Analyst applauds broad core growth in TV revenues

It's not just political advertising that's fueling television's strong growth. After going over the Q2 figures reported by the TVBR (8/27/04 TVBR Daily Epaper #168), Wachovia Securities analyst Jim Boyle is telling investors that TV is enjoying growth over a broad core of its major advertisers.

"While the Government/Organizations category [which includes political] showed the greatest Q2 increase at 84%, it's only the 7th largest category," Boyle noted. "The six categories above it - - auto, restaurants, auto dealers, telecom, furniture, and travel - - exhibited a strong 7% average gain. The biggest category for TV (auto) was up 9%. The wide core growth bodes well for 2005, when political is lacking," he said.

But, for the short-term, he also sees a continuation of massive political dollars continuing to flow to TV groups. "Political fundraising and spending continue to set record highs, and we expect this to heat up in the Sept.-Nov. time frame. Already, Bush has spent 70% of his 229 million dollars in contributions, while Kerry has spent 80% of his 187 million MM. More importantly, many reports indicate the independent groups (known as the 527's) are raising unprecedented funds. It is safe to say that 2004 political revenue may reach, if not surpass, $1B this year. That is a 43% increase over 2002's record $700 million. It is important to note that the large majority of all political ad spending goes to spot TV," Boyle told clients.

As for investment picks, the Wachovia analyst says to "stick with news leaders." He notes that both Hearst-Argyle and Gray Television claim the #1 or #2 spot for news in their markets with 80% of their stations. "We believe that both of these companies should outperform their peers in 2004 due to strong political and core revenue growth," Boyle said.