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Broadcast Revenues Stable at Double-digit Drop
7/28/2009

NEW YORK: Second-quarter media revenues are coming in steadily at declines of around 20 percent, where they appear to have stabilized, Wachovia's Marci Ryvicker said in a recent analyst note.

"Based on Q2 results reported by various traditional media companies thus far, we expect most pure-play broadcasters to report revenue declines similar to Q1, which ranged from -14 to -21 percent, and cost cuts to be substantial, resulting in potential beats to the bottom line," she said. "We do not expect much commentary on the second half of the year and anticipate the tone of the conference calls to be cautious."

Most of the reporting companies are expected to focus on paying down debt and cutting costs, as well as retrans agreements and the performance of the auto advertising category. Cost-cutting has been rampant among media companies during the first half of the year, yielding some positive results, at least in the short term.

"Expense cuts have been larger than expected, resulting in upside surprises to bottom line expectations. We anticipate that the pure-play broadcasters will demonstrate similar trends, causing most stocks to go higher," she said in a recent note on the broadcast and cable industries. "These trends are similar to what we saw in Q1, but how sustainable are such deep cost cuts, particularly as the recession looms on and the eventual recovery is likely to be extremely sluggish."

Ryvicker noted that upfront ad sales are starting to move faster, though the major networks are writing deals for CPM rates down 1 to 3 percent compared to last year. NBC is said to be discounting its upfront inventory by up to 7 percent.

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