Earlier this year, BTIG media analyst Richard Greenfield made headlines when he predicted that traditional TV viewing would decline for the first time in 2012, prompting worries from investors about what these trends may mean for media companies. So far, however, the TV business is holding steady.
Comcast Corp. (NASDAQ:CMCSA), parent of NBC Universal, today reported better-than-expected quarterly results, thanks in part to the strength of its NBCUniversal media and entertainment business. Revenue at the Philadelphia company’s cable-networks business, which includes USA, CNBC and MSNBC, gained 5.8% in the first quarter, to $2.1 billion, on a spike in advertising and distribution sales. Revenue at the NBC television network surged 36.9%, to $1.9 billion, because of the Super Bowl. But even excluding the Super Bowl, revenue rose 17.7% %, reflecting higher prime-time ratings and higher revenue from a content-licensing agreement.
Strong TV advertising sales enabled Time Warner Inc. (NYSE:TWX) to beat Wall Street consensus forecasts. New York-based Time Warner produces the hit sitcom The Big Bang Theory and gets about 70% of its annual operating income from its television business. Advertising revenue at its cable networks, including TBS, Cartoon Network and CNN, rose 6% in the quarter, better than analysts expected, while subscription fees rose 5%.
Earlier this week, CBS Corp. (NYSE:CBS). reported an 80% increase in first-quarter profit, which blew away Wall Street’s already high expectations for the parent company of the most-watched U.S. television network. Net income at the New York-based company rose to $363 million, or 54 cents per share, from $202 million, or 29 cents per share, a year ago. Revenue rose 12%, to $3.92 billion, as the company benefited from overseas sales of TV shows and surging digital revenue. Not surprisingly, Chairman Sumner Redstone was ecstatic.
“CBS’s performance this quarter was nothing short of amazing,” said Redstone, who emphasized during the earnings conference call that “content is king.”
“We have world-class content that people want to see, and we are delivering it in a way they want to see it. And because our content is so good, it commands a premium on every platform.”
Investors awaiting Viacom Inc.’s (NYSE:VIAB) earnings tomorrow and Walt Disney Co.’s (NYSE:DIS) and News Corp’s (NASDAQ:NWSA) results next week shouldn’t breathe easy, however. New York-based Viacom has seen huge ratings declines at Nickelodeon and MTV, which for years have been reliable cash cows.
The declines have baffled many industry pundits. Expectations for the corporate home of SpongeBob SquarePants are muted. Revenue is expected to rise 2.2%, to $3.3 billion, in the first quarter and drop in the current quarter and fiscal year.
Disney’s ESPN is under pressure as well from rivals such as NBC Universal, which recently launched its own cable sports network. During the football season, ESPN averaged 13.3 million viewers, down 9.6% from a year earlier, according to Bloomberg BusinessWeek. That was the biggest drop seen by any network.
Disney investors have other worries.
Earlier this month, Disney ousted studio head Rich Ross in the wake of the box-office bomb John Carter. The company’s theme parks also remain a concern, particularly with renewed concerns about an economic slowdown in Europe.
Expectations are high for the company, whose shares have surged more than 11% in the past three months. Revenue in the current quarter is forecasted to rise 5.4%, to $9.56 billion. Disney reports results May 8.
News Corp issues results May 9. Odds are that its cable and broadcast businesses are fine. Cable network programming, which saw a 20% rise in operating income this year, should benefit from rising viewership at Fox News as the presidential election draws closer. The start of baseball season should also bolster News Corp’s broadcast TV business.
Investors and the media, of course, remain eager to hear any updates regarding the U.K. phone-hacking scandal that has engulfed Rupert Murdoch’ media empire. They aren’t expecting much otherwise, as analysts are forecasting flat revenue growth for the next two quarters.
Jonathan Berr is long CBS. Follow him on Twitter@jdberr.