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/ 03.10.2010 1:00PM
Toyota Seen Contributing to Broadcast Recovery
NEW YORK: Several broadcasters reported improvement in
the auto advertising segment over the last couple of quarters. Now Wells
Fargo’s Marci Ryvicker sees further room for improvement, especially for
traditional media platforms.
“With auto being one of the largest ad categories in the United States, its
year-too-year growth or decline tends to be significant,” she said in a analyst
note today. “We see five catalysts in 2010 that could drive H1 growth in this
meaningful category:
1) Toyota’s recent ad campaign, which has been scheduled for March 2 through
April 5 but may likely be extended;
2) the piggy-backing of other automakers, particularly GM, Ford, Chrysler and
Hyundai, which together comprised approximately 52 percent of ’09 auto unit
sales versus Toyota at approximately 17 percent;
3) GM’s reinstatement of 661 dealerships--out of a total of 1,100 closed in
mid-2009;
4) easy prior year comparisons--auto advertising was down roughly 50 percent in
H1 2009; and
5) the Olympics, which has historically been an advertising ‘haven’ for auto
makers.
“While all traditional media are likely to benefit, we view TV broadcasters as
having the most potential upside to estimates, followed by radio, then local
cable and lastly outdoor,” Ryvicker wrote. “TV broadcasters have been the
greatest beneficiaries of the auto ad blitz. It is no surprise that the TV
broadcasters have been the most bullish of all traditional media given the
Super Bowl, Olympics and political, which have tightened inventory and rates.”
Broadcast TV stocks are up around 38 percent year-to-date, she noted, versus
the S&P 500, which is up 2 percent.
“We believe that expectations are high, and rightly so. As auto comprised
approximately 15 percent of broadcast ad revenue in ’09 versus historical
levels of approximately 25 percent, we believe there is still room for
potential upside,” she said. “We anticipate that incremental auto ad spend
could result in several hundred basis points of additional top-line growth--for
the TV broadcasters, a rising tide lifts all boats.”
Among broadcasters, Ryvicker said CBS has “significant exposure to Toyota.”
“With Toyota its largest advertiser, CBS is likely to see the most benefit from
Toyota’s recent ad campaign,” she said. “We estimate that Toyota comprises
roughly 1.5 percent of CBS’ total revenue and roughly 2.5 percent of total ad
dollars. Our current 2010 estimates are for 5 percent growth in revenue, 26
percent growth in EBITDA and earnings per share of 94 cents versus consensus
estimates of 4 percent, 29 percent and 94 cents, respectively. We believe there
could be modest upside to estimates.”
(Image by xwelhamite/G.B.B.)
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