December Cable Ratings: Sober into '16

Cable TV ratings declines continued as we exited 2015 with Nielsen's monthly live viewership data for December indicating that industry ratings were down 9% and 10% YoY in total day and primetime viewership, respectively. By contrast, QTD C3 viewership declines at the broadcast networks are more modest at 3% YoY. Given the encouraging tone on the state of ad market demand offered by ad agency buyers, and strong datapoints from Standard Media Index (SMI), we still contend that improving TV ad demand conditions could support better 4Q ad revenue results, but only for those with available inventory to sell. Please email us for our dynamic monthly live cable and weekly broadcast C3 ratings databases by network and company. Company-specific highlights include the following:

*Turner was a bright spot in December, realizing its sixth successive month of stabilizing ratings trends. This month, the performance was yet again fueled by CNN (+119% YoY in primetime) and ongoing strength at Cartoon Network, which recorded primetime viewership growth in 9 of the last 10 months. As such, despite ongoing ratings declines at TBS and TNT (down 3% and 20% YoY respectively), aggregate Turner primetime ratings were up 2% YoY (up from flat in November).

*Although Viacom's aggregate ratings remained down in December, the pace of the primetime declines eased again. Programming on Nickelodeon and Nick Jr. such as Talia in the Kitchen along with special episodes of Shimmer and Shine and Paw Patrol offset declines at VIAB's other larger networks. While Nickelodeon and Nick Jr. returned to growth (up 17% and 41% YoY in primetime), MTV and Comedy Central seem to face longer turnarounds given their respective management changes and loss of talent/hit shows. But overall, the news was good for Viacom in December, as aggregate YoY viewership was down just 8% and 3% YoY in primetime and total day viewership for VIAB's portfolio of networks - a marked improvement from the double digit declines the company has recorded for most of the past year.

*Disney's aggregate cable viewership was down in December, largely due to sluggish ESPN Monday Night Football ratings in the month. This month's datapoint included ESPN's two lowest rated MNF games of the season, a Detroit Lions win over the New Orleans Saints, and the Ravens victory over the Browns. As such, primetime viewership at ESPN declined by 14% YoY in December, still modestly above the 21% YoY drop reported in November. Across Disney's portfolio of networks, aggregate viewership was down 16% YoY in both primetime and total day.

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U.S. Media - December Cable TV Ratings: Sober into '16

Prepared by Nomura Securities International, Inc. For complete details of the research together with the associated important disclosures, analyst certification, valuation methodology and discussion of risks, please see the full publication attached.

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