Morgan Stanley media analyst Ben Swinburne upgraded his rating on the media sector to “attractive” from “cautious” Monday, citing expected revenue growth on the distribution side, a resurgent and resilient advertising market and continued hidden value in the stocks.

"Looking forward we see TV distribution revenue growth accelerating, increasing confidence in earnings growth and moving us from bearish to bullish," Swinburne wrote in a note to clients. "Fading headwinds from traditional bundles and emerging tailwinds from new bundles should moderate cord cutting and increase content pricing power."

Swinburne wrote that he prefers distribution to content stocks, adding that accelerated revenue is coming from three drivers: the exit from an “unprecedented” consolidation period among distributors; the emergence of new and future streaming video entrants and robust demand for existing OTT services.

Swinburne estimates that new streaming services will add about 5 million customers between 2016 and 2020, while current over-the-top offerings like CBS All Access and standalone OTT products like Starz’ Showtime and HBO Now ended 2016 with more than 10 million subscribers (excluding Netflix, Hulu and Amazon Prime), which should help offset the impact of a dip in bundled subscribers.

Swinburne also predicts that the advertising market will continue on its upward trajectory in 2017.

“Valuation levels are defendable,” Swinburne said, noting that media stocks trade below cable and the S&P. He added that tax reform “could be an additional tailwind.”

On the programming side, Swinburne resumed coverage of Viacom with an “overweight” rating. He upgraded The Walt Disney Co. and MSG Networks to the same level, joining movie studio and entertainment giant Lionsgate.

“We see [Disney] benefiting the most from new emerging streaming bundles,” Swinburne wrote. “We see continuing appreciation of content/IP in Disney (film outlook), MSG (nearly 55% discount to NAV), and Lionsgate. Finally, we see Viacom as a compelling risk/reward with an under-earning film studio and low-hanging fruit to improve its relationships with distributors.”

Donald J. Trump’s stunning upset win over Hillary Clinton for the presidency has had little effect on the stock market so far, with media stocks dipping between 1% and 2% in early trading and the Dow Jones Industrial Average rising slightly as investors and pundits try to digest the events of the past several hours.

Some pundits had expected the uncertainty that would envelop a Trump win would send the markets into a tailspin. That, at least early on, didn’t come, with the Dow Jones Industrial Average down just 5.8 points to 18,326.92 at around 10:20 a.m.  

Trump was a critic of big media during the campaign – he has said he would block the proposed AT&T-Time Warner merger and would never have approved Comcast’s purchase of NBC Universal. Time Warner was the biggest loser in the media space in early trading Wednesday, down 1.7% ($1.48 each) to $86.39 per share. AT&T stock rose 0.5% (17 cents each) to $37.16 per share.

The rest of the sector was a mix. Comcast and Charter each climbed slightly, with Comcast gaining 1.1% (66 cents) to $63.18 per share and Charter rising 1% ($2.19) to $264.45 per share.

Dish Network, which posted another quarter of subscriber losses, rose 1% ($47 cents) to $57.15 per share, possibly on optimism that a blocked AT&T-Time Warner deal would make a Dish-AT&T combination more likely.

On the programming side, content stocks were all down between 1% and 2% in early trading, with Viacom shedding 2.41 (78 cents) to $36.57 per share, Disney down 1.3% ($1.18) to $93.20 and 21st Century Fox down 1.7% (47 cents) to $26.62 per share.      

Telsey Advisory Group media analyst Tom Eagan initiated coverage of the programming sector on Friday, placing an “outperform” rating on content stocks Time Warner, 21st Century Fox, Viacom and CBS.

In a 54-page note to clients, Eagan details his outlook for the sector, which is optimistic despite pressures from over-the-top  video providers and skinny bundles.

Eagan prefers to value the sector on “fundamentals over fear,” adding that pay TV erosion concerns are overblown and that new measurement products could help provide additional upside to the stocks.

Eagan believes sector fundamentals are stabilizing, adding that CPMs gains and better scatter market pricing should  translate into a healthy 2016 upfront and mid-single digit percentage growth for the year. In addition, Eagan anticipates affiliate fees for pay TV networks will increase in the mid-to-high-single digit percentages. Broadcasters will see even bigger gains from retransmission consent fees. Eagan estimated that retrans fees at CBS would rise 30% to $1 billion this year, with Fox experiencing an 18% gain.

Content stocks continued to slide in the third quarter, albeit at a slower pace than earlier in the period, while distributors, riding a new wave of optimism fueled by merger opportunities and broadband superiority, managed to eke out a small gain.

Overall, content stocks slid about 13% in the third quarter, led by Viacom (down 33.2%), Scripps Networks Interactive (down 24.8%), Discovery Communications (down 21.7%) and Time Warner Inc. (down 21.3%).

Content stocks were battered in August when fears over cord-cutting and skinny bundles — smaller packages of programming offered at lower prices — drove the stocks down to record lows. The Walt Disney Co., parent of once-invincible ESPN, led the decline when it said during a quarterly conference call that smaller content packages had cost the sports network subscribers. It subsequently lowered its cash-flow growth guidance from high-single digit percentage growth through 2016 to midsingle digit growth.

The Disney news touched off a firestorm in the market for cable-network stocks, all of which were down at least 10% at one point between Aug. 5 and Aug. 6. The sector as a whole lost more than $60 billion in market capitalization.

The stocks have regained some of that ground but were still down in the quarter, a deficit that erased the sector’s 8.4% gain for second quarter of the year. For the nine-month period ended Sept. 30, the sector was down nearly 3% — not bad, considering the declines earlier in the third quarter.

Distribution was an entirely different story. Cord-cutting and over-the-top fears weighed on the sector as well in May — as a whole, the top four cable MSOs rose a collective 2.6% during that time — but rebounded as the months went on.

The distribution sector rose nearly 3% in the third quarter, boosted by European telecom giant Altice’s $17.7 billion bid for Cablevision Systems. The uptick was just below the 3.9% increase in the second quarter. For the full year, distributors are up nearly 12%.

Deal activity is the main driver of that growth. Besides Altice’s offer for Cablevision, which it hopes to complete by the first half of 2016, the Netherlands-based telecom giant also has a $9.1 billion deal to acquire midsized cable operator Suddenlink Communications. That deal is scheduled to close by the end of the year.

Couple that with Charter’s pending $78.7 billion purchase of Time Warner Cable — slated for a year-end close — and the cable deal plate appears quite full for the moment.

Altice recently completed the debt-financing portion of its Cablevision purchase, raising about $8.6 billion in bank and bond debt, but at higher prices than originally expected. Some have said the deal’s increased pricing could point to a growing skittishness in the debt markets for financing such deals.

He said he doesn’t expect much deal activity in the fourth quarter, but that’s mainly due to the number of deals currently in the pipeline, rather than a tightening of the finance markets.

Altice will likely spend the rest of the year moving its current targets through the regulatory process, he added, as will Charter. Comcast can’t expand in distribution “until we get a different FCC,” he said.

There have been recent deal rumblings on the content side — Starz was reportedly in advanced talks with movie studio Lions Gate Entertainment regarding a possible acquisition.

Starz, which has basically been in play from the day it split off from Liberty Media as a separate company in 2009, has been the subject of acquisition talks for years. Earlier this month reports claimed Starz was negotiating a possible merger with AMC Networks, but that speculation seemed to disappear.

Starz and Lions Gate reportedly discussed merger opportunities a year ago but couldn’t agree on price.