Wells Fargo shows some love for LIN


LIN MediaAfter talking with executives at LIN Media, analyst Marci Ryvicker believes the company is well positioned to take advantage of growth of the digital media as well as through positive events related to the traditional television business model. And it may even have a plan to be an incentive auction seller.

“Quite frankly,” said Ryvicker, “we were impressed –especially with LIN’s innovative digital business, which looks to be a significant driver of revenue and EBITDA growth for the foreseeable future. Other positives: there is significant focus on the monetization of spectrum, M&A seems to be a “when” rather than an “if,” and we think net retrans growth could be 30+%.”

Wells Fargo is expecting the company to realize significant growth across the spectrum of standard financial metrics, and is raising its valuation of the company from $20-$23 all the way to $28-$30.

LIN’s digital strategy is much more than simply adding digital elements to its tradition media assets. It is offering services at provide digital marketing, mobile and social media and has been acquiring the assets necessary to make the plan a reality. Ryvicker believes the service may be good for $200M by 2016.

Retransmission consent also figures to be a growth area, and a 30% gain is a very realistic possibility. That’s because 75% of its stations are up for renewal during the next two years.

Ryvicker says that LIN is the first public company to discuss participating in the incentive auctions as a seller. Class As and non-core television stations may well be offered for auction with the goal of a payday in the hundreds of millions as the driver.

Finally, the company is not done growing its television station portfolio. Ryvicker said M&A activity is a matter of when, not if.

Wells Fargo has rated the company to outperform.