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As the spring TV season ends, media investors are grappling with their own cliffhanger. The question on their minds: When will ad sales return? Some are taking heart from the $8 billion racked up by TV networks for the September season, a 16% hike from the year before. That brings their up-front ad sales to where they were in 2000. Some of those commitments could yet be withdrawn. Still, the gain is enough to start investors thinking about a revival in media stocks, a sector that has been trailing the Standard & Poor's 500-stock index most of this year.

Investors are already moving to companies such as Viacom (VIA) and News Corp. (NWS) There's even interest in such beaten-down players as AOL Time Warner (AOL) and Walt Disney (DIS). Some are also betting on John Malone's Liberty Media (L).

Basu Mullick, a portfolio manager of the Neuberger Berman Partners Fund, recently bought both Viacom and Disney. Mullick likes Viacom's cost-conscious management and hot shows such as The Osbournes on its MTV network. His rationale for buying Disney is completely different. He reckons market sentiment is so negative on the company that any ad upturn should buoy the stock. Disney also has hinted that advance theme-park bookings for this summer have firmed.

News Corp.'s globe-girding collection of assets make it, at $26, "the cheapest media company out there," says Ajay Mehra, a portfolio manager with Columbia Management Group. He says News Corp.'s cash flow could grow by 20% or more this year. The one wild card is Chairman Rupert Murdoch's penchant for the big deal, which in the past has hobbled the company with debt.

Perhaps a purer entertainment play is News Corp.'s 85%-owned Fox Entertainment Group, says Merrill Lynch's Jessica Reif Cohen. She likes the cash flow from Fox's 33-station TV group and its string of recent hit films such as Ice Age. She also upgraded AOL Time Warner from "neutral" to "buy," with a 12-month target of $25. That 58% boost assumes resolution of several issues, including negotiations to withdraw from ventures with Comcast and Newhouse.

Like AOL, Liberty Media is in the dumps but has its fans. Christopher Dixon of UBS Warburg says investors dislike Liberty's complexity. That's why the stock is at a 52-week low of $10.35. Dixon gives it a "strong buy," saying assets like the QVC channel come to $17 a share.

Some investors are weighing a return to the cable-TV sector, which has been battered by disclosures of self-dealings at Adelphia Communications (ADELA). Columbia's Mehra recently bought a million Comcast (CMCSA) shares, drawn by the efficiencies it can wring from its pending merger with AT&T's (T) cable unit.

There's merger potential among other players, too. Easier rules for TV station ownership can make targets of small station group owners, such as Gray Communications (GCS), says fund manager Mario Gabelli. After Univision's (UVN) $3.5 billion bid for Hispanic Broadcasting, tiny Spanish Broadcasting System (SBSA), with 25 radio stations, may be on the radar of NBC's Telemundo. All of which adds suspense to the new season. By Ronald Grover


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