7-22-13
Just ahead of earnings season, Wells Fargo senior analyst Marci Ryvicker has issued a report after speaking with a number of executives in the industry. She's concluded from those discussions that second quarter revenue should be up low to mid single digits. And third quarter trends look "pretty good," although she throws in that "it's starting to fade." Here is what Ryvicker will be looking for when companies start to report...
Beyond Q2 results and Q3 pacings, we think the focus of earnings calls will be on:
? M&A, as just recently, Sandusky Radio was sold to Hubbard Broadcasting for $85.5 million (on 7/16) and NextMedia, a 33-station radio group with a small- to mid-market focus, was put up for auction.
? The potential for further format changes given the many ?flips? we have seen in the recent past.
? Any competitive effects to the ?sports network? landscape post CBS Sports Radio, which launched full programming on January 2, 2013.
? The potential for shareholder returns ? we note that ETM is focused on utilizing free cash to pay down debt rather than enact capital returns; at least until its leverage ratio is within its 4-4.5x "comfort range," which we currently estimate is a 2014 event.
? Competition; especially commentary on Internet radio providers such as Pandora.
? The potential impact of new royalty agreements. (Clear Channel signed agreements with Wind-Up Records, Zojak World Wide Artists, Fearless Records, Dualtone, and Fleetwood Mac in Q2.)
? The progress of NextRadio ? which is the receiver application for FM and HD Radio enabled smartphones announced 1/8/13 with Sprint and the potential upside should it perform well (we think it could).
? The growth of digital radio, and any efforts to further monetize that business.
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