Warner Bros. Discovery, P7S1 and BCE Declines Illustrate State of TV Advertising in 2Q23
With results out today from several of the world’s largest TV network owners – Warner Bros. Discovery, Pro7Sat1 and BCE – TV advertising continues to post weak results globally, as an overall ad industry that expanded by mid-single digit levels in the second quarter is likely experiencing an accelerated shift from TV to pure-play digital platforms, even before the consequences of US actor and writer strikes have impacted what was once the dominant part of the advertising industry. As a result, while results should be less negative for television advertising in the second half of the year (if only because of easier comparables with declines in the second half of 2022) such an outcome is not fully assured.
It’s important to note that while a “downturn” or “advertising recession” may be cited by some sellers of advertising in their earnings calls and press releases, as I’ve pointed out, the growth in digital platforms in countries around the world means that the industry is generally expanding everywhere. Amazon’s results set to come out later today paired with previously released second quarter results from Alphabet, Meta and Microsoft as well as continuing traction at TikTok – all larger than any seller of TV advertising around the world this year – are a testament to this idea. Conveyances of negative trends may be informed by tracking sources that are either incomplete (not capturing all advertising spending data directed to digital platforms) or incorrect.
Warner Bros. Discovery reported second quarter results on Thursday featuring a 13% decline in ad revenue in constant currency terms, including both linear and digital platforms (which are ultimately drawing from the same pools of advertising budgets directed towards sponsoring professional video-related content). While the absence of NCAA Final Four programming was called out as a negative factor, this likely only accounted for a few percentage points of the outcome.
Although WBD is heavily skewed towards the particularly negatively exposed US cable networks business as well as Nordic markets where TV advertising is probably also worse off than other countries (based on Viaplay’s recent results) It would be unsurprising if combined with results from peers, TV / professional video-related ad revenue declined in the US and around the world didn’t decline by a high single-digit level.
Guidance for improving, if still high single digit declines in ad revenues during the second half of the year (with the fourth quarter better than the third) is consistent with my general expectations for the industry as well
Meanwhile, at Pro7Sat1, ad revenues from its Germany-focused entertainment business declined by 9%, although this includes the newly consolidated Joyn as well as podcasting revenues. Excluding “digital & smart” revenues from the segment, ad revenues were down by 11% year-over-year. As with WBD, P7S1 expects normalized spending in the second half of 2023 with DACH-region ad revenues returning to growth, led by the fourth quarter.
Similarly, Canada’s BCE – the largest Canadian network owner as well as a large owner of radio and outdoor assets – posted a 9% fall in ad revenue during its second quarter.
It’s important to note that there have been some sellers of TV advertising who have produced better results. Earlier this week MFE (MediaForEurope, the former Mediaset, the dominant network owner in Italy and Spain) only posted ad revenue declines of 1.5% in the quarter in Italy and 2.4% for Spain. Previously, Comcast’s NBCU recorded what I estimate was a 3% decline in its ad revenues excluding political advertising, and TelevisaUnivision actually grew in the US by 4% ex-political, and in Mexico by 16% in constant currency terms.