Based on the reports by the publicly owned media companies, ad spending was stronger than expected in the fourth quarter. Unfortunately for people who own media stocks, investors seem less concerned about ad revenue than they do about subscriber numbers and distribution dollars.
According to an analysis by Michael Nathanson of MoffettNathanson Research, national TV network advertising was up 7.2% to $11.2 billion. Nathanson says he’d been expecting a 4% increase.
The broadcast networks were up 8.3% to $4.7 billion. The gain includes the first quarter of ad sales growth at Fox in a year and a half.
The major cable groups were up 6.4% to $5.7 billion. Nathanson notes that ad sales were up 20% at Disney, thanks to college football playoff and bowl games moving to Dec. 31 from Jan 1 last year. Even though ratings fell because of the shift to New Year’s Eve, they accounted for a bushel of ad revenue. AMC also posted double-digit gains. Viacom was down 4%, but Nathanson and other analysts were expecting worse.
Nathanson noted that on earnings calls, company executive were bullish about the continued strength in the scatter market and the prospects for a strong upfront.
“Advertising should continue to be a benefit over the course of the year and lead to a stronger upfront than prior years’ disappointments. Ratings improvements, helped in part by Nielsen’s shift to its expanded NPX database, should benefit advertising as conservative upfront viewership promises mean that make goods are now less likely and lower upfront sell out ratios equate to more scatter inventory in a hot market,” he said.
Nathanson’s report also took a look at commercial clutter, an issue overhanging demand for TV advertising.
Among the broadcast networks commercial hours were up 4% in the quarter. The biggest increase was at ABC, which was up 5% from a year ago.
Among the cable networks, Viacom and Time Warner appear to have followed through on executive pronouncements that ad loads need to be reduced. Commercial hours were down 5% at Viacom and 2% at Time Warner.
AMC, which is airing more and more original programing attractive to advertisers, was up 5% in commercial minutes.