As states begin opening up, Nexstar CEO Perry Sook projects that the company will be profitable in every quarter of this year with a rebounding auto category and expected political spending among the reasons.
In Comcast’s analysts call Thursday, Chairman-CEO Brian Roberts said: “We absolutely believe that sports will come back. And when they do, there’s bound to be so much excitement and enthusiasm, which may resonate even more than before, regardless as to whether or not stadiums are filled with fans.” Broadcast TV (NBC, Telemundo, content licensing and the O&O stations) saw revenues increase in the first quarter by 8.8% to $2.68 billion. Higher retransmission consent payments were a big contributor to a 6.9% gain in “distribution and other revenue.”
“What’s old is new again, and broadcast linear television is seen by younger audiences as the perfect pairing for subscription services and virtual MVPDs. They’re plugging in digital antennas and tuning in to free, over-the-air television,” Scripps CEO Adam Symson told analysts this morning. “The combination of our local television portfolio and our five Katz networks uniquely positions Scripps to take advantage of the over-the-air renaissance in the media marketplace.”
“We are bullish about political advertising revenue prospects for 2020 and are off to a fine start this year,” Hilton Howell told analysts today. Gray is increasing its political guidance for 2020 to $250 million-$275 million, well ahead of the company’s record of $235 million in 2018. It also reported sequential improvement in auto advertising for 4Q and strength in the legal, medical and financial ad categories.
CEO Chris Ripley tells analysts: “Sports betting we think will have large new revenue pools associated with them. We think ultimately they will be bigger than advertising — not as big as subscriptions — but it also helps viewership, which helps advertising and viewership, which helps you with your MVPD negotiations.”
CEO Perry Sook reports 4Q growth in 16 of the station group’s 25 major ad categories that are regularly tracked. That translated to a 1.3% increase in same-station core advertising.
ViacomCBS CFO Christina Spade says strong 4Q retrans/reverse comp will continue as growth drivers this year, along with political advertising. And President-CEO Bob Bakish was extremely bullish on streaming opportunities.
CEO Dave Lougee tells analysts that the company’s advertising categories pacing up this year include auto, media & telecom, travel & tourism, medical & dental, banking & finance and auto after-market.
Disney’s legacy ABC businesses were down for the quarter, although the company didn’t offer specific details. A bright spot was an increase in affiliate revenue (retrans for the O&O stations and the ABC Network’s share of what affiliates received), which was attributed to higher rates. But the broadcasting segment had lower advertising revenues for the quarter, with ad sales down for the O&Os and a drop in average network viewership.
CBS Corp. CEO Joe Ianniello told analysts this morning that in the third quarter, growth was driven by an 18% increase in subscriber fees: retrans, reverse comp and virtual MVPDs. Station revenues decreased 6% to $406 million, attributed to the lack of political advertising compared to a year earlier and the impact of the AT&T blackout.
After the company reported third quarter results at the high end of its guidance to Wall Street today, the stock price opened at $18.15 and stayed above $18 for most of the day’s trading. Political advertising has outpaced expectations for Gray every quarter this year, despite the lack of a national election.
“We’re doing better in our larger markets, with local being specifically strong,” Tegna CEO Dave Lougee told analysts today, with good performances from insurance, media and telecom, medical, dental and services categories.
Retrans powers the group’s 3Q, passing ad dollars. While auto is still down, pharmaceuticals, attorneys and insurance are the driving ad categories.
“The category that is phenomenal in its growth — and it continues to be unabated — is the legal category,” the group’s CEO, Perry Sook, told analysts today. He noted that legal is already the top category reported by another group owner in at least two markets, surpassing auto. “We’re not there yet, and there’s a long way to go for us to get there, but legal is now our No. 2 category, supplanting fast food, furniture and some of the other perennially strong categories. They’re strong, it’s just that the growth curve on legal advertising continues unabated,” Sook said.
But the outlook of non-political national spot remains gloomy. C0-CEO Pat LaPlatney said the company remains “disappointed with the weakness in national ad revenue, especially the auto sector.”
Wall Street may be getting a different report from other broadcasters, but Sinclair’s auto ad sales have been growing, as are the retail and goods and services categories. “Core advertising for us has been consistent. It hasn’t been robust, but it’s been consistent and it’s been positive,” COO Steve Marks told analysts.
“It’s a goldilocks world,” Nexstar CEO Perry Sook said of core, which excludes political advertising. “It’s not too hot, it’s not too cold, it’s kind of plugging along.” And, he added, he sees no reason why the company’s double-digit annual retrans and net retrans growth should not continue for at least the next three years. “We see no change to the outlook or the ecosystem,”
CEO Dave Lougee said dropping Cox Reps to go in-house will increase automation of national spot sales and reduce the number of points of contact that the agencies have to deal with. “The response from the agencies to what we have announced has been tremendous,” he said. And he told analysts that retransmission consent revenues should account for about half of total revenues beginning in the 2020 cycle and continue to grow thereafter.
For right now, the company says it’s focused on integrating all its recently-acquired stations. But, said CEO Adam Symson, “it won’t be long before we’re positioned again to pursue accretive M&A.”
The revenue growth was “driven primarily by” subscription revenue growing 18% to $242 million that CEO Dave Lougee said was a “first quarter record,” along with growth in Tegna’s sales, digital and content operations.
Coming off a first quarter in which core was down, the station group will grow core this year, Sinclair COO Steve Marks told analysts following release of the 1Q results. That promise is based on what the stations are seeing in the auto subcategories of domestic dealers, domestic manufacturers and foreign dealers.“So, the three biggest categories we have are propelling our efforts right now and that gives us a reason to believe that we’re turning the corner,” Marks said.
Retrans was the chief contributor to the station group’s top line in the first quarter, accounting for just over half the company’s total $626.6 milllion in revenue. That reflects continued strong retrans growth, up 13.8% in the quarter. Spot and digital, both down the in quarter, account for 40.4% and 8.4% of total revenue, respectively.
After reporting first quarter revenue of $518 million that included $280 million from Raycom, the company is still eyeing potential future acquisitions.
“We like our chances on political dollars,” said Sinclair EVP Steven Marks on the group’s fourth-quarter call with analysts today. “You just look what goes on every day. [Watching politics has] become the best TV show on the planet.”
Nexstar, which is expected to become the industry’s largest station group when it closes on its merger with Tribune this fall, said that for the first time in its two-decade history, “non-TV revenue” from retransmission consent and digital will exceed that from TV advertising.
CBS is prepared to “do what is necessary” to hang on to its NFL rights. That was the message sent by CBS acting CEO Joe Ianniello and CBS Sports chief Sean McManus Thursday during CBS’ fourth-quarter earnings call. Ianniello also emphasized the growth in CBS’s direct-to-consumer platforms — CBS All Access and the standalone Showtime app — that has paced ahead of projections the company made in 2016.
Five years ago, said Scripps Local Media President Brian Lawlor, Scripps owned only 13 television stations. “When we close on our recent acquisitions, we’ll have 51 stations in 36 markets stretching across the country.” The plan, he said, is to build “a stronger and more durable station portfolio.”
Tegna President-CEO Dave Lougee says that ad category is destined to join subscription revenue as a reliable income stream that will inoculate the company from the ups and downs of the economy as a whole.
Sinclair not only exceeded guidance in political advertising, it exceeded every other midterm election in the company’s history, and also exceeded political income earned during the 2016 presidential election. As Television Group EVP-COO Steven M. Marks put it: “We’re drunk on political.” It also announces it has settled with the Justice Department over allegations of sharing of ad sales info.
The company’s media revenue rose 9.2% year-over-year in the quarter to $695.9 million, bolstered by $28 million in political advertising. The revenue outlook for the third quarter is also good. Sinclair said it expected media revenue of between $710 million and $722 million, which would be a gain of anywhere from 12.8% and 14.7% compared to the quarter last year.
Retrans and political helped offset lower ad revenue. Looking forward, CEO Perry Sook said that core is pacing better in 3Q and auto is a key improving category. Also on the upswing: attorneys, medical-health care, home repair, insurance, entertainment, utilities, real estate, lumber and hardware.
Gray EVP Kevin Latek said that Gray has received “very strong interest” in the nine stations that Gray said it would spin off from the Raycom merger to comply with the FCC local ownership limits. The interest has come from established broadcasters and new entrants. “We expect to finalize the divestiture agreements and get them to the FCC and the antitrust division for review by the end of this month.”
Once ownership questions get settled at the FCC, Tegna says it is ready to look at any and all types of M&A transactions.
The station group enjoyed an $8 million, 2% gain in revenue to $420 million in the second quarter, driven by retransmission consent revenue. And looking forward, political will drive a double-digit increase in local income during the third quarter, with political really rolling starting at the beginning of 4Q in October.
Over the last month or so, Dave Seyler and I have been dutifully sitting in on the earnings conference calls of the TV station groups and writing stories about them. However, upon reflection, we feel that we may not have given you a complete picture. At the same time, we realize that you don’t have time to listen to or read all the transcripts. So, as a reader service, we have produced a single composite transcript that seems to cover everything. Read on.
The company sees itself well-positioned for this year’s midterm election campaign spending. It has stations in 19 of 36 governor contests, with eight appearing to be highly competitive; it has 16 of 34 Senate races, with eight competitive; and Tegna’s 33% U.S. footprint suggests it will benefit from some 150 House races.
In spite of that, the groups execs see plenty of positves ahead this year including political advertising, retrans growth and the acquisition by Fox of Thursday Night Football. “Given the fact that Fox has been struggling in scripted primetime shows, putting in football should be a huge plus for the Fox network and for Sinclair in particular because of our huge exposure,” said COO Steven Marks.
Nexstar CEO Perry Sook said that retrans drove its 4Q and full-year financials, surpassing local advertising as the company’s top revenue stream. “We think the value proposition of our local content is equal to, and perhaps greater than, the value contribution from marquee network content,” Sook said.
In its earnings call Tuesday, the NBC-heavy group says this time next year it’s likely to be reporting revenue topping $1 billion, aided by Super Bowl, Olympics plus 20% higher retrans.
Execs say this year will see advertising, direct-to-consumer distribution, retransmission consent/reverse compensation and international licensing each post “incremental growth well in excess of $100 million.”