That’s what Wells Fargo analyst Marci Ryvicker is saying. Yes, big TV programmers are in a bit of a slump and in some cases revenue projections need to be lowered, but the negatives will not last “in perpetuity” as Wall Street seems to think.
“We know the negatives for the media names already,” commented Ryvicker, “ratings are down substantially, there is little to no demand for scatter, and political advertising is coming in slower than expected. But at this point, it feels like the weakness is overdone, esp. for CBS and VIAB, where the market seems to be pricing in MSD to HSD adv. declines in perpetuity.”
She said estimates will be lowered for CBS and Viacom, kept as is for Time Warner and Fox, and actually raised for Disney.
As far as investing is concerned, in Ryvicker said CBS has the least downside risk and upside potential of all of them.
Ryvicker noted that digital is still raking cash away from traditional media platforms, but argued that most of it is coming out of print’s hide. Further, a certain amount of the cash being raked away from print is going to broadcast, but is frequently categorized incorrectly by data collectors.
In other words, the reporting suffers from the double-edged effect of estimating too much loss from broadcast and not giving enough credit for gains to broadcast at the same time.
For those looking to invest, Ryvicker said, “we might FINALLY be at the bottom” for CBS, and ranks it #1 of the five companies examined. After that, she likes Fox, Time Warner, Viacom and Disney, in that order.
The problem with Disney, for those wondering, is tough 2015 comps and a relatively high price at the moment.
RBR-TVBR observation: The comment on digital deserves additional focus. It should come as no surprise that it has thrown a monkey wrench into media statistical reporting just like it has into everything else media related.
It is interesting to hear Ryvicker’s belief that media companies are not being sufficiently credited with digital income already earned. Broadcasters should be trying to correct that, because like it or not, digital is where the advertising growth is, and broadcasters need to be able to point out that despite their traditional media roots, they are an excellent choice when it comes to digital placements as well.
We believe that broadcast companies would do well to accurately categorize their income sources in great detail. The better the data, the easier it will be to sell and grow.
