Specialist
Former SVP & Chief Revenue Officer at Meredith Corp
Agenda
- Operating environment for Gray (NYSE: GTN), Tegna (NYSE: TGNA), Sinclair (NASDAQ: SBGI) and Nexstar (NASDAQ: NXST) – 1-2-year affiliate and advertising expectations and viewership sustainability, particularly in subsequent political cycles
- Comparison and competitive dynamics among the big four affiliates – NBC, CBS, ABC and Fox (NASDAQ: FOX)
- Importance of ATSC (Advanced Television Systems Committee) 3.0 – incremental revenue opportunities
- Outlook for H2 2021 and beyond – strategic investment focus areas and industry winners and losers
Questions
1.
Could you give an overview of the broadcast TV station operating environment and the key trends and drivers affecting it?
2.
Do you think broadcast will have trouble partaking in digital growth compared to the more premium cable networks, given those players’ streaming apps are more developed? How could the digital contribution going into 2021 affect broadcast advertising revenue recovery rates vs those of Disney or ViacomCBS?
3.
How do you assess the sustainability of local station viewership levels 5-10 years from now, given they are better-preserved than those of cable? What digital initiatives could help players buck the cord-cutting trend? To what extent may broadcast growth rely on CPMs offsetting viewership declines so much as there is an opportunity to stabilise viewership trends in the longer term?
4.
Do you think normalised broadcast station viewership may be somewhat lower than what was experienced in 2020, given the perfect storm of the pandemic, social injustice issues and the election? Could 2020 have provided an outlet through which local stations can now better and more sustainably engage viewers in the future?
5.
How important are the big four – ABC, CBS, Fox and NBC – to broadcast tv stations? Do these relationships drive differentiation for Nexstar, Tegna, Sinclair and Gray TV, or is it just station footprint?
6.
Do you expect Comcast to hold onto NBCUniversal in the long term, given your comments around consolidation and the increasing prevalence of such pairings? Could it be difficult for Disney, ViacomCBS or Fox to acquire NBC if Comcast were to shed the asset given the station group antitrust issue? If so, would this perhaps make Warner Bros the more likely buyer?
7.
How would you rank Nexstar, Tegna, Sinclair and Gray TV’s station presences? What is this a function of? Is it being in the best DMAs [designated market areas] or the quality of talent?
8.
Is the spectrum quite differentiated across Nexstar, Tegna, Sinclair and Gray TV?
9.
Could you highlight any leaders or laggards around trying to vie for the ATSC [Advanced Television Systems Committee] 3.0 or NextGen standard opportunities? Who’s leading the way if this factor will drive a lot of the interest from content owners in consolidating the sector?
10.
If Nexstar and Sinclair are leading the way on ATSC 3.0, the main differentiator between them seems to be Sinclair’s RSN [regional sports network] assets. Would you say those assets are a positive or negative for Sinclair? The RSNs may provide slightly increased leverage on the retrans side, but they were also exceptionally challenged through 2020, given reduced sports and potential disruption around new gatekeepers. Do you think Sinclair’s RSN assets more so check Nexstar’s box or its own box?
11.
Do you expect leagues to perceive Sinclair as the best digital partner for OTT [over-the-top] streaming rights? It seems that the leagues have not yet fully bought into that, so is the biggest risk for Sinclair that the leagues pivot partners and take the local rights elsewhere? What would you say Sinclair brings to the table as an OTT partner for the leagues, particularly in baseball and football?
12.
How could regional sports be packaged OTT? Could the sports model work in a streaming app? There are talks around Bally Sports coming out with a D2C offering, and Amazon offers the rights it holds exclusively through a broader app.
13.
You mentioned that broadcasters have a great opportunity to monetise sports betting. Could this monetisation happen through a premium CPM on the better who is engaged in watching local sports? Would there be a revenue-share model with the betting platforms?
14.
Could the stations face attribution issues around convincing the betting platforms that they drove a customer towards them? How could Sinclair or Nexstar prove this?
15.
How much runway do you think remains on the retrans side, given we’re likely at the advent of a more OTT-driven world relative to linear TV? Do you expect renewals to get more contentious? Could this manifest through affiliate rates flattening or any big network drops? I believe Sinclair and Dish have a renewal coming up.
16.
Where do you think dollars per sub per month may settle if cord-cutting stabilises towards 2024-25, as you suggested? Could it be mid-teens for Charter and Comcast? Where do we reach a stable point?
17.
Dish seems to the most contentious partner for the station groups, given chairman Charlie Ergen’s thoughts on the value of the pay TV bundle. How large of a risk may there be around station groups being next in line for him to shore up the package?
18.
Could you give an overview of what ATSC 3.0 or NextGen brings to the table for broadcast stations? What key monetisation opportunities are players homing in on?
19.
How do you assess the broadcast mediums as a digital advertising opportunity? Do you think these mediums will to cater to the more ROI-based advertisers so much as their impression-based counterparts? What are your expectations around advertising revenue opportunities?
20.
Could ATSC 3.0 enhance the pressure on the retrans side? It may accelerate cord-cutting by making broadcast more mobile, so how difficult could it be to find a balance with the MVPD [multichannel video programming distribution] partners as ATSC 3.0 roll-out continues?
21.
Where are we in the NextGen roll-out? Will this be wholesale vs a gradual, multi-year process? When should we expect the opportunities we’ve discussed to become available?
22.
What could ensue around the price per sub per month relative to the sub churn? You said this is probably more of a question for the MVPDs themselves, but do you think this will be offset through 2024-25, given your earlier comments on retrans revenue over this period?
23.
How could the distributors evolve once NextGen kicks in? Comcast and Charter could try to develop something more OTT, Roku and Amazon Fire, the OEMs [original equipment manufacturers] may try to disaggregate Roku on an OS. Even gaming portals from Microsoft and Sony are a consideration. What net-new distribution partner do you think the content owners will negotiate with most once we’re in a full-fledged OTT world? Could one distributor have outsized leverage analogous to what the cable operators had in the linear world, or may there be a proliferation of distribution options in the longer term? Could Roku be the beyond- all?
24.
It seems that the balance of power is in the hands of the broadcasters when it’s them vs the MVPDs, given they’re able to get these increases in retrans. How could this balance of power shift in an OTT world? Could Roku get share of ad inventory and pieces of subscription price for a certain amount of time? Do you think it will be harder for broadcasters to negotiate with new distribution partners vs what has been the case with Comcast and Charter?
25.
What are your expectations for near-term industry consolidation of content ownership? Who do you expect to be the most aggressive consolidators? What are the nuances of what Amazon vs Disney vs other networks may be hoping to achieve? Do any potential pairings make sense to you?
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