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Madison & Wall: Saturday Summary
I’m trying something new: below is a summary of some of the more interesting data points or ideas in my regular publications along with quick-takes or unique context on additional news of the week:
Here’s how to predict pricing changes in the US national TV upfronts, with data and an explanation for why pricing has risen by an average of 9% each year for like-for-like inventory over the last 42 years
Here’s an explanation behind why large agency holding companies are growing, and an estimate that Omnicom generates $3-4 billion in principal-based activity (all of which the company records as headline revenue, unlike its peers)
Here’s an analysis that shows ad-supported streaming accounts for around 14% of ad-supported TV viewing, up from 9% two years ago. The figures are significantly higher when we include YouTube in a definition of TV. (Important addendum to this note: in the post I focused on P2+ data both because that’s what’s available freely, but also because much of streaming is sold on that basis and because so much of the promise of CTV is to sell against outcomes rather than reach and frequency. If we looked at data for adults aged 18-49s or 25-54s the percentages of ad-supported attributable to streaming would almost certainly be much higher today, although with every passing year older audiences probably get closer to younger audience streaming viewing levels. On the other hand, if we looked at data by income my guess is that younger audience viewing levels might look similar to these figures for the upper half of viewers. Or we could exclude sports, as Camelot’s Sam Bloom pointed out, and it would skew streaming’s share even higher)
In case you missed it on Linkedin, I also posted the top 10 sellers of advertising in the United States in both 2002 and 2022. It can be hard to remember that each of Tribune, Knight-Ridder and New York Times Co were among this group 20 years ago.
In addition, there are two other news items from the past week I have thoughts on:
P&G increased its advertising spending during the first quarter, joining each of JP Morgan Chase, Citigroup and American Express among early-reporting large companies who posted growth in spending in marketing related activities during the quarter. My guess is that most large companies probably did the same, while only a minority cut.
Fox agreed to pay $787.5 million to Dominion Voting Systems which will apparently be a pre-tax figure. If the after-tax figure amounted to $600 million, I thought it might be notable in context of Fox News’ contribution to cashflow. The total Cable Network segment at Fox generated $6.1 billion in revenue during calendar 2022. Fox News probably accounts for a majority of this figure. Let’s assume it’s $3.5 billion, and assume that EBITDA profit margins are higher than the segment’s ~50% average. If that figure were around 60%, cashflow for the business was around $2 billion and maybe something closer to $1.5 billion in 2021. So long as the company gained only a modest amount more of ad revenue than they might otherwise have seen over the past couple of years (probably true, as Fox News never really lost much viewership to NewsMax or OANN) and so long as they are better positioned to gain affiliate fee increases from cable and satellite operators (the bulk of Fox News’ revenues) in upcoming renegotiations, unfortunately they probably came out ahead in the matter – or, in other words, the settlement probably wasn’t enough to deter similar behavior on Fox News’ part in the future. While there’s still the Smartmatic case to come, past transgressions such as “hacking, illegal data access and inappropriate payments to public officials”, for which Fox indemnified News after the two entities separated, certainly didn’t appear to have much of an institutional impact. By my calculations based on public disclosures, for those earlier incidents News Corp and Fox combined have so far paid out $1.2 billion (the numbers continue to rise, including $21 million from Fox in the fourth quarter of 2022).
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