Advertising revenues for the media sector
Advertising was a key growth driver for media companies this earnings season. For media companies like CBS (CBS), in fiscal 4Q15, advertising revenues were up by 1% over 4Q14, driven primarily by revenue growth of 8% in network advertising. CBS noted that it expects fiscal 2016 to “be a very good year for advertising” because of the Super Bowl broadcast and an increase in political advertising in 2016.
As the chart below indicates, advertising comprised an important 51% of CBS’s total revenues of $13.9 billion in fiscal 2015.
In comparison, the Walt Disney Company (DIS) had advertising revenues of $2.6 billion in fiscal 1Q16, a growth of 12% over 1Q15. Comcast’s (CMCSA) NBCUniversal Cable Networks segment had a marginal year-over-year decline in advertising revenues of 0.3% in 4Q15.
Time Warner’s (TWX) Turner business segment saw a 2% rise in revenues in fiscal 2015 and a 5% rise in fiscal 4Q15, driven by growth in domestic advertising.
Investment in advertising technology drives ad revenue growth
In the media sector, many media companies are investing in advertising technology to boost their advertising revenues. Comcast’s Canoe delivered 11 billion video-on-demand ad impressions in fiscal 2015. Canoe is an advertising technology company that inserts ads dynamically on linear television networks. Besides Comcast, Canoe is jointly owned by Cox, Time Warner Cable (TWC), and Brighthouse Networks.
Viacom’s (VIAB) Vantage is a data analytics platform that was unveiled by Viacom last year. It offers advertisers campaign measurement and enhanced audience targeting. Viacom’s Echo is another data analytics platform. It provides advertisers with the ability to reach targeted audiences through social media.
Twenty-First Century Fox’s (FOXA) is another company that acquired TrueX and is using this technology on Hulu, an OTT (over-the-top) service.
Notably, Comcast makes up 2.9% of the PowerShares QQQ ETF (QQQ). For investors interested in getting exposure to the television and radio sector, QQQ has 4.9% in TV and radio. In the next part of this series, we will look at retransmission revenues for the media sector.