Ad agencies as a group, however, are reeling from both the changes in the industry and the severity of the global recession. Interpublic Group (IPG), WPP Group (WPP.UK), Omnicom Group (OMC) and Publicis (PUB.France) continue to restructure as a result of shrinking revenue and profits. While the worst may be over for the agencies, the environment is still risky enough that investors may be wise to focus on other segments of the ad world. As Larry Haverty, veteran retailing and entertainment analyst and manager of the Gabelli Global Multimedia Trust, puts it: "I'd prefer to bet on the companies selling stuff, rather than those specializing in the art of trying to sell stuff."

It's no wonder, given the prevailing sentiment, that media stocks collectively trade for less than half their 2007 peak, and that best-in-class outfits, such as Omnicom (OMC), Walt Disney (DIS), News Corp. (NWSA), the parent of Barron's publisher Dow Jones, and Comcast (CMCSA) are as cheap, based on earnings and cash flow, as they have been in two decades. Still, it is courageous to argue that traditional media largely control their destiny, that consumer eyeballs still have value and that businesses will continue spending money to reach those eyeballs, even if they spend in different, more targeted ways in the digital era.

#1 advertising network

strong free cash flow generator, consistent results, excellent capital allocator, benefits from complimentary relationship to emerging internet advertising market, US presidential election, Euro soccer, '08 Olympics to benefit results next year, generating incremental revenue internationally, particularly in emerging markets

P/E is 20.7, the PEG is 1.62, and the yield is 1.1%.

Upgraded by Deutsche Securities from Hold to Buy

Employee Stock Purchase Plan

Best of Breed in the advertisig sector. But too expensive.

Downgraded by Deutsche Securities from Buy to Hold

failing to realize their opportunities with weak marketing comms brands