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Q2 Broadcaster Review – Somewhat Worse than Expected

We all knew that the Second Quarter of 2020 was going to be bad financially for broadcasters.  And it was.  But a review of FQ22020[1] financial results filed with the SEC by publicly-traded radio and television broadcasters shows that the hit was much more severe for radio than television broadcasters.

Summit Ridge Group (SRG) reviewed the FQ22020 Form 10-Q’s for nine publicly-traded radio companies and six publicly-traded television station companies and found that April through June 2020 was far less kind to radio than television broadcasters.

Radio Broadcasting

The nine radio companies SRG examined were Beasley, Cumulus, Entercom, iHeartMedia, Mediaco, Saga, Salem, Townsquare, and Urban One (although Urban One has some non-radio businesses).  Emmis Communications Corp. has recently stopped reporting its financial results to the SEC, which it could do due to having fewer than 100 shareholders of record.

The median percentage decline in net revenues from FQ22019 to FQ22020 for the nine radio companies was 48%.  The revenue decline was more than enough to turn Broadcast Cash Flow (“BCF”)[2] negative for all radio companies except Mediaco, Salem, and Urban One.  It is possible Saga had positive Broadcast Cash Flow, but that is not discernable from its filings, as Saga does not report Depreciation & Amortization expense on a quarterly basis.

However, as shown in Figure 1 below, the median percentage BCF decrease was 109%, the median EBITDA percentage decrease was -121%, and the median EBIT decrease was -170% from FQ22019 to FQ22020.

Figure 1: Broadcast Cash Flow Declines

Source: Consensus estimates, Capital IQ and Summit Ridge Group, LLC analysis

Figures 2 shows the percentage difference between actual and estimated revenue. Of the six radio broadcasters for which data are available (data is not available for Beasley, Mediaco, Saga, and Urban One), all six companies did well compared to estimated revenue through FQ42019. The range of the difference between actual and estimated revenue in the most recent quarter was greater than in the prior four quarters. The last two quarters have been especially challenging for Beasley, Cumulus, Entercom, and iHeartMedia, with actual revenues below estimated revenue (in some cases significantly below expectations). At the same time, Salem and Townsquare managed to exceed estimated revenue in FQ22020.

Figure 2: Radio Revenue Trend vs. Expectations

Source: Consensus estimates, Capital IQ and Summit Ridge Group, LLC Analysis

Results are mixed when reviewing estimated vs. actual earnings per share (“EPS”) for the past five quarters, as shown in Figure 3 below. Cumulus and Entercom generally exceeded consensus estimates while iHeartMedia, Salem, and Townsquare performed below expectations. Data is not currently available for Beasley, Mediaco, Saga, and Urban One.

Figure 3: Television Broadcast EPS Trends

Source: Consensus earnings estimates, Capital IQ and Summit Ridge Group, LLC analysis

In terms of the percentage difference, recent data is limited since actual and/or estimated EPS were generally negative for the two most recent quarters.

Television Broadcasting

Compared to the median percentage decline for radio companies, television broadcasters’ decline was lower but still significant as shown in Figure 4 below.

Figure 4: Television Broadcast Cash Flows Decline

Source: Consensus estimates, Capital IQ and Summit Ridge Group, LLC analysis

Revenue and profitability decrease for the six publicly-traded television broadcasters (Nexstar, Gray, Tegna, Sinclair, Scripps, and Entravision) were far less compared to radio broadcasters. Television broadcasters faired better largely due to the existence of retransmission consent revenue, a revenue stream that radio does not have.  Retransmission consent revenue was higher for television broadcasters in FQ22020, sometimes much higher.

Reported 2Q revenue was higher in 2020 than in 2019 for Nexstar and Tegna due to television station acquisitions that closed in or after FQ22019.  Yet, after adjusting for those acquisitions, television advertising revenues fell across the board in FQ22020, but at smaller percentage declines than for radio.

Nexstar reported that Core Advertising Revenue increased by 11% in FQ22020, but that was due to the television station acquisitions it made in or after FQ22019.  Nexstar reported that “Core Advertising Revenue” fell by $90.4 million in FQ22020 for the television stations it owned in both FQ22019 and 2Q/2020.

Gray Television reported that Local & National Advertising fell from $282 million in FQ22019 to $198 million in FQ2Q2020, a 30% decline.  Tegna reported a 21% advertising revenue decline, while Sinclair reported a 34% advertising revenue decline.  While Scripps reported an Advertising revenue decline of only 6%, it reported a “Core Advertising Revenue” decline of 36%. 

Entravision, which owns radio stations along with its television stations, reported a Broadcast Advertising decline of 39% versus FQ22019.  It reported a television advertising loss of 29% versus 53% in radio and 32% in digital revenues.

Figure 5 below shows the percentage difference between actual and estimated revenue. Of the six television broadcasters, Nexstar and Tegna generally exceeded revenue expectations during the past five quarters while Entravision underperformed. The most recent two quarters have been especially challenging for the six television broadcasters.

Figure 5: Television Broadcast vs. Expectations

Source: Consensus estimates, Capital IQ and Summit Ridge Group, LLC analysis

When considering normalized EPS, as shown in Figure 6 below, results were generally positive, with actual EPS often exceeding estimated EPS for all six television broadcasters. In the most recent quarter, actual EPS for two of the six television broadcasters were less than expected, and the range of the difference between actual and expected EPS was greater than in the prior four quarters.

Figure 6: Television Broadcast EPS vs. Estimates

Source: Consensus earnings estimates, Capital IQ and Summit Ridge Group, LLC analysis

In terms of the percentage difference, actual normalized EPS, in general, exceeded expectations through FQ12020 (in many cases a sizable difference). This trend shows signs of ending in FQ12020 and reversed in FQ22020, when actual normalized EPS for Tegna and Sinclair underperformed vs. expectations.


[1] FQ22020 is the 2nd fiscal quarter of 2020; FQ22019 is the 2nd fiscal quarter of 2019.

[2] Broadcast Cash Flow is the sum of EBITDA plus Corporate Expenses; alternatively, BCF is revenue minus operating expenses, without consideration of corporate overhead and costs.

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