Ad Spend – Media spend in October was up 6%, driven by digital spending (+16%), and broadcast (+14%), according to data from SMI. Better ratings performance this season helped broadcast results, as media spend at NBC, Fox, CBS, and ABC grew 21%, 17%, 13%, and 7%, respectively. Spot TV was up 9% in October, syndication and local cable were down 4% and 18% respectively. Year to date, however, broadcast is flat, while cable is up 6%, resulting in 25.7% share for cable vs. 24% for broadcast. ESPN showed a 17% decline in October, resulting from a 36% drop in automotive spending.

Mobile Usage – ESPN saw its highest monthly digital use to date in October, as all the main US sports seasons were underway. comScore multiplatform data estimates 8.2 billion minutes of use by 67.7 million unique visitors across PC, smartphones and tablets. For the second consecutive month, mobile visitors (43.8 million) exceeded desktop (43.3 million), while mobile-only users represented 36% of users (24.4 million) and 47% of time spent was on the ESPN mobile sites. Sports still lags in ad impressions generated, although it has broken into the top 10, according to MM's 3Q13 Mobile Mix. Games and Music/Entertainment apps still rank as the two leaders when it comes to delivering ad impressions, as well as being leaders in CTR.

Gaming Advertising – The growth of online gaming could create significant opportunities for advertising revenues, particularly as budgets shift further toward online (video), according to Spil Games. The number of global gamers will exceed 1.2 billion in 2013 (or 17% of the population) with 700 million online gamers (44% of the online population). Mobile gaming extends gaming further into more demographics and into more locations/timeslots. US Mobile gamers are expected to reach 162.4 million by 2015 (50.5% of the population). Video ads on Spil generate approximately 1.5% CTRs, which compare favorably to standard online advertising and FB ads. We see advertising as a potential stabilizing factor for ZNGA, although this will depend on their ability to turn around user metrics.

Home Entertainment - Streaming transactions surpassed the disc rental peak from 2007, according to data from DEG and NPD. NFLX streamed more titles (2.6 million YTD through September) than the amount of discs rented in 2007. Disc rentals have dropped to 1.1 million YTD, down from approximately 1.75 million for 2012. Spending on in-store rental declined 14.5% in 3Q, while mail rental was down 19.8%. Within disc rentals, 29% of discs were rented by mail, 29% in brick and mortar stores and 43% at kiosks. We believe the shuttering of Blockbuster stores may slow the decline of NFLX DVD subs in the near term and benefit OUTR's RedBox as well.

See It – The collaboration between TWTR and CMCSA to drive viewership through a "See It" buttons embedded in tweets, is being rolled out slowly across NBCU networks, starting with Syfy. The See It feature can make live or VOD content available to watch or record, and could be a boost for TV Everywhere usage, which will be measurable for ad purposes. If successful, the See It buttons can be embedded beyond social media and licensed to other networks and operators.

Triple Play – Separately, global triple play subscriptions will continue to rise in the next 5 years, reaching 333 million by 2018 (up 250% from 2012), according to a report by Research and Markets. Increasing penetration in China is a primary driver of sub growth, but with lower ARPU will result in triple play revenues growth of 125%. We believe that double play and triple play penetration is already fairly high among US operators, and increases stickiness that drives opportunities to market even more services (home alarm/automation, backup, etc.) to existing customers and increase revenue per household.

Tony Wible joined Janney Montgomery Scott in 2008 and is a Managing Director covering the Media and Entertainment sector after spending the previous 10 years at Citigroup Investment Research—most recently covering the Broadcasting and Entertainment Services industries.Tony Wible
Tony can be reached at twible@janney.com.

Janney Montgomery Scott LLC, is a U.S. broker-dealer registered with the U.S. Securities and Exchange Commission and a member of the New York Stock Exchange, the Financial Industry Regulatory Authority and the Securities Investor Protection Corp. Disclosures may be reviewed at Wible's Weekly.

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