• by Wayne Friedman , March 11, 2020

The spread of coronavirus in the U.S. and worldwide would “briefly” hurt the advertising-supported media industry, according to one analyst.

Neil Begley, media analyst/senior VP of Moody’s Investors Service, wrote that advertising disruptions “may be short-lived and should follow a similar economic pattern to that of the aftermath of September 11, 2001.”

However, he cautions: “If the virus spreads widely in the U.S., economic contraction and short supply of consumer products and durables is likely and would last through to the end of the outbreak, which could be more than one quarter.”

Begley adds: "The effect on U.S. media companies’ advertising revenue would be significant. Yet, because of the nature of the disruption, we believe the duration could be short — unlike the longer consumer-led recession during and following the 2008-2009 financial crisis."

A wide range of companies would be affected: Cable and broadcast networks; TV station groups; sports leagues, teams and regional sports networks; and internet advertising companies. To a much lesser extent, he says, pay TV providers would be affected.

The latter is due to what many analysts have already projected -- that more at-home customers and workers, who have been told to work at home, will produce higher TV consumption.

He says: “Pay-TV and streaming services may benefit from higher engagement and increased subscriptions as people remain at home. That, together with political advertising ahead of the Presidential election, may partially offset the reduction in demand for ads.”

Bernstein Research believes that at a minimum, advertising disruption could hinder TV advertising through the end of the year --- with TV networks witnessing advertising declines from 2% to the worst case of 8% during particular quarterly periods.