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Nine analysts and top management from thirty-seven sector firms examine the Media & Entertainment sector in this special 199-page issue from The Wall Street Transcript, available at (212/952-7433) or http://www.twst.com/info/info389.htm

TWST: What are the factors that have shaped the environment for media stocks in 2001?

Mr. Rohan: There are three factors that have shaped the environment for media stocks so far this year. Clearly, the first is the macroeconomic environment, specifically the timing and trajectory of a rebound in advertising and in other economically sensitive subsectors, such as theme parks. The second key trend in media this year is consolidation. The third theme is the digitization of content. You can see this in a number of sectors, such as publishing, music, radio, and broadcast and cable television. The digitization of content is something that in the long run will lower distribution costs for all media companies, enhancing profitability. But digitization by itself may not necessarily increase consumption until media companies figure out how to distribute their content on multiple devices and platforms, such as wireless and satellite. The pervasiveness of the Internet has only accelerated that change.

TWST: Against this backdrop, how have the traditional media and the content-related Internet stocks performed over the past six months?

Mr. Rohan: The past six months have been very interesting. For the first quarter of the year, through the end of March, there was a growing realization that the optimistic financial targets would not be met, and the stocks reacted very poorly. There was absolutely no stability in the advertising-driven media names; investors were seeking shelter. On or about the beginning of April, however, the tone changed a little bit. The shares of companies that hit more realistic financial targets appreciated measurably. Any sign of stability was rewarded with significant share price appreciation. This happened for AOL (NYSE:AOL), Viacom (NYSE:VIA), and Disney (NYSE:DIS) to some degree. So actually the second quarter has been strong for the shares of some of these media stocks. Heading into the third quarter, investors are beginning to focus on next year’s outlook. What does 2002 hold for media? Is anything getting any better? At some point, as we bump along the bottom in this economic cycle, investors will lose patience — unless things start to improve.

TWST: What’s the reason why you particularly like Disney at this time?

Mr. Rohan: Disney is a company whose content assets have real value. In a world where consolidation seems to be again presenting itself in very interesting ways, Disney could be a great part of a larger entity. Disney by itself is no longer big enough, in some ways, to command the respect of some of the gargantuan cable and satellite companies that are starting to take hold. If Rupert Murdoch gets control of Hughes (NYSE:GMH), then News Corp. will be a threat to cable network programmers seeking access to the fastest growth segment of the multichannel world. Disney’s role in this world might be marginalized. That said, it becomes a very attractive acquisition candidate, as it complements a number of other companies in the space.

This special issue includes:

1) Broadcasting - TV & Radio - In an in-depth (10,600 words) Analyst Roundtable, James Goss, Vice President at Barrington Research Associates, Inc. and Alissa Grahm, Media Analyst at William Blair & Company, examine the outlook for the sector including, general market radio, regulatory outlook and share specific stock recommendations.

2) The TWST confidential Off-The-Record survey of management performance at nineteen sector firms asked market insiders about the ability of management teams to create shareholder value.

3) Media & Entertainment Stocks - In an in-depth (3,100 words) Analyst Interview, Edward Hatch, Head of Media & Entertainment Equity Research Group for SG Cowen Securities Corp., examines the outlook for the sector and shares specific stock recommendations.

4) Entertainment & Media Stocks - In an in-depth (6,500 words) Analyst Interview, David Miller, Media and Entertainment Analyst at Sutro & Co., Inc., examines the outlook for the sector and shares specific stock recommendations.

5) Newspaper Stocks - In an in-depth (3,300 words) Analyst Interview, Leland Westerfield, Director in the Communications Group of UBS Warburg Equity Research, examines the outlook for the sector and shares specific stock recommendations.

6) Internet Media Stocks - In an in-depth (3,600 words) Analyst Interview, Safa Rashtchy, Vice President of U.S. Bancorp Piper Jaffray, examines the outlook for the sector and shares specific stock recommendations.

7) Outlook for Media & Internet Media Stocks - In an in-depth (3,400 words) Analyst Interview, Jordan Rohan, Head of Media Research at Wit SoundView Corp., examines the outlook for the sector and shares specific stock recommendations.

8) Interactive Television & New Media Technologies - In an in-depth (5,100 words) Analyst Interview, Murray Arenson, Equity Research Analyst at Morgan Keegan & Company, examines the outlook for the sector and shares specific stock recommendations.

9) Interactive Technology - In an in-depth (4,100 words) Analyst Interview, David Lee Smith, Senior Analyst covering the media sector for Dain Rauscher Wessels, examines the outlook for the sector and shares specific stock recommendations.

10) CEO interviews (average 2,500 words). Top management of thirty-seven sector firms examine the outlook for their firm and the sector.