In the U.S. since ad revenues are heavily transactional locally, national and regional, local-direct will be the savior for all concerned! People still have to work and eat and pay bills! Philip Jay LeNoble, Ph.D.

COMMENTARY

U.K. ITV Ad Revenues To Drop 10% In April -- Where Will U.S. TV Networks Land?

• by Wayne Friedman , Staff Writer, March 10, 2020

TV advertising amid virus concerns will take a hit for specific networks -- some of which are already teetering in recent ad results. 

Can we model where they might be going -- roughly -- based on what non-U.S. based TV networks are projecting? Not exactly. And yet there is some context to consider.

Looking at the ITV network in United Kingdom, the big independent ad-supported channel, the company says April advertising revenues will drop 10% as the coronavirus outbreak halts travel companies’ spending on marketing.

That’s a big drop. And while there may be different dynamics in Britain versus other countries -- in Italy, which has seen a sharp rise in Covid-19 infections -- there could be meaningful ad declines.

The United Kingdom isn’t where Italy is right now -- perhaps more akin to where other countries, including U.S., where the virus hasn’t spread with big infection numbers.

ITV’s update came as it released its annual revenue results, which grew 3% to £3.3 billion ($4.3 billion) in 2019, while pre-tax profits fell 7% to £530 million ($691.6 million).

TV Watch has mulled the idea that network TV media buys might fall as well -- but this wouldn’t be for all existing deals, especially those made during the upfront period in spring/summer 2019. That’s because the second-quarter option period has come and gone.

But it could affect near-term “scatter” TV deals — made with a lead time of a few days to a few weeks.

Plus, the third-quarter period can be subject to a 50% cancellation by TV marketers for upfront deals made a year ago. Looking forward, this year’s upfront market, processed in June/July/August, will see its true indicators in the fourth quarter, which are 100% non-cancellable.

U.S. TV networks are already under pressure from fractionalizing media. Cable TV networks have seen regular 2% to 3% annual declines in subscribers, which translates into ultimately viewers.

All this equates to stagnant or slight declines in advertising revenues: NBCUniversal witnessed ad revenue down 1.5% (excluding political spending, up in the low-single digit range) in its most recent reporting period.

Other results: ViacomCBS had ad revenue dropping 2% to $3.03 billion in the fourth quarter -- also due to political revenue drops. WarnerMedia was down 2% in the period. Discovery Inc.’s U.S. advertising grew only 1% to $1.05 billion, which followed declining growth over the last few quarters.

With these ad revenues already in a fragile state, whither the falling numbers to come?