Free-to-air TV advertising forecasts downgraded by analysts

By Chris Pash | 19 November 2019
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Analysts have downgraded the outlook for advertising in free-to-air television in Australia.

The industry had been expecting a pickup in business in the December quarter after a weak three months to September but the lift didn't come. 

Macquarie Bank researchers, in a note to clients, headline their report: “On track for worst half of TV ad market declines since the GFC!”

The reassessment of TV advertising comes after a trading update by Nine last week at its AGM saying the market is expected to decline by mid-single digits across the full financial year.

"The prevailing weakness in consumer sentiment in Australia has manifested itself in weak trading conditions for many consumer-facing businesses, and general softness in the overall advertising market," Nine says.

Brian Han, senior equity analyst, Morningstar: “The current malaise in the advertising market has caught up with Nine Entertainment.”

According to UBS, early SMI numbers suggest metro TV bookings were down 9.2% in October, a deterioration on the -6.4% September quarter metro TV market growth disclosed by Nine at its trading update.

The early numbers show a weak market across all media. Regional TV bookings were -9.8%, metro radio –12.7%, regional radio –10.6%, and outdoor -21.0%. 

Credit Suisse says the extent of the TV weakness, and lack of any recovery, highlighted at Nine’s AGM was greater than expected.

“We have reduced our TV market estimates to be in line with guidance,” Credit Suisse analysts comment in a note to clients.

The analysts are now looking for a 5% decline in the free- to-air market in the full financial year, down from previous estimates of a 1.5% fall.

Macquarie analysts say declines of 6.4% for the September quarter are expected to be compounded by even worse trends in the December quarter.

The analysts second half estimate for advertising market growth is now -7%, from -5%.

“This level of decline would make it the worst half of TV ad revenue declines over the last 15 years, with the exception of the June 2009 half, post-GFC,” the Macquarie analysts say.

“Weakness in TV now compounds commentary by radio operators recently about the general state of advertising being very weak.”

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