Analysts at Wells Fargo had the chance to speak with a number of broadcasters during the recent SNL Kagan event, and made use of the opportunity to do a little trend-spotting.
Wells Fargo analyst Marci Ryvicker acted as tour guide through a variety of topics.
Local: Results are still said to be spotty, largely because there are so many overall economic uncertainties both domestically and abroad that advertisers can tend toward cautious behavior.
Long term growth: Ryvicker noted that both radio and television broadcasters are optimistic. Digital is expected to be an area where growth in the 20% range can be expected. Television broadcasters as also expecting to gain increases in retransmission income.
Short term growth: After a weak April and strong May, broadcasters are expecting June to fall somewhere in between in terms of results. National is picking up for the first time in months, and anticipated gains are extending into Q3. Auto is driving business, other categories are hit and miss. Meanwhile, most of the money squirreled away for political spending looks like it will be spent later in the year.
M&A: Ryvicker said Wells Fargo was hearing more talk about dealing back at the NAB in April than they are now. She said the primary source of speculation concerns CBS’s plans for perhaps spinning some of its radio assets.
Spectrum: The FCC is expected to have its NPRM ready by Fall (and RBR-TVBR notes that it has already started taking preparatory steps toward that event). Ryvicker noted that broadcasters will need answers from the FCC on the “economics of this auction,” so they can start making decisions on whether or not to participate.
Retransmission: There is still growth seen in this area, but local broadcasters face the prospect of sharing with the networks – according to Ryvicker, just about everybody expects to have a 50/50 split by the time the situation matures.
Aereo: Most think that if the courts don’t shut down Aereo, Congress will. It’s prospects for survival are not good.
RBR-TVBR observation: Looking forward, it is clear that broadcasters have a future. Broadcast still have a strong local presence that will be very difficult for new media to match, due to the expense of building and maintaining that presence.
It is clear that the future is in digital and mobile, but that doesn’t mean the value of a local over-air contour will disappear. And on the plus side, there is nothing stopping broadcasters from using over-air assets as a foundation for digging into the digital and mobile pies.
Finding ways to monetize digital and mobile assets will be the key. Clearly more and more broadcasters are seeing ways to make it happen. All we can say is keep the innovations coming.
