News Corp (Nasdaq:NWS-A), CBS (NYSE:CBS), Disney (NYSE:DIS), Viacom (NYSE:VIA) Top Major Media Companies in 2011 Say Nomura

News Corp (Nasdaq:NWS) continues to be the top media pick of Nomura Securities in 2011, which also likes CBS (NYSE:CBS), Disney (NYSE:DIS) and Viacom (NYSE:VIA).

Media companies expected to continue to struggle in 2011 are Scripps Networks (NYSE:SNI) and Discovery (Nasdaq:DISCA), although in the short term Discovery may get a boost for their fourth quarter results, which Nomura raised their estimates on, as well as they did with Disney.

Nomura said, "For calendar 4Q10 earnings, we are raising our EPS estimates for Disney (DIS) and Discovery (DISCA) (lower EBITDA offset by lower marked-to-market equity-based comp) and lowering our estimates. We continue to rate News Corp (NWSA) our top pick for 2011 and reiterate our Buy ratings for CBS Corp (CBS), Disney (DIS) and Viacom (VIA)."

"Since the beginning of 2011, Discovery and Scripps Networks, the two pure-play cable network companies, have underperformed the market and their closest media peers. Year-to-date, DISCA and SNI have lagged the S&P 500 by 603 bps and 1,150 bps, respectively. Conversely, Time Warner and Viacom have performed markedly better - Time Warner currently lags the market by 12 bps while Viacom has outpaced the market by 470 bps."

"This month’s slide appears to have been triggered by comments made at a recent industry conference at which Scripps Networks' management noted 4Q10 advertising would unlikely match the prior quarter’s growth rate due in part to ratings softness at its networks. Scripps Networks, which posted impressive mid-to-high teen growth ex-Travel Channel through the first three quarters of 2010, seems to finally be slowing down. We are lowering our underlying advertising growth estimate for 4Q to a still-respectable +13.4% down from our last published estimate of +19.6% (see the end of this report for a detailed 4Q preview). Due primarily to that change, we are reducing our estimates by $0.03 and now project SNI will report 4Q10 EPS of $0.68 vs. consensus of $0.70.

"Disney will report F1Q11 earnings after the market close on Tuesday, February 8th. We anticipate Disney will start its fiscal year strongly and are increasing our F1Q11E EPS to $0.58, $0.02 ahead of consensus and our prior $0.56 estimate.

"Discovery Communications will report 4Q10 earnings before the market opens on Friday, February 11th. We believe Discovery will have an in-line quarter, as some ratings weakness should limit the usual outperformance investors expect from the company. We project EPS of $0.51, a penny below consensus driven by +8% revenue growth (vs. +9% previously) and +19.5% EBITDA growth (vs. +21.8% previously).

News Corp. was trading at $17.53, gaining $0.62, or 3.67 percent, as of 2:02 PM EST. CBS was at $20.80, up $0.10, or 0.48 percent. Disney was trading at $39.89, gaining $0.15, or 0.38 percent. Viacom was trading at $48.45, up $0.24, or 0.50 percent.