Fox, Discovery, AMC To See Mostly Double-Digit Ad Declines For 2020: Analyst Estimate

Three TV network companies strongly focused on cable tv -- Fox Corp, Discovery Inc. and AMC Networks -- will see sharply lower advertising revenues in key areas for 2020 due to the coming recession. Fox gets virtually all of its positive cash flow -- earnings before interest, taxes, depreciation, and amortization -- from its cable TV networks.

MoffettNathanson Research says Fox is projected to see somewhat better results among the three, with its cable networks sinking 8% versus a 2% previously estimated 2% drop. Fox’s broadcast business -- its TV network and stations -- will be up 8% in the U.S. TV advertising versus a previous 12% increase.

Discovery will see a 11% decline in U.S. advertising (with a previous 1% increase) and a 13% decline for international advertising (with a previous 5% increase). The company will be impacted by the loss of the Tokyo Olympics for its Eurosport network.

AMC Networks will decline 17% in U.S. network advertising, versus a 6% decline projected earlier.



MoffettNathanson notes the COVID-19 crisis is poised to be more severe than the 2008-2009 financial crisis.

For the 2008-2009 financial crisis, “national broadcast TV recorded five consecutive quarters of negative ad growth and national cable only had two negative quarters. However... cable networks were in structural growth mode before this weakness. We think this time will be different.”

According to the Interactive Advertising Bureau (IAB),and MoffettNathanson’s own analysis, the March/April period will see a 41% decline in linear TV ad spend versus marketers' original budgets and a 35% decline in the May/June period.

The IAB study says that 44% of respondents believe the COVID-19 crisis will have “substantially more negative impact” than the 2008-2009 financial crisis.

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