Nomura Securities on U.S. Media: Not Quite Earning It
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Up: 11 | Down: 12 | New: 9
Rating Summary:
30 Buy, 19 Hold, 3 Sell
Rating Trend:
Up
Today's Overall Ratings:
Up: 11 | Down: 12 | New: 9
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Nomura Securities on U.S. Media: Not Quite Earning It
Analyst, Michael Nathanson, said, "On the face of it, looking at earnings, there has been good news, with four of the five companies reporting earnings that were ahead of our forecasts. In addition, the sector’s core drivers of advertising and affiliate fees in the quarter did not provide a source of upside to numbers. With revenues coming in as expected but earnings beating handily, the upside in earnings and operating profit growth were driven by the expense line. Given that we believe timing of premium expenses such as the NBA, the BCS and Viacom’s events provided great help in lifting cable network profitability, we think that the potential for margin compression exists in the near term. We believe that media stock performance will have greater dispersion this year and that investors should concentrate on companies that have mass, premium and nonreplicable content, and the potential for near term positive earnings revisions from affiliate fee negotiations such as Disney (NYSE: DIS) and News Corp. (Nasdaq: NWSA) In our view, Viacom (NYSE: VIAB) remains a value opportunity, with the lowest value and the highest relative 2012 share buyback."
"...In general, ad growth did not exceed our forecasts. Affiliate fee growth of 10% was in line with expectations, albeit with a wide variability in growth rates: Viacom, News Corp. and Disney at low- to mid-teens growth (helped by timing and digital dollars), while Time Warner (NYSE: TWX) and Scripps (NYSE: SNI) were in the mid-single digits."
Analyst, Michael Nathanson, said, "On the face of it, looking at earnings, there has been good news, with four of the five companies reporting earnings that were ahead of our forecasts. In addition, the sector’s core drivers of advertising and affiliate fees in the quarter did not provide a source of upside to numbers. With revenues coming in as expected but earnings beating handily, the upside in earnings and operating profit growth were driven by the expense line. Given that we believe timing of premium expenses such as the NBA, the BCS and Viacom’s events provided great help in lifting cable network profitability, we think that the potential for margin compression exists in the near term. We believe that media stock performance will have greater dispersion this year and that investors should concentrate on companies that have mass, premium and nonreplicable content, and the potential for near term positive earnings revisions from affiliate fee negotiations such as Disney (NYSE: DIS) and News Corp. (Nasdaq: NWSA) In our view, Viacom (NYSE: VIAB) remains a value opportunity, with the lowest value and the highest relative 2012 share buyback."
"...In general, ad growth did not exceed our forecasts. Affiliate fee growth of 10% was in line with expectations, albeit with a wide variability in growth rates: Viacom, News Corp. and Disney at low- to mid-teens growth (helped by timing and digital dollars), while Time Warner (NYSE: TWX) and Scripps (NYSE: SNI) were in the mid-single digits."
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