Report: 3Q Core Spot Outook Flat, But Why?

Core spot TV advertising revenue, which excludes political spending, will be as flat in the third quarter as it was in the second,  says the latest report from Wells Fargo Securities.

“We believe the culprit has been national–but we don’t know why,” the report says. “Is it the economy? Is it a faster secular shift of money into new media? Is it the ‘unique’ sporting events such as the Olympics in Q1 and the World Cup in Q2/ Q3? Our sense is that the weakness is coming from all of these factors.”

But the good news is that “robust political is right around the corner,” which will cause the total spot revenue of TV stations groups exposed to “hot” gubernatorial, Senate or House races to spike.

“According to our math, it would seem that amongst the pure-play TV broadcasters, NXST [Nexstar] NXST and  SBGI[Sinclair Broadcast Group] SBGI have the best exposure to the hottest races of 2014.

“However, we would note that GTN [Gray] has gained significant exposure due to hot senate races in Colorado and Michigan as well as a hot gubernatorial race in Wisconsin–despite losing some exposure given Texas…is no longer considered to be a “hot” state.”