We recently compiled a list of the 10 Best Broadcasting Stocks to Buy. In this article, we are going to take a look at where E.W. Scripps Company (NASDAQ:SSP) stands against the other broadcasting stocks.
Technological advancements have transformed the global broadcasting market, just as much as any other industry. Innovation has elevated the broadcasting experience for an average viewer, offering a wide range of rich and high-quality content. Hence, in 2022, we had a global broadcasting market valued at $343.35 billion, as reported by Grand View Research. By 2030, this number could reach $448.34 billion, growing at a compound annual growth rate of 3.9% through the forecast.
As machine learning and AI help gain companies a competitive edge, AI-powered solutions are being used in broadcasting to enhance video quality, streamline live broadcasts, and personalize user experiences.
For instance, Korbyt, a workplace experience platform, recently launched its Machine Learning Broadcast solution, which uses an AI-powered camera to adjust content based on viewer engagement. In essence, it uses smart technology to show different content on screens based on who’s watching and how they react. So, if people are spending a lot of time looking at a certain ad, Korbyt might show that ad more often. It can even optimize recommendations according to people’s preferences and create new content for them.
The global advertising and broadcast industries are also close and benefit from one another. One impact currently is the surge in political advertising spending on broadcasting platforms due to the US election campaign. As the demand for advertising space across various platforms rises, advertising rates for broadcasting companies with increase and boost their revenues.
Forbes reported that the total spending reached $8.5 billion across TV, radio, and digital media in the last election cycle. This was 30% higher than the $6.7 billion projected earlier that year, and 108% more than spending in 2017-2018, which was a record at that time. GroupM projects a record-breaking $15.9 billion investment in political ad spending for the end of 2024.
As campaigns intensify their advertising efforts, especially in the weeks preceding the election, broadcast companies can anticipate a significant rise in revenue, given the heightened demand for airtime to reach voters.
According to Emarketer, 45% of the total digital political ad spending will be seen on CTV (connected TV). As major companies in the networking, entertainment, and streaming industry continue their ban on political content, the major benefit of this spending will go to broadcasting companies.
Goldman Sachs’ Jonny Fine, the global head of investment grade debt, in a recent discussion, mentioned that the US election will likely be a big market event. He says that the outcome could most definitely differ depending on which candidate emerges victorious, but investors need to be prepared for the potential market volatility nonetheless. However, when it comes to realizing short-term gains from elections, the 2019-2020 US election cycle advertising spending validates the projections for this year.
The Business Research Company reports that North America dominated the broadcast market in 2023, but Asia-Pacific is expected to grow the fastest in the coming years. With a promising growth potential, this industry can reward those who watch it closely and observe its dynamics. In this context, we are here with a list of the 10 best broadcasting stocks to buy.
Methodology
To compile our list, we sifted through ETFs, stock screeners and online rankings to compile a list of 15 best broadcasting stocks to buy. We then selected the 10 stocks that were the most popular among elite hedge funds and that analysts were bullish on. The stocks are ranked in ascending order of the number of hedge funds that have stakes in them, as of Q2 2024. The hedge fund data was sourced from Insider Monkey’s database which tracks the moves of over 900 elite money managers.
Why are we interested in the stocks that hedge funds pile into? The reason is simple: our research has shown that we can outperform the market by imitating the top stock picks of the best hedge funds. Our quarterly newsletter’s strategy selects 14 small-cap and large-cap stocks every quarter and has returned 275% since May 2014, beating its benchmark by 150 percentage points (see more details here).
A technician preparing a broadcast satellite dish for transmission of cable content.
E.W. Scripps Company (NASDAQ:SSP)
Market Cap: $177.12 million
Number of Hedge Fund Holders: 20
E.W. Scripps Company (NASDAQ:SSP) is a former media conglomerate that started as a chain of daily newspapers and now specializes in many services, from local television broadcasting to digital media and national networks.
Like most broadcasting companies, E.W. Scripps Company (NASDAQ:SSP) believes its 2024 Local Media election-year political advertising revenue will reach record levels, even with a low-end range of $270-$290 million.
Its core revenue was impacted by political advertising, a tougher NBA comparison, and a transition away from a national rep firm together. CTV revenue increased 11% but was impacted by market dynamics and discounted rates from Amazon and Netflix, so the overall year-over-year revenue fell by 1.58%.
So, E.W. Scripps Company (NASDAQ:SSP) recorded revenue that was less than street estimates for Q2, $573.63 million. The loss per share for this period was $0.15. However, Q3 revenue is expected to be up by 20%. The company has since lowered its expectations for connected TV revenue.
Viewership of the WNBA has skyrocketed and the revenue is up 85% from the 2023 season. It also recently signed the newest Stanley Cup champions, the Florida Panthers, to a production, sales, and distribution rights agreement. The Panthers are the third National Hockey League team to partner with Scripps Sports for broadcast rights.
The company’s Bounce television network, whose programming is created for Black audiences, has had a compound annual growth rate of 14% since 2017. The company is working to reduce expenses and improve profitability. For instance, capital expenditures are expected to be lower than previous guidance. With a focus on debt reduction, it is on track for future growth, making it one of the best broadcasting stocks to buy.
20 hedge fund holders were long SSP, and D E Shaw has the largest stake with a value of $10,388,458, as of June 30.
Cove Street Capital Small Cap Value Fund stated the following regarding The E.W. Scripps Company (NASDAQ:SSP) in its Q2 2024 investor letter:
“The E.W. Scripps Company (NASDAQ:SSP) is too stupid cheap and too levered. We think both will be relieved to a great degree by an upcoming sale of their Bounce network, which could be sold for more than their current market cap. We also note Berkshire Hathaway and the Scripps family are key variables here being underestimated in the public opinion of balance sheet resolution for the company. A complete miss in national advertising trends in the past year has developed into a hairier balance sheet to which we generally feel comfortable. We again have been slowly in and out of the equity several times over the past seven years with solid results. This time around has been a little stickier.”
Overall SSP ranks 4th on our list of the best broadcasting stocks to buy. While we acknowledge the potential of SSP as an investment, our conviction lies in the belief that AI stocks hold great promise for delivering high returns and doing so within a shorter timeframe. If you are looking for an AI stock that is more promising than SSP but that trades at less than 5 times its earnings, check out our report about the cheapest AI stock.
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Disclosure: None. This article is originally published at Insider Monkey.