Go Back   Eurocardsharing > General Discussions > General Satellite News > Latest Satellite News

Latest Satellite News Discussion, New Ad revenues to suffer further falls at General Satellite News forum; Ad revenues to suffer further falls Commercial TV broadcasters in Europe will suffer further falls in advertising revenues, says a ...

LinkBack Thread Tools Display Modes
New Ad revenues to suffer further falls
Bacteria's Avatar
Posts: 96,015

Level: 124 [♥ Bé-Yêu ♥♥ Bé-Yêu ♥♥ Bé-Yêu ♥♥ Bé-Yêu ♥♥ Bé-Yêu ♥]
Life: 4638 / 4638
Magic: 32005 / 104943
Experience: 68%

Thanks: 1,107
Thanked 5,578 Times in 1,419 Posts
Join Date: Oct 2006
Age: 37
New Ad revenues to suffer further falls - 27-July-2008, 11:00

Ad revenues to suffer further falls

Commercial TV broadcasters in Europe will suffer further falls in advertising revenues, says a banks major report. The second-half of this year could see further falls in income as the economic downturn starts to bite.

The macro indicators have taken a significant step down across Europe in Q208, says a report from Morgan Stanley. With inflation rising beyond expectations, GDP slowing down further and private consumption experiencing a sharp deceleration, major advertisers such as Procter & Gamble, Coca-Cola, Nissan, Vodafone (among others) have expressed their intentions to keep rationalising marketing spend in the near term. TV adspend shrinkage is therefore not over and could potentially take another step down in H208.

The next few days will see a cluster of first-half year results unveiled from some of the most important names in European broadcasting, including Frances M6 (July 24), Spains Antena 3 (July 31), Telecinco (July 31), Italys Mediaset (July 31), Frances giant TF1 (July 31) and Pro7-Sat 1 on August 6.

Bankers Morgan Stanley, in a 22-page report, examines each of these broadcasters in detail and says M6 is still gaining market share. An improving trend since mid-February, with the launch of two successful programs (Un Diner Presque Parfait and 100% Mag) and the positive effects on ratings of the Euro Cup have allowed M6 to be the only European Broadcaster we cover to show improving ratings in Q2 vs. Q1 (+8.3%). On the other hand, TF1s ratings are still declining, down -1.9% Q2 vs. Q1, -9.8% YoY in June and -1.6% year-to-date in June. Therefore, while YoY audience share erosion persists for both the French broadcasters, M6 continues to resist better in a down market, says the bank.

Despite the Euro Cup and a reasonably easy comp (Net Advertising Revenue-NAR) down -0.1% in Q207 at M6, -5% at TF1), we believe TF1 and M6 have experienced negative NAR growth in Q2, particularly as May was notably challenged. Like for Mediaset, we believe Q4 will be the determinant while Q3 should provide the market with a lot more details on the French Audiovisual Reform to be debated during the autumn. We remain Equal Weight on both stocks and keep M6 as our favourite broadcaster. If regulation news is positive and the advertising market stabilizes, we believe there could be some significant upside from the current share prices (our Bull case implies 92% upside potential for M6 118% for TF1).

As to Germanys Prosieben, Morgan Stanley suggests that there are many uncertainties ahead for the broadcaster. We think value resides in Prosieben but high uncertainty and a lack of clear leadership prevent us from being more positive. The imperatives created by a complex financial structure with high leverage are risky for public investors. Three elements in particular present a risk: 1) covenants, 2) dividend and the possibility of a dividend cut, and 3) uncertainty regarding management changes. Until cash requirements are quantified and/or diminished, and private equitys intentions are clarified, we think downside risks (dividend cut, underinvestment in core business etc.) are likely to prevail on Prosiebens virtues.

The bank says Mediasets results are likely to be in line with expectations, and now the challenge is all about its fourth Quarter. Mediaset will report H108 results on July 31. We believe there should be no big surprises, which implies that Q4 will be the determinant as Q308 still benefits from an easy comp (-2.4% in Q307, +0.7% in Q306) and is a small quarter anyway (17% of group NAR in 2007). We forecast +2.4% NAR growth for H108 and retain our full year NAR growth forecast of +1.6%. However, we believe the lukewarm economy, rising inflation and advertising budget cuts are affecting Mediasets Free TV operations in the short term, while direct competition with Sky Italia remains a long-term threat to Mediasets pay TV strategy.

Moving to Spain, the bank notes a drastic adspend reduction in Q2, saying: After a fairly decent month of April when audiences stabilised and adspend picked up slightly following a very negative Easter effect in March, May and June have been very weak, down about 15% according to TL5. The macro slowdown took a huge step down in May and progressed further in June, where it was coupled with a very negative Euro Cup effect. The Spanish Government cut its GDP forecast again in June while our economists have cut their three year macro forecasts (GDP and consumption) for the third time this year. Therefore, we expect Q2 NAR to be significantly negative for both TL5 (we forecast -3.9% for Q208 and -2.6% for H108) and A3 (we forecast -11.2% for Q208 and -10.5% for H108). In the light of the much steeper than originally forecast adspend shrinkage that occurred in Q208, we cut our EPS forecasts by 3.7% in 08e, 5.5% in 09e and 3.7% in 2010e for TL5, and by 5.7% in 08e, 7.1% in 09e and 8.4% in 2010e for A3. We still expect TL5 to perform much better than A3 in the short term, but remain Underweight on both stocks as momentum is clearly poor and advertising shrinkage may progress further in H208.
Reply With Quote


Currently Active Users Viewing This Thread: 1 (0 members and 1 guests)
Thread Tools
Display Modes

Posting Rules
You may not post new threads
You may not post replies
You may not post attachments
You may not edit your posts

BB code is On
Smilies are On
[IMG] code is On
HTML code is Off
Trackbacks are Off
Pingbacks are Off
Refbacks are Off

Forum Jump

ECS on RSS ECS on Twitter ECS on Facebook ECS on Youtube
Follow us on:

Powered by vBulletin
Copyright 2002 - 2010, Jelsoft Enterprises Ltd.
SEO by vBSEO ©2011, Crawlability, Inc.