TV Market Sector Summary

NEW YORK: The upfronts concluded last week, but the aftermath is likely to continue for sometime, Wachovia’s Marci Ryvicker anticipates.

“With earnings over, all focus is now on the network upfronts which started last week,” Ryvicker wrote in her weekly round-up. “Negotiations are likely to be drawn out, and it will be interesting to see who ‘blinks’ first. We hear that the networks are holding out on price, so we may see a significant decline in inventory--usually 70 to 80 percent of broadcast prime time is sold in the upfront.

For the week concluding Friday, May 22, Wachovia’s Broadcast stocks rose 1 percent last week, versus the S&P 500 at flat. Sinclair (NASDAQ: SBGI) had the best performance, up 11 percent, while Gray Television (NYSE: GTN) had the worst with -12 percent. Lamar Advertising Co. (NASDAQ) LAMR was down 1 percent and CBS (NYSE: CBS) was up 5 percent.

Wachovia’s broadcast stocks traded at 8.7x enterprise value-to-earnings before interest, taxes, depreciation and amortization, 8.3x price-to-earnings, and 4.5x price-to-free cash flow. By comparison, CBS traded at 4.4x EV/EBITDA and 5.4x P/FCF.

Among pay TV providers, rates remained the same. Cable and telcoTV pushed bundled services while Dish (NASDAQ: DISH) and (NASDAQ: DTV) DirecTV went after each other with deep discounts--$9.99 a month for Dish and $21 off per month for DirecTV.

With regard to programming, Comcast (NYSE: CMSA) finalized a deal with the National Football League’s network, paying the football franchise 40 to 50 cents a month per subscriber rather than the 75 to 80 cents under the previous contract. NFL Network ended up on a programming tier that gave it 11 million subscribers versus the 2 million it had before. The network will be moved Aug. 1.