Fox, Paramount, Sinclair, Roku, BCE, M6, TF1, Pinterest and More 3Q23 Results
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The last two days have seen a frenzy of earnings releases for companies focused on the advertising industry, which I review here along with several other scaled players who provided new data over the past week. Collectively the data reinforces trends I have previously pointed to, with strong growth for the ~70% of the industry that is centered around digital advertising, flat results for out-of-home advertising and mid- to high-single digit declines for TV (including CTV), audio and print. Collectively, the industry is growing - it’s just not evenly distributed.
First, looking at owners of TV networks and adjacent properties around the world, US-based Fox posted total ad revenue down 2%, with limited political advertising this year vs. last year probably dragging the number down a few percentage points. As Tubi grew around 30% - now on track for around $1 billion of ad revenue this year – if we exclude that revenue and political advertising – all other ad revenue was down -3.5%. While it’s possible that local TV outperformed, it’s unlikely the national TV business excluding Tubi was down by more than a mid-single digit level.
As referenced on its earnings call, Fox’s sports skew in its programming probably helps it outperform broader industry trends. Towards that end we saw Paramount report that its advertising revenue across linear and digital properties declined by 8.7% across its linear and digital platforms, with the absence of political advertising more of a slight drag on the results. This figure was essentially comparable to Comcast’s 8.4% US TV advertising revenue decline posted last week.
For a pure-play view on local TV advertising, Sinclair reported that its local media was up 1.1% excluding political advertising, similar to the flattish figures of the rest of the year, although this result was aided by a -15% comparable from 3Q22. By contrast, Altice saw news and advertising revenue decline 10.8% for the fifth consecutive quarter of double digit declines.
Over at Roku, advertising trends were negative, if non-specifically-so. The company stated that advertising was “slightly lower” year-over-year and was ahead of the SMI-based industry benchmark of a 12% decline they believe is reflective of the national TV marketplace. Costs to acquire ad inventory to sell were noted as higher vs. the year-ago period. Looking forward, the company indicated that for the fourth quarter video ads growth should be similar to 3Q23
These results can be compared to a more positive story for TV advertising at TelevisaUnivision where US ad revenue fell only 1% in the quarter – or rose 3% excluding political and advocacy revenue - while in Mexico revenue was up 21% in US dollar terms, although almost all of this was evidently driven by foreign exchange benefits. Implicitly, advertising growth in Mexico was likely up by low single digits in constant currency terms.
Looking elsewhere in the Americas, BCE’s Bell Media’s advertising revenue, covering TV, radio, outdoor and related digital assets, fell 5.2%. This was an improvement over the second quarter’s 9% decline, with digital advertising revenue up 34%. Management said the “advertising market remained challenging” and that the company was experiencing “a protracted advertising slowdown attributable to the current economic backdrop and Hollywood strikes, a shift of advertising revenue to foreign digital platforms and a more challenging regulatory environment that is not yet adopted to the new realities facing media.” Although Bell Media does not break out its TV ad revenues, last week peer Corus reported a -11% TV ad revenue decline for its quarter ending in August.
For reference, although Bell is Canada’s largest media company with just over C$3 billion (around USD$2.4 billion) in revenue from all sources, Meta alone generated around USD$4 billion in ad revenue there last year, and probably will be closer to $5 billion by the end of this year. Alphabet is likely even bigger than that figure as well.
For another international reference point, and a more positive one for television, both of France’s two dominant broadcasters saw significant growth in the third quarter. M6 stated that its TV advertising revenue was up 6.3% and TF1 advertising revenue was up 7.0%, or 9.7% in “constant scope” terms. Although both companies conveyed positive trends in advertising (“recovery of the TV advertising market”) and growth support from the Rugby World Cup,, both companies had high single digit declines in 3Q22, presenting easy comparables. Single digit declines observed in the first half of the year are likely more representative of underlying trends.
Among the digital platforms reporting this week, at Pinterest we saw 11% total growth in ad revenues including 7.5% growth in the US and Canada when revenues are apportioned to the users in the region. However, revenues in the US were only up by 4.8% when apportioned by billing address of advertisers. As “rest of world’ (ex US, Canada and Europe) revenues apportioned by users was only $31 million, up from $24 million in the year-ago quarter, but revenue apportioned by billing addresses showed those countries drove $52 million of revenue, up from $32 million in 3Q22, we can see the likely impact of advertisers based in China – presumably Temu and Shein in particular – was likely key to the quarter’s results. As the company’s CEO said on the earnings call, “Asian e-commerce exporters generally have been a nice contributor” to results.
The more locally-focused Yelp grew similarly, posting ad revenue up 12%, roughly similar to trends observed over the last four quarters. Meanwhile, Criteo saw 1% growth for its marketing solutions but 29% growth for retail media for a combined 8.6% ex-TAC growth rate.
Looking at audio-focused services, legacy local radio station group Cumulus experienced a 10% year-over-year decline in ad revenue, excluding political advertising, similar to trends observed in the first half of the year, with digital ad revenue (podcasting, streaming and digital marketing services) now accounting for 18% of revenue, but only growing 7%, or not enough to offset a 17% decline in broadcast radio revenue. This can be compared to the nationally-focused SiriusXM, which was up 0.7% with stronger growth at legacy Pandora offsetting declines at the terrestrial radio business, where ad revenues were down 16%. Note that these figures can be compared to Spotify which saw 24% constant currency growth in its global advertising business, implying significant share gains off what is still a developing revenue base of around $1.5 billion for last year.
In the out-of-home space, growth was muted for the two companies reporting today: at Lamar, acquisition-adjusted revenue was up 1.6%, not much different vs. the first and second quarters which were up 1.5% and 2.7%, respectively. Competitor Outfront grew 0.4%, or 0.2% domestically
Finally, traditional publisher Gannett recorded advertising and marketing services revenue which fell 8%, although this was an improvement from double digit declines during each of the prior five quarters.