Will Trump's war on the media hurt media stocks?

As a political description of the Wall Street trading mindset, what's not to like? While the country continues to divide itself across partisan lines, savvy investors are looking for opportunities to beef up their portfolios with dollar sign-tinged ideas that leverage the American political scene.

Take the media and President Donald Trump. With the president using his bully pulpit to denounce big media outlets like CNN, The New York Times, CBS, and The Washington Post, national news platforms gnash their teeth and fight back just as hard, taking the Trump administration to task for political and policy stances both real and imagined.

[See: 7 Dividend Stocks to Benefit From Trump Tax Changes.]

According to a March 1 report issued by Media Tenor, a global, non-partisan media research firm with offices in Hanoi, Zurich, New York and Vienna, only 3 percent of 370 stories on Trump by NBC and CBS aired between Jan. 20 and Feb. 17 were viewed as positive. Forty-three percent were deemed negative and 54 percent were neutral, the report shows. Media Tenor even decided that 25 percent of the stories aired by conservative-leaning Fox News were negative, and 12 percent were positive (the rest were labeled neutral).

At first blush, many investors may take a pass on the constant squabbling between the U.S. media and the Trump White House. But a closer look reveals a possible opportunity in the dust-up – ever since Trump took office, television news and print and online news ratings are up, and significantly so.

In fact, New York Times executive editor Dean Baquet, appearing with CNN's Brian Stelter on "Reliable Sources" Feb. 26, responded to a query about Trump and new subscriptions: "Every time he tweets, it drives subscriptions wildly."

Clearly, Baquet is onto something. The Times reports that in the last fiscal quarter, the media giant (ticker: NYT) posted 276,000 new digital news subscriptions, the most robust quarter for subscriptions in six years. The Times also added 25,000 new subscribers on the print side – also a six-year high.

CNN and Fox News (FOXA) are racking up viewers as well. As of Feb. 16, both cable broadcasting networks were up 50 percent in 2017 in the key 25-54 demographic that advertisers covet. Ratings for MSBNC, which is owned by Comcast Corp. (CMCSA), were up 30 percent in the same timeframe.

[See: How 8 CEOs Reacted to Donald Trump's Immigrant Ban.]

Some investors have already taken notice and are driving up benchmark media industry stocks and funds. For example, PowerShares Dynamic Media exchange-traded fund (PBS), which holds both old and new media stocks like CBS Corp. (CBS), Facebook (FB), Time Warner (TWX), Yahoo (YHOO), and Alphabet (GOOG, GOOGL), is up 5.15 percent on a year-to-date basis.

As the old saying goes, confrontational news sells, and Wall Street watchers say media companies are benefiting from being the recipient of so many Trump haymakers.

"The continuous allegations of fake news perpetuated by the Trump administration appear to have no end in sight, but media conglomerates are welcoming the notoriety," says Fabrice Hamaide, president of Piksel, a New York-based video content company. "While Trump's candid rhetoric undoubtedly wages war on journalism, 'fake news' has been a godsend for an industry heading to the brink of extinction in the age of technology."

As a result, Trump levering the fake news card is populating an unprecedented level of attention by the public, which will benefit the news media in terms of audience engagement, Hamaide says. "Most of the time, so-called fake news is considered detrimental to media stocks," he says. "However, with the fight raging on between the administration and news media outlets, executives of media stocks are embracing the opportunity to capitalize on the latest craze of media accuracy."

[See: 8 Ways to Profit From Donald Trump's Infrastructure Plans.]

That's not even counting the potential for increased merger activity among media companies, as the Trump administration looks to loosen regulations governing such activity, Hamaide says. "Additionally, while no formal position has been communicated on either issue, any changes the new administration may make regarding the loosening of ownership rules and merger review could trigger a wave of M&A activity."

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