Generational change accelerates for the media industry

THE new media moguls, like the Twitter chief executive Dick Costolo and Facebook's founder Mark Zuckerberg, have taken the stage in the past week or so on Wall St following the big takeover moves by traditional media titans Rupert Murdoch and John Malone earlier in July.

While Murdoch's 21st Century Fox is trying to buy Time Warner and Malone and his Liberty Media group is buying a stake in ITV to expand the European front of his global empire, Costolo and Zuckerberg brought their quarterly earnings to Wall St using a different language about their companies that many investors love and others remain sceptical about.

Twitter's second-quarter revenue more than doubled to $312m - real money - helped by the frenzied number of tweets sent during the World Cup.

Twitter's shares rose more than 30 per cent in after-hours trading after it announced its results. No mean feat.

Twitter's average monthly active users rose 24 per cent to 271 million, and its advertising revenue soared 129% to $277m. Investors pounced on such concrete numbers.

Those Twitter numbers, though, were dwarfed by Facebook's results reported a few days earlier - about 1.3 billion monthly active users, and advertising revenue of $2.68b.

Yet, according to Reuter's data, Twitter shares were trading last week at about 200 times forward earnings, compared to Facebook's 39 times.

Facebook's stock market value - already an incredible $190b - would be almost $1 trillion if its shares were trading at Twitter's valuation.

So why the lofty valuations for Twitter?

Is it all hype in a year where stock valuations have gotten a trifle out of control?

Some Wall St analysts believe Twitter still has huge, untapped potential as a distributor of mainstream information as opposed to the "goofing off" information that pervades most social media.

Going forward, it will be fascinating to see if the likes of Costolo and Zuckerberg have the gumption, stamina, gut instincts, cojones, decisiveness and ruthlessness of old school media men like Murdoch and Malone.

Who knows? Maybe they have all of the above and a lot more. They have certainly come from nowhere to stake a credible claim in the modern media landscape.

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