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
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U.S. Media - Quick Thoughts on the Turner Upfront
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