By: E&P Staff Goldman Sachs released three reports today on reactions to presentations at the year-end media conferences in New York. Here are the summaries, by company.
Tribune Co.We came away from TRB's presentation at the year-end media conferences impressed with the company's aggressive focus on cost management, but still concerned about the negative trend in revenues. Management outlined plans to keep cash costs in the publishing unit flat in 2006 (largely reflecting the full year impact of a 4% reduction in FTEs implemented in late 2005/early 2006) while also holding broadcast costs (excluding programming) flat. We have boosted our estimates fractionally (details below) to reflect better-than- expected cost performance. The missing link in the TRB story is better revenue performance. Recent revenue trends, reinforced by November results, provide little basis for optimism with regard to a near-term rebound in revenue growth. Accordingly, our rating remains Underperform in the context of our Cautious coverage view.
GannettGannett's earnings guidance at the Year-End Media Review was consistent with what we heard from other publishers: low-to-mid single digit newspaper ad revenue growth in 2006 with a continuing aggressive focus on cost management. GCI will benefit next year from an anticipated cyclical rebound in its broadcast unit, with 1Q results getting a particular boost from NBC's Olympics coverage (12 of the company's 21 stations are NBC affiliates). We note that ad growth trends have deteriorated at GCI over the last several quarters and we remain concerned that the UK papers (roughly 20% of newspaper revenues) will remain a drag in 2006. While the company has a strong history of effective cost management, well above industry average margins suggest there is probably less room for cost cutting at Gannett than at some of its peers.
No change to our estimates, maintain In-Line rating.
Dow JonesDJ's presentation highlighted a number of recurring themes: (1) continued volatility in the B-to-B ad market, (2) an aggressive focus on cost management in the context of difficult ad market conditions, (3) positive initial response to the Weekend WSJ, and (4) continued strong growth in the electronic publishing unit. While the company's comments did not break new ground, we came away slightly more optimistic about the near-term earnings outlook in the context of WSJ linage that is tracking in line with 4Q guidance and weekend WSJ losses that appear to be slightly below initial expectations. One cautionary note: our sense is that continued investment in marketing and new products in the electronic unit will likely limit margin upside in that unit on a near-term basis.
No change in our estimates.
New York Times Co.NYT released both Nov. revenue numbers and updated guidance ahead of their presentation at the Year End Media Reviews on Wed. 12/7. The good news: NYT
reported healthy ad revenue in its New York Times Media Group (+5.0%), posting a second month of growth in the national category. TimesSelect has added 60K subscribers to the 270K reported in Oct, bringing the total 330K. The bad news: overall ad revenue growth was dampened by persistent weakness at The Boston Globe. Guidance: NYT offered fine-tuning on 2005 guidance and tidbits of information for 2006 that are consistent with our estimates. Bottom line: NYT's
November revenue is encouraging, particularly the second month of healthy numbers in the national category at the New York Times, but anemic trends in
the New England Media group persist. Overall November revenue growth was in line with expectations. Maintain IL/C rating.
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