The Next Frontier: TV Takeovers
By Adam Lashinsky

(FORTUNE Magazine) – If 2003 was the year investors re-discovered beaten-down shares, 2004 is shaping up to be the year aggressive companies gobble up their healthy but smaller rivals. (Witness J.P. Morgan's buyout of Bank One and the ongoing auction for AT&T Wireless.) That makes stocks in consolidating industries like cable and satellite ripe for buyout-related gains. With the deal-making momentum driving prices higher, UBS cable-industry analyst Aryeh Bourkoff says, "It's going to be a good year for valuations."

At the top of Bourkoff's takeover list is EchoStar (DISH, $36), the sole remaining independent satellite-television company now that Rupert Murdoch's News Corp. has swallowed competitor DirecTV. EchoStar's ten million customers are enticing to phone companies, which could use additional services to offer as their traditional revenues slip away. The likeliest bidder: SBC Communications, already an EchoStar partner and investor.

Cable-industry consolidation is a sure bet in 2004, now that potential buyers like Time Warner, FORTUNE's parent, have shrunk heavy debt loads. One juicy target is Cablevision Systems (CVC, $27), which has a lucrative presence in the New York area but a relatively puny market value of about $8 billion. Smith Barney's Niraj Gupta sees a buyout value for Cablevision of anywhere from $36 to $42. That's the kind of programming that would draw high ratings from the cable company's investors.

--Adam Lashinsky