发帖
雷达卡
Initiating Coverage of the Broadcasting Sector:
CBS Corporation, Entravision Communications Corp, and Hearst-Argyle Television.
• Too early to call trough of advertising cycle. In our opinion, the U.S. economy will be in recession until 2H09. Although
companies tend to increase advertising spending to engage in long-term branding and product launches, they tend to cut it in
the face of uncertain demand. This is such a time.
• TV broadcasters face deep cyclical and continuing secular challenges. In the near-term, we see TV station industry
revenue declining 11% in 2009, as the recession forces cuts by the retailers (which account for c.10% of advertising), and auto
industry turmoil likely guts advertising by TV’s largest ad category (20%+). This compounds the normal difficulty the industry –
and HTV in particular - faces growing in years after presidential elections.
• Our 2009 radio industry revenue forecast is down 10%. We have heard numerous advertiser and agency contacts suggest
that they will look to move spending to online from radio and print during the recession. We expect CBS radio to be down 8%
in revenue and Entravision’s radio segment to be down 9% in radio in 2009. We think national advertising, on which CBS’
large market radio stations depend more, will be down more than local in 2009.
• CBS Corporation (CBS – HOLD): Initiating coverage with a Hold rating and $9.00 price target.
o We believe it is still too early in the cycle to buy the stock of CBS, which generates roughly 70% of its revenue from
advertising, as we assume the U.S. economy will be in recession into 2H09. The stock could rebound sharply after
the trough, however. CBS stock substantially outperformed the S&P 500 in the 6-12 months after the trough of the
1991 and 2001 recessions. In the interim, macro conditions could absorb positive catalysts from 1) clearing the
National Amusements overhang, 2) higher retransmission consent revenue via upcoming agreements with cable
operators, 3) network revenue share gains, on the strength of CBS’ strong primetime performance, and 4) visibility on
the traction of CBS’ interactive strategy as the CNET acquisition is integrated during an online advertising downturn.
Our price target assumes that CBS continues to pay its quarterly cash dividend, currently $0.27 per share, although
recent management comments appear to suggest some risk of at least a cut, and our 2009 forecasts imply the
current dividend would result in payout of slightly over the company’s stated target of 50% of free cash flow.
• Entravision Communications (EVC – BUY): Initiating coverage with a Buy rating and $2.00 price target.
o For an advertising-based company during a recession, non-growth catalysts seem the most compelling, and would
make us a buyer of EVC at these levels. Specifically, we see 1) de-leveraging through debt repurchases, 2) possible
upside to our revenue and cash flow forecasts as new retransmission consent deals are announced in 2009, and 3)
clearing of the next slug of the Univision stock overhang as making the stock worth the risks posed by 1) our 2009
forecast for revenue to be down 5% and EBITDA down 11%, and 2) a leverage covenant step-down to 5.25x on
12/31/08 vs. 9/30/08 leverage of 5.46x.
• Hearst-Argyle Television (HTV – HOLD): Initiating coverage with a HOLD rating and $6.30 price target.
o Our concerns about the television station industry's declining share of advertising during the recession give us a
cautious view of the upside for one of the leading U.S. pure-play TV station broadcasters. Price pressure due to
selling in recent months by Private Capital Management appears to have abated and reversed somewhat for the time
being. We have no insight into whether 82% owner, privately held Hearst Corp., is interested in making another bid
to buy in the public stub, given its prior $23.50 per share cash tender in August 2007, but see a take-out as a
potential upside catalyst. Our price target assumes that HTV continues to pay its quarterly cash dividend, currently
$0.07 per share, despite potential leverage covenant issues that could arise in 2009.
TABLE OF CONTENTS
INVESTMENT THESIS............................................................................................................................................4
VALUATION..............................................................................................................................................................4
RISKS TO THESIS AND PRICE TARGET ..............................................................................................................4
ESTIMATES...............................................................................................................................................................6
GUIDANCE AND OUTLOOK...................................................................................................................................7
RECENT RESULTS...................................................................................................................................................7
COMPANY OVERVIEW and COMPETITIVE POSITION................................................................................8
GROWTH AND MARGIN TRENDS .......................................................................................................................28
TECHNOLOGY TRENDS.......................................................................................................................................35
DEAL TRENDS........................................................................................................................................................37
REGULATORY TRENDS........................................................................................................................................38
CAPITAL STRUCTURE AND GOVERNANCE.....................................................................................................40
VALUATION............................................................................................................................................................44
FINANCIAL MODELS ...........................................................................................................................................48
287616.pdf
(1.71 MB, 需要: 500 个论坛币)
京公网安备 11010802022788号
