/// Q2 TV Forecast: Cloudy With a Chance of Stasis

July 23, 2012  |  Media Week

Despite a decelerating economy and an increasingly gloomy macro outlook, media stocks have remained reassuringly buoyant, ticking upwards as other big-cap offerings sputter and sink. Year to date, media stocks have handily outperformed the S&P 500; among the strongest listings are TV-heavy hitters like Disney (up 28 percent in share price versus the index’s 8 percent gain); News Corp. (up 23 percent); and CBS Corp. (up 19 percent). Given the volatility of the economy, it appears unlikely that media will continue to whiz along in its contrary orbit. On the eve of second-quarter earnings, some analysts are beginning to take a dim view of the TV market, warning that a slowdown in advertising and depressed consumer spending could herald a rude awakening for investors. “In order to fuel the rally further, earnings numbers need to start moving up,” said Nomura Equity Research analyst Michael Nathanson. “Yet we do not see the scope for positive earnings revisions for the Q2 reporting season.” Nathanson added that he believed earnings would reflect a significant slowdown in the broadcast ad business, with network sales likely to fall 2 percent year over year, versus a 5 percent gain in Q1 2012. In keeping with the forecast, Nathanson revised CBS’ price target down from $35 to $34 a share, while leaving Disney unchanged at $51

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Q2 TV Forecast: Cloudy With a Chance of Stasis



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