Warner Bros. Discovery, RTL, ITV, IAC, Ebay, Tegna, Gray, Nexstar, Clear Channel Outdoor, NYT and more 3Q23 Ad Trends
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Another flurry of results from yesterday and this morning generally reinforce that overall TV ad trends are weak, digital advertising is strong and outdoor is flattish.
To start, Warner Bros. Discovery reported its 3Q23 results on Wednesday. Ad revenues declined 13% on a constant currency basis, with commentary indicating international markets were down by less and implying an incrementally weaker US market. Although ad revenues associated with the direct-to-consumer segment (including ad revenue at Max and Discovery+) were up by 29% excluding currency changes, I argue this largely represents a shift of budgets that would otherwise have gone to linear networks. WBD expects incremental improvement in advertising in the fourth quarter, although this likely still means an expectation of ongoing and meaningful decline. Comments from management conveyed willful optimism around the potential for improving trends for their overall TV business, but tonally there was a clear recognition around the likelihood of persistent challenges facing the industry with references to the “possibility of continued sluggish advertising trends” and a statement that it would be “unlikely” that they will hit their target leverage range by the end of next year.
Meanwhile, Germany-based RTL reported that its ad revenue was down 1.8% during the third quarter with TV ad revenue down 3.9%. With previously disclosed results from France-based affiliate M6 growing 5.7% in the quarter, implicitly the rest of the company’s TV advertising – mostly in Germany – was down 9.2%, similar to what we saw in the second quarter. Across the company, radio was up slightly while digital ad revenue was up by 7.5%. RTL now expects TV ad revenue to fall by a mid-single digit percentage in the second half vs. prior guidance of “stable to slightly growing”
Also today, UK-based ITV reported that it saw an improvement of 0.7% in its net ad revenue during the quarter, although management’s expectations for the fourth quarter are for an approximate 10% decline en route to an 8% decline for the calendar year, driven by difficult comparables associated with last year’s World Cup.
Presuming these expectations play out, ITV would be generating slightly more in ad revenue during 2023 than it did in 2019, prior to the pandemic. By contrast, RTL’s guidance implies 2023 will be around 9% lower than 2019 while Warner Bros. Discovery’s commentary suggests that WBD’s 2023 ad revenue will be around 15% below their 2019 pro forma ad revenue.
Looking at local US broadcasters, Tegna reported yesterday that it saw a 2.6% decline in its advertising and marketing services revenue – advertising ex-political – or around flat excluding the loss of a large client at the company’s Premion CTV business. At Gray, which reported today, we saw core advertising revenue up 1%, and both of these companies were essentially similar to results from local broadcaster Sinclair, which last week indicated its local media ad revenue was up 1.1% year-over-year. As something of an outlier, Nexstar core ad revenue (excluding political) was down 2.3%, although this figure includes the CW in 3Q23 but not in 3Q22. Excluding the CW and presuming around two thirds of revenue there is advertising, like-for-like ad revenue was probably down more like 10%. Note that Nexstar does not separate reporting for its national business, including NewsNation (formerly WGN).
Nationally-oriented TV network owners aren’t the only media companies experiencing challenges, of course. IAC reported results on Tuesday afternoon. In describing trends for Dotdash Meredith, management stated that “the advertising market is soft” with digital advertising revenue falling 12% and total print revenues falling by 16%. Assuming similar trends for print subscriptions and print advertising, total advertising for the combined Dotdash Meredith fell around 14% year-over-year. Within digital advertising, premium advertising and programmatic advertising were both characterized as declining which highlights the challenges that publishers across the open web are facing.
As I’ve previously written the overall industry and spending by advertisers is collectively growing by a mid-single digit level at the present time – it’s just not evenly distributed. Search is one such place, and sure enough IAC’s own search related ad revenues grew by 6%.
As illustrations of the beneficiaries of growth in advertising trends at the present time, Ebay also reported on Tuesday and stated that that its promoted listings advertising business grew by 39% as-reported, or 36% in constant currency terms. Uber also reported on Tuesday, although no commentary was provided on specific growth rates. Presumably its growth was not dissimilar to what we saw from Ebay, or well above teens-level rates of expansion.
For an example of a legacy print business showing growth, the New York Times Company ad revenue was up 6% year-over-year, with all of the growth attributable to revenues at The Athletic as monetization of the relatively recently acquired property improves. Perhaps surprisingly, print ad revenue grew by 5% in the quarter due to “classifieds, luxury and home furnishings” while digital ad revenue’s Athletic-driven growth was offset by lower revenues from podcasts and creative services. Guidance for the fourth quarter implies a range of outcomes for advertising revenues with slightly up at the mid-point.
Finally, Clear Channel Outdoor saw a 2.7% increase excluding foreign exchange for its business (which now excludes southern Europe) although the Americas – primarily the US – declined by 1.9%. Weakness in the San Francisco Bay Area (i.e. tech-centric advertisers) and from media and entertainment verticals were cited as driving the decline. Similar to the New York Times Company, guidance for the Americas’ fourth quarter revenue is for slightly higher revenues at the mid-point of their range although Northern Europe is expected to be up by slightly more and Airports more substantially. For reference, last week US peer Lamar reported that its acquisition-adjusted revenue was up 1.6% and Outfront grew 0.4%, or 0.2% domestically