Viacom (NYSE:VIA-B) Disney (NYSE:DIS) Scripps Networks (NYSE:SNI): News Corp (Nasdaq:NWSA), CBS (NYSE:CBS) Most Potential in Entertainment Says Barcla

Barclays gave a review of entertainment stocks in the U.S., and those considered to have the best potential in 2011 are Viacom (NYSE:VIA-B) Disney (NYSE:DIS) Scripps Networks (NYSE:SNI): News Corp (Nasdaq:NWSA) and CBS (NYSE:CBS).

They said "We remain constructive on the Entertainment group, as (1) we believe in the strength of the U.S. advertising recovery; (2) we believe 2011E Street estimates are achievable; and (3) we continue to believe valuation is undemanding relative to Consumer stocks."

Comments:

Viacom (VIA-B): Trades at most attractive EV/EBITDA, P/E, and P/FCF valuations and at the largest discount relative to historical valuation.

Disney (DIS): Operates best-in-class asset portfolio. A recovery at the Parks & Resorts segment, which is mid-cycle in nature, offers upside potential.

Scripps Networks (SNI): Strongest organic growth, continued outperformance from the Travel Channel, opportunities for international expansion, and the potential purchase of the outstanding portion of the Food Network.

News Corp (NWSA): Attractive valuation relative to US Entertainment and historical multiples. An acquisition of BSkyB, assuming it goes through, would improve News Corp's asset mix and increase the efficiency of its free cash flow generation.

CBS (CBS): Offers the most exposure to a cyclical rebound. Strong ratings at the network and retransmission consent fees keep us constructive on the TV network business.

Time Warner (NYSE:TWX): Least exposure to the advertising recovery; while valuation is reasonable, structural growth upside less likely given maturity of assets.

Discovery (Nasdaq:DISCA): Continues to trade at the highest valuation multiple in the group. While we expect Discovery to generate above-average growth in 2011, growth is decelerating and programming costs rising.

Viacom was trading at $41.09, down $0.13, or 0.32 percent, as of 2:40 PM EST. Disney was at $39.21, up $0.04, or 0.10 percent. Scripps was trading at $47.48, down $0.35, or 0.73 percent. News Corp. was at $14.18, down $0.18, or 1.25 percent. CBS was at $19.81, up 0.02, or 0.13 percent. Time Warner was trading at $33.66, down $0.03, or 0.15 percent. Discovery Communications was at $38.84, down $0.82, or 2.07 percent.