Moody's Goes Stable on Broadcasting
October 1, 2009
NEW YORK: Moody’s
Investors Service changed its outlook on the U.S. TV broadcast industry from
“negative” to “stable.” Moody’s said it expects broadcast revenue declines to
ease throughout the remainder of this year, and to start growing again next
year with political and a mild, overall recovery. Most of the revenue growth is
expected to be reflected in earnings before interest, taxes, depreciation and
amortization because most broadcasters have already cut costs to the bone, and
fixed costs remain substantial.
As for CBS, Wells Fargo analysts noted that it had its best ratings trend
during the first week of the new 2009-10 prime-time season of the top five
“We expect this to translate into higher scatter pricing, which was already
trending better than we had initially expected based on management’s commentary
at a recent investor conference--scatter pricing is up high single digits over
last year’s upfront,” a Wells Fargo investor note stated.
The firm reiterated its “outperform” rating on CBS, which had the best
year-over-year ratings performance of the five broadcast nets for week one of
the new season. CBS was up 4 percent; ABC was down 12 percent; NBC, down 16
percent; Fox was flat and the CW fell 25 percent.
CBS won the most 30-minute time slots for the week as well with 22 at the top.
ABC had 16; NBC, six, attributed to “Sunday Night Football.” The Eye Network
was also said to have the largest net gain from the so-called “Jay Leno Effect.”
“Not surprising--Jay Leno has lost roughly half of the viewers he had last week
now that the other broadcast networks are airing original programming,” Wells
Fargo’s note said. “Looking year-over-year at the 10 p.m. time slot, NBC lost approximately
30 percent of its viewers, which is pretty close to the one-third that we had
predicted. Given this week’s performance, it looks like CBS is set to benefit
the most from NBC’s loss, which could result in about 5.2 million incremental
The numbers bode well for CBS affiliates, and by association, Meredith, and
Gray, both with around half of the stations they own affiliated with CBS.
NBC-heavy groups, such as Gannett (52 percent) Media General (42 percent) and
Raycom (40 percent) will be on the other side of the Jay Effect if it persists.
-- Deborah D. McAdams