money digest


TW shares 'inexpensive'

Shares of Time Warner Inc. rose 2.2% on Tuesday to $20.52 after Citigroup said investors are undervaluing the stock after the company spun off Time Warner Cable, the second-largest cable operator in the country. Citigroup analyst Jason Bazinet said TW's remaining assets are "inexpensive" and predicts the stock can add about 20% in the next year. He rates it "buy" and assigns a price target of $24. "To our surprise, the pullback in Time Warner shares is almost exclusively tied to movements in Time Warner Cable," Bazinet wrote. "In effect, Time Warner is trading just like a cable stock."

Pair of downgrades for Mediaset

The bad news continued to mount for Italian broadcaster Mediaset on Tuesday as two investment banks lowered their outlooks for the company. Morgan Stanley cut its target for Mediaset shares to €7.80 ($10.45), below their 52-week low, while Hildebrandt and Ferrar lowered its recommendation to "reduce" from "hold." Both banks cited rising costs, a sagging advertising market and limited growth prospects tied to a pending media sector reform plan. Mediaset shares traded lower most of the day but finished up €0.04 (5 cents) during a strong trading day on the Italian bourse.

Sat radio merger 'ludicrous'

A report released Tuesday by media research company the Carmel Group calls arguments in favor of a combination of Sirius Satellite radio and XM Satellite Radio "ludicrous" and "selfish." Opponents of the proposal, including the National Association of Broadcasters, which retained the Carmel Group's services, said the deal will create a monopoly. In addition, the Carmel Group argued that approval of the deal could set a precedent for cable operators and other industries seeking to consolidate. The research firm is known for helping to kill the 2003 combination between satellite television companies EchoStar Communications Corp. and DirecTV Group Inc.