Analyst Bullish on European TV Sector, Says It's "Not the U.S."

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German TV giant ProSiebenSat.1 at an investor event offered a "very strong defense of the TV advertising model," he says.

"Europe is not the U.S.," said Liberum Capital analyst Ian Whittaker on Friday in a report that touted the resilience of European TV sector stocks despite the growth of online video consumption in the digital age.

"We see the European TV broadcasters as the most structurally resilient of the various media sub-sectors given our belief that TV advertising is a lot more resilient than the market expects," he wrote.

His comments came in a report following German TV giant ProSiebenSat.1's investor day on Thursday, which saw the company raise its long-term growth guidance.

"ProSieben was at pains to point out that TV-related consumption in the German market is likely to continue to grow ... with the mix changing (more mobile/online and less linear via a TV set)," Whittaker wrote. "It was pointed out that there were a number of reasons why Germany was not like the U.S. (low pay TV penetration; preference of Germans for dubbed programs, etc.). However, there were also a number of points that were relevant for all European broadcasters, such as the continued demand for TV content and that audiences switch to live TV as their lifestyle changes."

He said that "one of the most noticeable features" of the company's event was "its very strong defense of the TV advertising model."

Whittaker said that similarly to the U.S., European TV networks have seen some weaker ratings, leading to debate about whether digital media is eating into TV viewing, especially among younger demographics. The idea that YouTube "could be seen as a substitute for linear TV to reach mass market audiences looks to be overdone," the analyst wrote. "Crucially, new measurement systems may address some of the perceived issues surrounding youth audiences," he concluded in a comment similar to what U.S. industry executives have said.

Whittaker's top stock pick among European TV stocks is ITV, which he rates a "buy." "But we are also positive on the German and Spanish broadcasters," he said.