Take-Aways from Needham & Company's 'Future of TV' Conference (CBS) (NLSN) (SCOR) (WWE) (RATE) (SYNC)

Below are analyst Laura Martin top three take-aways from the recent Needham & Company's 'Future of TV' conference:

1) speakers agreed that the ad market current 20% y/y scatter growth is attributable to ad revenue returning to TV as fraud and effectiveness questions are hurting digital alternatives;

2) streaming long form TV and video content is garnering >80% of video ad dollars online, and more is coming

3) data is the new black with data increasingly tied to TV inventory, both online and offline

CBS (NYSE: CBS). CEO Les Moonves interviewed in a fireside chat noted that:

1) Of CBS’s 6 new shows in primetime, CBS owns 50% of two, 70% of one, and 100% of the remaining three. The growing economics of the “back-end” (after a series is off the air) can be up to $100mm- which links ownership to highest NPVs.

2) Given today’s strong scatter market and the fact that political will tighten ad inventory in the December quarter, CBS hopes to get double digit price increases in upfronts, plans to sign contracts for 80% of its primetime ad inventory up front (up from 74% last year) and expects the upfront market to end quickly (ie, July, 3) CBS projects 4mm subs of Showtime OTT plus 4mm subs for CBS All Access OTT in 5 years. Together, this would generate $800mm of revenue annually.

Nielsen (NASDAQ: NLSN). Megan Clarken, EVP of Global Product Leadership at Nielsen, was interviewed in a fireside chat and noted that:

1) all TV programs have ratings lift after live+7 days and the more total lift an episode has the more viewing comes after day 35;

2) generally, viewers watch reality shows within 48 hours and serial dramas within 7-14 days;

3) Digital often adds 2-4% incremental monthly reach;

4) TV ad growth is robust because there is a shift of ad revenue back from digital to TV because TV is stable with broad reach and no fraud);

5) On average, about 80% of total TV viewing is still live (nearly 100% for sports).

comScore (NASDAQ: SCOR). Executive Vice Chairman and President Bill Livek interviewed in a fireside chat noted that:

1) no mention of accounting issues or an update 10Q filing date, other than to reiterate that the Board will have an update in late June

2) cross platform measurement product proceeding on schedule;

3) data and analytics will drive ad upside

4) Viacom (VIA) has announced (and NBC may be next) they are using SCOR’s hyper-granular data across platforms to guarantee delivery, implying SCOR’s data is a currency, like NLSN’s.

World Wrestling Entertainment (NYSE: WWE). CFO George Barrios interviewed in a fireside chat noted that:

1) WWE has grown revenue diversification (ie,downside protection) because WWE now has three discrete revenue streams including traditional TV (5-7 hours live/week on TV), OTT network direct-to-consumer (live events every month plus new reality and animated series plus a 150,000 hour total library) and advertising revenue from YouTube(ie, free short form videos);

2) international represents 25% of OTT revenues; 3) WWE dividend yield is above market averages of 2.8% (ie, downside protection). Upside comes from elongating engagement- 4 billion hours of WWE watched in 2015 (3.4 billion TV hours plus 650 million digital). Doubled revenue from the old pay-per-view business to $160MM via the OTT Network in 2015 (now 30% of revenues).

Bankrate (NASDAQ: RATE). CEO Ken Esterow interviewed in a fireside chat stated that: 1) RATE is buying more credit card leads while keeping ROIs positive; 2) dynamic pricing and new management has fixed the mortgage business within banking but now weak CD demand is hurting this segment; 3) the loss of a large customer within the Caring segment has set its growth trajectory back by 6 months; and 4) FCF generation is the primary positive Wall Street is missing about the RATE story.

Synacor (NASDAQ: SYNC). CEO Himesh Bhise interviewed in a fireside chat noted that: 1) ATT business was won owing to SYNC’s repositioning via recent acquisitions; 2) ATT deal alone should double SYNC’s revenue by 2019; 3) the $10mm investment required to bring ATT onboard can be funded from internal cash flows; 4) SYNC’s strong first quarter reporting 13% revenue growth to $30mm and 17% EBITDA growth to $1.5mm (with gross margins up 1100 basis points y/y) was driven by acquisitions and strategic repositioning that should be aided by ATT deal; 5) SYNC’s targets of $300mm of revenue, $30mm of EBITDA in 3 years (2019) suggests a strong growth trajectory.

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