Nomura Equity Research’s Michael Nathanson underscored his concern about the upcoming earnings reports by cutting his Q3 estimates across the board this morning. He dropped CBS by 5.2% (to 60 cents in Q3 earnings per share), News Corp by 4.6% (to 40 cents), Disney by 4.5% (to 69 cents), Discovery by 3.2% (to 63 cents) Scripps Networks by 2.7% (to 77 cents), Viacom by 1.3% (to $1.16) and Time Warner by 1% (to 81 cents). Nathanson notes that “we did not get much of an update” from media execs when they were asked at recent investor conferences about the state of the ad market. The analyst projects that the companies collectively will show a 1.1% drop in ad sales in Q3, due in part to disruptions from the Olympics and later-than-expected purchases by political campaigns. While everyone expects sales to improve, Nathanson says that “recent trends don’t give much hope for 4Q upside ad surprises.” He’s also concerned about trends in broadcast TV ratings: The major networks were down in 35 out of 49 non-Olympics weeks in the season that just ended and “broadcast trends in 3Q have been disappointing.” He also lowered film studio estimates for Time Warner, Disney, and CBS — leaving News Corp and Viacom unchanged — saying that “fewer releases for some in the quarter actually help the bottom line.”
But here’s a twist. Media company stock prices could continue to rise, even if Q3 earnings are a let-down. Investors are valuing media companies at historically high multiples of their earnings. “Frankly, we have been surprised,” Nathanson says. He knows it’s futile to fight the market: He raised his target prices for Viacom (by $5 to $58), CBS ($2 to $38), Time Warner ($3 to $45), Scripps Networks ($3 to $56) and Discovery ($2 to $52), leaving unchanged News Corp ($28) and Disney ($55).


Gotta love the media taking it in the pocketbook in this era of Obamanomics. These clowns promote him openly, yet the economy continues to falter. If Obama wins, I hope they all get laid off. What goes around comes around.
What about all the political ad spending out there??
Many advertisers in much of the country will be shut out of TV advertising for the next month due to all those political ads.
It’s my understanding the political ad blitz will even delay most Detroit carmakers’ introducing 2013 models until after the election because in many areas, they won’t be able to buy TV commercial time until after Election Day!