Linear TV Shows Flat Q4 Ad Growth, Nearly On Par With Digital Media

Traditional linear TV -- national and local broadcast and cable -- will see flat advertising growth in the fourth quarter -- nearly the same as digital media advertising platforms, according to estimates from MoffettNathanson Research.

“While traditional television advertising dollars are historically more resilient given the protective dynamics of the upfront reservation system, last week we cut our fourth quarter U.S. TV advertising forecast by 200 bps to 0% growth, reflecting just how weak the domestic advertising market was at the end of 2022,” writes media analyst Michael Nathanson.

Taking out Olympics comparisons of a year ago and advertising video-on-demand [AVOD] platforms, TV declined 2% in the third quarter after a 1% drop in the second quarter and a 7% rise in the first quarter.



Full-year (calendar) 2023 is projected to see advertising revenue results for major TV-based (linear TV and direct-to-consumer streaming) companies similar to results for 2022. Walt Disney is estimated to be 2% higher to $12.9 billion, while Paramount Global will slip 1% to $10.8 billion, Warner Bros. Discovery will lose 8% to $9.2 billion, Fox Corp will be up 8% to $6.6 billion and AMC Networks will dip 6% to $824 million.

Total domestic direct-to-consumer streaming/virtual advertising platforms -- owned by the major TV-based companies -- are projected to rise 6.1% in the fourth quarter to $1.95 billion -- with Hulu, the leader, down 2% to $861 million.

At the same time, MoffettNathanson says, digital media advertising results -- which include Meta, Google, and Snap -- are on virtually par with TV -- anticipating just 0.8% growth in the period to $39.6 billion in the fourth-quarter period with international business projected to sink 6.1% to $46.4 billion.

MoffettNathanson says in a report released on Thursday: “It’s the lowest level of growth we’ve seen since the Covid-impacted quarter of 2Q 2022... Despite meaningful outperformance among the digital advertising names over the past several years, we saw that growth rapidly decelerate across the course of 2022.”

Back in Q2 2022, while TV cratered with a monstrous 30% decline in advertising revenues, digital media was still able to inch up by 1%.

TikTok, most recently, may be partly attributable for the challenges faced by digital media, according to analysts. Nathanson references a Financial Times report that “TikTok has kept their CPMs artificially low in recent months in order to undercut the competition, bringing their pricing to nearly half that of [Meta’s} Instagram Reels.”

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