Core Local TV Ad Spending Declining

• by Wayne Friedman , Staff Writer, 2024

Cord-cutting continues to weaken broadcaster linear TV core advertising. 

In 2023, local TV stations witnessed core ad revenue sinking 3% compared to annual growth for the previous three years, according to Moody’s Ratings.

In addition, it says ever-growing FAST (Free Ad-Supported Television) streaming channels will continue to eat into broadcaster viewing and revenue-generating efforts.

Moody’s says FAST channels are at an annual audience growth rate of 30%.

“This will continue to pressure broadcasters’ core advertising revenue and we expect annual run-rate declines in the 1% to 4% range,” writes Gregory A. Fraser, vice president and senior analyst of Moody’s Investors Service.

Moody’s estimates that traditional cable TV subscribers declined 10% in 2023 from the previous year to 33.3 million, with traditional satellite and telco pay TV distributors sinking lower --15% -- to 18.6 million subscribers.

As other estimates have revealed, virtual (internet-based) pay TV distributors (such as YouTube TV, Sling, Hulu + Live TV and FuboTV) have been unable to boost overall business.

Virtual pay TV grew 16% in 2023 to 18.2 million, according to Moody’s.

The overall linear TV marketplace -- traditional and virtual -- is down 6.1% to 70.1 million, compared to 83.8 million four years ago in 2020.

Not only is local TV station ad revenue softening, so too are annual retransmission fees -- estimated to soften within a range of a 2% decline to a positive 4% growth.

In 2023, broadcasters’ retransmission revenue rose to nearly 2% -- compared to 8% higher revenue in 2022, 11% in 2021 and 24% in 2020.

“Accelerating subscriber losses, coupled with depressed local TV ratings, means broadcasters will have a tougher time negotiating offsetting distribution rate increases at contract renewal.”