TV Ad Prospects As Recession Looms: Are Social Media Ad Concerns A Harbinger?

Have TV and digital media roles as they relate to advertising been reversed?

Forecasted downturns from major digital media players -- especially Snap and Meta Platforms -- may be ahead of the curve.

Legacy TV-based media companies are a bit behind. And that's good (at the moment)

“TV advertising has not collapsed as fast as digital advertising,” according to some recent analysis from MoffettNathanson Research.

One major indication of this is that social media company Snap will not even offer "guidance" for analysts in terms of users and advertising growth.

In other words, it has no idea what could happen over the next several months. No investor wants to hear that in-the-dark news. After its earnings report, its stock was crushed -- down a massive 26%. The next day it lost another 38% in early Friday trading.

Although Snap and others gain a great deal from direct-response/smaller advertisers, analysts are particularly concerned about cuts from brand advertisers. That's where young digital media companies typically want to expand into.



Meta Platforms has also been citing economic/business concerns -- beyond its usual worries of disappearing cookie-based advertising data.

Where does that leave TV? Well, it's hard to say --- especially for the fourth quarter, where it is highly expected that a recession will start.

That's because yearly upfront commitments -- just completed over the last several weeks -- include no option to cut back on fourth-quarter media buys, which are traditionally firm. However, some indication could come from scatter deals that are made during the period

TV networks have talked up high single-digit price increases for the upfront, with improved overall revenue volume gains -- partly driven by faster-growing streaming platforms.

Still, one TV-based media company -- Paramount Global -- might be the first to see some hits.

MoffettNathanson Research points out two important things about the company: Weakening cable TV networks and a much slower new estimate for growth at its advertising video on demand platform Pluto TV. For example, the stock market research company is now projecting for the AVOD service to see 17% ad growth, down from 42% estimate previously.

The positive for Paramount comes from better local TV-media advertising this year from mid-term political ad dollars.

One point to remember: the first quarter of this year, before the upfront marketplace got going.

Previous to all the high-flying upfront advertising press releases from TV network groups, the first-quarter scatter market was particularly weak -- with virtually no price increases compared to upfront deals the year before. This has remained an issue, especially in the second quarter.

MoffettNathanson now estimates big publicly traded media companies ad revenues will be anywhere from 2.7% to 4.3% lower than prior projections for companies including Walt Disney, Warner Bros. Discovery, Paramount Global, Fox Corp. and AMC Networks.

Right now that sounds okay. But is there more to come?

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