Lions Gate Entertainment Corp (LGF.B)

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The media merger guessing game • 1:20 PM

If 21st Century Fox (FOXA +0.1%) strikes a deal to buy Time Warner (TWX +3.7%), media analysts thinks a chain reaction will occur.

CNN will almost assuredly be unloaded, most likely to Disney (DIS +0.6%) or CBS (CBS +2.5%).

The development could also draw out a tech giant such as Apple or Google to make a bid for content-heavy Lions Gate (LGF +0.1%) or Discovery Communications (DISCA +2.2%).

Though premiums in the media sector are expected to get quite frothy, having significant content owned in perpetuity might pay off in the future as some licensing costs go away.

Looking for a wildcard scenario? NYT M&A writer David Gelles thinks a spoiler plan would see Time Warner take the defensive measure of trying to buy out CBS.

A catch-all for investing in media stocks is the PowerShares Dynamic Media ETF (NYSEARCA:PBS).