In this article, we will talk about the 10 worst broadcasting stocks to buy according to short sellers.
Election Volatility in the Stock Market
September is a relatively volatile month for the stock market every year, under the pretense of one reason or another. However, with rate cuts around the corner, 2024 might be different.
Mona Mahajan, a senior investment strategist at Edward Jones, recently joined CNBC to discuss the importance of long-term investors leaning into market weakness. She believes that market volatility, such as that of this September, is an opportunity for investors to diversify their portfolios.
In August, the S&P 500 was up 18%, which, according to Mahajan, suggested an unsustainable rise that would most likely be met by a pullback or correction. Last week, the market experienced a 4.2% decline following this.
A series of weaker-than-expected economic reports on employment contributed to the market decline. These reports included job openings, ADP employment data, and non-farm payrolls. The most significant report, non-farm payrolls, was lower than anticipated. Additionally, downward revisions to previous economic data further spooked the market.
To balance this, the unemployment rate was brought down to 4.2%-4.3%, and 144,000 jobs were added. While this isn’t a big number, it shows that the economy is still improving. In a recession, job growth would be negative. Therefore, the current situation, while not ideal, is not indicative of a recession. In fact, the number of people filing for unemployment claims decreased on a week-to-week basis.
She advocates for long-term investors to take advantage of market downturns, as market volatility provides ideal entry points for investing in undervalued assets.
Mahajan also addressed the broader economic landscape, including the performance of large-cap technology stocks, which she noted may not be the haven they once were, as in 2023 or the first half of 2024. This suggests a need for investors to consider diversification beyond tech stocks. Still, she thinks that AI is a driving force in the market, suggesting that it will play a crucial role in various sectors over the next several years.
She says that historical patterns indicate that bull markets typically last longer than bear markets — the average S&P 500 bull market lasts about 5.6 years, which can encourage investors to maintain a long-term perspective rather than reacting impulsively to short-term market fluctuations.
In Mahajan’s view, for the S&P 500, a multiple of 17 seems reasonable. This valuation is generally on the higher end compared to historical levels over the past 15 years.
Interest rates are currently at a high point of 5.5% but are expected to decline over the next year or two. This potential rate-cutting cycle could positively impact stock valuations. While earnings growth for the current year has been revised downward to around 10%, it is still expected to be strong. Given these factors, it’s possible that the S&P 500’s multiple to exceed 17.
However, it’s important to note that election-driven volatility brings growth spurts for broadcasting media companies, with their revenues increasing because of the global advertising industry benefiting from political ad revenue due to election campaigns. We recently discussed this in another one of our articles, 10 Best Broadcasting Stocks to Buy. Here’s an excerpt from it:
“Forbes reported that the total spending reached $8.5 billion across TV, radio, and digital media in the last election cycle. This was 30% higher than the $6.7 billion projected earlier that year, and 108% more than spending in 2017-2018, which was a record at that time. GroupM projects a record-breaking $15.9 billion investment in political ad spending for the end of 2024.
As campaigns intensify their advertising efforts, especially in the weeks preceding the election, broadcast companies can anticipate a significant rise in revenue, given the heightened demand for airtime to reach voters.
According to Emarketer, 45% of the total digital political ad spending will be seen on CTV (connected TV). As major companies in the networking, entertainment, and streaming industry continue their ban on political content, the major benefit of this spending will go to broadcasting companies.”
With that, we’re here with a list of the 10 worst broadcasting stocks to buy according to short sellers.
Methodology
To compile our list, we sifted through ETFs, stock screeners, and online rankings to compile a list of 15 broadcasting stocks. We then selected 10 stocks that were shorted but at the same time popular among elite hedge funds and that analysts were bullish on. The hedge fund data was sourced from Insider Monkey’s database which tracks the moves of over 900 elite money managers. The stocks are ranked in ascending order of their short interest, as of August 15.
Why are we interested in the stocks that hedge funds pile into? The reason is simple: our research has shown that we can outperform the market by imitating the top stock picks of the best hedge funds. Our quarterly newsletter’s strategy selects 14 small-cap and large-cap stocks every quarter and has returned 275% since May 2014, beating its benchmark by 150 percentage points (see more details here).
10 Worst Broadcasting Stocks to Buy According to Short Sellers
10. Urban One Inc. (NASDAQ:UONE)
Short % of Shares Outstanding As of August 15: 0.11%
Number of Hedge Fund Holders: 5
Urban One Inc. (NASDAQ:UONE) is the largest African-American-owned broadcasting company in the US, with over 50 radio stations. For over 35 years, it has been the leading voice speaking to Black America, providing content, entertainment, and services that resonate with its audience.
The company generated $117.7 million in revenue for the second quarter of 2024, exhibiting a 9.2% year-over-year fall. This decline was mainly attributed to the cable TV and digital segment revenue, each of which fell by 21% and 16% respectively, year-over-year.
The challenges in the cable TV segment were mitigated through newer technological advancements, like using a connected TV ad server to improve the monetization of digital advertising inventory.
These revenue declines were partially offset by radio broadcasting revenue, which rose by 7.2%. The current political climate suggests that Urban One Inc. (NASDAQ:UONE) benefits from political ad revenue. While this boost is still anticipated, the non-political ad revenue dropped by 26.5% in Q2.
Despite challenges, the company is taking steps to improve its financial situation. It repurchased $35.5 million of its 2028 notes, reducing its debt. This positive development suggests that Urban One Inc. (NASDAQ:UONE) is on the right track and could be a good investment. 5 hedge fund holders are long in the company. Renaissance Technologies has the largest stake, valued at $464,858.
9. CuriosityStream Inc. (NASDAQ:CURI)
Short % of Shares Outstanding As of August 15: 0.73%
Number of Hedge Fund Holders: 3
CuriosityStream Inc. (NASDAQ:CURI) is a media company that provides documentary video streaming services with a focus on educational content on science, history, nature, and technology.
In June, the company announced a $4 million share repurchase program through open market purchases or private negotiations and repurchased 22,001 shares. The plan has no expiration date and can be modified or stopped whenever.
In Q2 2024, the company’s direct business generated $9.8 million, up 17% year-over-year, and 3% quarter-over-quarter. Total revenue was $12.40 million. On August 15, 0.73% of its shares were shorted.
It partnered with Estrella MediaCo. and Harbour Rights to expand its reach in Spanish-language markets and Asia. 3 new programming initiatives were taken, and other original series were premiered.
Management is exploring licensing its assets to GenAI companies to generate higher revenue. This innovative strategy makes the company a promising investment. 3 hedge funds are long in the company as of the second quarter of this year. Renaissance Technologies has the biggest position with a value of $458,424.
8. Cumulus Media Inc. (NASDAQ:CMLS)
Short % of Shares Outstanding As of August 15: 1.28%
Number of Hedge Fund Holders: 5
Cumulus Media Inc. (NASDAQ:CMLS) is an audio-first broadcasting company and the second largest owner and operator of AM and FM radio stations in the US, behind iHeartMedia. It owns 401 stations in 85 media markets and also operates Westwood One.
Westwood One, the largest audio network in the US, is the exclusive national radio partner of the NFL for the 38th consecutive season. Currently, it is presenting national audio coverage of the 2024 college football season, featuring a total of 16 regular season games. It will also broadcast postseason events.
In Q2 2024, the company recorded $204.85 million, which represented a 2.52% year-over-year decline. This revenue is mainly attributed to the digital marketing services (DMS) business, which grew by 24%. The number of legacy radio clients purchasing DMS rose 25% year-over-year.
The digital businesses alone account for 19% of the total revenue and increased 5% from 2023. Cumulus Boost, a line of digital products, is responsible for a lot of this growth.
It also generated $1.9 million of political revenue in the second quarter, versus $1.2 million in the same period of 2020. Despite Q3 revenue currently pacing down, management expects advertisers’ spending to rise soon, considering the current political climate, which positions the company for growth. As of June 30, 5 hedge funds hold long positions In the company. The largest stake is $253,980 by CastleKnight Management.
7. iHeart Media Inc. (NASDAQ:IHRT)
Short % of Shares Outstanding As of August 15: 4.42%
Number of Hedge Fund Holders: 14
iHeart Media Inc. (NASDAQ:IHRT) is primarily a radio broadcasting company, that provides listeners with many music and entertainment options through podcasting and internet radio, reaching millions of listeners every day.
The company is the exclusive audio partner for NBC’s 2024 Summer Olympics coverage. A recent partnership between iHeartPodcasts, Universal Television, and Wolf Entertainment resulted in the distribution of “Law & Order: Criminal Justice System” through iHeartPodcasts, premiering on August 22.
On August 29, the company announced the return of the House of Music at the 2024 iHeartRadio Music Festival, where fans can explore interactive rooms featuring their favorite artists and brands. It will open on September 20 and 21 at Toshiba Plaza outside T-Mobile Arena.
The Digital Audio Group made a 31% contribution to the total revenue in Q2 2024, with a 10% year-over-year improvement. The company’s overall revenue was $929.09 million, improving 1% year-over-year. This revenue growth was driven by political ads, and without it, the increase would only be 0.1%.
Airtasker, a global platform for local services, formed partnerships with iHeart Media Inc. (NASDAQ:IHRT) and TelevisaUnivision to accelerate growth in the US on September 3. These partnerships will reach over 300 million people in the US, and amount to a total of $9.75 million expansion.
iHeart Media Inc. (NASDAQ:IHRT) reached 110 million Americans monthly through 3,000+ websites, increasing its social media presence 7 times, and positioning for success in the broadcast industry. 14 hedge funds are long in the company, and AQR Capital Management has the largest stake of $4,261,605.
Palm Harbour Capital made the following comment about iHeartMedia, Inc. (NASDAQ:IHRT) in its Q1 2023 investor letter:
“The second largest detractor was iHeartMedia, Inc. (NASDAQ:IHRT) (-37.5% -58 bps), the American radio and podcasting company. The company suffered two self-inflicted wounds, which will impact the first quarter. The first, which the company flagged as temporary was a change in sales incentives. Apparently, they changed their sales force behaviour to sell more lower margin products at the expense of higher margin products (where management believed it should have been incremental volumes of lower margin not a switch). The second was their guidance for interest rate expense. The company did not hedge their floating term loan and is suffering from the higher interest rate environment, something you do not want to see in a highly levered company. Their debt maturities are years out, but every quarter that passes where free cashflow is low will make refinancing more difficult. Up until now, the company has been executing well, and their podcast business is growing strongly. Management has also been buying shares and we believe their major shareholder, if allowed by the Federal Trade Commission, is potentially interested in owning the business.”
6. E.W. Scripps Company (NASDAQ:SSP)
Short % of Shares Outstanding As of August 15: 4.45%
Number of Hedge Fund Holders: 20
E.W. Scripps Company (NASDAQ:SSP) is a media company that owns TV stations, national news channels, and entertainment brands. It started as a chain of daily newspapers and now specializes in diverse services, from local television broadcasting to digital media.
The company promoted Sean Franklin to vice president and general manager of WLEX, their NBC affiliate in Lexington, Kentucky on September 5. Franklin has been with WLEX since 2019 and has previously worked in engineering roles at other media companies.
E.W. Scripps Company (NASDAQ:SSP) recorded revenue of $573.63 million in Q2 2024. Q3 revenue is expected to be up by 20%. Expectations for connected TV revenue are lowered by the management, but Local Media election-year political advertising revenue is estimated to reach record levels, with a low-end range of $270-$290 million.
Previously in July, Scripps Sports signed the newest Stanley Cup champions, the Florida Panthers, to a production, sales, and distribution rights agreement. Viewership of the WNBA also skyrocketed and the revenue is up 85% from the 2023 season.
20 hedge fund holders hold long positions in the company, and D E Shaw has the largest stake with a value of $10,388,458, as of June 30. The shares are shorted by 4.45%. The company is reducing expenses and focusing on debt reduction. This will improve profitability and position the company for future growth, making it a promising investment.
Cove Street Capital Small Cap Value Fund stated the following regarding The E.W. Scripps Company (NASDAQ:SSP) in its Q2 2024 investor letter:
“The E.W. Scripps Company (NASDAQ:SSP) is too stupid cheap and too levered. We think both will be relieved to a great degree by an upcoming sale of their Bounce network, which could be sold for more than their current market cap. We also note Berkshire Hathaway and the Scripps family are key variables here being underestimated in the public opinion of balance sheet resolution for the company. A complete miss in national advertising trends in the past year has developed into a hairier balance sheet to which we generally feel comfortable. We again have been slowly in and out of the equity several times over the past seven years with solid results. This time around has been a little stickier.”
5. Sinclair Inc. (NASDAQ:SBGI)
Short % of Shares Outstanding As of August 15: 4.97%
Number of Hedge Fund Holders: 10
Sinclair Inc. (NASDAQ:SBGI) is a diversified media company and a leading television broadcasting company that provides local news and entertainment. It has 183 operating stations covering 38% of US television households. Over 50% of their news operations rank number one or two.
Q2 2024 revenue was up 8% year-over-year. By August, the company had $146 million in political advertising booked for the second half of 2024, almost double the amount in 2020.
It is expanding its podcast division with new sports shows, aiming to provide exclusive access to the stories of athletes and games. Management reported that 97 of the 100 most-watched telecasts in 2023 were on broadcast TV, and 96 were sports content. The company’s focus on sports content is also justified when we see that the Paris Summer Olympics ratings on NBC are up 80% compared to the 2021 games.
Just recently on September 5, the company also announced the return of Full Measure with Sharyl Attkisson for its 10th season. The 30-minute-long investigative news program airs on Sunday mornings on company television stations and live online. This season will focus on immigration and its impact on the presidential race and European politics, premiering on September 8.
It also partnered with Feeding America to help provide 1.2 million meals to children and families, with $25,000 in donations to the campaign.
Sinclair Inc. (NASDAQ:SBGI) is making a positive impact through its community initiatives and award-winning journalism. Its commitment to social responsibility and excellence makes it a promising investment. The company is held by 10 hedge funds, as of the second quarter of this year. Sinclair Inc.’s (NASDAQ:SBGI) shares are shorted by 4.97%.
4. Tegna Inc. (NYSE:TGNA)
Short % of Shares Outstanding As of August 15: 5.21%
Number of Hedge Fund Holders: 31
Tegna Inc. (NYSE:TGNA) is a broadcast, digital media, and marketing services company that provides local news and entertainment.
Tegna Inc. is an American publicly traded broadcast, digital media, and marketing services company headquartered in Tysons Corner, Virginia. It was created on June 29, 2015, when the Gannett Company split into two publicly traded companies.
On September 6, it was announced that Tegna Inc. (NYSE:TGNA) is being removed from the S&P MidCap 400 index and is being added to the S&P SmallCap 600 index. 5.21% of the company’s shares were shorted on August 15. Still, by the second quarter of 2024, 31 hedge funds had stakes in the company. AQR Capital Management is the biggest stakeholder, with a value of $48,585,722.
On the same day, the Dallas Mavericks announced a new multi-year broadcast rights agreement with Tegna Inc. (NYSE:TGNA), which will increase the number of Texas households that can watch Mavericks games for free over-the-air.
Q2 2024 saw a year-over-year decline of 2.89%, attributed to a 7% and 3% decline in subscriber and national advertising segments respectively. Local advertising remained strong, driven by small and medium businesses. The political advertising revenue was up to $31.6 million from $6 million in the previous year in Q2.
Premion, a CTV sales platform of the company, will capitalize on the growing local market adoption of CTV advertising. It also highlighted the early success of the Summer Olympics in Paris and the expanded distribution of WNBA Indiana Fever and NHL Seattle Kraken games.
It received 10 National 2024 Edward R. Murrow Awards. KARE, a television station, was recognized for Overall Excellence for the 3rd consecutive year.
The company is benefiting from the return of local sports content to broadcast. Recent deals with sports teams and undergoing leadership changes are all working towards improving its operations. These positive developments make it a promising investment.
Here is what Hourglass Capital has to say about TEGNA Inc. (NYSE:TGNA) in its Q1 2022 investor letter:
“At the portfolio level, clients fully invested at the start of the year saw an average return of 5.4% in the first quarter after all associated fees. I made three sales during the quarter, all for very different reasons. First, I sold the entirety of our position in TEGNA, Inc., a broadcasting and digital media business, after the company received a leveraged buyout offer by two joint-venture private equity investors, Standard General and Apollo.”
3. Nexstar Media Group Inc. (NASDAQ:NXST)
Short % of Shares Outstanding As of August 15: 6.41%
Number of Hedge Fund Holders: 34
Nexstar Media Group Inc. (NASDAQ:NXST) is a media company that broadcasts local news, sports and entertainment content to about 68% of the total US households, covering 200 stations in 116 US markets.
President of Networks, Sean Compton, sold 3,930 of his company shares on August 16, with 10,684 remaining shares. Executive VP and CRO, Michael Strober, sold all of his shares (1,076) on August 21. The director, Armstrong D Geoffrey, sold 3,505 shares on August 26. Executive VP and General Counsel, Rachel Morgan, sold all of her shares (6,196) on August 27.
Before all of this insider selling, the company’s shares were already shorted by 6.41% as of August 15. In the second quarter of 2024, 34 hedge funds were long in the company, where Citadel Investment Group is the biggest stakeholder with a value of $113,527,100.
Q2 generally looked great with political advertising generating a record revenue. Overall revenue year-over-year growth was 2.34% , translating into a revenue of $1.27 billion.
This quarter features the launch of NewsNation, a 24/7 cable news network, providing live coverage of recent news events. It has also secured the rights to broadcast PAC-12 football games and the 2024 Snoop Dog Arizona Bowl on The CW.
It is expanding content offerings with new premier shows like Trivial Pursuit and Scrabble, and renewed series like All American and Wildcard. With multiple awards for journalistic excellence over time, the company has built a reputation and is positioned for growth and success.
Here is what Richie Capital Group has to say about Nexstar Media Group, Inc. (NASDAQ:NXST) in its Q1 2022 investor letter:
“Nexstar Media Group (NXST up 24.8%) – The television broadcasting and digital media company surged during the quarter after presenting at an investor conference where management pointed to a strong 2022 for both political advertising and retransmission. They have exposure to more than 80% of markets with competitive mid-term political races. NXST is developing new ad categories such as sports betting and they are focused on expanding digital ad revenue and providing digital solutions to local advertisers. Auto advertising will return in the fall as auto dealerships re-enter the market to sell their replenished inventory.”
2. Gray Television, Inc. (NYSE:GTN)
Short % of Shares Outstanding As of August 15: 7.10%
Number of Hedge Fund Holders: 22
Gray Television, Inc. (NYSE:GTN) is a broadcasting company operating in around 180 stations across the US. It is the nation’s largest owner of top-rated local television stations and digital assets serving 113 television markets that collectively reach approximately 36% of US television households.
On September 4, InvestigateTV+, the company’s award-winning news magazine, expanded its clearances for the 2024-2025 season. The program now reaches a wider audience, with the weekday edition available in 46% of the US and the weekend edition in 67%.
Earlier, management reported a 1.6% year-over-year increase in revenue in the second quarter of 2024. This mainly came from political advertising, which was higher than 2020 this time. Core advertising revenue fell 1.5% year-over-year because of the absence of the NCAA final four games, which were broadcast last year but not in 2024.
Q3 projections are also not very high because growth will mostly only come from the Olympics advertising revenue alone, with the company’s 56 NBC affiliates generating approximately $19 million. Under such outlooks, its shares are shorted by 7.10%.
22 hedge fund holders have stakes in the company as of June 30. The largest one is held by Darsana Capital Partners with a position of $21,278,728.
It recently announced a live broadcast of the Harlem Globetrotters game and launched new networks in Ohio and South Carolina. There are comprehensive coverage plans for the 2024 Democratic National Convention.
The company received 8 National Edward R. Murrow awards for excellence in journalism this August, highlighting the company’s commitment to quality journalism and its impact on local communities. making it a top stock for investment.
Miller Value Deep Value Strategy stated the following regarding Gray Television, Inc. (NYSE:GTN) in its Q2 2024 investor letter:
“Our two largest detractors during the quarter were Nabors Industries (NBR) and Gray Television, Inc. (NYSE:GTN), whose share prices were down 17% and 16% respectively during the quarter. We think both company’s share prices are at deep discounts to their long-term fundamental value; we have recently increased both holdings.
Gray Television remained under pressure during Q2, with ongoing marketplace concerns on the company debt leverage. Gray has limited maturities over the next 2 years and recently announced an opportunistic debt repurchase program. After a slow start to political advertising due to weaker than expected primaries, we expect to see a nice ramp in political advertising in the back half of the year. Gray’s strong local TV stations, #1 and/or #2 in 89% of their markets, has the company well positioned to achieve $500-700M in high margin political advertising in 2024. In addition, Gray has been outpacing peers in growing their core business over the past couple of years and still appear to be in the early innings of an improvement cycle. Management has recently retrained their salesforce with a greater focus on expanding their high margin digital market share over the next couple of years. In addition, ATSC 3.0 (industry new IP standard), provides opportunity for Gray to stream more content and capture new high margin digital revenue streams overtime. We see the potential for $2.5B of free cash flow generation over the next 5 years that could allow the company to rapidly de-lever their balance sheet and accrue value to the equity holder. With a greater than 80% earnings and free cash flow yield, and an attractive 6.2% dividend yield, we believe patient investors have potential to be rewarded over the coming years.”
1. FuboTV Inc. (NYSE:FUBO)
Short % of Shares Outstanding As of August 15: 13.84%
Number of Hedge Fund Holders: 13
FuboTV Inc. (NYSE:FUBO) is an American streaming television service serving customers in Canada, Spain, and the US, focusing primarily on channels that distribute live sports, providing a convenient and accessible way for viewers to watch their favorite games and other live television content.
The company successfully blocked a proposed joint venture by Disney, Fox, and Warner Bros. Discovery on August 16, which would have controlled a significant portion of live broadcast sports content. The CEO argued that this would have harmed consumers and FuboTV’s business.
FuboTV Inc. (NYSE:FUBO) introduced The Triple Play, a new ad format for its CTV platform on September 6. This allows brands to feature branded video content prominently on the company’s home screen. Advertisers can customize the ad experience with QR codes, mid-roll spots, and themed backgrounds. The Triple Play reflects its ongoing innovation in CTV advertising.
Total revenue for the company increased by 25.01% year-over-year in Q2 2024. Advertising business revenue rose 14%, while paid subscribers grew by 24%. The growth mainly came from North America.
Management expects North American subscribers to grow 7% year-over-year at the midpoint in 2024. The projected number of subscribers is between 1.725 million and 1.745 million.
It repurchased $46.9 million of convertible debt, improving its financial health and shareholder value. This strategic move demonstrates the company’s commitment to providing affordable sports entertainment and makes it a promising investment.
13.84% of the company’s outstanding shares were shorted by August 15. Currently, 13 hedge fund holders hold long positions here, Highbridge Capital Management being the largest one with a position of $11,975,000.
While we acknowledge the growth potential of FuboTV Inc. (NYSE:FUBO), our conviction lies in the belief that AI stocks hold great promise for delivering high returns and doing so within a shorter timeframe. If you are looking for an AI stock that is more promising than the stocks on our list but that trades at less than 5 times its earnings, check out our report about the cheapest AI stock.
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