(MONEY Magazine) – These are tough times in show business. A weak economy has hit TV and print advertising, crimping sales at media and entertainment conglomerates. The result: Giants like Disney, AOL Time Warner and Viacom have tumbled about 30% from their 52-week highs.

Amid this turmoil, we decided to look at two of the battered sector's less followed names--News Corp. and Vivendi Universal. Both are based overseas, have vast global operations and are less dependent than rivals on the U.S. economy's health. And they both look cheap.

At a recent price of $36, News Corp. has plunged 45% from its March 2000 high. Since taking over his father's business in 1953, CEO Rupert Murdoch has transformed it from a one-newspaper outfit in Australia into a global colossus with a market value of $38 billion. His relentless dealmaking has produced a stellar portfolio of assets, including the Fox TV network, 20th Century Fox movie studio, papers like the New York Post, a baseball team (the L.A. Dodgers) and a satellite-TV operation spanning Europe, Latin America and Asia.

Murdoch's lust for new deals has produced a world-class company, but it has also hurt his stock. Hobbled in part by the so-called Murdoch discount, it has risen just 51% in five years vs. 85% for the S&P 500. Critics carp that the billionaire mogul is so set on empire building that he loses sight of shareholders' interests. His expansionist binges have tended to dilute News Corp.'s stock--one reason why earnings per share shrank from $1.12 in '97 to 72[cents] in 2000.

To make matters worse, some of Murdoch's recent deals have been costly flops. Last year, the firm lost $293 million after its investments in new-media firms like WebMD went sour. Yet Murdoch has lost none of his appetite for dealmaking. He's now negotiating with GM's Hughes division to take control of DirecTV, America's largest satellite-TV provider.

Anyone investing with Murdoch needs patience and steady nerves, since News Corp. has a history of sharp swings. In 1990, for instance, it was near bankruptcy, then recovered spectacularly. It seems likely that the 70-year-old tycoon will turn things around again. In the long run his money-losing foreign businesses, such as his satellite-TV operations in Asia, could be explosively profitable as countries like India grow richer. And his U.S.-based assets, such as Fox TV, should rebound sharply when advertising picks up. Meanwhile, the stock trades at around book value--a rare bargain for a global blue chip with such high-quality assets. Among those waiting for a turnaround: the Capital Group, which recently owned shares worth $800 million. And Murdoch himself has a keen interest in making things work: His family owns 20% of the stock.

Vivendi Universal also boasts impressive properties. But it may offer a quicker payoff than News Corp. The French media and telecom titan, which has a market value of $73 billion, was formed by last year's merger of Seagram and Vivendi. Its prize assets: Universal Music Group (with artists like U2 and Eminem) and Universal Studios (whose recent blockbusters include Gladiator and Erin Brockovich). Vivendi is also in the mobile-phone business and owns 63% of a vast water utility with sales of $24 billion.

Some investors are put off by the complexity of this behemoth, but Caesar Bryan of Gabelli International Growth fund sees its diversity as a strength. "It owns a number of businesses with high barriers to entry," he says. One example: Its phone operations, which produced $1.2 billion in cash flow last year. Christopher Dixon of UBS Warburg adds that Vivendi is also at the forefront of the race to yoke content (film, TV and music) to new forms of delivery (mobile phones and the Web). Vivendi is teaming up with Sony and Yahoo to launch Duet, a subscription service for delivering music and videos over the Internet.

In contrast to News Corp., Vivendi's media business is on a roll. Its cash flow more than doubled to $805 million in the first quarter of 2001, and sales jumped 10%. Yet the stock, which has slipped 15% since January, remains cheap. At $67, it trades at 11 times cash flow vs. 54 times cash flow for aol. Vivendi also has little debt and is led by a formidable ceo, Jean-Marie Messier. He has already dazzled investors by transforming Vivendi from a bloated French utility into an international media power. Now he's vowing to boost cash flow for Vivendi's media and communications businesses by 35% a year in 2001 and 2002. The challenges? To prove that his French and American executives can work together, and to hit his aggressive growth targets in a slowing economy. But as Gabelli's Bryan says: "The risks are more than reflected in Vivendi's current price."

--ARAVIND ADIGA