner sent Wall Street into frenzy. The bid was rejected and, even if approved, would certainly face some degree of antitrust scrutiny.

More importantly though, the purported bid drove Time Warner shares up nearly 20 percent and simultaneously lifted the PowerShares Dynamic Media ETF (PBS | B-46). PBS tracks an index that evaluates momentum, quality, value and management actions to select the 30 media companies comprising its portfolio. Those securities are then weighted in tiers.

While PBS' portfolio includes many of the media's biggest companies, it doesn't necessarily include all the largest media companies, as its multifactor selection scheme has the latitude to exclude companies deemed unfavorable.

Importantly though, PBS includes a big 5.06 percent stake in Time Warner as well as notable positions in DISH and DirecTV. Oddly, the portfolio also includes large stakes in Facebook and WebMD—certainly not the first companies that comes to mind when considering media companies.

Unfortunately, investors deterred by PBS' portfolio or methodology don't have anywhere else to turn: This is the only media ETF currently on the market. Fortunately, it's highly liquid and quite efficient.

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