The U.S. television station business is facing a soft ad market, high interest rates and inflationary pressure in 2023, but will get a boost from $4 billion in political ad spending in 2024, S&P Global Market Intelligence said.
TV-station ad revenue is expected to drop 9.5% to $21.86 billion in 2003, according to S&P. With election year spending, station ad revenue will jump 13.5% to $23.82 billion in 2024.
“The U.S. broadcast station industry has mostly rebounded from the pandemic-level advertising declines in 2020-21, however, new headwinds have emerged in 2023 resulting in softness in the ad market as a result of high interest rates and inflationary pressures,” Justin Nielson, principal research analyst at S&P Global Market Intelligence, said.
“The local ad market continues to be stronger than the national side of the spot ad business as national ad agency and brand budgets have shifted dollars to streaming, mobile and social media platforms,” Nielson said.
S&P said core TV-station local and national ad revenues (excluding political spending) for 2023 are expected to grow by 0.4% to $17.67 million. Local spot is expected to be up 1%, digital is seen rising 3% while national spot is down 3%.
TV station revenue normally fluctuates between election years and non-election years. S&P says that over the five-year period of 2023-2028, TV station ad revenue is expected to rise at a 2.31% compound annual rate, hitting $24.75 billion in 2028.
Some estimates for political spending next year are even higher: Vivvix/CMAG projects $5 billion will be spent on local and network broadcast TV in the 2024 cycle, ahead of $1.8 billion on connected-TV platforms, $1.6 billion on Google/Facebook, $1.5 billion on local and network cable TV and $400 million on radio. CTV spending (up 80% since the midterms in 2022) would surpass cable for the first time should that happen, Vivvix/CMAG said.
Over the five-year projection period of 2023-2028, political advertising will be spent disproportionately on local stations in swing-state markets and those with higher expected population growth such as Arizona, Colorado, Florida, Georgia, Nevada, North Carolina and Texas, S&P said.
TV-station ratings have been down so far this year compared to 2022 with more broadcast network content and viewers moving from traditional multichannel to streaming-video platforms, although local news and live sports have still been relatively strong in terms of viewership, S&P noted.
The TV station ratings do not include live station streams on virtual MVPDs or the station’s own mobile apps or connected TV distribution strategies.
