Table of Contents
Revisions summary.................................................................................... 3
TP and forecast changes we have made in this note................................................................3
Valuation ................................................................................................ 4
What’s in the price? ................................................................................... 7
Target price sensitivity to 2011 ad revenue recovery levels .....................................................7
Sensitivity to 2012 EBIT margin levels – picking up the laggards............................................10
How will the shares trade? .....................................................................................................11
Introduction........................................................................................... 14
The positives.......................................................................................... 19
Reason 1. Broadcasters are largely through the worst on fragmentation...............................19
Reason 2: TV should take ad market share on the upswing ...................................................20
Reason 3. Getting a grip on costs – margin preservation .......................................................21
Reason 4: Consolidation – change in the landscape ...............................................................26
Negatives: the next mid cycle will be lower than the last................................... 28
The loss of pricing power........................................................................................................28
Technology risk: the impact of ad-skipping hardware.............................................................29
Online strategy: still too small to be a panacea.......................................................................31
ProSieben (Buy, TP E9.50).......................................................................... 33
Extreme upside potential remains ..........................................................................................33
Valuation ................................................................................................................................33
Risks ......................................................................................................................................34
Mediaset (Buy TP E5) ............................................................................... 36
Investment thesis ...................................................................................................................36
Valuation ................................................................................................................................36
Risks ......................................................................................................................................36
M6 (Buy, TP E21) ..................................................................................... 38
Playing ad recovery and deregulation through a quality operator ...........................................38
Valuation ................................................................................................................................38
EV/Sales based analysis ..........................................................................................................39
Risks ......................................................................................................................................40
TF1 (Hold, TP moved to n/a)....................................................................... 42
Investment thesis ...................................................................................................................42
Upgrade to forecasts ..............................................................................................................42
Valuation: we remove the Target Price from TF1, maintain Hold............................................43
Risks ......................................................................................................................................43
The Spanish: T5 (Sell TP E6) and Antena3 (Sell TP E5.25) ................................... 45
The impact of switch off in 2010 ............................................................................................45
Estimating the impact of the TVE withdrawl from the TV market. ..........................................47
Telecinco valuation – TP E6/share implies 26% downside. ....................................................48
Antena 3 - TP E5.25/share implies 29% downside .................................................................49
Risks for Telecinco and Antena3.............................................................................................49
ITV (Sell TP TP 33p) ................................................................................. 52
Investment thesis – a lot now priced in ..................................................................................52
Valuation and revisions to estimates.......................................................................................52
Risks ......................................................................................................................................52