Anjali Sundaram | CNBC
The television advertising market is on the mend after being hit by a wider pandemic advertising slowdown. With the number of Covid-19 cases rising, some networks are cautious about the quarters ahead, even if the political ads are giving a strong boost this quarter.
In the past few days and weeks, media outlets such as ABC and ESPN parent company Disney, Fox, AMC Networks, NBCUniversal parent Comcast, WarnerMedia parent AT&T, ViacomCBS and Discovery have reported profits showing that the market is growing for TV advertising after a pandemic-induced low point warmed the second quarter.
The record year for political advertising will give businesses a boost in the fourth quarter. However, some companies warned that macroeconomic factors could re-impact advertising spending due to the pandemic. And it all happens as television experiences a long-term general slowdown.
Here are some of the overall trends the networks shared in their revenue:
Better than when the pandemic started
TV commercials last quarter showed the market is in a better place than it was in the early days of the pandemic.
Discovery’s third-quarter advertising revenue was still down 7.7% year over year. However, this was an improvement on the 14% decline in the second quarter.
“In terms of commercial success, behind the consolidating advertising market around the world, we have once again seen significant sequential improvement in our advertising revenue growth, which is still negative year-over-year but is demonstrably improving globally.” The President and CEO from Discovery, David Zaslav, said on his call to win. “We’ve seen advertising partners reappear around the world.”
At Comcast, advertising revenue grew 12% year-over-year, driven by political ad revenue 70% higher than the 2016 election. However, the company said that core advertising, excluding political advertising, was down 6.8% year over year. That’s still a “significant improvement” over the last quarter.
Fox Corp also saw advertising momentum driven by heavy ratings on Fox News and political advertising.
The company’s management announced that for the quarter ended June 30, the fourth quarter of the fiscal year, local broadcasters saw their base ad market decrease approximately 40% year over year (i.e., minus political ads and other non-ads ) recurring events).
CEO Lachlan Murdoch said on Fox’s call that the corresponding decline for the quarter ended September 30th was only 20%.
“Including the benefits of political acquisitions and channel acquisitions, we are now the same time as last year. At the start of Covid, our stations were down by almost 50% compared to last year. Today they go up and down.”
According to ViacomCBS, advertising revenue has also improved dramatically, down only 6% year over year, compared to the 27% decline in the second quarter.
“We have also seen certain industries affected by COVID, such as auto and retail, are gradually returning. This reflects the improvement in the economy and the significant value our portfolio brings to advertisers to fuel their own business recovery,” said Bob Bakish, President and CEO of ViacomCBS Profit Call. “Overall, we are encouraged by what we see and the promotion of the bigger picture is certainly moving in the right direction.”
According to Disney, ad revenue for its broadcast unit was year-over-year as lower average network viewers were offset by an extra week in the current quarter, higher network rates, and an increase in political advertising on its own television channels.
Uncertain times after the political advertising boom
Discovery noted that visibility is low after the U.S. election, which helped the business in the third quarter, and due to the increasing cases of Covid. The company said US advertising was flat in October from a year earlier, while international advertising was down slightly.
“This may not be a trend that we would necessarily extrapolate for the full quarter as number one has some tailwinds from political advertising in the US in October and number two risks from rising Covid case numbers worldwide and the start of government countermeasures especially for Europe, which harbors risks at the end of the current quarter “, said Gunnar Wiedenfels, CFO of Discovery, in his invitation. “However, we are confident that the fourth quarter will improve sequentially compared to the third quarter.”
AT&T CEO John Stankey said the upcoming sports calendar still had many questions.
“We saw clearly that the leagues have shown that they can actually host and enforce games. The timing of these and how many there are and exactly what happens in ’21 and where it falls into the league.” The calendar is still a little uncertain, “he said on the company’s October conference call.” And until we’re a little better informed, it’s difficult to give you precise views on such as the first, second, third, fourth Quarter looks like next year. “
ViacomCBS leadership said the return of a steady fall schedule at CBS along with sport, a “successful” foresight and a “hot political category” should help in the fourth quarter.
AMC Networks said while the ad market is improving sequentially, fourth quarter results will be affected by the timing of its shows, including a delay in the airing of “The Walking Dead.” The year-over-year decline in advertising revenue in the fourth quarter should be in line with the third quarter.
The production of content starts
Media companies largely said they had ramped up production after pandemic restrictions caused serious disruptions earlier this year.
According to Discovery, content production was almost back to normal, with only 10% of the company’s production being interrupted, largely due to travel and local restrictions. At AT&T, Stankey said the company had 180 productions underway in February before the pandemic began. By October, the company had put about 130 productions into operation.
At Viacom, the company estimates that Viacom Media Network’s production levels are about 95% year-over-year, while CBS “has essentially all of the full network series currently in production” and Showtime “almost all” produces series.
At AMC Networks, executives said the company is resuming production for a number of its shows, including “The Walking Dead” at its Georgia studio, “Fear the Walking Dead” in Texas and a new series called “Kevin Can F *” ** Himself “in Boston.
Fox said all of its Fox Entertainment return shows are back in production, with return flight dates scheduled in early January.
Disney CEO Bob Chapek said although many of its production teams had to shut down due to Covid in early March, its animation teams were able to work remotely and continue production “uninterrupted” during the pandemic. On the TV side, the company has more than 100 live-action projects with and without scripts in active production, with dozens more in other phases of pre- or post-production.
Disclosure: Comcast owns NBCUniversal, the parent company of CNBC.