National broadcast and cable TV took a beating in Q1 as live sports and events were canceled due to the COVID-19 pandemic.
Ad revenues in the first quarter fell 5.4% YoY to $10.8 billion across broadcast, cable and syndicated programming, according to Standard Media Index, which measures TV ad revenues based on billings from the six largest agency holding companies. In March, revenues declined 12.8% YoY to $3.8 billion.
Broadcast TV suffered the most as dollars evaporated from the canceled NCAA tournament and postponed Olympics. Revenues would have been flat had the events proceeded as planned, but instead they declined 19% YoY to $1.2 billion in March and 3.8% to $4.2 billion in Q1. Meanwhile, Q1 cable TV revenues dipped 7.3% YoY to $6.16 billion.
“Live sports are such a big part of the marketplace,” said Standard Media Index CEO James Fennessy. “Taking that out wields a pretty considerable drop.”
Total ad revenues against sports in March plummeted to $96 million, a 76% drop from $391 million in March 2019.
CBS and Turner were impacted most by the loss of March Madness. March revenue declined:
- 48% at CBS (to $284 million)
- 59% at TBS (to $93 million)
- 27% at TNT (to $97 million)
It will likely be impossible to recapture the money lost on those broadcasts, Fennessy said.
And the worst is still yet to come for national TV as live events remain on hold. Standard Media Index expects almost double the ad revenue declines in April and May.
“We’re going to get the double whammy of no live sports plus big brands being very nervous around the economy and pulling significant ad buys,” Fennessy said.
Inform and entertain me
Networks are seeing a surge in ratings for news and entertainment as people quarantine at home.
Ad revenues for broadcast entertainment programs remained flat across the networks at $825 million in Q1, while news programming revenues grew 11.8% to $5.9 billion.
Evening news broadcast viewership has grown 40% YoY to 30 million people on average since the pandemic began, leading CNN to grow March ad revenues 18.7% YoY to $72 million and Fox News to grow 4.8% to $78 million during the same period.
But it’s difficult for the networks to fully monetize the surge in news viewership due to brand safety concerns.
“Advertisers are wary of advertising in a wall-to-wall COVID-19 environment,” Fennessy said. “The networks are never going to be able to fully monetize that audience growth.”
Entertainment programs will have an easier time scoring ad budgets. TLC, for example, grew March ad revenues by 8.9% to $48 million. Even ESPN increased its March revenue 2.7% to $166 million as viewers crave sports-related entertainment.
But entertainment programs could struggle to sustain momentum as productions remain on pause.
“The networks are going to have the audience, but what they continue to serve up to those audiences is a key question mark,” Fennessy said.
Bumpy road ahead
Despite huge losses on March Madness, CBS was still the top-rated prime-time broadcast network in March, and its Q1 revenues grew by 3.2% to $1.05 billion. And Fox nearly doubled its Q1 revenue year-over-year to $1.06 billion, thanks to the Super Bowl.
Meanwhile, NBC’s revenue dropped 7.6% to $317 million in March. At ABC, Q1 ad revenues remained flat at $814 million, even though viewership grew 31% YoY in March.
While Standard Media Index expects Q2 to look significantly worse, sellers hope to recoup ad spend in the second half of the year as advertisers respond to pent-up consumer demand.
But with pricing down by 20-40% across networks, it will be difficult for them to return to charging a premium for inventory, even as ratings spike.
“The networks have had real challenges filling their inventory at pricing they would’ve hoped for,” Fennessy said. “It’s going to be interesting to see whether those premiums are going to hold up or whether CPMs will be impacted on a more permanent basis.”