Friday, March 05, 2021

Salem Media (SALM)
A Rush To Fill A Void

Salem Media Group is America’s leading radio broadcaster, Internet content provider, and magazine and book publisher targeting audiences interested in Christian and family-themed content and conservative values. In addition to its radio properties, Salem owns Salem Radio Network, which syndicates talk, news and music programming to approximately 2700 affiliates; Salem Radio Representatives, a national radio advertising sales force; Salem Web Network, a leading Internet provider of Christian content and online streaming; and Salem Publishing, a leading publisher of Christian themed magazines. Salem owns and operates 115 radio stations, with 73 stations in the nation’s top 25 top markets – and 25 in the top 10. Each of our radio properties has a full portfolio of broadcast and digital marketing opportunities.

Michael Kupinski, Director of Research, Noble Capital Markets, Inc.

Refer to the full report for the price target, fundamental analysis, and rating.

Q1 results. Total company revenues were above expectations at $64.47 million versus our estimate of $62.10 million. Cash flow, as measured by adjusted EBITDA was $10.24 million versus our $9.70 million estimate. The solid quarter was driven by better-than-expected Political advertising and strong results in its Digital businesses.


Q1 outlook.  Management provided two months of revenue trends, with total company revenues down 4%, but indicated that March revenue is significantly improved. We are raising our Q1 revenue estimate from $55.99 million to $56.40 million and maintaining our adj. EBITDA estimate of $4.5 million. We are raising our full year 2021 revenue and cash flow estimates…

This Company Sponsored Research is provided by Noble Capital Markets, Inc., a FINRA and S.E.C. registered broker-dealer (B/D).

*Analyst certification and important disclosures included in the full report. NOTE: investment decisions should not be based upon the content of this research summary.  Proper due diligence is required before making any investment decision. 

 

Media and Entertainment Industry – Who Wins?

 

The change in leadership in the broadcast media and entertainment industry accelerated during the 2020 lockdowns. Recently, hedge funds that held short equity positions in companies suffering most from reduced business have shone a spotlight on the industry and names like AMC Entertainment Holdings Inc. (AMC).

With ticket sales for the film industry down significantly last year, and a $905M Q3 net loss, there were bets that AMC wouldn’t weather the pandemic. Other theater chains like Cinemark (CNK) and Regal (parent Cineworld) (CNNWF) have also fared poorly. The trend had already been to this mix is a test of a changing industry business model; WarnerMedia is releasing its films concurrently on both HBO Max and in theaters. What does this hold for the media industry?

Broadcast

Consumers of all forms of media have been spending more time at home, which equates to more time in front of the (small) screen. In 2021, that includes a mix of both broadcast and digital. The E. W. Scripps Co (SSP) made two purchases in the over-the-air digital multicast market, Katz network in 2017 and Ion Media in January; Scripps now owns 61 stations in 41 markets. Scripps has joined with Gray Television (GTN) and other major broadcast players to navigate opportunities and capitalize on the changing market. Scripps isn’t going to count on reaching viewers via broadcast only; its content is also available “over-the-top.”

 

“During peak pandemic months, Nielsen saw a rise in digital game purchases, streaming video engagement, online ordering, and working from home. Out of necessity, businesses quickly moved not just their workforces but their services and more of their advertising online.”

 

Digital and Over-the-top (OTT) Media

Streaming media offered directly to viewers through the Internet is referred to as “Over-the-Top” or “OTT.” Consumption of OTT has risen with the usage of smartphones, smart TVs, fire sticks, Roku boxes (ROKU), and the added ingredient of societal lockdowns. Well-known names such as Netflix (NFLX), Amazon Prime Video (AMZN), Hulu, and Disney-Plus (DIS) exist in the OTT landscape, and Netflix alone reported 37 million net additional subscriptions in 2020.

 

 

Gaming and Gambling

When a large part of the population is forced to stay home and interact remotely, it would be natural to assume an increase in entertainment consumed from home or remotely, and the numbers bear this out. According to Nielsen’s SuperData, the games and interactive media industry grew 12% year-over-year to $139.9B in 2020, with worldwide digital games earnings rising by 15% year-over-year to reach $11.6B in January 2021. One game, Cyberpunk 2077, released late in 2020, had the biggest digital game launch of all time, selling 10.2 million digital units and grossing $609 million in digital sales by the year’s end.

Additionally, the stay-at-homes are also turning to esports and online gambling. As locked-down areas face revenue shortfalls, regulators realize the potential for esports and online casinos as sources of increased tax revenue.

 

“Pennsylvania’s sportsbooks and online casinos set new records in January, with more than USD 600 Million in monthly sports wagers for the first time. Now, Pennsylvania’s sportsbooks are en route to bring in nearly USD 6 Billion in sports wagers in 2021 with the state’s online casinos capable of reaching more than USD 800 Million in taxable revenue, according to projections from analysts PlayPennsylvania, and reported by SBC Americas.”

 

The global esports market is anticipated to grow 20% annually over the next few years, and Esports Entertainment Group (GMBL) has been busy positioning itself to capitalize on that growth, acquiring online casinos and building bridges with US football and soccer teams. Baltimore Ravens, New England Patriots, and the New England Revolution have all inked recent deals to make Esports Entertainment Group their Official Esports Tournament Provider Sponsor. Rumors from the Reddit crowd recently helped more than double its stock price.

Take-Away

Getting back to the cinema, AMC went from roughly $4B in total YTD revenues ending Sept 2019 to $1B and change a year later. Revenues were strong before the long period of staying at home last year and the future is yet to be written, but, please excuse the quintessential 90’s term, we see a new paradigm in entertainment and its distribution channels.

 

Suggested Reading:

Digital Media and Entertaining Industry Report

How to Invest in Esports

What
Percentage of US Retail Sales is Ecommerce?

Sources:

Covid 19 Changed the Advertising Playbook, Now What?

EW
Scripps Plans to Take Over the Air Nets OTT

Netflix Fourth Quarter 2020 Earnings Interview

Games and interactive media earnings

Digital games market

 

 

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Tuesday, March 02, 2021

E.W. Scripps Company (SSP)
Several Surprising Comments On The Investor Call

The E.W. Scripps Co. (www.scripps.com) serves audiences and businesses through a growing portfolio of television, print and digital media brands. After approval of its acquisition of two Granite Broadcasting stations later this year, Scripps will own 21 local television stations as well as daily newspapers in 13 markets across the United States. It also runs an expanding collection of local and national digital journalism and information businesses including digital video news service Newsy. Scripps also produces television programming, runs an award-winning investigative reporting newsroom in Washington, D.C., and serves as the longtime steward of one of the nation’s largest, most successful and longest-running educational programs, Scripps National Spelling Bee. Founded in 1879, Scripps is focused on the stories of tomorrow.

Michael Kupinski, Director of Research, Noble Capital Markets, Inc.

Refer to the full report for the price target, fundamental analysis, and rating.

Q4 results in line with expectations. Total company revenues of $591.1 million were in line with our $588.3 million estimate. Cash flow, as measured by Adj. EBITDA, was $206.6 million, in line with our $205.8 million estimate. Notably, Local core advertising was slightly better than expected, while Katz was slightly lower than expected.


Improving core advertising trends.  Management indicated that March core advertising is pacing up mid single digits. This is considered to be strong given that the year earlier advertising did not fall off significantly until Q2. It indicates that advertising is building and is very encouraging heading into the second quarter against the year earlier advertising impact from the Pandemic …

This research is provided by Noble Capital Markets, Inc., a FINRA and S.E.C. registered broker-dealer (B/D).

*Analyst certification and important disclosures included in the full report. NOTE: investment decisions should not be based upon the content of this research summary.  Proper due diligence is required before making any investment decision. 

Friday, February 26, 2021

Gray Television Inc. (GTN)
Outlook: A Solid Start To The Year

Gray Television, Inc. operates as a television broadcast company in the United States. As of April 6, 2010, it operated 36 television stations in 30 markets, including 17 affiliated with CBS Inc.; 10 affiliated with the National Broadcasting Company, Inc.; 8 affiliated with the American Broadcasting Company (ABC); and 1 affiliated with FOX Entertainment Group, Inc. (FOX). The company also operated 39 digital second channels comprising 1 affiliated with ABC, 4 affiliated with FOX, 7 affiliated with CW Network, LLC, 18 affiliated with Twentieth Television, Inc., 2 affiliated with Universal Sports Network, and 7 local news/weather channels. Gray Television, Inc. was founded in 1897 and is headquartered in Atlanta, Georgia.

Michael Kupinski, Director of Research, Noble Capital Markets, Inc.

Refer to the full report for the price target, fundamental analysis, and rating.

Q4 results outperform. Revenues exceeded expectations, with the variance driven by better Political and Core advertising. Q4 revenues of $792 million was better than our $734 million estimate. Adjusted EBITDA was $404 million, much stronger than our $341 million estimate. Political advertising was $245 million in the quarter, well above our $217 million estimate. Coincidently, the quarter had more Political advertising than the entire year of 2018 at $235 million.


Q1 guidance better than expected.  Total core revenues appear stronger than we expected, with guidance of 0% to 2% growth to approximately $253 million, significantly better than our $220 million estimate. Retransmission revenue was better than expected as well, with guidance of $245 million, better than our $230 million estimate. In spite of higher expenses, adjusted EBITDA is expected to be a …

This research is provided by Noble Capital Markets, Inc., a FINRA and S.E.C. registered broker-dealer (B/D).

*Analyst certification and important disclosures included in the full report. NOTE: investment decisions should not be based upon the content of this research summary.  Proper due diligence is required before making any investment decision. 

Friday, February 26, 2021

Gray Television Inc. (GTN)
Outlook: A Solid Start To The Year

Gray Television, Inc. operates as a television broadcast company in the United States. As of April 6, 2010, it operated 36 television stations in 30 markets, including 17 affiliated with CBS Inc.; 10 affiliated with the National Broadcasting Company, Inc.; 8 affiliated with the American Broadcasting Company (ABC); and 1 affiliated with FOX Entertainment Group, Inc. (FOX). The company also operated 39 digital second channels comprising 1 affiliated with ABC, 4 affiliated with FOX, 7 affiliated with CW Network, LLC, 18 affiliated with Twentieth Television, Inc., 2 affiliated with Universal Sports Network, and 7 local news/weather channels. Gray Television, Inc. was founded in 1897 and is headquartered in Atlanta, Georgia.

Michael Kupinski, Director of Research, Noble Capital Markets, Inc.

Refer to the full report for the price target, fundamental analysis, and rating.

Q4 results outperform. Revenues exceeded expectations, with the variance driven by better Political and Core advertising. Q4 revenues of $792 million was better than our $734 million estimate. Adjusted EBITDA was $404 million, much stronger than our $341 million estimate. Political advertising was $245 million in the quarter, well above our $217 million estimate. Coincidently, the quarter had more Political advertising than the entire year of 2018 at $235 million.


Q1 guidance better than expected.  Total core revenues appear stronger than we expected, with guidance of 0% to 2% growth to approximately $253 million, significantly better than our $220 million estimate. Retransmission revenue was better than expected as well, with guidance of $245 million, better than our $230 million estimate. In spite of higher expenses, adjusted EBITDA is expected to be a …

This research is provided by Noble Capital Markets, Inc., a FINRA and S.E.C. registered broker-dealer (B/D).

*Analyst certification and important disclosures included in the full report. NOTE: investment decisions should not be based upon the content of this research summary.  Proper due diligence is required before making any investment decision. 

Wednesday, February 24, 2021

Cumulus Media Inc. (CMLS)
In A Good Spot

CUMULUS MEDIA, Inc. (NASDAQ: CMLS) is a leading audio-first media and entertainment company delivering premium content to over a quarter billion people every month — wherever and whenever they want it. CUMULUS MEDIA engages listeners with high-quality local programming through 428 owned-and-operated stations across 87 markets; delivers nationally-syndicated sports, news, talk, and entertainment programming from iconic brands including the NFL, the NCAA, the Masters, the Olympics, the GRAMMYS, the American Country Music Awards, and many other world-class partners across nearly 8,000 affiliated stations through Westwood One, the largest audio network in America; and inspires listeners through its rapidly growing network of original podcasts that are smart, entertaining and thought-provoking. CUMULUS MEDIA provides advertisers with local impact and national reach through on-air, digital, mobile, and voice-activated media solutions, as well as access to integrated digital marketing services, powerful influencers, and live event experiences. CUMULUS MEDIA is the only audio media company to provide marketers with local and national advertising performance guarantees.

Michael Kupinski, Director of Research, Noble Capital Markets, Inc.

Refer to the full report for the price target, fundamental analysis, and rating.

Q4 results better. Results were better than expected with revenues $245.9 million versus our $235.0 million estimate and cash flow, as measured by adjusted EBITDA, $39.6 million versus our estimate of $25.4 million. The improved results reflected better revenue in Digital and Political than our estimates. The quarter benefited from significant cost reductions, which declined $25 million in the quarter and allowed the company to beat our cash flow estimate.


Q1 pacings in line.  Management indicated that Q1 advertising pacings were currently down 20%, but likely will improve in March. The company has a difficult comp in Q1 due to year earlier Political advertising, which was a hefty $4 million. We are maintaining our Q1 revenue and cash flow estimate, which anticipates revenues to be down 18.8% and with modest cash flow of $250,000 …

This research is provided by Noble Capital Markets, Inc., a FINRA and S.E.C. registered broker-dealer (B/D).

*Analyst certification and important disclosures included in the full report. NOTE: investment decisions should not be based upon the content of this research summary.  Proper due diligence is required before making any investment decision. 

Thursday, February 18, 2021

E.W. Scripps Company (SSP)
A Triton Haul

The E.W. Scripps Co. (www.scripps.com) serves audiences and businesses through a growing portfolio of television, print and digital media brands. After approval of its acquisition of two Granite Broadcasting stations later this year, Scripps will own 21 local television stations as well as daily newspapers in 13 markets across the United States. It also runs an expanding collection of local and national digital journalism and information businesses including digital video news service Newsy. Scripps also produces television programming, runs an award-winning investigative reporting newsroom in Washington, D.C., and serves as the longtime steward of one of the nation’s largest, most successful and longest-running educational programs, Scripps National Spelling Bee. Founded in 1879, Scripps is focused on the stories of tomorrow.

Michael Kupinski, Director of Research, Noble Capital Markets, Inc.

Refer to the full report for the price target, fundamental analysis, and rating.

Sells Triton.  E.W. Scripps agreed to sell Triton, its digital audio and podcast measurement business, to iHeartMedia for $230 million, above the top end of our $195 million estimate. The company purchased Triton in 2018 for $150 million, plus a small tuck in acquisition of Omny Media. The transaction is expected to close.


Transaction viewed favorably.  Triton was an orphan business in the audio space following E.W. Scripps’ sale of Stitcher, its podcast business, to SiriusXM for $265 million. The transaction price is estimated to be 5 times 2021 revenues and 13 times estimated 2021 cash flow, substantially higher than the 3.7 times revenues and 9 times EBITDA the company paid for it in 2018 …

This research is provided by Noble Capital Markets, Inc., a FINRA and S.E.C. registered broker-dealer (B/D).

*Analyst certification and important disclosures included in the full report. NOTE: investment decisions should not be based upon the content of this research summary.  Proper due diligence is required before making any investment decision. 

Thursday, February 18, 2021

Tribune Publishing Company (TPCO)
Rating Changed To Underperform; Dropping Coverage

Tribune Publishing Co is a print and online media company that publishes various newspapers and websites. It creates and distribute content across its media portfolio, offering integrated marketing, media, and business services to consumers and advertisers, including digital solutions and advertising opportunities. The company manages its business as two distinct segments, M and X. Segment M is comprised of the company’s media groups excluding their digital revenues and related digital expenses, except digital subscription revenues when bundled with a print subscription. Segment X includes the company’s digital revenues and related digital expenses from local Tribune websites, third party websites, mobile applications, digital only subscriptions, Tribune Content Agency and BestReviews.

Michael Kupinski, Director of Research, Noble Capital Markets, Inc.

Refer to the full report for the price target, fundamental analysis, and rating.

Rating changed. The rating on the TPCO shares has been changed from Market Perform to Underperform due to the modest discount of 1.4% to the takeout price of $17.25 per share by the Alden Group. The rating change reflects the expectation that there will be no sweetened offer or competing bid for the company and investors should consider other investment options that have more upside potential. Furthermore, there is a risk, albeit slight, that the acquiring company may not be able to complete the acquisition. In that case, there would be significant downside risk.


Dropping coverage.  Tribune will become a privately owned company. As such, we will be dropping coverage and will not maintain estimates going forward …

This Company Sponsored Research is provided by Noble Capital Markets, Inc., a FINRA and S.E.C. registered broker-dealer (B/D).

*Analyst certification and important disclosures included in the full report. NOTE: investment decisions should not be based upon the content of this research summary.  Proper due diligence is required before making any investment decision. 

Wednesday, February 17, 2021

Tribune Publishing Company (TPCO)
Alden Bucks Up

Tribune Publishing Co is a print and online media company that publishes various newspapers and websites. It creates and distribute content across its media portfolio, offering integrated marketing, media, and business services to consumers and advertisers, including digital solutions and advertising opportunities. The company manages its business as two distinct segments, M and X. Segment M is comprised of the company’s media groups excluding their digital revenues and related digital expenses, except digital subscription revenues when bundled with a print subscription. Segment X includes the company’s digital revenues and related digital expenses from local Tribune websites, third party websites, mobile applications, digital only subscriptions, Tribune Content Agency and BestReviews.

Michael Kupinski, Director of Research, Noble Capital Markets, Inc.

Refer to the full report for the price target, fundamental analysis, and rating.

Alden Group increased its offer. The Alden Group agreed to purchase Tribune in an all cash price of $17.25 per share for the remaining shares it does not currently own. The offer is substantially better, over 20% than the original $14.25 per share offer and a price considered to be reasonable.


Board approved.  Tribune’s board approved the transaction following the recommendation of its special, independent committee. The transaction is expected to close in the second quarter 2021 …

This Company Sponsored Research is provided by Noble Capital Markets, Inc., a FINRA and S.E.C. registered broker-dealer (B/D).

*Analyst certification and important disclosures included in the full report. NOTE: investment decisions should not be based upon the content of this research summary.  Proper due diligence is required before making any investment decision. 

Tuesday, February 02, 2021

Gray Television Inc. (GTN)
Plenty Of Room For Acquisition Fueled Growth

Gray Television, Inc. operates as a television broadcast company in the United States. As of April 6, 2010, it operated 36 television stations in 30 markets, including 17 affiliated with CBS Inc.; 10 affiliated with the National Broadcasting Company, Inc.; 8 affiliated with the American Broadcasting Company (ABC); and 1 affiliated with FOX Entertainment Group, Inc. (FOX). The company also operated 39 digital second channels comprising 1 affiliated with ABC, 4 affiliated with FOX, 7 affiliated with CW Network, LLC, 18 affiliated with Twentieth Television, Inc., 2 affiliated with Universal Sports Network, and 7 local news/weather channels. Gray Television, Inc. was founded in 1897 and is headquartered in Atlanta, Georgia.

Michael Kupinski, Director of Research, Noble Capital Markets, Inc.

Refer to the full report for the price target, fundamental analysis, and rating.

Plans purchase of Quincy. The $925 million acquisition fits nicely with the company’s strategy of smaller market TV stations that have leading market positions. The company plans to divest stations with markets that it currently overlaps, in order for a quick regulatory approval. The planned station sales are some of Quincy’s largest and more valuable markets, including Tucson, Madison, Paducah and Cedar Rapids. Management expects to close the transaction in Q2 or Q3 2021.


Attractive purchase price.  The company expects to achieve $23 million in synergies and indicated that the purchase price is a compelling 6.9 times blended 2019/2020 cash flow, with synergies. We believe that the purchase price is reasonable for smaller market TV stations …

This research is provided by Noble Capital Markets, Inc., a FINRA and S.E.C. registered broker-dealer (B/D).

*Analyst certification and important disclosures included in the full report. NOTE: investment decisions should not be based upon the content of this research summary.  Proper due diligence is required before making any investment decision. 

Tuesday, February 02, 2021

Cumulus Media Inc. (CMLS)
What Does A Transitional Year Mean?

CUMULUS MEDIA, Inc. (NASDAQ: CMLS) is a leading audio-first media and entertainment company delivering premium content to over a quarter billion people every month — wherever and whenever they want it. CUMULUS MEDIA engages listeners with high-quality local programming through 428 owned-and-operated stations across 87 markets; delivers nationally-syndicated sports, news, talk, and entertainment programming from iconic brands including the NFL, the NCAA, the Masters, the Olympics, the GRAMMYS, the American Country Music Awards, and many other world-class partners across nearly 8,000 affiliated stations through Westwood One, the largest audio network in America; and inspires listeners through its rapidly growing network of original podcasts that are smart, entertaining and thought-provoking. CUMULUS MEDIA provides advertisers with local impact and national reach through on-air, digital, mobile, and voice-activated media solutions, as well as access to integrated digital marketing services, powerful influencers, and live event experiences. CUMULUS MEDIA is the only audio media company to provide marketers with local and national advertising performance guarantees.

Michael Kupinski, Director of Research, Noble Capital Markets, Inc.

Refer to the full report for the price target, fundamental analysis, and rating.

NobleCon 17 Highlights. This report highlights a fireside chat discussion with Frank Lopez-Balboa, CFO of Cumulus Media. A rebroadcast of that conversation may be obtained by clicking here. Topics that were discussed included improving revenue trends, revenue visibility, growth businesses, thoughts on getting back to 2019 revenue levels and debt.


Revenue improving, but lacks visibility.  Trends at the end of the year were better, but first quarter 2021 will be a tough comp given 10 weeks absent Covid a year earlier and the NCAA dispute. Notably, management indicated that advertising is being booked later and very close to air time, which provides poor revenue visibility …

This research is provided by Noble Capital Markets, Inc., a FINRA and S.E.C. registered broker-dealer (B/D).

*Analyst certification and important disclosures included in the full report. NOTE: investment decisions should not be based upon the content of this research summary.  Proper due diligence is required before making any investment decision.