New York - Rupert Murdoch's News Corp. will see a financial windfall from technology giant Cisco's announcement Thursday that it will acquire pay TV technology firm Nds Group, in which the conglomerate owns a 49 percent stake, for $5 billion. "We believe the Nds sale is good for News Corp. shareholders," said Wells Fargo analyst Marci Ryvicker. Sanford C. Bernstein analyst Todd Juenger said the price tag, $4 billion in cash and $1 billion in debt, means a "significant premium to book value." And Michael Morris, analyst at Davenport & Co., echoed that the successful sale "would be upside"
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- 3/15/2012
- by Georg Szalai
- The Hollywood Reporter - Movie News
Cable is still king when it comes to driving the revenue and profits of Hollywood's entertainment giants -- and the degree to which they do will become clear as the conglomerates report first-quarter earnings in a few weeks.
Thanks to their dual revenue streams, many cable units held up better than other media businesses during the recession. Plus, several, including the divisions at Time Warner and Viacom, have managed costs closely and shifted money from overhead into program development.
Still, parts of the cable channel universe have faced ratings challenges. A look at where the congloms and their units stand:
Time Warner
The cable channel unit -- with such brands as TBS, TNT, Cartoon, HBO and CNN -- edged out the film unit $11.7 billion to $11.1 billion in 2009 revenue after the latter was on top of the conglom's remaining content businesses in 2008. A 3% ad decline was more than offset by 10% in subscription revenue growth,...
Thanks to their dual revenue streams, many cable units held up better than other media businesses during the recession. Plus, several, including the divisions at Time Warner and Viacom, have managed costs closely and shifted money from overhead into program development.
Still, parts of the cable channel universe have faced ratings challenges. A look at where the congloms and their units stand:
Time Warner
The cable channel unit -- with such brands as TBS, TNT, Cartoon, HBO and CNN -- edged out the film unit $11.7 billion to $11.1 billion in 2009 revenue after the latter was on top of the conglom's remaining content businesses in 2008. A 3% ad decline was more than offset by 10% in subscription revenue growth,...
- 3/29/2010
- by By Georg Szalai and Paul Bond
- The Hollywood Reporter - Movie News
New York -- Media conglomerates hadn't seen revenue growth for at least a year, relying on cost cuts to boost their bottom lines. But the current quarterly earnings season has brought a return to at least slight growth at several sector biggies.
NBC Universal and Viacom are the exceptions so far with 4% and 3% revenue declines, respectively, and Disney already had returned to revenue growth in the third calendar quarter of 2009 and eked out another slight uptick in the fourth.
Most have cited better ad momentum in fourth-quarter 2009 as a key reason for the revenue gains, and Time Warner even predicted it would record revenue gains for full-year 2010.
But News Corp. chairman and CEO Rupert Murdoch was the most vocal about touting his conglomerate's quarterly revenue boost that at 10% outperformed the gains of its peers.
"Our strong top-line revenue growth demonstrates that News Corp. is emerging from this recession with renewed vigor and strength,...
NBC Universal and Viacom are the exceptions so far with 4% and 3% revenue declines, respectively, and Disney already had returned to revenue growth in the third calendar quarter of 2009 and eked out another slight uptick in the fourth.
Most have cited better ad momentum in fourth-quarter 2009 as a key reason for the revenue gains, and Time Warner even predicted it would record revenue gains for full-year 2010.
But News Corp. chairman and CEO Rupert Murdoch was the most vocal about touting his conglomerate's quarterly revenue boost that at 10% outperformed the gains of its peers.
"Our strong top-line revenue growth demonstrates that News Corp. is emerging from this recession with renewed vigor and strength,...
- 2/15/2010
- by By Georg Szalai
- The Hollywood Reporter - Movie News
New York -- Several media and entertainment analysts returned to work Monday and shared their thoughts on cable carriage fee disputes that rang in the new year.
News Corp. and Time Warner Cable avoided a loss of Fox stations and various News Corp. cable networks in systems operated by the second-largest U.S. cable firm with a new carriage agreement that included retransmission fee payments for the Fox network. But with both firms having remained mum on financial details, analysts argued the math is largely up to each side.
"We expect the companies negotiated a multi-channel, multi-platform agreement which included the Fox broadcast network, and several cable channels," said Collins Stewart analyst Thomas Eagan in a note to investors, adding that the deal likely also included digital rights and possibly even the relinquishing of several minutes of advertising time by Fox.
Addressing reports of a 50 cents-plus per subscriber per month...
News Corp. and Time Warner Cable avoided a loss of Fox stations and various News Corp. cable networks in systems operated by the second-largest U.S. cable firm with a new carriage agreement that included retransmission fee payments for the Fox network. But with both firms having remained mum on financial details, analysts argued the math is largely up to each side.
"We expect the companies negotiated a multi-channel, multi-platform agreement which included the Fox broadcast network, and several cable channels," said Collins Stewart analyst Thomas Eagan in a note to investors, adding that the deal likely also included digital rights and possibly even the relinquishing of several minutes of advertising time by Fox.
Addressing reports of a 50 cents-plus per subscriber per month...
- 1/4/2010
- by By Georg Szalai
- The Hollywood Reporter - Movie News
New York -- The latest economic data Thursday suggested that the U.S. recession is over, news that comes just ahead of key quarterly earnings reports in which investors will focus on just how much improvement big media and entertainment CEOs see in the advertising market.
U.S. gross domestic product rose at a better-than-expected 3.5% annualized rate during the third quarter, the first gain in a year. The bump comes after recent reports from media analysts talking up improving ad trends and boosting earnings predictions for this year and 2010.
"We expect third-quarter ad results to show an improvement in trends from the second quarter," Ubs analyst Michael Morris said. But year-over-year ad comparisons will remain down in many cases, and cost cuts will continue to play a key role.
Industry watchers will listen closely for how bullish CEOs sound, with CBS Corp. president and CEO Leslie Moonves so far the...
U.S. gross domestic product rose at a better-than-expected 3.5% annualized rate during the third quarter, the first gain in a year. The bump comes after recent reports from media analysts talking up improving ad trends and boosting earnings predictions for this year and 2010.
"We expect third-quarter ad results to show an improvement in trends from the second quarter," Ubs analyst Michael Morris said. But year-over-year ad comparisons will remain down in many cases, and cost cuts will continue to play a key role.
Industry watchers will listen closely for how bullish CEOs sound, with CBS Corp. president and CEO Leslie Moonves so far the...
- 10/29/2009
- by By Georg Szalai
- The Hollywood Reporter - Movie News
New York -- Wall Street folks have become more optimistic about the advertising outlook for media companies ahead of the hot phase of third-quarter earnings season, and stocks have continued to run up as a result.
If quarterly results and CEO comments on conference calls confirm a strengthening of ad demand, analysts could further lift financial projections for key sector firms.
But they warn that only select industry stocks may have more left in the tank at this stage, arguing that many are already trading at prices that include assumptions for most of the ad upside opportunity.
"Since early September, ad-sensitive media stocks have rallied reflecting the positive momentum in national and local TV advertising," Sanford Bernstein analyst Michael Nathanson said in a report Monday, touting Disney and Viacom as having the biggest upside. "While the momentum is real and could drive earnings per share revisions, we think the market...
If quarterly results and CEO comments on conference calls confirm a strengthening of ad demand, analysts could further lift financial projections for key sector firms.
But they warn that only select industry stocks may have more left in the tank at this stage, arguing that many are already trading at prices that include assumptions for most of the ad upside opportunity.
"Since early September, ad-sensitive media stocks have rallied reflecting the positive momentum in national and local TV advertising," Sanford Bernstein analyst Michael Nathanson said in a report Monday, touting Disney and Viacom as having the biggest upside. "While the momentum is real and could drive earnings per share revisions, we think the market...
- 10/26/2009
- by By Georg Szalai
- The Hollywood Reporter - Movie News
New York -- As publicly traded entertainment giants report their quarterly results during the next two weeks, Wall Street will read the tea leaves even more than usual as investors try to get a better handle on how fast to expect a more tangible recovery of the economy and the advertising market.
Given a rally in many media and entertainment stocks since the market's lows in March, a growing number of people have argued that real evidence of -- rather than just talk of -- improvement is needed now for stocks to continue the upward push.
During the previous quarterly earnings season, many sector CEOs highlighted that advertising seems to have bottomed out and could gain momentum in the back half of the year. But ad conglom CEOs suggested in recent days that ads will return to growth mode only next year.
"We're still down year-over-year even as ad comparisons get easier,...
Given a rally in many media and entertainment stocks since the market's lows in March, a growing number of people have argued that real evidence of -- rather than just talk of -- improvement is needed now for stocks to continue the upward push.
During the previous quarterly earnings season, many sector CEOs highlighted that advertising seems to have bottomed out and could gain momentum in the back half of the year. But ad conglom CEOs suggested in recent days that ads will return to growth mode only next year.
"We're still down year-over-year even as ad comparisons get easier,...
- 7/27/2009
- by By Georg Szalai
- The Hollywood Reporter - Movie News
New York -- Wall Street is trying to assess the impact of the General Motors bankruptcy on media companies, and at least one analyst's conclusions might surprise you.
Although headlines about the U.S. car industry have sounded dire, Sanford C. Bernstein analyst Michael Nathanson on Wednesday increased his fiscal-year 2010 earnings-per-share estimates on CBS Corp., Walt Disney and News Corp. and his price targets across sector stocks. He even upgraded CBS shares to "market perform."
"Consumer demand for new autos has rarely been this weak and at some point in 2010 will strengthen, which will strengthen local ad markets -- most notably local TV stations," he noted in a report.
Based on a 21-year regression analysis, Nathanson said growth in auto sales has explained 39% of the growth in auto advertising.
Auto ads declined 17% in 2008, with TV stations seeing an outsized 33% drop. "As a result, auto was knocked from its perch as...
Although headlines about the U.S. car industry have sounded dire, Sanford C. Bernstein analyst Michael Nathanson on Wednesday increased his fiscal-year 2010 earnings-per-share estimates on CBS Corp., Walt Disney and News Corp. and his price targets across sector stocks. He even upgraded CBS shares to "market perform."
"Consumer demand for new autos has rarely been this weak and at some point in 2010 will strengthen, which will strengthen local ad markets -- most notably local TV stations," he noted in a report.
Based on a 21-year regression analysis, Nathanson said growth in auto sales has explained 39% of the growth in auto advertising.
Auto ads declined 17% in 2008, with TV stations seeing an outsized 33% drop. "As a result, auto was knocked from its perch as...
- 6/3/2009
- by By Georg Szalai and Tina Yazdani
- The Hollywood Reporter - Movie News
"Up" is not just Hollywood's latest blockbuster-in-waiting, it's also the direction media stocks -- and, many hope, the overall fortunes of studio congloms -- are headed after a decidedly downbeat period.
This earnings season, U.S. entertainment execs have started to sound cautiously bullish on the ad market and the overall economy. No doubt that's because stocks have been so buoyant since early March, in many cases outpacing gains in broader markets.
"Commentary from management on second-quarter calls was virtually unanimous that the bottom is in for the economy and advertising growth," says Steve Birenberg of Northlake Capital Management and SNL Kagan's media blogger.
The key questions now are: Is the stabilization for real, and how can the congloms best position themselves for the stock rally to continue?
Indeed, the bounce might be a temporary bear-market rally, as evidenced by declines this week and persistent skepticism from European and Canadian execs at ad-reliant media companies.
This earnings season, U.S. entertainment execs have started to sound cautiously bullish on the ad market and the overall economy. No doubt that's because stocks have been so buoyant since early March, in many cases outpacing gains in broader markets.
"Commentary from management on second-quarter calls was virtually unanimous that the bottom is in for the economy and advertising growth," says Steve Birenberg of Northlake Capital Management and SNL Kagan's media blogger.
The key questions now are: Is the stabilization for real, and how can the congloms best position themselves for the stock rally to continue?
Indeed, the bounce might be a temporary bear-market rally, as evidenced by declines this week and persistent skepticism from European and Canadian execs at ad-reliant media companies.
- 5/14/2009
- by By Georg Szalai and Paul Bond
- The Hollywood Reporter - Movie News
New York -- The slump in auto advertising may take a while to turn around, and that's bad news for media companies, most notably those owning TV stations.
The auto sector has reduced media spending for 12 consecutive quarters, and once third-quarter figures are out in early December, it will be 13, according to Jon Swallen, senior vp research at Tns Media Intelligence.
Annual auto ad declines have accelerated from 2.9% in 2005 to 6.4% in 2006 to 6.9% in 2007, according to Tns data. For the first half of 2008, auto spending was off 11.2% to $6.48 billion. October was particularly weak because of the financial crisis, meaning the typical year-end spurt could turn into a year-end crawl.
The auto category provides about 12.5% of overall U.S. ad spending, making it one of the biggest categories of all, according to a recent Sanford C. Bernstein report based on Tns data.
Local TV stations are particularly exposed, because they get, on average,...
The auto sector has reduced media spending for 12 consecutive quarters, and once third-quarter figures are out in early December, it will be 13, according to Jon Swallen, senior vp research at Tns Media Intelligence.
Annual auto ad declines have accelerated from 2.9% in 2005 to 6.4% in 2006 to 6.9% in 2007, according to Tns data. For the first half of 2008, auto spending was off 11.2% to $6.48 billion. October was particularly weak because of the financial crisis, meaning the typical year-end spurt could turn into a year-end crawl.
The auto category provides about 12.5% of overall U.S. ad spending, making it one of the biggest categories of all, according to a recent Sanford C. Bernstein report based on Tns data.
Local TV stations are particularly exposed, because they get, on average,...
- 11/25/2008
- by By Georg Szalai
- The Hollywood Reporter - Movie News
New York -- The economy will be front and center when the big publicly traded entertainment companies start reporting their latest quarterly earnings next week.
Management teams will provide updated guidance that investors hope will shed more light on the level of economic pain they should expect.
Case in point: Viacom Inc., which will be among the first sector biggies to report its second-quarter earnings on Tuesday.
CEO Philippe Dauman shocked investors in late May by lowering his U.S. cable network ad growth estimate for the latest quarter from 7% just a few weeks earlier to 3%- 4% citing a weak scatter ad market.
"Despite a solid upfront at Viacom and across the cable network industry, investors are increasingly concerned about Viacom's growth prospects," Pali Research analyst Richard Greenfield said.
Sanford C. Bernstein analyst Michael Nathanson expects 13.3% revenue growth at Viacom for the quarter to $3.38 billion but a 3.5% profit decline on higher costs. However, this estimate came before the disappointing boxoffice for "The Love Guru," which may push the film division below expectations.
A day after Viacom, Disney will step up to the plate, and Ubs analyst Michael Morris predicts that fiscal third-quarter results "should reflect tough comparisons." He particularly cited the firm's theme parks unit, which faces an unfavorable Easter timing comparison, and studio division, which last year got a major boost from "Pirates of the Caribbean: At World's End."
And like in the case of Viacom, "financial trends at economically sensitive businesses should be a focus for investors," Morris predicted.
The parks have held up well so far this year, but analysts are concerned that the negative impact of a weak economy will only hit Disney with some delay. For example, Lehman analyst Anthony Diclemente recently downgraded Disney shares to "underweight," arguing that "the deteriorating U.S. economic trends are likely to begin to impact results at the parks segment as we move into Disney's fiscal year 2009."
Nathanson said he expects a 10.4% decline in film unit revenue and a 46.2% decline in profit, while Disney's cable networks unit should grow its revenue and bottom line around 9% each. Overall, he sees revenue ending up 2.8% in the quarter and profit rising from $1.18 billion to $1.20 billion.
For CBS Corp., the analyst projects a minimal revenue gain but a 13.4% profit decrease to $340.4 million as costs for new radio initiatives and other factors weigh in.
Analysts are looking for signs of how the company is managing its TV and radio assets amid economic weakness, which many have suggested will hurt it more than its peers and has already led to staff reductions.
Wall Street also will ask for more color on the plans for recently acquired CNet, which has elevated CBS Corp. into the top echelon of online players.
News Corp. chairman and CEO Rupert Murdoch has played amateur economist more regularly than other media moguls, so one can expect comments from him on where the U.S. and world economy is going when News Corp. reports its fiscal fourth-quarter results on Aug. 5 and gives its initial growth outlook for its new fiscal year.
"News Corp. should be able to grow organic operating income at least 7% in fiscal 2009," Greenfield said. However, amid Murdoch's past gloomy predictions, "the risks to achieving that growth are escalating," he said.
Nathanson eyes a whopping 14.8% quarterly revenue gain from News Corp. thanks to its acquisition of Dow Jones, its satellite TV arms and cable networks. Profit could decline 7.6%, though, amid higher interest and tax costs.
Time Warner will wrap up this quarterly earnings season, and again the outlook will be a key focus.
Morris warns that Tw's "film segment faces tough comparisons in the second half" of 2008. Luckily, " 'The Dark Knight' outperformed our expectations and should improve Tw's ability to meet full year guidance," he added.
AOL and the Time Inc. publishing unit should see lower quarterly revenue and profit, most analysts expect. Nathanson expects overall revenue to rise 2.7%, but profit to decline 3.2%.
Interestingly, Miller Tabak + Co. analyst David Joyce recently raised his earnings per share estimate by a penny, "reflecting continued strong demand for advertising at Turner and better than expected film performance" despite a likely writedown for "Speed Racer."
On Tw's conference call, investors will, of course, also look for updates on the spinoff of the cable unit, planned for later this year, and a possible sale or merger of AOL.
Management teams will provide updated guidance that investors hope will shed more light on the level of economic pain they should expect.
Case in point: Viacom Inc., which will be among the first sector biggies to report its second-quarter earnings on Tuesday.
CEO Philippe Dauman shocked investors in late May by lowering his U.S. cable network ad growth estimate for the latest quarter from 7% just a few weeks earlier to 3%- 4% citing a weak scatter ad market.
"Despite a solid upfront at Viacom and across the cable network industry, investors are increasingly concerned about Viacom's growth prospects," Pali Research analyst Richard Greenfield said.
Sanford C. Bernstein analyst Michael Nathanson expects 13.3% revenue growth at Viacom for the quarter to $3.38 billion but a 3.5% profit decline on higher costs. However, this estimate came before the disappointing boxoffice for "The Love Guru," which may push the film division below expectations.
A day after Viacom, Disney will step up to the plate, and Ubs analyst Michael Morris predicts that fiscal third-quarter results "should reflect tough comparisons." He particularly cited the firm's theme parks unit, which faces an unfavorable Easter timing comparison, and studio division, which last year got a major boost from "Pirates of the Caribbean: At World's End."
And like in the case of Viacom, "financial trends at economically sensitive businesses should be a focus for investors," Morris predicted.
The parks have held up well so far this year, but analysts are concerned that the negative impact of a weak economy will only hit Disney with some delay. For example, Lehman analyst Anthony Diclemente recently downgraded Disney shares to "underweight," arguing that "the deteriorating U.S. economic trends are likely to begin to impact results at the parks segment as we move into Disney's fiscal year 2009."
Nathanson said he expects a 10.4% decline in film unit revenue and a 46.2% decline in profit, while Disney's cable networks unit should grow its revenue and bottom line around 9% each. Overall, he sees revenue ending up 2.8% in the quarter and profit rising from $1.18 billion to $1.20 billion.
For CBS Corp., the analyst projects a minimal revenue gain but a 13.4% profit decrease to $340.4 million as costs for new radio initiatives and other factors weigh in.
Analysts are looking for signs of how the company is managing its TV and radio assets amid economic weakness, which many have suggested will hurt it more than its peers and has already led to staff reductions.
Wall Street also will ask for more color on the plans for recently acquired CNet, which has elevated CBS Corp. into the top echelon of online players.
News Corp. chairman and CEO Rupert Murdoch has played amateur economist more regularly than other media moguls, so one can expect comments from him on where the U.S. and world economy is going when News Corp. reports its fiscal fourth-quarter results on Aug. 5 and gives its initial growth outlook for its new fiscal year.
"News Corp. should be able to grow organic operating income at least 7% in fiscal 2009," Greenfield said. However, amid Murdoch's past gloomy predictions, "the risks to achieving that growth are escalating," he said.
Nathanson eyes a whopping 14.8% quarterly revenue gain from News Corp. thanks to its acquisition of Dow Jones, its satellite TV arms and cable networks. Profit could decline 7.6%, though, amid higher interest and tax costs.
Time Warner will wrap up this quarterly earnings season, and again the outlook will be a key focus.
Morris warns that Tw's "film segment faces tough comparisons in the second half" of 2008. Luckily, " 'The Dark Knight' outperformed our expectations and should improve Tw's ability to meet full year guidance," he added.
AOL and the Time Inc. publishing unit should see lower quarterly revenue and profit, most analysts expect. Nathanson expects overall revenue to rise 2.7%, but profit to decline 3.2%.
Interestingly, Miller Tabak + Co. analyst David Joyce recently raised his earnings per share estimate by a penny, "reflecting continued strong demand for advertising at Turner and better than expected film performance" despite a likely writedown for "Speed Racer."
On Tw's conference call, investors will, of course, also look for updates on the spinoff of the cable unit, planned for later this year, and a possible sale or merger of AOL.
- 7/23/2008
- by By Georg Szalai
- The Hollywood Reporter - Movie News
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