A Wall Street analyst has offered Discovery Communications quite the holiday present: a glowing report that suggests 2013 should be an outstanding year for the company. Bernstein’s Todd Juenger writes that company “performance is evidence it has the best positioned platform in media.”
Juenger has increased his target for the share price to $70, which would represent about a 10% bump. It might be higher but for a pair of recent deals in Europe.
Diving into growth drivers, Juenger cites upside in affiliate fees, partly because it’s unlikely to draw the ire of operators looking to contain costs. He notes strong ratings and brands, but also a “history of cooperative behavior” in past negotiations.
On advertising, Juenger isn’t forecasting a slowdown, but suggests the company is well-prepared to weather one. Any deceleration at its leading networks could be helped by “significant CPM catch-up at the mid-tier networks.”
In addition, Discovery’s programs come with a relatively low cost and global appeal, Juenger writes. There’s a belief in the investment community that Discovery’s channel fleet will “continue to find the ‘next idea’,” yet the discoveries shouldn’t come with a much higher price tag.
Praising “creative leadership,” he suggests it has carved out network identities that shouldn’t fall victim to TV’s copycat tendencies — even though its core reality TV genre continues to generate more would-be competition. "Creating characters and story lines is arguably much harder in an unscripted, real-life environment than it is with the luxury of professional writers, producers and actors.”