BBGI’s Q4 print was mixed, as reflected in today’s (02/18/20) stock price performance, -3% vs. S&P -0.3%. Revenue beat by ~200bps, but EBITDA came in light due to higher expenses – a recurring theme for this name. Q1 revenue, on the other hand, is pacing in-line with our estimate with higher political offset by lower core. As we look out to the rest of 2020, we expect BBGI to better monetize its investments in digital but worry that the rev. gains will again be offset by higher expenses. As a result, we raised our 2020 and 2021 revenue by ~1% each, but keep our 2020 and 2021 EBITDA unchanged. We maintain our Peer Perform rating and $4 YE 2020 price target.
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On an as-reported basis (which includes the impact of the WDMK-FM as of Aug. ‘19), net revenues beat at -4.6% vs. our -7.1% est. and the “down HSD” pace mgmt. provided on its Q3’19 earnings call. The y/y decline in revs was mostly due to tough comps from the absence of political. Ex. political, the release characterized the Q4 ad environment as “healthy,” with “six of our markets generating y/y increases.” Our sense is that core adv. was still down organically but ended the year better than expected given the top-line beat.
The NFL’s TV rights negotiations are about to HEAT UP. Standing in the way is the collective bargaining agreement (CBA) between the league and the players, which the NFL reportedly hopes to wrap in the next few weeks (despite the CBA running through the 2020 season, or another 18 months). According to today’s WSJ, the NFL wants to lock down a new deal ASAP, as ratings were strong this year on the back of young new stars – plus the league wants to get in front of any potential economic downturn or the 2020 Presidential election, which could dampen ratings and hurt its negotiating leverage (i.e. ratings fell 8% in 2016). From the studios’ perspective, we think getting a deal done sooner rather than later would remove an overhang for the stocks – as some investors still question if a meaningful portion of the rights will go to digital players (we strongly disagree).
The hottest names this week were ETM (866 bps better than the S&P), MDP (652 bps), NFLX (375 bps), SSP (299 bps), and GTN (199 bps).
We had a chance to tour ETM’s Studio down in TriBeca with a group of investors, followed by meetings with management (CEO CEO David Field, CFO Rich Schmaeling, Chief Digital Officer J.D. Crowley and NY Regional President, Susan Larkin). Our biggest takeaway is how the narrative for the company has finally taken a turn. We didn’t get a single question about USTN or legacy CBS Radio stations. Rather, investors were most interested in ETM’s multi-platform audio strategy – i.e. how ETM plans on integrating its newly acquired podcast platform with its core business, radio.com and its analytics group – along with capital allocation (some thought ETM should be buying back more stock) and the 2020 political opportunity.
The hottest names this week were BBGI (893 bps better than the S&P), CABO (628 bps), OUT (521 bps), NFLX (455 bps), and LAMR (272 bps).
The hottest names this week were GTN (797 bps better than the S&P), SSP (753 bps), TGNA (695 bps), SBGI (623 bps), and NXST (140 bps).
As many of you have already heard, Marci has taken the plunge and left Wall Street after an exemplary 17 years to join Comcast as Senior Vice President, Investor Relations. We wish her the absolute best of luck in this new chapter of her career.
The hottest names this week were IHRT (953 bps better than the S&P), TGNA (304 bps), FOXA (276 bps), CHTR (95 bps), and BBGI (81 bps).
The hottest names this week were ETM (627 bps better than the S&P), CCO (597 bps), BBGI (589 bps), LAMR (326 bps), and GTN (231 bps).
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