Analyst Cuts Estimates Before 4Q Earnings - Broadcasting & Cable

Analyst Cuts Estimates Before 4Q Earnings

Juenger cites lower ratings, ad revenue
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Analyst Todd Juenger of Sanford C. Bernstein has lowered his fourth-quarter earnings estimates for seven of the eight companies in the TV business he covers.

Juenger has been a big pessimist on the state of TV ratings, blaming streaming video on demand for what he calls "real" declines in viewing of traditional ad supported channels, and believes that something is structurally wrong with TV advertising until proven otherwise.

"We sense we have one of the most pessimistic sell-side views of the future of U.S. advertising, which is expressed in our numbers but not so much in sell-side consensus — so we expect earnings revisions to generally keep moving down," he said in a new report Thursday.

"The media companies have fostered a storyline of advertisers delaying spending. We bought into that storyline throughout the first half of 2014. However, after many quarters have passed, we don't believe it is valid to continue calling it a 'delay.' At some point it has to be a 'decline,'" Juenger said.

The exception among the TV companies Juenger covers is the Walt Disney Co., which has positive developments coming in the consumer products and parks businesses.
In addition to Disney, Juenger continues to rate 21st Century Fox and Time Warner as "Outperform."

"We favor companies in the U.S. Media sector that are poised to benefit the most from increases in affiliate fees and international growth (both in TV and Theatrical) and have the best programming cost structures," he said. "We also prefer companies that are least exposed to certain negative industry forces, including declining home video sales and publishing."

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