There are some signs that its gonna get rocky for the networks with ad revenue.
TV Ad Revenues To See Sharp 40% Decline in 2Q, Moderating Drops Through 2020by Wayne Friedman , March 26, 2020
Second-quarter TV advertising dollars for the April through June period could see a massive 40% decline in business, with lesser drops in the proceeding quarterly periods, according to one media analyst.
Bernstein Research estimates a “base case” scenario -- one where first-quarter 2020 will see a 10% decline in TV advertising, a 40% drop in the second quarter, a 15% pullback in the third quarter, and a 5% loss in the fourth quarter.
Todd Juenger, media analyst at Bernstein Research, says 2021 could see a 75% recovery of the TV advertising dollars lost in 2020. In a worse-case scenario, 2021 would only recover 20% of 2020’s decline in TV advertising dollars “given a prolonged recovery scenario as well as accelerated cord-cutting.”
“The underlying assumption is that advertisers will learn to live without TV and replace with more efficient/effective methods -- mostly digital. Much like what happened to print media in the last U.S. recession.”
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Cord-cutting will accelerate in second and third quarters due to COVID-19 issues with consumers who are under pressure to cut costs. Juenger says this is will be “primarily driven from no sports” programming, which will lead to many cancellations at virtual pay TV distributors of networks.
The best-case scenario is that a 50% loss in business will be regained in the fourth quarter, when sports and the economy overall recover. The worst-case scenario is that the pay TV marketplace continues to decline with a 2021 recession causing cord-cutting to fall at annual rate of 9%.
“We have learned that COVID-19 is most dangerous to the population of people who are older and have preexisting underlying medical conditions. We believe that analogy also applies to media stocks.”
He adds: “Shareholders of stocks like Viacom, Discovery, and AMC Networks own underlying assets that rely almost entirely on an old business model with both severe adverse structural forces and cyclical risk, as well as the preexisting condition of overly extended balance sheets.”
https://www.mediapost.com/publications/ ... q-mod.html
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From PepsiCo to GM, Big Advertisers Set to Cancel Commitments to TV Networks
Companies are seeking to take advantage of options that became available May 1 to cancel up to 50% of third-quarter spending
As movie theaters sit empty during the coronavirus pandemic, some films are being released direct to streaming services and digital platforms, shaking up a distribution model that's been in place for decades. WSJ explains.
By Suzanne Vranica
May 12, 2020 11:40 am ET
Big advertisers from General Motors Co. to PepsiCo Inc. to General Mills Inc. are seeking to walk back spending commitments they made to broadcast and cable networks, a dynamic that is testing the industry’s five-decade-old way of doing business.
TV ad spending fell in the initial weeks of the coronavirus pandemic, but was insulated from an even bigger drop. That is because the majority of the roughly $42 billion spent on national TV ads in the U.S. is bound by contractual commitments that are made well in advance of a new...
https://www.wsj.com/articles/from-pepsi ... 1589298017
Coronavirus could wipe out $10 billion in TV ad spending
March Madness signage
This year’s March Madness tournament was a bust. Signage as seen before the first round of the 2018 NCAA Men’s Basketball Tournament at PPG PAINTS Arena in Pittsburgh. (Rob Carr / Getty Images)
By MEG JAMESSTAFF WRITER
APRIL 20, 202012:04 PM
The shutdown of sports due to the coronavirus pandemic is propelling a historic decline in U.S. TV advertising: Sales could be down by as much as $10 billion in the first half of the year.
The projection, released Monday in a new report by digital research firm EMarketer, illustrates the financial pain facing U.S. broadcasters, particularly ESPN, CBS, Turner and NBC, which rely on live sports to boost their ratings and advertising hauls.
The New York firm said Monday that TV ad spending in the U.S. will decline by an estimated 22.3% to 29.3% — or $10 billion to $12 billion — during the first half of the year, compared with its previous projection for the period.
In the first half of 2019, broadcast and cable networks collected $33.9 billion in advertising spending, according to EMarketer. It now estimates that TV networks could collect $24 billion to $26.3 billion in the first six months of this year.
TV advertisers also are racing to adjust to their new reality. “TV networks will lose billions in ad revenues due to canceled or postponed March Madness, NBA, NHL and other major sports games,” the EMarketer report said.
The postponement of the 2020 Summer Olympics in Tokyo wiped out more than $1.2 billion in advertising commitments to NBCUniversal.
Kantar Media, in a separate report, estimated that the cancellation of the NCAA basketball tournament and the professional NBA and NHL playoffs and finals could collectively obliterate as much as $2 billion in advertising spending. Research firm MoffettNathanson separately said that scuttling the NBA season because of COVID-19 could cost ESPN, ABC and TNT $700 million in advertising spending.
Walt Disney Co., which owns ESPN, has been devastated by the pandemic because of the nature of its portfolio mix. ESPN’s entire game schedule was erased, leaving the network to cobble together lineups devoid of its biggest draw. Meanwhile, movie theaters are closed, crimping the film studio’s profits. Disney’s vast theme parks, resorts and cruise lines also have been shut down since mid-March and the company is furloughing employees.
The pandemic also disrupted plans by Sinclair Broadcast Group to launch a new sports network with the Chicago Cubs. The Maryland TV station owner, which also owns the Tennis Channel, was hoping to benefit from its takeover last year of the Fox Regional Sports networks, including Fox Sports West and Prime Ticket in Los Angeles. But there are no NHL or Major League Baseball games to broadcast.
“With consumers stuck at home, many find themselves having more time on their hands and thus greater interest in watching TV,” EMarketer principal analyst Nicole Perrin said in a statement. “But that coincides with millions of newly unemployed or underemployed consumers who will have to keep an eye on their personal finances.”
The TV industry expects a return to more healthy levels in the second half of the year, thanks to hoped-for political ad spending. TV station owners initially thought political spending would be spread throughout much of 2020. But campaign spending also shut down in early March. Candidates for president stepped aside, all but assuring the Democratic nomination to former Vice President Joe Biden. “The election season itself and the apparent insensitivity of campaigning during the pandemic” has put political spending “largely on hold,” the report said.
EMarketer’s new estimates erase a rosy forecast the firm issued on March 6, which called for a 2% increase in ad spending for the full year. That prediction came nine days before the Centers for Disease Control and Prevention recommended scrapping gatherings of 50 people or more.
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