After a round of optimistic comments during fourth quarter earnings calls and more recent invenstor conferences, analyst Michael Nathanson has raised his estimates for TV ad growth in 2016.
Nathanson, with MoffettNathanson Research, now sees TV ad spending increasing 5.8% in a year featuring a presidential election and a summer Olympics, up from his previous estimate of 4.8%, according to a research note on Friday.
The broadcast nets are expected to show a 6% increase, national cable is penciled in for 3.5% growth and syndication is expected to increase 1%. On the local side stations are expected to gain 9.5% and local cable should be up 10%, according to Nathanson.
Overall Nathanson sees total advertising up 7.2% in 2016, up from his original prediction of 4.5%. Traditional media will be up 0.5% instead of declining 0.1%, with Internet display and search advertising up 20.3%, up from 13.9%.
Nathanson says the big reasons for health in the TV market includes the notion that for now, most digital growth is coming from different clients and different budgets.
He also sees auto sales at a high level, having recovered from the recession. “While the allocation of advertising dollars for automakers and car dealers has changed over the last five years with an increasing emphasis on online search as a way to engage the consumer at the point of sale, TV remains an important medium for auto,” he said.
Finally there’s supply and demand in the TV market, where lower ratings led to record level of price inflation.
“Looking forward, we think that the strong scatter market will force buyers to move more money into the 2016 upfront. As we have long written and observed, there is often little correlation between upfront dynamics and ultimate advertising growth,” Nathanson said.
Total TV was down 0.6% in 2015. The broadcast nets were down 2.1% and cable networks down 6.7%. Syndication was down 1%, while station sales were down 2% and local cable was down 7%.