The supply chain crisis that is affecting the economy is also likely to have an impact on television advertising.
Ad sales executives say that after a gangbusters upfront, fourth quarter scatter got off to a slow start, then had an early spurt as retailers wanted to get shoppers into their store now before facing the possibility of bare shelves. Advertisers are also looking to move some of the fourth-quarter inventory they bought in the upfront into the first quarter, when they’re hoping to have more goods for sale.
MoffettNathanson research analyst Michael Nathanson Research also expressed concern that supply chain issues will affect media company revenues.
“Despite Black Friday less than a month out, we’ve also heard from our channel checks that national TV scatter inventory (which is the top of the food chain) has yet to sell out 4Q,” Nathanson said in a research note Monday.
Nathanson said the categories that buy national TV advertising most likely to be affected by supply chain issues are auto, tech, retail and restaurants, due to labor shortages. He estimates those categories represented 30% of spending in 2019.
As a result of the concerns, Nathanson is lowering his fourth-quarter national TV estimate to down 1% year over year.
“Fourth quarter should be protected by the benefit of a strong upfront — with much of the inventory in the quarter already locked in — as well as strength in football ratings. However, if supply chain challenges persist into the first half of 2022, we could see a larger impact on TV advertising,” Nathanson said.
Similarly, Nathanson sees spending on ad-supported video on demand streaming, which had strong growth in the third quarter, cooling off in the fourth quarter, particular if there’s a supply-chain related slowdown.
For ViacomCBS’s Pluto TV, Nathanson projects revenue to almost double from a higher base and reach about $245 million in U.S. advertising. For Fox’s Tubi, he sees growth of 80% to about $125 million in advertising revenue. Roku ad revenue is expected to be up 74% to $280 million.
He notes that in Comcast’s earnings report last week, Peacock was up 429% for the third quarter and Nathanson expects The Walt Disney Co.‘s Hulu, the AVOD leader, to be up 40% with revenue topping $900 million.
