After hearing updates from three companies covered by esteemed Wall Street analyst house MoffettNathanson at a conference held this week, the firm is moving forward with something it may not have anticipated just one month ago.
It’s raising its estimates for the second quarter and for the 2020 calendar year for both national and local TV advertising revenue.
To be clear, the boost involves just three companies — Discovery, Fox and ViacomCBS.
Even so, improving trends, off “dismal” March and April data, “drive some positive earnings revisions as well,” Senior Analyst Michael Nathanson notes.
At the same time, he’s still not a fan of cable television, as an ad-driven medium.
“While these data points and upward revisions are welcome news to a sector that has been pummeled by the market, there are two bigger overhangs that are not likely to be cleared any time soon,” Nathanson says. “The first is the number of U.S. Pay TV subscribers, which we currently forecast due to the absence of live sports and economic weakness will decline by a further -160 basis points from Q1 to -7% in Q2 2020. The second is the sequential pace of the TV advertising recovery, which will undoubtedly improve from Q2 to Q3 as political spending strengthens and key sports return, but at what rate?”
As such, MoffettNathanson is increasing its Q2 calendar year EBITDA estimate for Fox — its fiscal Q4 2020 — by 8%. For ViacomCBS, it is raising its estimate for the period by 3%.
Fox’s FY 2021 EBITDA is being raised by 2%, while ViacomCBS’s 2020 EBITDA is being elevated by 1%.
MoffettNathanson is leaving Discovery unchanged due to weaker international affiliate fee
projections.
