The buying and selling of media properties was in the air during several of the recent quarterly earnings calls of companies with broadcast TV properties. Not that it was necessarily explicit. However, there were some specifics related to big political windfalls. And company officials also discussed the impact of sports programming, streaming maneuvers and which core advertising categories are showing strength.
A potential asset sale was certainly in the glaring subtext during Paramount’s abbreviated and heavily scripted call, which was presided over by a freshly installed triumvirate of executives who were elevated to fill the gap after CEO Bob Bakish was pushed out of his position — reportedly due to disagreements related to the acquisition contenders.
If Paramount’s CBS stations come up for grabs, don’t count on Nexstar to go after them. “Obviously, given our station footprint, you know, the digestion of CBS station assets would be a tough path, particularly under this regulatory environment and regime. If that were to change, maybe, you know, our opinion would change,” said Perry Sook, Nexstar founder, chairman and CEO.
However, Sook said that if he were a gambling man, he’d bet that that three years from now his company will be even larger than it already is.
Fox also appears to be open to new acquisitions, eventually. “We obviously don’t want our balance sheet to go to waste, but we haven’t found anything yet that we’re immediately going to do or follow,” said Lachlan Murdoch, the company’s executive chair and CEO.
On the flip side, Scripps discussed its plans to sell its digital network Bounce. “The inbound interest that we’ve had has been strong. It was strong before the news of the sale process went public, and it’s really only gotten more robust,” said Scripps President-CEO Adam Symson.
Similarly, Sinclair seems very open to selling some assets. During the discussion with analysts, the company’s CEO, Chris Ripley, said: “As we’ve always stated, we have no sacred cows. We want to unlock some of the parts valuation that we think we’re grossly undervalued for. And to the extent that asset sales make sense in order to unlock that value and help us de-lever, then that’s something that we’d be open to as well.
There was no explicit mention, during Sinclair’s call, that it has reportedly hired the investment banker Moelis to explore the potential sale of more than 30% of its stations as well as the Tennis Channel. That’s according to a CNBC article, which surfaced shortly after the presentation.
Political Bonanza
Sinclair was, however, more forthcoming about expectations for political revenue during the current election cycle. It forecasts that the company’s revenue will top $350 million this year. “We have pre-booked over $77 million in political advertising for the second half of the year through the election. This compares to $21 million as of the same day in 2020 and $28 million in 2022,” said Rob Weisbord COO and president of broadcast.
TelevisaUnivision is also primed to take in a record amount of political revenue. “The U.S. Hispanic electorate are potentially the largest, if not only, swing vote at play in the 2024 elections,” said Wade Davis, the company’s CEO. “The candidates recognize this, and they recognize that Univision is the most powerful platform to reach this electorate.”
In addition, Scripps is looking forward to a political tidal wave. It has raised its projection for political spending to somewhere between $240 million and $270 million. If it reaches the $270 million range, the company will top 2020 political results, when the last presidential race took place.
Meanwhile, Gray anticipates political will be between 55% and 72% higher in the second quarter than it was in 2020, on a pro forma basis.
Gray also noted growth in its local client base. “During the first quarter our new local direct business — which is our local sales force finding a customer that’s new to Gray — continues to break records set just a year earlier,” said Pat LaPlatney, president and co-CEO. “In the first quarter of ’24, our new local direct business brought in 18% more revenue than the first quarter of ’23.”
Some of the companies reported that first quarter core was soft. For example, Nexstar said that its core was down 7%, compared with same time 2023. And core dipped 3.4% at Scripps. A downdraft in the sports betting category was one sore spot for some broadcasters. But interestingly, some — including Fox and Scripps — said that national advertising was showing improvements.
The powerful auto ad category was driving revenue growth at companies like Gray TV, Tegna and Scripps. And services was also a winning ad sector for Gray, Tegna and Sinclair. Tegna also reported strength in restaurants, entertainment and finance.
Distribution revenue was an up-and-down story for broadcasters, due at least in part to when contracts were up for renewal. Among those exhibiting a growth spurt was Nexstar, whose distribution revenue was up 4.5% in Q1, to $761 million, an all-time quarterly high. Scripps distribution revenue for the quarter, $197 million, marked a 21% improvement over same time last year.
And Fox’s television unit, where the broadcast stations are housed, increased its affiliate fees by $70 million, or 9%.
Streaming And Sports
Fox’s Murdoch was very enthusiastic about the fall launch of a sports streaming service that is a joint venture with The Walt Disney Co. and Warner Bros. Discovery, nicknamed Spulu. “It’s very innovative. It’s designed to be entirely focused on the cord nevers [and] cord cutters, people who are not in the cable bundle, and who frankly won’t be able to compare it to a tier of live channels. It’s a very different digital-first product,” Murdoch said.
For its part, Disney focused on other matters, like its move to crack down on passcode sharing in September. “We feel quite bullish about it,” said Bob Iger, Disney’s CEO. “We believe that it will be one of the contributors to growth.”
News of Disney and Warner Bros. Discovery’s new bundling of Max with Hulu and Disney+ came a day after the presentation. But the company — which was reporting on fiscal second-quarter earnings — did say that it expects its streaming business to turn a profit in the fourth quarter.
TelevisaUnivision also has profitability for the DTC service ViX in its sightlines, in the second half of the year.
Comcast noted the huge success that the AFC wildcard game had on Peacock. The streamer’s results were largely the reason that revenue for Comcast’s media sector increased 3.6% in the first quarter, in comparison with the same quarter last year, the company’s officials explained.
Needless to say, Comcast expects a huge surge in revenue when the Olympics take place in Paris this summer. So do NBC affiliates. “We currently anticipate generating $15 million to $20 million in advertising revenue related to those broadcasts in the third quarter of this year,” said Gray’s LaPlatney. In the meantime, the addition of Phoenix Suns, New Orleans Pelicans and Atlanta Hawks games to Gray’s broadcast stations lineups have increased audiences and revenue.
Excitement about women’s sports was clear on a few of the calls with analysts. In discussing ESPN, Iger said: “The NCAA women’s Final Four in Cleveland was the most viewed on record, and the championship between Iowa and South Carolina was ESPN’s most viewed college basketball game ever, men’s or women’s.”
A key driver for Ion’s growth relates to women’s sports, both WNBA and National Women’s Soccer League games. “We launched the National Women’s Soccer League on Ion in mid-March. And those games have been driving a younger and more affluent demographic to the network,” Symson said. “More than half of the NWSL viewers are new to Ion.”
Symson added: “We’re capturing average unit rates for NWSL games that are 65% higher than our [rates] for non-sports Ion primetime programming.”
Among the sports deals that Tegna touted during its call was one with the Seattle Reign of the Women’s Soccer League and an exclusive broadcast distribution deal in the Indianapolis market with the WNBA’s Indiana Fever. More recently, it extended its Fever agreement to include 11 additional markets.
Dave Lougee, Tegna’s president-CEO, noted that the recent NCAA Women’s Basketball final featuring Caitlin Clark was seen by a record-breaking 19 million viewers on ABC stations, including Tegna’s Des Moines and Quad City stations.
Lougee noted that women’s sports still don’t command the same level of interest from advertisers as men’s, but that will change, he predicted.
77 million in political ? I would bet 3 million is actually “candidate” and the other 74 million is issue
Actually, an agency executive said during TVNewsCheck’s Mar 5 webinar, Optimizing Political Revenue in a Multimedia World, that the ratio of candidate and issue advertising is still likely to be about 50-50 in 2024.
Candidates, even those for state rep, raise way more money than they did in the past.