Wall St. Speaks Out on the Turner Upfront - Anthony DiClemente

Following a season of YoY ratings declines Turner39s big networks have regained some ratings traction in recent months driven in large part by the entertainment TNTTBS and news networks CNN This year Turner integrated its TV and digital ad sales for all of its networksamp160Investment in originals was a key theme as TNT and TBS are set to realize a doubling in the number of original series aired in the next three years In addition given the ongoing conversation surrounding issues that are presented by Nielsen39s crossplatform viewership measurement Turner39s upfront incorporated a focus on big data As a reminder we estimate that the overall Turner segment is 38 of TWX39s 2015E revenue and 60 of 2015E adjusted operating incomeamp160Evolution at TNT revolution at TBS In keeping with its plans to double investments in original programming to 1bn in 2018 Turner outlined its plans to rebrand TBS starting 4Q15 with an emphasis on originals including diverse liveaction comedies original animation latenight talk shows and sports Building from a position of strength despite soft YoY viewership trends TBS is basic cable39s 1 network in primetime delivery of adults 1849 adults 1834 and total viewers Turner laid out a plan to launch more than 15 scripted and unscripted series over the next two years While less pronounced changes at TNT39s programming strategy are targeted at moving younger and towards the middle of the media universe in terms of agesex demographics Core to this strategy is the move away from plain vanilla procedurals to more currentdaring shows that resonate with younger male viewersamp160Digital opportunity best exemplified at CNNDespite the growth in alternative digital video platforms Turner noted that CNN has roughly 20mn more customers than its closest news competitor in part driven by its strong brand recognition worldwide newsgathering resources and longstanding video experience With more than 66mn 1Q15 US multiplatform users and roughly 250mn page viewsmonth Turner has a digital property that should benefit from the rapid growth in digital video consumption The company also highlighted the growth of Bleacher Report which has now passed Yahoo as the 2 online sports destination The presentation highlighted Turner39s position and opportunity to combine its digital and TV inventory to provide custom solutions to its advertising partnersCombination of data and content Turner appears to be at the forefront of integrating big data into their ad sales platform The company has partnered with marketing analytics software company Marketshare to create Turner Incite a planning and forecasting tool designed to project the sales growth brands can achieve through advertising across Turner39s linear and digital entertainment news kids and sports propertiesTurner also introduced Turner Audience Now which targets consumer behavior rather than traditional age and sex demographics The platform will offer clients the ability to buy behaviorbased inventory across the company39s suite of networks and digital platforms in an effort to combine the reachquality of TV with the targetabilityanalytical intricacy of digital Recent reports suggest that the company is planning to sell 2030 of its inventory with guarantees on behavioral targets We believe Turner39s investments in sophisticated targeting and attribution analysis through Turner39s ROI Now platform for example that directly demonstrates sales lifts for multiscreen campaigns should narrow the ad tech gap versus its digital competitionamp160amp160Fig 1 Turner Primetime Live Monthly Viewership GrowthRatings declines have eased in the last few monthsNote Viewership is based on 18amp821149 demographic for each networkSource Nielsen Media Research Nomura researchThis email including any attachments is private and confidential may contain proprietary or privileged information and is intended for the named recipients only Unintended recipients are strictly prohibited from taking 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REPORTPRESENTATION including important disclosuresUS Media Quick Thoughts on the Turner UpfrontPrepared 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 attachedThe opinions and points of view expressed in this commentary are exclusively the views of the author and do not necessarily represent the views of MediaVillagecom management or associated bloggers

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Wall St. Speaks Out on the Turner Upfront - Anthony DiClemente

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