Credit Suisse’s Michael Senno adds fresh data today to support the increasingly popular view on Wall Street that the TV ad market is losing steam — and may endanger the boom in media company stock prices. His survey of ad buyers indicates that they “expect modest low to mid-single digit CPM inflation and flat to slightly higher total dollar volume growth” in the 2013/2014 upfront market which follows “last year’s trend of slowing growth.” Senno predicts unit prices to rise 4% with CBS +5%, Fox and cable +4%, NBC and ABC +3%, and syndication +2%. The problem goes beyond sluggish ratings. Overall ad spending was lower in relation to the GDP than it’s been at least since 1980. And national broadcast ad sales last year were still 7% below their pre-recession peak in 2006, despite a 12.6% growth in spending by auto makers. It seems that ad buyers who are cutting spending on print newspapers and magazines are shifting more dollars to online media than to TV. All told, Senno says that TV ad sales this year will fall 2.8% — which would represent 1.7% growth if you eliminate spending tied to the elections and the Olympics from the 2012 tally. But national broadcast ad sales will “remain weak” into 2014 “in light of soft ratings and lower CPM inflation.” The findings clash with Wall Street’s go-go view of media stocks: For example, Discovery shares have appreciated 24.4% more than the benchmark Standard & Poor’s 500 so far in 2013 followed by News Corp and Time Warner (both +17.8% ahead of the S&P), Viacom (+17.2%), and Disney (+14.4%). Viacom and Discovery “could be at risk,” Senno says, due to their “higher relative ad exposure.”
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