What Better Ad Trends, Higher Sports Costs Mean for Hollywood Earnings Season

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Longer-term, 'the bigger question is the trajectory of the pandemic, strength of the U.S. economy and how much improvement will be seen into 2021,' says one analyst.

Longer-term,"the bigger question is the trajectory of the pandemic, strength of the U.S. economy and how much improvement will be seen into 2021," says one analyst.

UBS analyst John Hodulik also forecasts"noticeable improvement" in advertising in the third quarter after 25-30 percent national and 30-40 percent local TV declines in the second quarter. Recent commentary from top entertainment executives"have pointed to a strong scatter market, including premium pricing, as some of the ad dollars pulled out of commitments earlier in the year were repurposed during the quarter," he explained in his Oct. 12 earnings season preview.

On earnings conference calls, investors will look for management updates and color on their all-important streaming strategies, as well as their longer-term outlook and strategies to recover from the pandemic. Said Hodulik:"The bigger question is the trajectory of the pandemic, strength of the U.S. economy and how much improvement will be seen into 2021.

AT&T recently closed its $1.1 billion sale of a majority stake in Central European Media Enterprises and has also been looking at divesting a stake of slightly more than 50 percent in satellite TV unit DirecTV, among others. At NBCU's broadcasting unit, Williams expects an ad decline of 9 percent,"offset by distribution growing 7 percent and content licensing growing 55 percent, with EBITDA up 12 percent."

Meanwhile, Comcast's cable systems are widely expected to provide some good news and report record quarterly broadband user growth since Comcast chairman and CEO Brian Roberts at an investor conference in September said the firm was trending to add more than 500,000 such subscribers.which recently reached

In other positives, strong political ad spending should help Fox's local TV stations to some degree, and retransmission consent revenue will continue to grow, according to analysts. On the call, expect questions on the outlook for TV advertising and sports, as well as the company's digital strategy.ViacomCBS, led by CEO Bob Bakish, continues the earnings parade for entertainment powerhouses on Nov. 6.

Creutz predicts ViacomCBS' quarterly revenue will fall 15 percent to $5.73 billion, with adjusted OIBDA down 24 percent to $964 million. He expects the TV Entertainment unit, which includes the CBS network, and film division to record higher profits than in the year-ago period, with the cable networks business to post a lower profit.

 

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