The Merger Frenzy Explained

This is how the market views media right now: It loves video assets when they're in the hands of a well-regarded conglomerate like News Corp. (NWS ) or Walt Disney (DIS ). It likes companies with data that people will pay serious money for, like financial-information providers Thomson (TOC ) and Reuters (RTRSY ). It also likes players with a commanding presence in one media space and an Internet strategy that's considered smart, like cable giant Comcast (CMCSA ) and broadcaster CBS (CBS ). It doesn't like companies owning content and distribution perceived to be commoditized, like newspapers and radio. And when Wall Street hates a company that is admired in other quarters for its holdings, that company becomes deal bait.

Understanding all of that helps explain May's flurry of big potential hookups. (In brief: News Corp.-Dow Jones (DJ ), Microsoft (MSFT ) merging all or some of its media operations with Yahoo!'s (YHOO ), Thomson-Reuters, the speculation that Gannett (GCI ) might or should pursue help-wanted giant Monster.com (MNST ).) And understanding why, beyond simple earnings growth, the Street likes or dislikes a media company offers insights into the next deal or merger targets.