This report covers major financial and operating metrics for the US television market. It covers the major pay TV providers, cable networks, broadcasters and station owners, and reviews key financial trends and events from Q2 2015. Going forward, this will be a paid report from Jackdaw Research.
For any questions, please contact Jan Dawson, Chief Analyst, Jackdaw Research. Contact details are in the deck.
4. 4
• We cover the major US pay TV providers, including the largest
public cable, satellite and telecoms providers:
• Cable: Comcast, Cablevision, Charter, Time Warner Cable,
Cable ONE, Mediacom, Suddenlink, WoW
• Satellite: DirecTV, DISH
• Telecoms: AT&T, Verizon, CenturyLink, Consolidated Comms,
Frontier, Windstream
• We track subscriber numbers and revenue for those that report
PAY TV PROVIDER TRENDS
SCOPE OF COVERAGE
5. 5
• Cord-cutting finally seems to be taking hold
• After a period of slowing growth, the last two
quarters show declining subscribers, even year on
year, when all relevant providers are considered
• The decline is still fairly slow, but it is now noticeable,
and composed of declines at most cable companies,
flat growth to declines at the satellite companies, and
slowing growth at the telecoms providers
PAY TV PROVIDER TRENDS
MAJOR TRENDS
6. 6 Source: Company reporting, Jackdaw Research Analysis
REPORTED VIDEO SUBSCRIBERS
ALL PROVIDERS
Video subscribers, 000s
0
5,000
10,000
15,000
20,000
25,000
30,000
Q1 2012 Q3 2012 Q1 2013 Q3 2013 Q1 2014 Q3 2014 Q1 2015
AT&T Cable ONE Cablevision CenturyLink Charter
Comcast Cons Comms DirecTV DISH Frontier
Mediacom Suddenlink TWC Verizon Windstream
WoW
7. 7 Source:
REPORTED VIDEO SUBSCRIBERS
LARGER PROVIDERS
Video subscribers, 000s
0
5,000
10,000
15,000
20,000
25,000
30,000
Q1 2012 Q3 2012 Q1 2013 Q3 2013 Q1 2014 Q3 2014 Q1 2015
AT&T Cablevision Charter Comcast DirecTV DISH TWC Verizon
Source: Company reporting, Jackdaw Research Analysis
8. 8 Source:
REPORTED VIDEO SUBSCRIBERS
SMALLER PROVIDERS
Video subscribers, 000s
0
500
1,000
1,500
2,000
2,500
Q1 2012 Q3 2012 Q1 2013 Q3 2013 Q1 2014 Q3 2014 Q1 2015
Cable ONE CenturyLink Cons Comms Frontier
Mediacom Suddenlink Windstream WoW
Source: Company reporting, Jackdaw Research Analysis
9. 9 Source:
TOTAL VIDEO SUBSCRIBERS
ALL PUBLIC PROVIDERS
Total video subscribers, 000s
90,800
90,900
91,000
91,100
91,200
91,300
91,400
91,500
Q1 2013 Q2 2013 Q3 2013 Q4 2013 Q1 2014 Q2 2014 Q3 2014 Q4 2014 Q1 2015 Q2 2015
Source: Company reporting, Jackdaw Research Analysis
10. 10 Source:
TOTAL VIDEO SUBSCRIBERS
BIG PLAYERS ONLY
Total video subscribers, big players, 000s
85,200
85,400
85,600
85,800
86,000
86,200
Q1 2012 Q3 2012 Q1 2013 Q3 2013 Q1 2014 Q3 2014 Q1 2015
Source: Company reporting, Jackdaw Research Analysis
11. 11 Source:
TOTAL VIDEO SUBSCRIBERS
ALL PUBLIC PLAYERS PLUS ESTIMATES FOR COX AND BRIGHT HOUSE
Total video subscribers, 000s, incl Cox/Bright House
97,300
97,400
97,500
97,600
97,700
97,800
97,900
98,000
98,100
Q1 2013 Q2 2013 Q3 2013 Q4 2013 Q1 2014 Q2 2014 Q3 2014 Q4 2014 Q1 2015 Q2 2015
Source: Company reporting, Jackdaw Research Analysis
12. 12 Source:
YEAR ON YEAR VIDEO NET ADDS
LARGER PLAYERS ONLY
Year on year video net adds, 000s
-1,000
-800
-600
-400
-200
0
200
400
600
800
1,000
Q1 2012 Q3 2012 Q1 2013 Q3 2013 Q1 2014 Q3 2014 Q1 2015
AT&T Cablevision Charter Comcast DirecTV
DISH Frontier TWC Verizon
Source: Company reporting, Jackdaw Research Analysis
13. 13 Source:
YEAR ON YEAR VIDEO NET ADDS
SMALLER PLAYERS ONLY
Year on year video net adds, 000s
-120
-80
-40
0
40
80
120
Q1 2012 Q3 2012 Q1 2013 Q3 2013 Q1 2014 Q3 2014 Q1 2015
Cable ONE CenturyLink Cons Comms Frontier
Mediacom Suddenlink Windstream WoW
Source: Company reporting, Jackdaw Research Analysis
14. 14 Source:
YEAR ON YEAR VIDEO NET ADDS
OVERVIEW
Year on year video net adds, 000s
-1,500
-1,000
-500
0
500
1,000
1,500
2,000
2,500
Q4 2012 Q1 2013 Q2 2013 Q3 2013 Q4 2013 Q1 2014 Q2 2014 Q3 2014 Q4 2014 Q1 2015 Q2 2015
Telco Cable Satellite Total Total incl Cox/BrightHouse
Source: Company reporting, Jackdaw Research Analysis
15. 15 Source:
YEAR ON YEAR VIDEO NET ADDS
ALL PUBLIC PLAYERS
Year on year video net adds, all players, 000s
-300
-200
-100
0
100
200
300
400
Q1 2013 Q2 2013 Q3 2013 Q4 2013 Q1 2014 Q2 2014 Q3 2014 Q4 2014 Q1 2015 Q2 2015
Source: Company reporting, Jackdaw Research Analysis
16. 16 Source:
YEAR ON YEAR VIDEO NET ADDS
BIG PLAYERS
Year on year video net adds, 000s, big players
0
100
200
300
400
500
Q1 2013 Q2 2013 Q3 2013 Q4 2013 Q1 2014 Q2 2014 Q3 2014 Q4 2014 Q1 2015 Q2 2015
Source: Company reporting, Jackdaw Research Analysis
17. 17 Source:
YEAR ON YEAR VIDEO NET ADDS
PUBLIC PLAYERS PLUS ESTIMATES FOR COX AND BRIGHT HOUSE
Year on year video net adds, 000s, incl Cox/Bright House
-400
-300
-200
-100
0
100
200
300
400
Q1 2013 Q2 2013 Q3 2013 Q4 2013 Q1 2014 Q2 2014 Q3 2014 Q4 2014 Q1 2015 Q2 2015
Source: Company reporting, Jackdaw Research Analysis
18. 18 Source:
QUARTERLY VIDEO NET ADDS
ALL PUBLIC PLAYERS
Quarter on quarter video net adds, all players, 000s
-500
-400
-300
-200
-100
0
100
200
300
400
Q1 2013 Q2 2013 Q3 2013 Q4 2013 Q1 2014 Q2 2014 Q3 2014 Q4 2014 Q1 2015 Q2 2015
Source: Company reporting, Jackdaw Research Analysis
19. 19 Source:
VIDEO REVENUES
BY PLAYER, REPORTED AND ESTIMATES
Video revenues, $m
0
1,000
2,000
3,000
4,000
5,000
6,000
7,000
8,000
Q1 2012 Q3 2012 Q1 2013 Q3 2013 Q1 2014 Q3 2014 Q1 2015
AT&T Cablevision Charter Comcast DirecTV DISH Mediacom
Suddenlink TWC Verizon
Source: Company reporting, Jackdaw Research Analysis
20. 20 Source:
VIDEO REVENUES
OVERVIEW
Video revenues, $m
0
5,000
10,000
15,000
20,000
25,000
30,000
Q1 2012 Q3 2012 Q1 2013 Q3 2013 Q1 2014 Q3 2014 Q1 2015
Telco Cable
Total Satellite
Source: Company reporting, Jackdaw Research Analysis
22. 22
• We track several major US cable network providers,
including standalone providers as well as networks
which are part of bigger companies:
• Standalone providers: Starz, AMC, Discovery, Scripps
• Other providers: Comcast, CBS, 21st Century Fox,
Disney, Time Warner, Viacom
• For each provider, we track revenues, margins, and
revenue composition, as well as financial trends
CABLE NETWORK TRENDS
SCOPE OF COVERAGE
23. 23
• Along with the cost-cutting evident from pay TV numbers, the
decline in cable network subscribership is beginning to take hold
• Even major networks such as ESPN are seeing declines, which
was the major topic of conversation on Disney’s earnings call this
quarter
• Advertising seems to be holding up to some extent as a result of
higher prices and inventory, but ratings are impacting revenue
elsewhere
• Increased investment in content is also negatively impacting
margins at some cable networks
CABLE NETWORK TRENDS
MAJOR TRENDS
24. 24
Financial trends:
• Affiliate fees up 13% year on year,
advertising up 8% year on year
• Fox Sports 1 launch drove significant
cost increases for content acquisition
but also new revenues
• Some cable networks seeing lower
ratings, while others rising
INCLUDING FOX NEWS CHANNEL, FOX BUSINESS NETWORK
21ST CENTURY FOX CABLE NETWORKS
Revenue, $m
0
1,000
2,000
3,000
4,000
Q1 2012 Q4 2012 Q3 2013 Q2 2014 Q1 2015
Margins
0%
10%
20%
30%
40%
50%
Q1 2012 Q3 2012 Q1 2013 Q3 2013 Q1 2014 Q3 2014 Q1 2015
EBITDA margin Operating margin
Source: Company reporting, Jackdaw Research Analysis
25. 25
Financial trends:
• Ad revenues increasing driven by
higher prices, mostly around a couple
of big shows
• Distribution revenues increasing from
fee increases, mostly at the AMC
channel, also from digital and other
licensing of original content
• Increasing programming costs from
investment in original programming.
INCLUDING AMC, BBC AMERICA, WE TV, IFC, SUNDANCE TV
AMC CABLE NETWORKS
Revenue, $m
0
100
200
300
400
500
600
Q1 2012 Q4 2012 Q3 2013 Q2 2014 Q1 2015
Margins
0%
10%
20%
30%
40%
50%
Q1 2012 Q3 2012 Q1 2013 Q3 2013 Q1 2014 Q3 2014 Q1 2015
EBITDA margin Operating margin
Revenue sources as % of revenue
0%
10%
20%
30%
40%
50%
60%
70%
Q1 2012 Q3 2012 Q1 2013 Q3 2013 Q1 2014 Q3 2014 Q1 2015
Advertising Subs/distribution/fees
Source: Company reporting, Jackdaw Research Analysis
26. 26
Financial trends:
• Higher revenues from pay-per-view
boxing on Showtime
• Higher rates for cable networks
driving higher revenues
• Lower ad revenues
• Lower content licensing and
distribution revenues
INCLUDING SHOWTIME, CBS SPORTS, SMITHSONIAN
CBS CABLE NETWORKS
Revenue, $m
0
100
200
300
400
500
600
700
Q1 2012 Q4 2012 Q3 2013 Q2 2014 Q1 2015
Margins
0%
10%
20%
30%
40%
50%
60%
Q1 2012 Q3 2012 Q1 2013 Q3 2013 Q1 2014 Q3 2014 Q1 2015
EBITDA margin Operating margin
Showtime Networks subscribers, m
70
72
74
76
78
80
Q1 2012 Q4 2012 Q3 2013 Q2 2014 Q1 2015
Source: Company reporting, Jackdaw Research Analysis
27. 27
Financial trends:
• Declines in audience ratings for cable
networks, driving lower ad revenues,
albeit somewhat offset by higher
prices and volumes
• Content licensing revenues fairly
volatile due to timing of specific deals
• Many of the larger networks losing 2m
or so subscribers year on year
COMCAST CABLE NETWORKS
INCLUDING USA, MSNBC, CNBC, SYFY, E!, AND OTHERS
Revenue, $m
0
500
1,000
1,500
2,000
2,500
3,000
Q1 2012 Q4 2012 Q3 2013 Q2 2014 Q1 2015
Margins
0%
10%
20%
30%
40%
50%
Q1 2012 Q3 2012 Q1 2013 Q3 2013 Q1 2014 Q3 2014 Q1 2015
EBITDA margin Operating margin
Revenue sources as % of revenue
0%
10%
20%
30%
40%
50%
60%
Q1 2012 Q3 2012 Q1 2013 Q3 2013 Q1 2014 Q3 2014 Q1 2015
Advertising Content licensing
Subs/distribution/fees
Source: Company reporting, Jackdaw Research Analysis
28. 28
Financial trends:
• Distribution revenue up due to annual
contractual rate increases, but offset
slightly by declines in subscribers
• Advertising revenue declining slightly
as pricing increases (and in some
cases slightly higher volumes) offset
by lower audience delivery
• Production costs increasing as
spending on content is increasing
DISCOVERY CABLE NETWORKS
INCLUDING DISCOVERY CHANNEL, TLC, ANIMAL PLANET, AND OTHERS
Revenue, $m
0
200
400
600
800
1,000
Q1 2012 Q4 2012 Q3 2013 Q2 2014 Q1 2015
EBITDA margin
0%
10%
20%
30%
40%
50%
60%
70%
Q1 2012 Q3 2012 Q1 2013 Q3 2013 Q1 2014 Q3 2014 Q1 2015
Revenue sources as % of revenue
0%
10%
20%
30%
40%
50%
60%
Q1 2012 Q3 2012 Q1 2013 Q3 2013 Q1 2014 Q3 2014 Q1 2015
Advertising Other Subs/distribution/fees
Source: Company reporting, Jackdaw Research Analysis
29. 29
Financial trends:
• July earnings call introduced bigger
theme around declining ESPN subs
and challenging conditions for cable
networks in general
• ESPN ad revenue seems to be doing
OK
• Declining subs on cable networks, but
launch of SEC Network driving new
subs there
DISNEY CABLE NETWORKS
Revenue, $m
0
1,000
2,000
3,000
4,000
5,000
Q1 2012 Q4 2012 Q3 2013 Q2 2014 Q1 2015
INCLUDING ESPN CHANNELS, DISNEY CHANNELS, A&E, AND OTHERS
Operating margin
0%
10%
20%
30%
40%
50%
60%
Q1 2012 Q3 2012 Q1 2013 Q3 2013 Q1 2014 Q3 2014 Q1 2015
Revenue sources as % of revenue
0%
10%
20%
30%
40%
Q1 2012 Q3 2012 Q1 2013 Q3 2013 Q1 2014 Q3 2014 Q1 2015
Advertising Content licensing
Subs/distribution/fees
Source: Company reporting, Jackdaw Research Analysis
30. 30
Financial trends:
• Advertising revenue flat, reflecting
softness in advertising market, but
increases in pricing and units, offset by
falling ratings at some networks
• Affiliate fee revenues increasing due
to contractual rate increases, falling
subscribers offsetting slightly.
• Investment in original programming
driving up content costs.
SCRIPPS CABLE NETWORKS
INCLUDING FOOD NETWORK, HGTV, TRAVEL CHANNEL, DIY AND OTHERS
Revenue, $m
0
200
400
600
800
Q1 2012 Q4 2012 Q3 2013 Q2 2014 Q1 2015
Margins
0%
15%
30%
45%
60%
Q1 2012 Q3 2012 Q1 2013 Q3 2013 Q1 2014 Q3 2014 Q1 2015
Operating margin
Revenue sources as % of revenue
0%
20%
40%
60%
80%
Q1 2012 Q3 2012 Q1 2013 Q3 2013 Q1 2014 Q3 2014 Q1 2015
Advertising Content licensing
Subs/distribution/fees
Source: Company reporting, Jackdaw Research Analysis
31. 31
Financial trends:
• Higher effective rates, partially offset
by lower average subscriptions,
leading to higher affiliate fee revenues
• Distribution highly variable
• Programming costs for original
programming are increasing, but prior
Disney/Sony deal provides savings,
which they’re using to finance their
investment in original programming.
STARZ CABLE NETWORKS
INCLUDING STARZ, ENCORE
Revenue, $m
0
150
300
450
600
Q1 2012 Q4 2012 Q3 2013 Q2 2014 Q1 2015
Margins
0%
10%
20%
30%
40%
Q1 2012 Q3 2012 Q1 2013 Q3 2013 Q1 2014 Q3 2014 Q1 2015
EBITDA margin Operating margin
Revenue sources as % of revenue
0%
15%
30%
45%
60%
75%
90%
Q1 2012 Q3 2012 Q1 2013 Q3 2013 Q1 2014 Q3 2014 Q1 2015
Advertising Content licensing
Subs/distribution/fees
Source: Company reporting, Jackdaw Research Analysis
32. 32
Financial trends:
• Growing rates but falling subscribers,
leading to slightly growing affiliate
revenues
• Ad revenues seeing growth in news
channels offset in part by lower
subscribers for some entertainment
networks
• Programming costs shrinking due to
getting out of certain categories
TIME WARNER CABLE NETWORKS
TURNER NETWORKS – CNN, TBS, TNT, AND OTHERS
Revenue, $m
0
500
1,000
1,500
2,000
2,500
3,000
Q1 2012 Q4 2012 Q3 2013 Q2 2014 Q1 2015
Margins
0%
10%
20%
30%
40%
50%
Q1 2012 Q3 2012 Q1 2013 Q3 2013 Q1 2014 Q3 2014 Q1 2015
Operating margin
Revenue sources as % of revenue
0%
15%
30%
45%
60%
Q1 2012 Q3 2012 Q1 2013 Q3 2013 Q1 2014 Q3 2014 Q1 2015
Advertising Content licensing
Subs/distribution/fees
Source: Company reporting, Jackdaw Research Analysis
33. 33
Financial trends:
• HBO raising rates and growing
subscribers domestically and
internationally, driving higher
revenues
• Spending more on original series and
to some extent film acquisition, so
programming costs rising
• HBO Now investment only beginning
to pay off, so a drag on profits
TIME WARNER CABLE NETWORKS
HBO
Revenue, $m
0
250
500
750
1,000
1,250
1,500
Q1 2012 Q4 2012 Q3 2013 Q2 2014 Q1 2015
Margins
0%
10%
20%
30%
40%
50%
Q1 2012 Q3 2012 Q1 2013 Q3 2013 Q1 2014 Q3 2014 Q1 2015
Operating margin
Revenue sources as % of revenue
0%
20%
40%
60%
80%
100%
Q1 2012 Q3 2012 Q1 2013 Q3 2013 Q1 2014 Q3 2014 Q1 2015
Content licensing Subs/distribution/fees
Source: Company reporting, Jackdaw Research Analysis
34. 34
Financial trends:
• Falling ratings (and subscriber
numbers) at cable networks, driving
falling advertising revenues (even with
some increased volumes), along with
falling prices per unit
• Affiliate fees continue to rise in the
mid-to-high single digits each year,
due to rate increases
INCLUDING NICKELODEON, NICK JR, COMEDY CENTRAL, SPIKE AND OTHERS
VIACOM CABLE NETWORKS
Revenue, $m
0
500
1,000
1,500
2,000
2,500
3,000
Q1 2012 Q4 2012 Q3 2013 Q2 2014 Q1 2015
Margins
0%
10%
20%
30%
40%
50%
Q1 2012 Q3 2012 Q1 2013 Q3 2013 Q1 2014 Q3 2014 Q1 2015
Operating margin
Revenue sources as % of revenue
0%
15%
30%
45%
60%
Q1 2012 Q3 2012 Q1 2013 Q3 2013 Q1 2014 Q3 2014 Q1 2015
Advertising Content licensing
Subs/distribution/fees
Source: Company reporting, Jackdaw Research Analysis
35. 35
CABLE NETWORK COMPARISONS
REVENUES, $M
0
1,000
2,000
3,000
4,000
5,000
Q1 2012 Q3 2012 Q1 2013 Q3 2013 Q1 2014 Q3 2014 Q1 2015
Discovery Comcast (cable nw) CBS (cable nw) AMC
21CF (cable nw) Disney (cable nw) Scripps Starz
Time Warner Turner Time Warner HBO Time Warner Total Viacom (cable nw)
Source: Company reporting, Jackdaw Research Analysis
36. 36
CABLE NETWORK COMPARISONS
SUBSCRIBER AND AFFILIATE FEES AS A % OF REVENUES
Subs/fees as % of revenue, cable networks
0%
15%
30%
45%
60%
75%
90%
Q1 2012 Q3 2012 Q1 2013 Q3 2013 Q1 2014 Q3 2014 Q1 2015
Discovery (cable nw) Comcast (cable nw) AMC (cable nw)
Scripps (cable nw) Starz (cable nw) Time Warner Turner (cable nw)
Time Warner HBO (cable nw) Time Warner Total Viacom (cable nw)
Source: Company reporting, Jackdaw Research Analysis
37. 37
CABLE NETWORK COMPARISONS
ADS AS A % OF REVENUES
Ads as % of revenue (cable networks)
0%
10%
20%
30%
40%
50%
60%
70%
80%
Q1 2012 Q3 2012 Q1 2013 Q3 2013 Q1 2014 Q3 2014 Q1 2015
Discovery (cable nw) Comcast (cable nw) AMC (cable nw)
Scripps (cable nw) Starz (cable nw) Time Warner Turner (cable nw)
Time Warner HBO (cable nw) Time Warner Total Viacom (cable nw)
Source: Company reporting, Jackdaw Research Analysis
38. 38
CABLE NETWORK COMPARISONS
OPERATING MARGINS FOR THOSE REPORTING
Operating margins – cable networks
0%
10%
20%
30%
40%
50%
60%
70%
Q1 2012 Q3 2012 Q1 2013 Q3 2013 Q1 2014 Q3 2014 Q1 2015
Discovery (cable nw) Comcast (cable nw) CBS (cable nw)
AMC (cable nw) 21CF (cable nw) Disney (cable nw)
Scripps (cable nw) Starz (cable nw) Time Warner Turner (cable nw)
Time Warner HBO (cable nw) Viacom (cable nw)
Source: Company reporting, Jackdaw Research Analysis
41. 41
• We cover the four major public broadcasters, as part of our coverage of their
parent companies:
• ABC (Disney)
• CBS
• Fox (21st Century Fox)
• NBC (Comcast)
• We analyze revenues, margins, and revenue composition, as well as financial
trends
• These companies tend to combine performance for broadcasting and owned
TV stations, so it’s harder to isolate broadcasting performance alone
BROADCAST NETWORK TRENDS
SCOPE OF COVERAGE
42. 42
• Ratings for broadcasters are slipping, though they are
pushing for consideration of longer time windows
• Advertising revenue is struggling in most cases, with
weak Upfronts for most broadcasters
• Affiliate fees are rising steadily, which is helping to
bolster or even grow overall revenues
• Political and sports event-related advertising impacts
year on year comparability quite a bit
BROADCASTER TRENDS
MAJOR TRENDS
43. 43
Financial trends:
• Higher rates (affiliate fees etc.) plus in
some cases higher unit volumes for
advertising
• ABC’s ratings have been faring better
than some other networks’ – some
year-on-year increases, but still
broadly down, especially in Q2
• Higher prices in this year’s Upfronts
BROADCASTING (INCLUDING OWNED STATIONS)
ABC (DISNEY)
Revenue, $m
0
500
1,000
1,500
2,000
Q1 2012 Q4 2012 Q3 2013 Q2 2014 Q1 2015
Operating margin
0%
5%
10%
15%
20%
25%
Q1 2012 Q3 2012 Q1 2013 Q3 2013 Q1 2014 Q3 2014 Q1 2015
Revenue sources as % of revenue
0%
20%
40%
60%
80%
Q1 2012 Q3 2012 Q1 2013 Q3 2013 Q1 2014 Q3 2014 Q1 2015
Advertising
Source: Company reporting, Jackdaw Research Analysis
44. 44
Financial trends:
• Lower ad revenues, lower Upfront
commit’s, prices up, volumes down
• Higher programming expenses,
especially NFL rights
• Shift of expense from programming to
production, as they prioritize internal
development
• 40% growth in fees received from
affiliated television stations
BROADCASTING, RADIO, MOVIE STUDIOS
CBS
Revenue, $m
0
500
1,000
1,500
2,000
2,500
3,000
Q1 2012 Q4 2012 Q3 2013 Q2 2014 Q1 2015
Margins
0%
5%
10%
15%
20%
25%
30%
Q1 2012 Q3 2012 Q1 2013 Q3 2013 Q1 2014 Q3 2014 Q1 2015
EBITDA margin Operating margin
Source: Company reporting, Jackdaw Research Analysis
45. 45
Financial trends:
• Lower primetime ratings at Fox
• Lower advertising revenues partially
offset by higher affiliate fee revenues
• Lower general entertainment
primetime ratings at FOX
• Higher retransmission consent rates
for fiscal 2015
INCLUDES BROADCASTING, TV CONTENT PRODUCTION, OWNED STATIONS
FOX (21ST CENTURY FOX)
Revenue, $m
0
500
1,000
1,500
2,000
Q1 2012 Q4 2012 Q3 2013 Q2 2014 Q1 2015
Margins
0%
10%
20%
30%
40%
50%
Q1 2012 Q3 2012 Q1 2013 Q3 2013 Q1 2014 Q3 2014 Q1 2015
EBITDA margin Operating margin
Source: Company reporting, Jackdaw Research Analysis
46. 46
Financial trends:
• Flat broadcasting revenues, thanks to
higher retransmission fees
• Had been talking about increases in
ratings in earlier quarters, little
mention of this lately
• Increases in volumes and pricing for
advertising
INCLUDES BROADCASTING, OWNED STATIONS
NBC (COMCAST)
Revenue, $m
0
500
1,000
1,500
2,000
2,500
3,000
Q1 2012 Q4 2012 Q3 2013 Q2 2014 Q1 2015
Margins
-10%
-0%
10%
20%
30%
40%
50%
Q1 2012 Q3 2012 Q1 2013 Q3 2013 Q1 2014 Q3 2014 Q1 2015
EBITDA margin Operating margin
Revenue sources as % of revenue
0%
20%
40%
60%
80%
Q1 2012 Q3 2012 Q1 2013 Q3 2013 Q1 2014 Q3 2014 Q1 2015
Advertising Content licensing Other
Source: Company reporting, Jackdaw Research Analysis
48. 48
• We cover the largest publicly traded station owner groups:
• CBS Local Broadcasting
• EW Scripps
• Graham Holdings
• Media General
• Sinclair Broadcasting Group
• TEGNA (formerly Gannett)
• Tribune Media
STATION OWNER TRENDS
SCOPE OF COVERAGE
49. 49
• Consolidation continues, with Media General being
one of the major drivers over the past couple of
years, and the prospect of a merger with either
Meredith or Nexstar likely in the coming months
• As with broadcasters, advertising is pressured by
challenging ratings
• But retransmission consent fees are helping drive
revenue growth for a number of station owners
STATION OWNER TRENDS
MAJOR TRENDS
50. 50
Financial trends:
• Lower advertising revenues, partially
offset by growth in affiliate and
subscription fees
• The lower ad revenues mostly reflect
lower political advertising and lower
spending by advertisers in several
industries, including entertainment,
telecommunications and financial
services.
INCLUDES BOTH TV AND RADIO STATIONS
CBS LOCAL BROADCASTING
Revenue, $m
0
100
200
300
400
500
Q1 2012 Q4 2012 Q3 2013 Q2 2014 Q1 2015
Margins
0%
10%
20%
30%
40%
50%
Q1 2012 Q3 2012 Q1 2013 Q3 2013 Q1 2014 Q3 2014 Q1 2015
EBITDA margin Operating margin
Revenue sources as % of revenue
0%
15%
30%
45%
60%
75%
90%
Q1 2012 Q3 2012 Q1 2013 Q3 2013 Q1 2014 Q3 2014 Q1 2015
Advertising Subs/distribution/fees
Source: Company reporting, Jackdaw Research Analysis
51. 51
Financial trends:
• Retrans fees roughly doubling from
2014 to 2015 on a pro forma basis as
a result of renegotiated contracts and
to a lesser extent annual rate increases
• Increased prices and inventory for
advertising is helping ad revenues
RESULTS SHOWN ARE FOR TV STATIONS ONLY
EW SCRIPPS
Revenue, $m
0
50
100
150
200
Q1 2012 Q4 2012 Q3 2013 Q2 2014 Q1 2015
Margins
0%
10%
20%
30%
40%
50%
Q1 2012 Q3 2012 Q1 2013 Q3 2013 Q1 2014 Q3 2014 Q1 2015
EBITDA margin
Revenue sources as % of revenue
0%
25%
50%
75%
100%
Q1 2012 Q3 2012 Q1 2013 Q3 2013 Q1 2014 Q3 2014 Q1 2015
Advertising Subs/distribution/fees
Source: Company reporting, Jackdaw Research Analysis
52. 52
Financial trends:
• Retrans fees growing strongly, as with
other station groups
• Advertising revenue overall
challenged by lack of political
advertising in 2015, but otherwise
holding up OK
• Investments in digital capabilities are
impacting operating income
TELEVISION BROADCASTING
GRAHAM HOLDINGS
Revenue, $m
0
30
60
90
120
Q1 2012 Q4 2012 Q3 2013 Q2 2014 Q1 2015
Margins
0%
15%
30%
45%
60%
Q1 2012 Q3 2012 Q1 2013 Q3 2013 Q1 2014 Q3 2014 Q1 2015
Operating margin
Source: Company reporting, Jackdaw Research Analysis
53. 53
Financial trends:
• Media General has been acquiring
(and to a lesser extent divesting)
business so quickly, comparisons are
challenging
• Retrans fees are rising rapidly, though
it no longer reports them explicitly
• Advertising revenue (on pro forma
basis) relatively stable, digital revenue
rising
STATION OWNER
MEDIA GENERAL
Revenue, $m
0
100
200
300
400
Q1 2012 Q4 2012 Q3 2013 Q2 2014 Q1 2015
Margins
-10%
0%
10%
20%
30%
40%
Q1 2012 Q3 2012 Q1 2013 Q3 2013 Q1 2014 Q3 2014 Q1 2015
EBITDA margin Operating margin
Net margin
Revenue composition (no longer reported), gross
0%
15%
30%
45%
60%
Q1 2013 Q2 2013 Q3 2013 Q4 2013 Q1 2014 Q2 2014 Q3 2014
Retransmission Local
National Political
Digital Barter and other revenue
Source: Company reporting, Jackdaw Research Analysis
54. 54
Financial trends:
• Retrans fees rising, continuing to enter
new contracts with opportunity to
raise prices, forecasting growing
revenues
• Growth in advertising revenues in the
services, drugs/cosmetics and internet
sectors
• Declines in revenues in the political,
automotive and telecoms sectors
TELEVISION BROADCASTING
SINCLAIR BROADCAST GROUP
Revenue, $m
0
100
200
300
400
500
600
700
Q1 2012 Q4 2012 Q3 2013 Q2 2014 Q1 2015
Margins
0%
10%
20%
30%
40%
Q1 2012 Q3 2012 Q1 2013 Q3 2013 Q1 2014 Q3 2014 Q1 2015
Operating margin
Source: Company reporting, Jackdaw Research Analysis
55. 55
Financial trends:
• Substantial increase in retransmission
revenue (up 23% year on year in Q2
2015) and digital revenue
• Offset in part, by the lower political
advertising
• Advertising overall to be challenged in
2015, dragging down overall revenue
BROADCASTING SEGMENT
TEGNA
Revenue, $m
0
100
200
300
400
500
Q1 2012 Q4 2012 Q3 2013 Q2 2014 Q1 2015
Margins
0%
10%
20%
30%
40%
50%
60%
Q1 2012 Q3 2012 Q1 2013 Q3 2013 Q1 2014 Q3 2014 Q1 2015
EBITDA margin Operating margin
Revenue sources as % of revenue
0%
20%
40%
60%
80%
Q1 2012 Q3 2012 Q1 2013 Q3 2013 Q1 2014 Q3 2014 Q1 2015
Advertising Subs/distribution/fees
Source: Company reporting, Jackdaw Research Analysis
56. 56
Financial trends:
• Continue to grow advertising market
share and generate higher
retransmission fees
• Core advertising revenues growing
• Digital business growing too, partly
thanks to acquisitions
TV & ENTERTAINMENT SEGMENT, INCLUDING WGN NETWORK
TRIBUNE MEDIA
Revenue, $m
0
100
200
300
400
500
Q1 2012 Q4 2012 Q3 2013 Q2 2014 Q1 2015
Margins
0%
10%
20%
30%
40%
50%
Q1 2012 Q3 2012 Q1 2013 Q3 2013 Q1 2014 Q3 2014 Q1 2015
EBITDA margin Operating margin
Revenue sources as % of revenue
0%
15%
30%
45%
60%
75%
90%
Q1 2012 Q3 2012 Q1 2013 Q3 2013 Q1 2014 Q3 2014 Q1 2015
Advertising Subs/distribution/fees
Source: Company reporting, Jackdaw Research Analysis
57. 57 Source:
MARGINS
BROADCAST NETWORKS AND STATION OWNERS
EBITDA margins – broadcast and other
-10%
0%
10%
20%
30%
40%
50%
60%
Q1 2012 Q3 2012 Q1 2013 Q3 2013 Q1 2014 Q3 2014 Q1 2015
21CF (broadcast TV) Comcast (broadcast TV) CBS (broadcast TV) (incl. movies)
CBS (local broadcast) Scripps (local broadcast) TEGNA (local broadcast)
CBS (total) 21CF (total)
62. 62
• Cable networks and station owners have, in general, far higher
margins than the broadcasters
• Cable networks are mostly in the 30-40% operating margin
range
• Station owners are in the 30-45% range
• Broadcasters are in the 10-20% range
• Margins seem to be declining for the cable networks, for the
most part, while they’re a little more stable for broadcasters and
station owners
FINANCIAL OVERVIEW
MARGINS