What is America doing with its free time? Judging from the expanding waistlines we aren’t outside too much. The truth is Americans are becoming larger house potatoes and that trend doesn’t seem to be letting up. The weird thing is this is a very obvious trend but making money off it hasn’t been as obvious or easy. Just think: all the weight loss stocks have been under immense pressure and all the media stocks have been trading as if the entire industry is facing the challenges of newspapers.

With that in mind there has to be something in the media space worth investing in, right? Well there are a few ways to look at the space. First of all there's the so-called new media consisting of the Internet and satellite radio. Then there's the old school media of celestial television, radio and newspapers. Money is being spent to reach us couch potatoes.


Source: TNS Media Intelligence

In the individual spaces there are investment opportunities, some much more enticing than others, obviously. In television I would say Comcast (CMCSK) is compelling (I like News Corp. (NWS) but as a contributor to the Fox Business Network would rather not tout the stock) and CBS (CBS) has pretty good risk/reward here. I’m not pounding the table on television, however still in its latest release Nielson Media reported the average American viewing time of television during the month of May climbed to 127 hours and 15 minutes, up from 121 hours and 48 minutes a year earlier. That's huge and should be monetized by programmers, distributors and investors. There's the issue of bifurcation and a zillion channels to choose from but what has become real clear is that network TV is holding its own with quality acting, scripts and production. Cable is doing the same and has carved out a formidable niche, too.

Then there are magazines which have been hurting badly. Remember when those tech and financial magazines were the size of the Manhattan telephone book? Man, it was like reading War and Peace and that was just “Red Herring”. Toss in “Wired” and “Business 2.0” and keeping up with current events in technology and business was a job unto itself. Now many magazines are as thin as tissue paper. I happen to love magazines and still read a pile each week but I can’t find any pure play in the space I think worth investing in and recent trends underscore that contention.

Newspapers… should we even bring this up as an investment? I do believe newspapers will survive but mostly as soapboxes for very wealthy, very opinionated people. The same sort that own money losing sports teams.

Internet is where it’s at but even there the picking looks slim. What happened to all the also-rans like AOL (TWX), C-NET (CNET) and now Yahoo (YHOO)? Right now it’s all about Google (GOOG) and if you aren’t in this stock then you're missing a great opportunity. Sure, overall ad spending is decreasing but Google is taking market share and working on stuff that will keep it dominating for a long time, perhaps even a generation. As for Microsoft (MSFT), the sooner it gets this crazy courtship with Yahoo over the better, because a combined company is still a longshot to be a formidable rival to Google.

In the meantime ad spending on the Internet keeps climbing and came in at $5.8 billion in the first quarter of 2008, the second highest ever (4Q '07 was $5.9 billion). It should be noted that according to Nielsen Media the average American spent 26 hours and 30 minutes in the net in May up from 24 hours and 16 minutes in the year earlier comparison.


Source: Internet Advertising Bureau

I wouldn’t buy radio stocks just yet but in the outdoor space Lamar Advertising (LAMR) looks very compelling.