Jim Cramer picks Disney as best of the major media stocks

CNBC’s Jim Cramer on Friday ranked major media stocks, choosing Walt Disney as the best of the bunch.

“After earnings season, it’s worth reassessing the independent media plays, because some of them are doing much better than expected,” Cramer said. He noted that investors were concerned about this sector due fears that a slowing economy would weaken advertising revenue, coupled with the general idea there are so many other sources of entertainment competing for consumers’ time.

1. Walt Disney: Disney “stole the show” this quarter, Cramer said, reporting better-than-expected earnings after years of struggling. The company also managed to raise its cost-cutting projections by $2.2 billion. Cramer said CEO Bob Iger has taken control of Disney’s narrative, expressing confidence that this quarter is a turning point. To Cramer, Disney is likely to deliver on its cost-cutting promises or at least “die trying.”
2. Fox: According to Cramer, Fox isn’t the best, but it’s also far from the worst. He said the company’s quarter wasn’t bad, but it also didn’t do much to move the stock, which is still trading below where it was before the report. And although Fox’s streaming service, Tubi, reported revenue growth, Cramer said it’s still not popular in the mainstream. However, he pointed out that the company is set to make a “fortune” next year ahead of the election.
3. Warner Bros: Cramer called Warner Bros’ most recent quarter “distinctly suboptimal,” even though it produced “Barbie,” the highest-grossing film of the year. Management said the company won’t be able to pay down its debt as previously planned if the advertising market stays weak. Warner Bros came out of the quarter with $43 billion in debt, and Cramer said the stock won’t perform well if it doesn’t make progress on that front.
4. Paramount: Cramer said Paramount has the worst balance sheet of the four, bringing it to the bottom of the list. Even though its streaming service has made progress in terms of profitability, the company’s advertising revenue missed Wall Street’s expectations. To Cramer, Paramount needs lower interest rates and an improved ad market.

Disclosure: Comcast was excluded from the list to avoid a conflict of interest. Comcast owns NBCUniversal, the parent company of CNBC

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Disclaimer The CNBC Investing Club Charitable Trust holds shares of Walt Disney.