Ad Dollars Shrink in Fourth Quarter


Over the past few weeks, media executives have noted that the ad market slowed down during the fourth quarter. Many media companies had been racking up quarters of double-digit ad sales growth despite a weak overall economy. So how slow did it get?

Analyst Anthony DiClemente of Barclays Capital said in a new research report he was lowering his expectations for ad revenue at Viacom’s media networks group in the fourth calendar quarter (which is Viacom’s first fiscal quarter) to just 1% from 5.4%.

Viacom’s ad revenue was hit hard by a fourth-quarter ratings shortfall at Nickelodeon, which generates a large share of its ad revenue during the holiday season, also in the fourth quarter.

As a result, DiClemente has cut his first quarter earnings estimate for Viacom to $1.05 a share from $1.08 a share. He expects Viacom to make up those earnings over the rest of the year and still recommends buying the stock because of its aggressive share repurchase plans.

Meanwhile at Time Warner, CFO John Martin indicated that it was unlikely that the company would be able to manage ad revenue growth in the mid-single digits for the fourth quarter.

“In the fourth quarter we saw a slowdown in the volume of activity in scatter. And I think that’s pretty consistent with what at least other companies have been saying,” Martin said at Citigroup’s media conference last week.

“Going into the quarter, we had said we thought ad revenue was going to be around mid-single digits because we had the lack of the NBA games, which proved to be true. But looking back now, with the slowdown in scatter, the mid-single digits may even be a little aspirational for Q4,” he said.

Like other media company execs, Martin was more upbeat about prospects for the first quarter. “Things look brighter and things seem to be picking up with the caveat being that it’s early,” he told the conference. “Our cancellations in the first quarter are at very, very low levels. We’re selling the NCAA Tournament at very attractive rates. We’ve got the NBA back on the air thankfully. Ratings have been terrific so far and advertising sales have also been following suit.”

How tough was the fourth quarter? We’ll find out more when the media companies report earnings next month.