Analyst Sees 1Q Ad Revenue Up 1% - Broadcasting & Cable

Analyst Sees 1Q Ad Revenue Up 1%

Broadcast increases almost 2%, cable shows small 0.4% gain
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Analyst Michael Nathanson of MoffettNathanson Research sees media companies reporting a positive first quarter for ad sales, though not as strong as fourth quarter.

In a new report, Nathanson sees broadcast up 1.7%, with Fox showing a healthy 3.5% gain.

Cable is up just 0.4% with Viacom down as usual (4%) and Disney down 13.5% because of the shift of some college football bowl games to fourth quarter from first a year ago. The biggest gainer among the cable networks is Scripps Networks Interactive, up 9.5%, followed by 21st Century Fox and Discovery, each up 7%.

“While scatter pricing remains strong, we believe the deceleration of ad growth is indicative of the power of NFL programming (which ended in early 1Q), lower ad loads at many of the larger cable network groups, and ratings woes at several broadcast networks,” Nathanson said.

Nathanson also lifted his earnings estimate for several of the media companies, including 21st Century Fox, Disney CBS, Scripps Networks and Time Warner. He also raised his target prices for Time Warner, Fox, Disney CBS Scripps, AMC Networks and Discovery.

But he adds: “Despite the recent bounce, we continue to be cautious on longer-term sector trends. Slowing affiliate fee growth, which has been a singular focus for investors, will likely continue to be the largest obstacle in generating a more broadly positive perspective.”

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