Securities analysts led by Marci Ryvickers tell investors that following a meeting with the FCC, their earlier concerns over what the commission would do about sharing agreements have been allayed, and upgraded TV station group stocks to outperform.
Wells Fargo Reverses TV Stocks Stance
On March 17, securities analyst Marci Ryvicker and her Wells Fargo team downgraded TV station stocks from overweight (buy) to market weight (hold). “Can’t fight city hall,” they said.
Well, never mind. Today, they reversed course: “We heard what we needed to — upgrading [Gray, Nexstar and Sinclair Broadcast Group] to outperform,” Ryvicker wrote.
“The primary reason for our prior broad television sector downgrade,” she said, “was the increasing regulatory uncertainty” involving the FCC’s then-upcoming actions on joint service agreements following a March 14 meeting with the FCC. “Our biggest fear being incremental downside to numbers should the FCC look to unwind current sharing agreements, and/or not allow current deals to go through even upon restructuring.”
But, Ryvicker continued, following that meeting, “the FCC convinced us that neither of these concerns is likely to transpire. So at this point, it feels like the ‘negatives’ are known, and given where the stocks are trading, we see limited downside risk.
“We understand we pulled a 180, BUT … we did get a huge amount of comfort these last two days. Again, we were a bit spooked post our March 14 meetings with the FCC, but do believe there is a renewed ‘rationality’ when it comes to regulatory relations with the broadcasters.”
Comments (2)
Tom Baden says:
April 9, 2014 at 3:51 pm
Wall Street analysts are generally mediocre on the space, with Marci and Craig Huber being the exceptions. Marci’s mistake was in downgrading in the first place because as one would expect – the market had already largely priced in her concerns. Her upgrade today is on point.
Jay Miller says:
April 9, 2014 at 5:50 pm
Local Television is the greatest marketing avenue other than word of mouth ever known to mankind. All the pundits, most of them who don’t know a transmitter from a hammer have been calling for the demise of Local Television for years. Try getting elected without Local TV in your state or market. Try keeping pace with your competitors in your market without it. TV stations , especially those with a strong local news presence will continue to flourish because they have figured out the mobile/digital arena now. The 1-2 punch of on air and digital/mobile, when done right, is the most powerful form of marketing on earth! Period the end!