Underscoring a weak market for TV advertising, analyst Robert Fishman of MoffettNathanson Research has cut his forecast for the second-quarter ad revenue figures media companies will be reporting over the next few weeks.
Fishman said he expects The Walt Disney Co. to report a 6% drop in cable ad revenues in calendar Q2, compared to his earlier estimate of a 3% drop. He also expects Paramount to report a 17% drop in cable ad revenue, compared to the 15% decline forecast earlier, and AMC Networks’s ad revenue to be down 12%, compared to 10%.
That would lower Fishman’s forecast for second-quarter cable advertising revenue to $4.48 billion, down 12.3% compared to a year ago. Fishman’s previous forecast called for an 11.3% decline.
For the broadcast business, Fishman expects Paramount-owned CBS to be up 1.4%, compared to an earlier forecast of a 2.4% gain, and for Disney’s ABC to be down 16% versus his earlier forecast of a 15% drop.
Fishman now sees total broadcast ad revenues of $2.47 billion, down 8.3%, compared to his earlier forecast of $2.48 billion, down 7.8%.
Total national TV ad revenue is now expected to be down 10.9% to $6.95 billion, compared to dropping 10.1% to $7 billion.
Meanwhile, Fishman sees ad revenue for the big direct-to-consumer platforms rising 19.7% to $2.26 billion.
Among the media company-owned streamers, Fishman sees revenue rising 67.8% Paramount Plus, 32.2% at Peacock, 29.8% and 4.1% at Warner Bros. Discovery’s Max and Discovery Plus. He sees Pluto TV revenue as down 3% and Hulu down 8% in the quarter.
Fishman also sees The Roku Channel growing by 5.5% and the new ad-supported tiers for Disney Plus and Netflix generating $138 million and $119 million in Q2 ad revenue, respectively.
“While we have never put a whole lot of weight behind the outcome of the upfronts, this year’s is worth paying closer attention,“ Fishman said. ”Previously, advertisers were forced to hold their noses and accept CPM increases as lowered ratings also meant lowered supply, and alternative options for broadscale premium reach remained limited. This year, FAST channels and AVOD services are delivering a fresh pool of inventory, increasing supply, and cord-cutting and ratings declines outside of sports have eaten into just how much reach television is able to deliver.”
As a result of the ad-revenue weakness, which Fishman said might not be a short-term phenomenon, the analyst has also cut his stock price targets for AMC Networks ($14 a share versus $18 previously, Warner Bros. Discovery ($15 vs. $16) and Paramount ($11 vs $12).
