CBS, Scripps could be under pressure amid slow Q2 for TV ads, analyst says

Jefferies analyst John Janedis said the TV ad market in the first quarter was weighed down by key categories and less pricing power.

TV advertising in the first quarter fell short of expectations and with the second quarter setting up to be slow, CBS and Scripps Networks Interactive could be under pressure.

Jefferies analyst John Janedis said the TV ad market in the first quarter was weighed down by key categories and less pricing power. With June starting off slowly, he said there could be risk for advertising/EPS.

“With that in mind, we look at our entertainment coverage sensitivity to advertising downside. With varying ad exposure, CBS and SNI are the most sensitive, while DIS and TWX are the least. Our top picks remain FOXA & VIAB,” Janedis wrote in a research note.


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Janedis said that Jefferies’ ad estimates have been below consensus all year and remain so. On average, he said first-quarter U.S. cable advertising finished down 0.7% and broadcast advertising was up 3.5%, which was still 110bps below expectations.

“With the outlook largely unchanged for 2Q, our U.S. cable networks estimates moved 200bps lower to -0.2%, with broadcast moving 150bps lower to -0.1%. Risk to 2H is ongoing,” Janedis wrote.

RELATED: CBS thriving, AMC struggling amid soft TV ad marketplace, analyst says

While the consensus is solid around the TV ad market being slightly soft this year, other analysts have not necessarily placed CBS and Scripps in danger due to higher exposure.

In a research note for which UBS interviewed 39 advertising executives, UBS said the lack of improvement lately in the TV ad marketplace appears to be driven more by cyclical factors than secular shifts. The firm is predicting the TV upfront market will be up low- to mid-single digits in CPM price increases and flat to down slightly in volume.

“Advertisers indicated that the sports category will see the greatest increases and broadcast prime and news would see declines. Also, advertisers seemed interested in the Paramount [Network], Viacom's new entertainment channel focused on A25-54 year old audiences. From our survey, upfront positioning was noted as favorable for (in order) CBS, NBC, Turner and Scripps, and less favorable for (also in order) AMCX, FOXA, A&E and ESPN. From our panelist, Fox and NBCU were highlighted for integrating broadcast and cable, and that Viacom's targeting efforts were helping it keep ad spend it would otherwise be losing,” UBS wrote.

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