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

By Wall St. Village Archives
Cover image for  article: Wall St. Speaks Out on the Turner Upfront - Anthony DiClemente

We attended Turner's 2015/16 Upfront Event at the Theater at Madison Square Garden in New York; this was the first Turner upfront for former Kevin Reilly, President of TNT and TBS and Chief Creative Officer for Turner Entertainment.

Following a season of YoY ratings declines, Turner's big networks have regained some ratings traction in recent months, driven in large part by the entertainment (TNT/TBS) and news networks (CNN). This year, Turner integrated its TV and digital ad sales for all of its networks. 

Investment 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 Nielsen's cross-platform viewership measurement, Turner's upfront incorporated a focus on big data. As a reminder, we estimate that the overall Turner segment is ~38% of TWX's 2015E revenue and ~60% of 2015E adjusted operating income. 

Evolution 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 live-action comedies, original animation, late-night talk shows, and sports. Building from a position of strength (despite soft YoY viewership trends, TBS is basic cable's #1 network in primetime delivery of adults 18-49, adults 18-34 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 TNT's programming strategy are targeted at moving younger and towards the middle of the media universe in terms of age/sex demographics. Core to this strategy is the move away from plain vanilla procedurals to more current/daring shows that resonate with younger, male viewers. 

Digital opportunity best exemplified at CNN

Despite 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 U.S. multi-platform users and roughly 250mn page views/month, 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 Turner's position and opportunity to combine its digital and TV inventory to provide custom solutions to its advertising partners.

Combination 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 Turner's linear and digital entertainment, news, kids and sports properties.

Turner 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 behavior-based inventory across the company's suite of networks and digital platforms in an effort to combine the reach/quality of TV with the targetability/analytical intricacy of digital. Recent reports suggest that the company is planning to sell 20-30% of its inventory with guarantees on behavioral targets.

We believe Turner's investments in sophisticated targeting and attribution analysis through Turner's ROI Now platform for example (that directly demonstrates sales lifts for multi-screen campaigns) should narrow the ad tech gap versus its digital competition.

 

 

Fig.1: Turner Primetime Live Monthly Viewership Growth

Ratings declines have eased in the last few months

Note: Viewership is based on 18–49 demographic for each network.
Source: Nielsen Media Research, Nomura research

This e-mail (including any attachments) is private and confidential, may contain proprietary or privileged information and is intended for the named recipient(s) only. Unintended recipients are strictly prohibited from taking action on the basis of information in this e-mail and must contact the sender immediately, delete this e-mail (and all attachments) and destroy any hard copies. Nomura will not accept responsibility or liability for the accuracy or completeness of, or the presence of any virus or disabling code in, this e-mail. If verification is sought please request a hard copy. Any reference to the terms of executed transactions should be treated as preliminary only and subject to formal written confirmation by Nomura. Nomura reserves the right to retain, monitor and intercept e-mail communications through its networks (subject to and in accordance with applicable laws). No confidentiality or privilege is waived or lost by Nomura by any mistransmission of this e-mail. Any reference to "Nomura" is a reference to any entity in the Nomura Holdings, Inc. group. Please read our Electronic Communications Legal Notice which forms part of this e-mail: http://www.Nomura.com/email_disclaimer.htm

CLICK BELOW TO ACCESS RESEARCH REPORT/PRESENTATION (including important disclosures):
U.S. Media - Quick Thoughts on the Turner Upfront

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.

The opinions and points of view expressed in this commentary are exclusively the views of the author and do not necessarily represent the views of MediaVillage.com management or associated bloggers.

Copyright ©2019 MediaVillage, Inc. All rights reserved. By using this site you agree to the Terms of Service and Privacy Policy.