Time Warner (TWX) was downgraded to Hold from Buy by research firm Brean Capital, which cited valuation as the primary reason for the downgrade. Additionally, the firm believes that CBS (CBS) and 21st Century Fox (FOXA) have become more attractive stocks to own in the media space.

WARNER DOWNGRADE: Brean Capital analyst Alan Gould noted that the gap between Time Warner's stock price and the takeover offer the company received from AT&T (T) has narrowed to 12%, down from high teen percentage levels previously. Time Warner's shares are worth $104, representing a 5% discount to the acquisition price, the analyst stated, noting that the transaction is not scheduled to be closed for another year.

BETTER OPTIONS: CBS and 21st Century Fox are better options for investors than Time Warner, Gould asserted. He raised his price target on CBS to $75 from $65 today, contending that CBS' large size will make it "more important in the media industry." Moreover, the company is "extraordinarily well-positioned," as its two networks and "predictable" retrans and revenue comp revenue will enable it to grow, Gould believes. Additionally, its programming expenses are due to rise "only modestly" as its key sports deals do not need to be renewed in the near term, the analyst stated. Gould continues to predict that the company's profits will increase at a compound annual growth rate of 15%-19% over the next five years, and he kept a Buy rating on CBS shares. On December 14, Gould upgraded 21st Century Fox to Buy from Hold. The decline in the stock following the company's acquisition offer for the rest of Sky (SKYAY) it doesn't already own was overdone, and the shares looked "inexpensive," the analyst stated. Consensus estimates for Fox have dropped significantly since July, and the stock is the cheapest in the broadcast media group based on a variety of metrics, Gould stated. He placed a $33 price target on the shares.

PRICE ACTION: In early trading, Time Warner lost 0.5% to $96 per share, CBS added 0.1% to $64.56, and Class A 21st Century Fox shares were flat near $28.40.