The Wrap: Media, Housing And Aged Care

Weekly Reports | Feb 15 2019

Weekly Broker Wrap: Banking Royal Commission; traditional media; RBA cash rate; housing; and aged care.

-Challenges for traditional media advertising, yet better trends expected
-NAB economists remove cash rate hike from forecast horizon
-Reduced home loan approvals, UBS expects house prices to fall more
-Aged care funding announced, expected to boost outcomes for listed providers


By Eva Brocklehurst

Banking RC Fall-out

Distrust in the big four banks in Australia has increased and National Australia Bank ((NAB)) is the main victim of the final report of Commissioner Kenneth Hayne. While all of the large banks have suffered declines in their net trust score (NTS) in the latest Roy Morgan survey, NAB is now the most distrusted bank brand in Australia.

The level of trust in NAB has dropped to 11.5% from 18.5%, delivering the banking sector's worst NTS of -42.2%, while the other three major brands are in the -20% region.

Traditional Media

Advertising markets weakened over the December quarter, as expenditure by the banking/finance sector and government softened. Metro free-to-air TV advertising revenue declined -5% in the December half year versus growth of 3.8% in the June half year, 2018.

Although conditions are challenging, Macquarie's analysis of prior election periods raises hopes for better trends in the current half-year, particularly for TV. Part of the slowdown in TV is a migration of cricket content and audience to Foxtel, although broad weakness stems from economic uncertainty.

The broker expects some assistance in the current half-year from election expenditure and possibly also an increased investment from banks. All up, for the June half year the broker forecasts TV and radio advertising markets to be down -1% and up 1%, respectively.

While not immune from a broader slowdown, Macquarie considers the outdoor advertising segment well-positioned and there is scope for improved operating leverage in 2019 following the recent investment in digital platforms.

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