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Investment Analysis Clubs Macro Economic Trends and Risks
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CBS (Paramount) ad revenue last year was $22 Billion. I assume the great majority of that was the CBS Network, although it also includes sales from its 7 or 8 owned stations. I’m thinking that with that kind of revenue (even with headwinds) there’s still a lot of something there. In fact linear TV represents almost 75% of Paramount’s value. I know that ABC for Disney is also sizeable, I assume NBC for Comcast is as well, but Comcast gets a lot of monthly checks from people, so maybe not.

Even in decline there’s a lot of value there, especially since everyone has decided you need to be “multi-platform” to succeed today. With platforms expanding apace, having one that reaches most of the country, even less often, would seem to hold value to launch new franchises for entertainment, toys, cruises, theme parks, etc. Disney has always played this fiddle adroitly, but NBC, which owns theme parks, isn’t far behind. They have Minions, Harry Potter, Sponge Bob, Transformers, Simpsons, etc. Yes, some of those didn’t require a TV network, but many did. (I watched a “Toys That Built America” episode last night that opined that Teenage Mutant Ninja Turtles was dead until it got a cartoon snow, and Power Rangers followed, too. Those are multi-billion dollar franchises.)

Obviously I have no idea how it will all play out, but I think counting the TV networks out is probably a mistake. (It happened eventually for the old time radio networks, but it still took 50 years after the disruption from TV.)’

So yeah, they’re not what they were when it was a tri-opoly, but they still have value, methinks. Cigarbutt, if nothing else. Of course nobody listens to me, so you have that, too.

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What is the trend? Graph of TV demographics up to 2016. We old phartz are clinging to conventional TV, but not so much the younger generations.

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Newer data set, several countries use of conventional TV through 2021, I notice a kink downward, starting in 2020. Could be an effect of the plague? Blip, or trend?

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Oh it’s definitely down. It’s been down since the advent of cable in the 70’s but it’s even accelerating more with the explosion of streaming services. That said, Byron Allen offered $10B at the first sniff that it might be available. That’s barely a few years profit, not including ancillary benefits. I think the price should be higher, but not if it’s to someone who just wants to strip it and sell it for parts.

TV stations are being sold for.between 6-7 times cash flow these days, and that includes calculations for their diminishing place in the world. But, as I say, who knows Iger’s mind except him?

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The place in the world for “over the air” TV is getting even smaller. Some 20 years ago, I remember AT&T advocating that broadcast TV be shut down entirely, so the cell operators can have the spectrum. The UHF TV spectrum has been cut several times. UHF used to go to channel 83. Then it was cut to 69. Then it was cut to 51. The latest spectrum auction, in 2016, cut the TV band down to channel 36, with the “virtual channel” capability of ATSC 1.0 allowing the stations moved below 36, to still appear to be broadcasting on their original channel numbers.

Steve

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That’s what I was going to comment about. Maybe they are paying 6-7 times cash flow, not only for the value of the franchise (advertising over-the-air), but rather, or partially, for the value of the spectrum that once OTA TV is shut down they can sell to the highest bidder.

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The licenses are held by the local stations. Each network only owns a handful of stations directly. One of the local Detroit stations, previously transmitting on channel 38, was going to go dark, and sell it’s license. Plan didn’t work, as no-one was willing to pay what the “JC” wanted.‘’

From the Wiki article, sounds like the 2016 auction to the cell operators didn’t go all that well.

Each bidder in the forward auction was required to bid on 95 percent of census blocks in which an interest was shown. As of August, AT&T, T-Mobile, Verizon and others had submitted bids for 100 MHz of spectrum in the forward auction totaling over $11 billion, with the goal $88.4 billion…Only $22.45 billion had been raised when the FCC ended stage one of the forward auction after two weeks.

Stage two of the forward auction ended October 19 with $21.5 billion in total bids, $33.1 billion less than expected

Not surprisingly, “private equity” had been rolling up independent stations in the hopes of making a fast buck.

Beginning in 2010, a large number of television station acquisitions began to occur among a group of companies referred to as “spectrum speculators”. Backed by private equity groups, these companies have primarily purchased smaller, low-rated stations within or in close proximity to major markets, with an intent to possibly sell the stations and their licenses during the incentive auction, and no interest in their future operation as a television station.

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