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3 Reasons To Load Up On Media Stocks: BT Group plc, Sky PLC & TalkTalk Telecom Group Plc

With the media sector undergoing a major transition at the present time, it could prove to be an opportune moment to increase your exposure to a fast-growing space. After all, the advent of quad-play (broadband, landline, pay-tv and mobile all from one supplier) is an exciting shift not only for consumers (as it could mean lower bills), but also for the companies involved in it, due to the vast potential for cross-selling and increased profitability over the medium to long term.

As such, these three media plays could be worth buying right now.

BT

While the £12.5bn acquisition of EE by BT (LSE: BT-A) (NYSE: BT.US) is not yet a done deal, it appears increasingly likely that it will go through the regulatory hurdles and make BT a true quad-play operator. This is excellent news for the company’s shareholders, since it provides the company with an integrated offering that is likely to appeal to many of its customers and, in the medium to long term, could stimulate a bottom line that is forecast to fall by 3% this year and then rise by 6% next year.

Of course, BT continues to offer considerable potential as an income stock. Certainly, it only yields 3.1% at the present time but, during the last five years it has increased dividends per share by a whopping 95% and, with its payout ratio being just 47%, there is plenty of scope for further dividend increases. This could boost investor sentiment in the company and, alongside improving growth prospects, could send BT’s shares higher in the long run.

Sky

With a move into the mobile phone space expected to take place over the next year, Sky (LSE: SKY) (NASDAQOTH: BSYBY.US) is set to quickly follow BT into the world of quad-play. This, combined with its excellent financial position following the tie-up with Sky Deutschland and Sky Italia, means that the company’s future remains relatively bright and it should be able to maintain its average bottom line growth rate of 19% during the last five years.

Looking ahead, Sky is forecast to post a decline in earnings of 10% in the current year which, while disappointing, is set to be overcome by growth of 18% next year. And, with it having a price to earnings growth (PEG) ratio of just 0.9, Sky appears to offer good value for money at the present time.

TalkTalk

When it comes to the most appealing quad-play operator, however, TalkTalk (LSE: TALK) is the clear winner. Not only does it already offer all four services, it trades at a very appealing price and has superb earnings growth potential.

For example, TalkTalk is expected to increase its bottom line by 73% in the current year, and by a further 42% next year. Despite this superb growth rate, TalkTalk trades on a price to earnings (P/E) ratio of just 22.8 and this equates to a PEG ratio of 0.4. As such, and while it is the smallest of the four operators with arguably the least financial firepower, it remains the pick of a very lucrative and exciting media sector.

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Peter Stephens has no position in any shares mentioned. The Motley Fool UK has recommended Sky. We Fools don't all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors.