Analyst Turns Partly Sunny on 1Q Advertising Outlook

An analyst who has been pretty pessimistic on the state of TV advertising revenues is now raising his first quarter earnings estimates for several of the media companies he follows.

"After a terrible end to 2014, the main driver of the improved outlook is slightly better growth in domestic advertising at cable and some select broadcast networks," Michael Nathanson of MoffettNathanson said in a new report.

A year ago the first quarter, Nathanson recalls, included about $1 billion in spending attached to the Sochi Winter Olympics. He says excluding the impact of Olympic dollars, domestic cable ad revenues were up 3.1% in this year's quarter, while broadcast was down 2.5%.

Nathanson sees improvement at Disney (thanks to ESPN and ABC), Time Warner's cable networks, and CBS. On the downside, NBC and NBCU cable networks were down from the Olympic year, and Viacom, A+E Networks and 21st Century Fox's cable channels struggled.

Including the Olympics, total TV ad revenue was down 8.6% in the quarter, with broadcast down 20% and cable up 1.5%.

"We will have to wait until 2Q to see if 1Q's somewhat better results are a false positive sign or if advertising trends can keep improving for those with a more stable ratings hand," Nathanson said.

Nathanson raised his earnings estimate for AMC Networks and Discovery Communications by 7% each, upped Disney by 5% and Time Warner by 2%. His forecast for CBS is unchanged.

He took a penny off his estimates for 21st Century Fox and Scripps Networks Interactive.