Analyst Amy Yong of Macquerie Capital has taken a look at the radio business and has a few observations to share ahead of the next round of revenue results conference calls.
She is expecting a mixed bag.
Heading her remarks with the advice to “proceed with caution,” she looked in particular at iHeart, Cumulus, Townsquare, Entravision, and Pandora.
Her overall impression: “The backdrop for local ad remains muted at best, with limited visibility into 2H. But, we expect a wide range of outcomes heading into earnings season.”
She believes that iHeartRadio is going to benefit from rebranding efforts and will pick up share – unfortunately, she thinks it will come at Cumulus’ expense.
Pandora, she believes, faces a mixed bag within its own parameters, picking up a strong gain in revenue but losing about 8% in EBITDA. Still, it is picking up momentum, adding in-vehicle users and picking up local ad revenue.
Townsquare is expected to report a nice gain in local revenue. Yong says the company is “relatively immune to the volatility given its hyper-local small town presence. She said, “..a focus on digital brands/live events is generating outsized growth relative to its peers.”
Entravision is expected to have almost explosive radio growth, thanks to the return of Piolin to its airwaves and general strength in both national and local sales.
(Its TV results are expecting the opposite, due to the lack of World Cup soccer and political. But here’s the TV upside – Yong sees the chance for the company to peddle some of its stations in the incentive auction and knock its leverage all the way down to 2.5x by 2017.)
Yong sees another tough quarter in the cards for Cumulus. She sees the company’s investment in new executives possibly beginning to pay off in the second half, eroded however by the absence of about $3 million in political income.
