TV revenues gained in Q1


It wasn’t the kind of growth enjoyed in the 2010 election year, but the publicly traded television companies still reported average revenue growth of 1.2% in Q1. The calculation comes from the media investment bank M.C. Alcamo & Co.

“After four consecutive quarters of double-digit growth, the US broadcast industry coasted positively into a soft landing in Q1,” said Michael Alcamo, the firm’s President. “The industry reported a respectable revenue growth rate of 1.2% over the first quarter in 2010 – which itself had shown revenue growth of 15.3% from Q1 2009.”

The seven pure-play TV companies tracked by the quarterly survey did better than the TV divisions of larger media companies, with revenues up an average 2.2%, versus a slight decline of 0.1%. However, the best performer came from the latter group, with the TV unit of McGraw-Hill up 10.2%.

Source: MC Alcamo & Co.

Television companies continue to be strong generators of cash. Alcamo noted that Sinclair just declared a quarterly dividend of 12 cents per share and Belo of five cents per share. He said broadcasters are expected to use their free cash flow in four ways. “First, many broadcasters will continue to pay down credit facilities, and maintain borrowing capacity. Secondly, cash is being reserved to fund potential strategic deals. Third, broadcasters are investing in their product by gradually rolling out high-definition capabilities at station assets. Lastly, several firms reported that they are re-instituting dividend programs,” Alcamo said.

RBR-TVBR asked Alcamo why there hasn’t yet been a post-recession station deal in TV to set the new benchmark. “It remains very difficult to syndicate a financing of $250 million or more in television.  The smaller transactions are being financed out of cash on hand or available credit facilities.  It will still take a while for bank groups to get used to the idea of valuing a major acquisition as a multiple of cash flow at levels that will be sufficient to meet the expectations of a seller,” he replied. “We feel there are major sale transactions waiting in the wings, and that it is only a matter of time.”

RBR-TVBR observation:
Not a bad quarter for an off-year election-wise. TV is clearly a good cash-flow business. It seems strange that we’re still waiting for the first big television station transaction post-recession when radio has already had a couple.

Click here for RBR-TVBR’s complete review of Q1 stock trading – not just for TV stocks, but radio as well.