U.S. TV station owners face a mixed advertising market, with strength in key categories such as local programming, auto programming and sports programming offset by weakness in other areas.
The auto category has historically been the biggest driver of local ad revenue for broadcasters and continues its long recovery from pandemic-related inventory issues and chip shortages. Spending across local advertising clients continues, contributing to the improvement of the station group’s core advertising position. But amid budget cuts, the country’s spot spending has declined, particularly in areas such as media, sports betting, health care and insurance.
“The local advertising market has been and continues to be strong. The national advertising market has struggled most of the year,” said Pat LaPratny, president and co-CEO of Gray Television. He added that the automotive category is “coming back with a vengeance, not a vengeance.” It is not only a local but also a national spot. ”
Adam Simson, president and CEO of EW Scripps, said at an earnings call on November 3 that, although the domestic upfront market is sluggish across the industry, the company believes that spot purchases are expected. He stated that there are some buds emerging in the scatter market in the fourth quarter. The broadcast date of the program is getting closer. Let’s take a look at the major station groups as a whole. Nexstar Media Group Co., Ltd.Sinclair Corporation, Tegna Co., Ltd.gray and E.W. Scripps — Broadcasters generally expect to end 2023 with core advertising growth in the fourth quarter.
Core advertising becomes more important in odd-numbered years when advertisers are less crowded with political spending.
shift gears
In terms of areas of strength, all Station Groups benefited from continuous improvements in the automotive market.
At Nexstar, the nation’s largest television station operator, auto spending rose 13% from a year earlier, making it the top core performer. Michael Baird, president and chief operating officer, said the category still has runway. Automotive advertising costs are still below 2019 levels and more vehicles are being sold. but, Baird Nexstar noted it faces tougher comparisons in the fourth quarter as it wraps up category expansion that has occurred for five consecutive quarters.
Even for Sinclair, the nation’s second-largest TV station owner, auto sales rose 7% year over year in the third quarter.
At EW Scripps, autos were up 13% year over year. CFO Jason Combs said cars accounted for 18% of the group’s advertising revenue over the period, the highest share in “some time.”
The positive trend for automobiles continued into October. Chief Operating Officer Lisa Ann Knutson said auto growth for the month was 10%. Knutson said if the category continues as it is, it will be the sixth straight quarter of increases in auto spending, she said.
The improvement comes as automakers look to ramp up production and sales in the wake of the pandemic and related chip shortages. According to S&P Global Mobility, U.S. light vehicle sales in 2022 will be 13.8 million, the lowest in a decade. That number is expected to jump to about 15.5 million people in 2023 and reach 15.9 million in 2024, according to S&P Global Mobility’s October forecast.
score in sports
Beyond cars, station owners found advertising success by increasing live sports programming.
A year after Nexstar took control of The CW (US), the network secured the rights to LIV Golf. Atlantic Coast Conference Football and Basketball. And most recently, WWE NXT is scheduled to begin airing on The CW in 2024. In 2025, The CW will also be the exclusive home of the NASCAR Xfinity Series starting in 2025.
“The ratings for ACC football on The CW are very strong and are attracting new advertisers to the network,” Nexstar CEO Perry Sooke said on a Nov. 8 earnings call.
Overall, Nexstar’s core advertising decreased 2.3% to $391 million in the third quarter. COO Baird said core advertising, excluding The CW, was down 6.8%.
Scripps believes it also benefits from live sports coverage. The company expects local core advertising revenue to improve to low-to-mid single digits in the fourth quarter. This benefits from a 4 percentage point increase associated with two local NHL deals with the defending champion Vegas Golden Knights and Arizona The Club. Coyote.
“Linear television, especially broadcast television, is built for this, and leagues, teams, fans, and distributors and advertisers know it,” said Scripps CEO Adam Simson. “And that’s why Scripps is leading a broadcast renaissance in live sports.”
Sports programming is gaining support from advertisers, but spending on sports betting declined in the third quarter.
At Gray, sports betting was the category with the biggest decline. Sandra Breland McNamara, Grey’s chief operating officer, said sportsbooks that spent a lot of money last year to launch the platform are now shifting to maintenance costs.
testing technology
Amid the downturn in sports betting, Gray said the company’s local direct division posted year-over-year growth of 9%, 15% and 16% in the first, second and third quarters, respectively. Emphasized business interests.
To overcome some of the weaknesses in the advertising market, some other broadcaster groups are turning to technology.
Sinclair CFO Lucy Rutishauser said the company is leveraging an integrated ad sales platform that connects linear and digital to improve its services. The company also uses his AI to develop customers and create more customized communications.
sinclair fQ4 guidance calls for mid-single-digit improvement in core advertising on a pro forma basis, driven by digital spending. rooty shauser Said.
Of course, bets on technology don’t always pay off. At Tegna, core advertising in the company’s advertising and marketing services division fell 2.6%, in part due to earlier disclosure of a single national account loss for Premion, the company’s connected TV, OTT advertising business. of his total of $312.4 million.
“Similar to last year, Premion’s sales declined year over year due to the impact of a single large national account loss,” Tegna Chief Financial Officer Victoria Dax Harker said in a Nov. 7 earnings call. “It has decreased,” he said. “However, Premion’s main focus is local OTT revenue growth, where the company can achieve unique wins. Premion’s local revenue has been strong, with double-digit growth since the beginning of the year.”