EARNINGS PREVIEW: Media Companies Still Face Modest Ad Revenue
April 23 2012 - 11:57AM
Dow Jones News
TAKING THE PULSE: Despite bullish comments from broadcasters of
late about an uptick in advertising sales, analysts expect only
modest improvement from the generally sluggish ad sales reported in
the final quarter of 2011. Affiliate fees remain a key profit
source for broadcasters and cable operators even as digital
distribution deals will continue to help profits. "Affiliate fees
are still the 'golden goose' of media," write analysts at Barclays.
Meanwhile, cable distributors face an ongoing squeeze on profit
margins due to higher programming costs and new competition from
the likes of Verizon Communications Inc.'s (VZ) FiOS service.
COMPANIES TO WATCH:
Walt Disney Co. (DIS) - reports May 8
Wall Street Expectations: Analysts polled by Thomson Reuters
expect a profit of 56 cent a share on revenue of $9.56 billion for
the second fiscal quarter. Disney reported a profit of 49 cents a
share on revenue of $9.08 billion in Disney's 2011 second
quarter.
Key Issues: Disney has warned that its studio segment would book
up to a $120 million loss for the second quarter due to the poor
box office performance of "John Carter," leading up to the
resignation of studio Chairman Rich Ross last week. Analysts will
look for more detail on the costs and the initial performance of
highly-anticipated "The Avengers," slated for release May 4.
Viacom Inc. (VIA, VIAB): reports May 3
Wall Street Expectations: Analysts expect a profit of 90 cents a
share on revenue of 3.33 billion for Viacom's second fiscal
quarter. Viacom booked a profit of 63 cents a share and revenue of
$3.27 billion in its 2011 second quarter.
Key Issues: Viacom's advertising revenue will be closely watched
as the broadcaster faces ratings softness at two of its most
important networks, Nickelodeon and MTV.
DirecTV (DTV): reports May 10 (estimated)
Wall Street Expectations: Analysts expect a profit of $1.05 a
share on revenue of $7.03 billion. DirecTV reported a profit of 85
cents a share on revenue of $6.32 billion a year earlier.
Key Issues: DirecTV last month outlined plans to more than
double its revenue and subscriber base in Latin America, which is
becoming the satellite TV operator's main source of growth as its
U.S. markets attract fewer new customers. DirecTV already said it
added more than 550,000 subscribers in Latin America for the first
quarter.
News Corp. (NWS, NWSA): reports May 9
Wall Street Expectations: Analysts expect a profit of 31 cents a
share on revenue of $8.25 billion for News Corp.'s fiscal third
quarter. The company, earned a profit of 24 cents a share on
revenue of $8.26 billion in its 2011 fiscal third quarter.
Key Issues: In February, Chief Operating Officer Chase Carey has
pointed optimistically to upcoming renewals on Fox News' pay-TV
carriage rights, which coincide with popular election year news
coverage. He also acknowledged ratings weakness at top-rated
reality show "American Idol," which faces new competition from
shows like NBC's "The Voice." News Corp., which owns this newswire,
is also still dealing with the aftermath of a phone-hacking scandal
at its U.K. newspapers division.
Cablevision Systems Corp. (CVC): reports May 3
Wall Street Expectations: Analysts expect a profit of 19 cents a
share on revenue of $1.67 billion. Cablevision reported a 36 cents
a share profit on revenue of $1.92 billion a year earlier.
Key Issues: Investors have aggressively dumped Cablevision
shares over the past year amid worries about low growth prospects
and overlap with Verizon's expanding FiOS service. They are also
worried about a slew of high-level executive departures, including
much-respected former Chief Operating Officer Tom Rutledge last
year.
--By William Launder, Dow Jones Newswires; 212-416-3412;
william.launder@dowjones.com
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