|HOME||MEDIABIZBLOGGERS.com||WOMEN in MEDIA||HOOKED UP||MEMBERSHIP INFO||MEMBER COMPANIES||MEDIA BUSINESS REPORT||ECONOMIC FORECASTS||RESEARCH|
Published: October 26, 2012 at 12:27 AM GMT
Last Updated: July 31, 2013 at 12:27 AM GMT
The biggest media story this week came from the North, as Canada's broadcast regulator (CRTC) denied Bell Canada's bid to acquire Astral, a leading broadcast and cable programmer with heavy penetration in the Quebec province. Dval Ghose, an analyst at Canaccord Genuity, called the decision a "major surprise," with both media and advertising executives across Canada stunned by the decision.
As we gear up for the flurry of this quarter's earnings season, this week was one of preparation. For companies yet to report, Wall Street analysts were super busy updating their models. For those who reported this week, analysts spilled their ink updating their forecasts.
Google (GOOG) put up surprisingly light numbers in a prematurely issued report, sending the stock down over 8% on Thursday. Though light, J.P. Morgan analyst, Doug Anmuth cautioned investors that the Google numbers were not as bad as they initially appeared. Google's net revenue of $8.76B missed Anmuth's own target of $8.99B and the analyst blames most of the shortfall on greater than expected FX and hedging. Margins were also weak, "likely attributable to higher than expected Nexus 7 tablet sales". Anmuth suggested investors take advantage of the sharp sell off to add to their positions as he expects the stock to regain some ground.
VOOM Trial and AMC Networks
Barclays also updated investors on the VOOM vs. EchoStar trial, currently in progress in the New York State Supreme Court. Though details are unknown, on the Court's website, there is a reference to a "possible settlement" on Monday morning. According to analysts, a settlement would be a material positive for AMC Networks (AMCX). Barclays' Chris Merwin believes a cash settlement could be worth between $200M and $1B (split 50/50 with CVC). This works out to $1-4 per share, after tax, for AMCX. But for Merwin, more important than the settlement is the value of a new carriage deal for AMC's 4 networks. Without DISH subs, AMC would lose between $80-100M per year in EBITDA. Merwin assumes a 7 year deal would be worth $7/share for AMCX. He's over-weighted the shares and has a $48 price target on AMCX.
Meanwhile, AMCX's own Walking Dead, which premiered last week, smashed all cable ratings records for biggest telecast for any drama in cable history (even without DISH's 14M subs). "On Sunday night, the program drew a 5.8 rating and a 13 share, the highest premiere rating this season for any show on cable or broadcast," wrote the Barclays analyst. On the topic of ratings, NBC continues to keep its hot hand in 18-49, as Sunday Night Football has its best week of the season. MLB playoffs boosted TBS ratings and while MTV stumbles, Nick ratings continue on the path to recovery, down "only" 13% (they were down −25% in 2Q).
Omnicom (OMC) reported earnings this week with slightly weaker organic revenue. The agency's 0.8% revenue growth compared favorably to the 0.5% expected by Nomura's Michael Nathanson. The firm's 3.5% organic growth came in behind his +3.8% estimate, driven by strength in the Rest of World (+10.2% organic), flat UK (-0.1%), and slightly weaker Euro markets (-1.8%). The analyst maintained his Neutral rating on OMC, instead favoring the pure-play media names.
Nathanson and Nomura also published on Scripps Interactive (SNI). Year to date, one of the best performing stocks, SNI has benefited from positive earnings revisions and relative multiple expansion. With the stock trading at 16X 2013 EPS (a 25% premium to the market), Nathanson is a little more cautious on the name. He thinks expense growth may remain high during 2013, ratings may mean revert, and advertising may continue to slow. He's still Neutral on SNI and has a $56 target.
Analysts published their thoughts on Yahoo (YHOO), ahead of the company's earnings report early next week. Needham's Laura Martin expects YHOO will report 3Q12 revenues of $1.119B (up 4% y/y) and EPS from Operations of $0.24 (up 3% y/y). Analysts, like Barclays' Doug Anmuth, are looking forward to hearing new CEO, Marissa Mayer's strategy to "re-invigorate the business, recruit better talent, make strategic acquisitions, return cash to shareholders, and monetize Yahoo Japan."
Business network, LinkedIn (LNKD) held an event this week called "Meet the New LinkedIn", during which the company announced a new product enhancement. The goal of the new Profile page, according to Mark May of Barclays, is to "enhance the utility of LinkedIn to its members, to facilitate greater social interactions and to drive greater member engagement". This should improve time spent on the site, boost average page views per member, and overall growth of the LinkedIn community. May believes there is strong correlation between better engagement and better revenue results. He points to the company's report at the event that it is now seeing 175,000 new member profiles created each day (vs. 146k in Q2).
eBay's (EBAY) 3Q12 results were very modestly above Barclays' estimates. PayPal had a strong 3Q, as revenue grew 24% Y/Y (with FX effects neutralized). Marketplace revenue growth in the U.S. remained high (+16%), the highest ever reported. Analyst Ryan Ripp attributes this success to "the improved customer experience, mobile and strong performance in certain categories such as Clothing & Accessories and Tickets". Ripp emphasized EBAY's traction in mobile and at the point-of-sale, and still expects $10B in mobile payment volume in 2012. On the strength of the earnings report, Barclays raised its price target on EBAY shares to $49 (from $44).
Online Travel Agencies
Credit Suisse's Stephen Ju updated his models on the Online Travel Agencies (OTAs). He raised his firm's PT on Priceline (PCLN) to $808 (from $727) as the firm's Booking.com added 16k hotels this quarter. He's less bullish on Expedia (EXPE), as the analyst is looking for an improvement in the firm's conversion rate. Nevertheless, he raised his PT on EXPE shares (to $60 from $56), as risk/reward skews positive here.
Moving on the Gannett (GCI), strong TV advertising bolstered the firm's quarterly results. The company, publisher of the largest American newspaper chain in terms of circulation, said its Q3 net income rose 33% to $133.1M or $0.56/share (compared to $99.8M and $0.41/share y/y). That topped analyst estimates on both profit and revenue. Gannett's CEO Gracia Martore told the NYT, "Holiday spending is extremely important. It's hard to say this early, but already our expectations are we will have a better comparison in the fourth quarter."
While the summer's officially over, the box office is just beginning to heat up. 4Q12 domestic box office started off very strongly in October, up 23% month to date. And that's before James Bond's Skyfall, the last Twilight, and The Hobbit make their way to the big screen. Also, long awaited M&A occurred in the sector as Carmike purchased 251 screens from Rave Reviews Cinemas for $120M. Nomura's Robert Fishman maintained his Buy rating on Cinemark (CNK) with a $27 PT and a Neutral on Regal (RGC) with a $15.50 target price.
If you are receiving this report, you are a registered subscriber to Jack Myers Media Business Report or are receiving it as part of a registered corporate subscription. As a subscriber, Jack responds personally to your e-mails, requests and comments. He is available to speak at your company events. In addition to Jack Myers Media Business Reports, your subscription underwrites MediaBizBloggers.com, Women in Media Mentoring Initiative, Jack Myers Wall St. Report, Jack Myers Video Media Report, plus our exclusive industry economic forecasts, trend forecasts and corporate performance research. Re-distribution in any form, except among approved individuals within your company, is prohibited. As a subscriber you have full access to all archives and reports at www.jackmyers.com. If you require your ID and password, contact email@example.com
We enjoyed The Great Christmas Light Fight on ABC last night. The show has four families competing each week for 50K. A guy named Michael Maloney is the judge. Never seen him before, but he's REALLY into Christmas. Michael goes around the country judging Christmas lights. Not a bad gig at all. He gets driven around by Santa in a red ‘65 Impala. First stop was Whitestone, NY, where Kevin Lynch and his family -- Tina, Tara, Tori and Timmy -- help to decorate. Kevin is a retired firefighter and 9-11 first responder. He has some crazy Christmas spirit and obviously LIVES for this time of the year.Read More
I no longer read business books. Been there, done that for too many years. Stimulation comes from reading many other sources. My current obsession seems to be evolutionary theory. And there are few better to read than Stephen Jay Gould. I prefer him to evolutionary reductionists just as I push away from all sorts of reductionism in every field imaginable. There is a psychological matrix that all reductionists share. I just don’t fit that mold I guess. Online marketing is presently overwhelmed with marketing reductionism.Read More