[opendtv] Broadcast Sector Logs 12 Percent 2Q10 Recovery
- From: "Manfredi, Albert E" <albert.e.manfredi@xxxxxxxxxx>
- To: "opendtv@xxxxxxxxxxxxx" <opendtv@xxxxxxxxxxxxx>
- Date: Fri, 17 Sep 2010 17:40:30 -0500
Good to see that the downturn of the last few years was indeed related to the
overall economy, rather than to waning advertizer interest in broadcasting.
Bert
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http://www.tvtechnology.com/article/106562
Broadcast Sector Logs 12 Percent 2Q10 Recovery
09.17.2010.
NEW YORK: The U.S. television broadcast sector maintained its upward momentum
in the second quarter of the year with revenue growth of 12 percent over 2Q09,
according to Michael Alcamo. First-quarter revenue growth for the sector was
15.3 percent.
"The recovery of 2010 has arrived not a moment too soon, for a broadcast
industry reeling from a near-catastrophic slowdown in advertising, particularly
automotive, finance, travel, and technology," said Alcamo, president of
investment banking firm MC Alcamo & Co. "These categories are rebuilding
steadily."
The recovery combined with greater productivity drove revenue growth and margin
gains across all publicly traded TV broadcast operators.
"Despite a sluggish consumer recovery, corporate ad budgets are up sharply and
are fueling industry growth," Alcamo said.
Fisher led among broadcasters in the second quarter with revenue growth of 27.7
percent. Meredith followed with 23.4 percent. Scripps recorded a 23.4 percent
gain over last year, followed by LIN with 20. 5 percent and Gannett with 20.3
percent.
The seven publicly traded, pure-play broadcasters--Belo, Entravision, Fisher,
Gray, LIN, Nexstar and Sinclair--posted aggregate revenue growth of 16.7
percent.
The broadcast divisions of the eight publicly traded integrated media
groups--Gannett, Journal, Meredith, Media General, McGraw Hill, Saga, Scripps
and Washington Post--posted aggregate revenue growth of 9 percent.
All 15 companies averaged 12.1 percent growth on broadcast revenues totaling
$1.649 billion.
Margins for the sector increased five percentage points to 39 percent. First
quarter margin growth was 11 points, to 35 percent. Sinclair posted the highest
2Q10 EBITDA margins at 47 percent. Fisher gained the most, doubling 2Q margins
over last year to 22 percent.
"Industrywide margin expansion reflected two factors," Alcamo said. "First,
revenue was up nearly 17 percent on the strength of major ad categories. This
was magnified by technical innovation and tight control over expense growth.
The two dynamics led to 34 percent EBITDA growth industrywide, and margin
expansion to 39 percent."
Sector recovery evident in the first six months of this year is expected to
persist through the year's end.
"We expect continued revenue and profit growth in 2010," Alcamo said. "First,
fully digital transmission commenced in mid-June 2009, thus, lower levels of
electricity costs will be incorporated into the expense base starting with the
third quarter. Secondly, the full impact of political advertising will be felt
in the latter two quarters of 2010."
Broadcasters are likely to use 2010 profits three ways, he said. Many will
likely pay down debt, especially those that negotiated temporary extensions of
their credit lines in 2009. Others will use profits for acquisitions, and some
will simply build cash reserves.
"Broadcasters are well-advised to be cautious." he said. "Nevertheless, for the
next three quarters, visibility for revenue and EBITDA growth is excellent."
Political advertising, for example, typically comes in with gross margins of 90
percent or more, and that revenue's just beginning to come in. Third-quarter
political ad revenue is also expected to reach new heights in the wake of the
Supreme Court lifting campaign finance prohibitions. ( See "Supreme Court Cuts
Corporations Loose.")
"Unlike campaign advertisements, issue advertising is not subject to the FCC's
lowest-unit-rate pricing limits," Alcamo said. "Moreover, unlike
agency-originated consumer advertising, issue and political advertising usually
comes to broadcasters with minimal cost-of-goods-sold. We expect that the
approaching wave of political advertising--coupled with strengthened consumer
categories--will drive the industry's revenue and EBITDA margins for 2010 quite
substantially." -- Deborah D. McAdams
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