"Dot-Coms" Help Competing Media In Near Term

Market players say the proliferation of Internet companies is expected to help - in the short term, anyway - the very same companies it is expected to hurt in the long run.

In other words, bond investors in some of the more traditional media sectors, where Internet companies advertise, are reaping the benefits for the time being.

To be sure, new Web companies - the so-called dot-coms - will eventually take a substantial market share away from the more traditional media companies, but in the near term it should have the opposite effect and help those other mediums in terms of cash flow, according to Chase Securities high yield analyst David Walker.

As the young Internet companies increasingly dot the virtual landscape, they have to get the word out. And the best way for them to accomplish that, thus far, is by buying advertising space in media like radio, billboards, newspaper space and television commercials, Walker said.

Two portfolio managers agreed with the sentiment that media companies are poised to gain in the capital markets as online start-ups begin to hawk their wares. But they said they haven't seen gains as yet.

Names that may look attractive to high yield investors in the near future, however, include AMFM (formerly Chancellor Media), and Emmis Communications in the radio sector, as well as Young Broadcasting, Allbritton Communications and Granite Broadcasting in the television sector, sources said last week.

AMFM has $2.5 billion in outstanding junk bonds in six separate issues with coupons ranging from 8% on a senior note issue to 10.5% on a senior subordinated issue. AMFM was rated last week as a candidate to "outperform significantly" by Schroder & Co., but company officials there could not be reached for comment. Emmis has one 8.125% issue worth $300 million.

On the television front: Young has $570 million in outstanding junk bonds in four issues; Allbritton has one $175 million issue; and Granite has $460 million in existing high yield debt.

One of the buy-siders went on to say that TV is still the best form of advertising for such a company, because TV viewers still far outnumber online users who may just happen across a particular Web page by coincidence without having seen an ad.

"You see their commercials on TV all the time," one of them said, referring specifically to the growth in online trading.