Nielsen released its July monthly live cable TV ratings Thursday morning. Ratings were down 11% YoY in both total day viewership and in primetime. The pace of declines has moderated slightly and we are hopeful that upcoming easier YoY comps will produce more encouraging ratings trends going forward. In the lead-up to 2Q media earnings, our channel checks indicated that while ad demand remained steady, GRP (gross ratings point) delivery issues proved to be an obstacle to domestic ad revenue growth. Therefore, we note that if ratings trends do not improve in light of the 2H15 easier comps, our 2% YoY 3Q15E domestic ad revenue growth outlook for our media coverage group could be at risk. Please email us for our dynamic monthly live cable ratings database. Company-specific highlights:

Following gradual improvement in monthly ratings, DISCA's primetime and total day ratings reverted back into the green, driven by 61% YoY growth in total day ratings at its flagship network, Discovery Channel. Discovery's outsized growth was largely propelled by this year's record-setting edition of Shark Week. On a total day basis, 2015's Shark Week was the most-watched ever, with an average of 1.27mn viewers throughout the event (above the previous high of 1.20mn in 2013). Though TLC ratings remain down, positive underlying trends at several of DISCA's networks, including viewership growth at I.D., contributed to 15% and 11% YoY ratings growth at DISCA's portfolio of networks in primetime and total day, respectively.

FOXA's cable ratings remained in positive territory in July, driven largely by Fox Sports 1 and Fox News. Soccer continues to be a ratings driver for FS1; while the company aired games featuring the US teams on the Broadcast network, strong Women's World Cup and Gold Cup viewership helped lift ratings 92% YoY in primetime. Fox News recorded continued growth (+4% YoY in primetime), driven by a news-heavy month that included the Iran nuclear deal, Donald Trump's presidential bid, and the removal of the Confederate flag from the grounds of the South Carolina State House. In contrast, ratings continued to struggle at FX and National Geographic, where primetime viewership was down 10% and 16% YoY, respectively, in July.

Disney's aggregate cable viewership was down again in July, largely due to the continued tough FIFA World Cup comp in 2014, which spilled into July. While the 2015 ESPY ratings were up 253% YoY, the company's decision to shift the award show to ABC also created a difficult YoY viewership comp. The lack of the ESPYs and the tough FIFA World Cup comp weighed on ratings, with ESPN's viewership down 22% and 40% YoY, in primetime and total day, respectively. Across Disney's portfolio of networks, aggregate viewership was down 18% and 20% YoY in primetime and total day.

CLICK BELOW TO ACCESS RESEARCH REPORT/PRESENTATION (including important disclosures): U.S. Media - July Ratings: Down but Not Out

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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