Local TV Forecast: 2% 'Core' Ad Decline In Q3 For TV Station Groups

Although major TV station groups in the third quarter are projected to see an average 2% decline in “core” advertising, those groups will also see "some recovery” later on, according to Wells Fargo Securities. 

The biggest U.S. TV station company, Nexstar Media Group, is estimated to be down 7% for the period --- due to its heavier national TV ad presence versus other groups. 

“The soul of the local ad market is trending better than the national ad market,” writes Steven Cahall, media analyst of Wells Fargo.

In recent years, many big TV station companies looked to add national TV platforms and networks -- either starting national TV channels, including local digitally based TV networks, or through major acquisitions.



The biggest of these is Nexstar’s acquisition of a 75% ownership interest of The CW broadcast network in October 2022.

But national TV business won’t suffer for long -- improvement will come in the fourth quarter: “We expect broadcast management teams to ascribe incremental core strength in the second half  [2023] to national ad improvement and an easier political comp,” says Cahall.

The best third-quarter ad-revenue performance will come from Gray Television, which is projected to see a slight increase of 2% year-over-year.

Sinclair is projected to see a 1% decline, while E.W. Scripps is estimated to be down 3% and Tegna is projected to be flat.

With regard to core-advertising categories, automotive -- which has long been the top local TV ad category -- has comprised the biggest share of local TV dollars, with 17% in the first quarter of 2023. 

Automotive has had some trouble over the last few years, but “started to strengthen in 2023.”

At the same time, Cahall cautions about the effects of the ongoing automotive strike.

Advertising brands such as  home improvement, services and packaged goods are gaining as well. 

But healthcare, media, telecommunications and restaurants are facing “headwinds.”
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