In the middle of the last century, there was a time when there were three major networks and maybe a couple of independent stations in your hometown. Now the choices are endless, and with the millennial generation leading the way, the over-the-top and streaming video on demand companies like Netflix, Hulu and Amazon are starting to own the viewers, as clearly the younger generation has no interest in paying huge cable or satellite bills for swaths of channels they will never watch.

In a new RBC report, the media team make the case that the content providers and TV studios are the ones that will clean up in this bold new world. Plus, the market is growing as the demand for new and edgy original programming continues to skyrocket. The report made this observation on the state of the sector:

In this unique deep dive on TV studios we examine the double-edged sword of The Golden Age of TV. Media investors (and couch potatoes) know we’re living in an unprecedented era of television content. Dynamics in TV content production are generally favorable and benefiting the TV studios that exist within most large cap Media companies.

The team also commented on the sheer size of the market:

We think the annual market for TV shows broadly defined is currently ~$45bn and growing rapidly due to the well-understood increase in original content spending. Demand is so strong that it’s creating per-episode price inflation both in production and in syndication. It’s a seller’s market so we see TV studios as bright spots in Media and consider them high multiple assets within Media companies.

Four top companies are rated Outperform at RBC, and they all make good sense for more progressive growth accounts looking to the future.

CBS

This large cap broadcaster’s shares are down over 20% from where they were trading this time last year and could be an incredible value. CBS Corp. (NYSE: CBS) may be in the best position of all the broadcast networks with an outstanding prime-time lineup, solid sports franchises like the NFL, March Madness College Basketball, The Masters and other top programming, the venerable network could once again be an outstanding stock for shareholders.

The company is leading in the ratings and is poised to continue the network’s programming dominance in 2016. The broadcasting giant is now in the midst of a significant stock repurchase process, and many on Wall Street expect the company to shrink its share base by around 25% over the next two years.

The company surged past Wall Street expectations in the first quarter, with the company crediting strength across all units. Revenue in the quarter ending March 31 increased 13% year over year to $3.76 billion, a company record for the quarter. Affiliate and subscription fee revenues shot up 16%, with retransmission revenues and fees from CBS Television Network rising 25% in the quarter.

CBS shareholders are paid a 1.32% dividend. RBC has a price target for the shares is $68, and the Wall Street consensus figure is set at $69.92. The stock closed Tuesday at $54.42 a share.

Disney

This is a top consumer media company with multiple streams of income to push revenue, and it is the top pick at RBC. Walt Disney Co. (NYSE: DIS) stock continues outperforming on a near-term and long-term basis. With the movie studio business poised to improve, as with accelerating theme park business, the network programming continues to drive viewership with extensive sports programming. Combining that revenue growth with the company’s solid media networks and interactive presence, and 2018 revenue estimates could be conservative.

Many on Wall Street feel that the company’s distribution leverage and optionality, as well as its concentration of valuable intellectual property, will only improve with the acquisition of 21st Century Fox assets. Another plus is Disney’s continued impressive theatrical momentum.

Shareholders receive a 1.64% dividend. RBC has a $135 price target, and the consensus target is $119.95. The stock closed most recently at $102.92.

Discovery

This is a somewhat off-the-radar media content play that could bring solid returns. Discovery Inc. (NASDAQ: DISCA) is one of the leading global providers of cable networks. Its portfolio of networks includes key networks such as Discovery Channel, Food Network, Eurosport (international network), HGTV, Animal Planet, The Learning Channel (TLC) and Travel Channel, as well as OWN (the Oprah Winfrey Network), DIY, Science Channel, Motor Trend Network and Investigation Discovery.

Discovery swung to a loss in the first quarter, hit by hefty costs linked to its purchase of Scripps Network Interactive and its deal to raise its stake in Oprah Winfrey’s network OWN. During the quarter ended March 31, the company lost $8 million, versus year-ago income of $215 million. On top of its Scripps acquisition, Discovery closed on its $70 million deal to buy a majority of Oprah Winfrey’s network. Revenue jumped 43% to $2.31 billion, compared with a year earlier.

The $29 RBC price target compares with a consensus target of $26.77 and the most recent close at $22.96.

Lions Gate

This could be one of the best pure-plays in the entertainment content arena. Lions Gate Entertainment Corp. (NYSE: LGF-A) engages in motion picture production and distribution, television programming and syndication, home entertainment, interactive ventures and games and location-based entertainment in Canada, the United States and internationally. The company operates through three segments.

The Motion Pictures segment is involved in the development and production of feature films; acquisition of North American and worldwide distribution rights; North American theatrical, home entertainment and television distribution of feature films produced and acquired; and worldwide licensing of distribution rights to feature films produced and acquired.

The Television Production segment engages in the development, production and worldwide distribution of television productions, including television series, television movies and mini-series, and non-fiction programming, as well as sells and licenses music from television broadcasts of its productions, and licenses its films and television programs to ancillary markets.

The Media Networks segment distributes STARZ branded premium subscription video services; streaming services on subscription video-on-demand platforms; and content and other programming services.

RBC has set its price target at $35. The posted consensus target is $32.25, and the shares closed Tuesday at $21.98.

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The future is endless, as the business and demand for new and exciting programming will grow exponentially, and new users will continue to add the over-the-top and subscription video on demand outlets. Faster and increasing bandwidth and latency will only help push that adoption.

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