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Jan Dawson
Chief Analyst
(408) 744-6244
jan@jackdawresearch.com
@jandawson
JACKDAW RESEARCH TV
REPORT Q2 2015
SEPTEMBER 2015
1 Pay TV Provider trends
2 Cable network trends
3 Broadcast network trends
4 Station owner trends
5 Overview
1
2
3
4
5
1 Pay TV Provider trends
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
• 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 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 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 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 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 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 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 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 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 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 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 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 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 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 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 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
2
1
3
4
5
2 Cable network trends
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
• 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
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
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
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
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
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
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
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
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
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
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
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
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
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
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
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
39
CABLE NETWORK COMPARISONS
EBITDA MARGINS FOR THOSE REPORTING
EBITDA 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) Starz (cable nw)
Source: Company reporting, Jackdaw Research Analysis
1
2
4
5
33 Broadcast network trends
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
• 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
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
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
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
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
1
2
3
5
44 Station owner trends
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
• 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
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
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
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
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
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
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
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 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)
58 Source:
MARGINS
BROADCAST NETWORKS AND STATION OWNERS
Operating margins – broadcast
-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)
Disney (broadcast TV) CBS (local broadcast) Graham (local broadcast)
Sinclair (local broadcast) TEGNA (local broadcast)
59 Source:
REVENUE COMPOSITION
BROADCAST NETWORKS AND STATION OWNERS
Subs/fees as % of revenue, broadcast and other
0%
10%
20%
30%
40%
50%
60%
Q1 2012 Q3 2012 Q1 2013 Q3 2013 Q1 2014 Q3 2014 Q1 2015
Comcast (broadcast TV) Scripps (local broadcast)
TEGNA (local broadcast) CBS (total)
21CF (total) Disney (cable + bcast TV)
60 Source:
REVENUE COMPOSITION
BROADCAST NETWORKS AND STATION OWNERS
Ads as % of revenue (broadcast and other)
0%
20%
40%
60%
80%
100%
Q1 2012 Q3 2012 Q1 2013 Q3 2013 Q1 2014 Q3 2014 Q1 2015
Comcast (broadcast TV) Scripps (local broadcast) TEGNA (local broadcast)
CBS (total) 21CF (total) Disney (cable + bcast TV)
1
2
3
4
55 Overview
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
63
FINANCIAL OVERVIEW
REVENUES, TRAILING 4 QUARTERS
Trailing 4-quarter revenues (to Q2 2015), $m
0
5,000
10,000
15,000
20,000
25,000
30,000
Disney(cablenw)
21CF(cablenw)
Turner(cablenw)
Viacom(cablenw)
Comcast(cablenw)
HBO(cablenw)
Discovery(cablenw)
Scripps(cablenw)
CBS(cablenw)
AMC(cablenw)
Starz(cablenw)
CBS(broadcastTV)
Comcast(broadcastTV)
Disney(broadcastTV)
21CF(broadcastTV)
CBS(localbroadcast)
Sinclair(localbroadcast)
TEGNA(localbroadcast)
MediaGeneral
Scripps(localbroadcast)
Graham(localbroadcast)
21CF
Disney
Comcast
Turner
CBS
Cable networks Broadcasting Combined
Source: Company reporting, Jackdaw Research Analysis
Jan Dawson
Chief Analyst
(408) 744-6244
jan@jackdawresearch.com
@jandawson
JACKDAW RESEARCH TV
REPORT Q2 2015
SEPTEMBER 2015

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Jackdaw Research TV Report Q2 2015

  • 1. Jan Dawson Chief Analyst (408) 744-6244 jan@jackdawresearch.com @jandawson JACKDAW RESEARCH TV REPORT Q2 2015 SEPTEMBER 2015
  • 2. 1 Pay TV Provider trends 2 Cable network trends 3 Broadcast network trends 4 Station owner trends 5 Overview
  • 3. 1 2 3 4 5 1 Pay TV Provider trends
  • 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
  • 39. 39 CABLE NETWORK COMPARISONS EBITDA MARGINS FOR THOSE REPORTING EBITDA 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) Starz (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)
  • 58. 58 Source: MARGINS BROADCAST NETWORKS AND STATION OWNERS Operating margins – broadcast -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) Disney (broadcast TV) CBS (local broadcast) Graham (local broadcast) Sinclair (local broadcast) TEGNA (local broadcast)
  • 59. 59 Source: REVENUE COMPOSITION BROADCAST NETWORKS AND STATION OWNERS Subs/fees as % of revenue, broadcast and other 0% 10% 20% 30% 40% 50% 60% Q1 2012 Q3 2012 Q1 2013 Q3 2013 Q1 2014 Q3 2014 Q1 2015 Comcast (broadcast TV) Scripps (local broadcast) TEGNA (local broadcast) CBS (total) 21CF (total) Disney (cable + bcast TV)
  • 60. 60 Source: REVENUE COMPOSITION BROADCAST NETWORKS AND STATION OWNERS Ads as % of revenue (broadcast and other) 0% 20% 40% 60% 80% 100% Q1 2012 Q3 2012 Q1 2013 Q3 2013 Q1 2014 Q3 2014 Q1 2015 Comcast (broadcast TV) Scripps (local broadcast) TEGNA (local broadcast) CBS (total) 21CF (total) Disney (cable + bcast TV)
  • 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
  • 63. 63 FINANCIAL OVERVIEW REVENUES, TRAILING 4 QUARTERS Trailing 4-quarter revenues (to Q2 2015), $m 0 5,000 10,000 15,000 20,000 25,000 30,000 Disney(cablenw) 21CF(cablenw) Turner(cablenw) Viacom(cablenw) Comcast(cablenw) HBO(cablenw) Discovery(cablenw) Scripps(cablenw) CBS(cablenw) AMC(cablenw) Starz(cablenw) CBS(broadcastTV) Comcast(broadcastTV) Disney(broadcastTV) 21CF(broadcastTV) CBS(localbroadcast) Sinclair(localbroadcast) TEGNA(localbroadcast) MediaGeneral Scripps(localbroadcast) Graham(localbroadcast) 21CF Disney Comcast Turner CBS Cable networks Broadcasting Combined Source: Company reporting, Jackdaw Research Analysis
  • 64. Jan Dawson Chief Analyst (408) 744-6244 jan@jackdawresearch.com @jandawson JACKDAW RESEARCH TV REPORT Q2 2015 SEPTEMBER 2015