Cable networks' ad growth to slow in Q3, analyst says

Results
Many media companies struggled to display advertising growth during the second quarter.

In the wake of some shaky quarterly earnings for media companies, Jefferies analyst John Janedis is lowering his growth estimates for ad revenues in the third quarter.

“It was another tough quarter from a stock perspective, as several of the media companies posting disappointing results / or outlooks. From that perspective, we reduced our 3Q cable network ad growth estimates to +0.5% from 3.0%, ~140bps better sequentially. On the distribution side, we expect U.S. cable affiliate growth of 5.1%, the slowest growth over the past four quarters and 160bps sequentially as skinny bundles continue to have an impact on growth. Investor sentiment across the group remains negative,” wrote Janedis in a research note.

Indeed, many media companies struggled to display advertising growth during the quarter.

Discovery’s U.S. Networks growth was driven by 4% distribution growth and relatively flat advertising growth. Higher rates managed to somewhat offset subscriber declines and but higher ad pricing and continued monetization of Discovery’s GO platform was impacted by lower delivery and the Group Nine transaction.

At NBCUniversal, content licensing revenue rose a modest 2.1%, while advertising revenue fell 1.2%, due to audience ratings declines.

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At Viacom, domestic advertising revenues fell 2% to $955 million as higher pricing ran up against lower impressions. But international advertising revenues came through with big 14% growth to $280 million during the quarter.

Turner’s revenues reached $3.1 billion for the quarter, up from about $3 billion one year ago. Turner’s subscription revenue rose 13% and helped offset a 6% decrease in advertising revenues and 8% decrease in content and other revenues.

AMC’s national networks segment saw a 7.8% increase in distribution revenues, due to an increase in licensing revenues as well as an increase in affiliate fees. The segment also saw its advertising revenues rise 2.6%.