HomeEntertainmentThe TV Advertising Market Is Slumping, But Sports Ads Are Booming

The TV Advertising Market Is Slumping, But Sports Ads Are Booming

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The TV Advertising Market Is Slumping, But Sports Ads Are Booming

As major media, entertainment and technology companies downsize in search of better profit margins, a recurring theme has been advertising. In recent months, Warner Bros. Discovery CEO David Zaslav has called the ad market “very weak,” NBCUniversal chief Jeff Shell deemed it “shallow,” while Paramount topper Bob Bakish described it “cyclically tough.”

But the difficult advertising environment obscures a silver lining: Despite the tough macro environment, the sports advertising business is still booming. Look no further than Fox’s broadcast of the Super Bowl last month, where 30 second ads sold for north of $7 million, and with the network anticipating a record ad haul.

Or the NCAA March Madness men’s basketball tournament, which Bloomberg Intelligence estimates will bring in $1.2 billion in ad revenue for broadcast partners Warner Bros. Discovery and Paramount this year, up 8 percent from a year ago.

In a world where the strongest media companies are seeing their ad revenue flat year over year, an 8 percent gain can be considered, well, madness.

“The sports dollars continue to be I would say relatively consistent each year with the advertisers that have these tentpole events that they participate in,” says John Bogusz, the executive VP of CBS Sports advertising for Paramount.

In the case of March Madness in particular, “seasonality is on our side,” says Jon Diament, executive VP of ad sales for Warner Bros. Discovery.

“It’s starting to get warm, the sun’s coming out,” the WBD exec adds. “Winter is over, you start thinking about home improvement, you start thinking about going on a trip or travel, you start thinking about going out again … picking up a beer and going to picnics and all that kind of fun.”

While sports is inconsistent on the TV schedule, the impact can be clearly seen. The World Cup last fall led NBCUniversal and Fox to advertising growth in a quarter when everyone else was down (ESPN, for its part, was merely flat when accounting for a change in college football playoff schedules).

Disney CFO Christine McCarthy said on the company’s last earnings call that while the ad market had “softened,” demand across sports “remains solid.”

And the NFL playoffs earlier this year will surely provide a nice bump to the league’s TV partners, including Fox, which had both the Super Bowl and the NFC championship game.

There’s also the fact that sports is providing something that few other programs on linear TV can deliver: A meaningful audience.

“Sports first and foremost is live, which you know, some other scripted programming is not,” Bogusz says. “Secondly, we deliver significantly large audiences so you can come for particular sports properties and cume reach rather quickly, versus some of the other properties that are out there.”

“Not only do the ratings hold up, which is pretty challenging in television these days, but the demos are quite upscale and, and as John mentioned, it’s live and super engaging content which advertisers seek out,” Diament adds. “So you’ve got a combination of a lot of great things on your side.”

And while the NFL season is over, the marketplace for other sports is beginning to warm up, potentially providing a meaningful boost to national networks (RSNs are another story).

March Madness will deliver Paramount some $755 million and WBD about $475 million, per the Bloomberg Intelligence estimates, while the NBA (Turner Sports and Disney) and NHL (Turner Sports and Disney) seasons are in high-gear. Meanwhile, the MLB season (Fox and Turner Sports) is about the begin, providing a steady stream of games over the summer.

The timing is particularly fortuitous for WBD, which does not have NFL rights and was hit particularly hard by the ad slowdown last year. A combination of March Madness, the NBA, NHL, and MLB could provide an advertising cushion to what has been an otherwise tough few quarters.

And the fandom around sports helps as well. While viewers may tune in or out of scripted series or shows, their affection to their favorite teams is a constant.

“Fans out there they have just such a strong affinity to, in this particular instance, it’s the schools and the teams,” Bogusz says. “But for the NFL, it’s for their local local team in that market.”

It’s a fandom that’s unique in the entertainment world. Just look at the reaction from Fairleigh Dickinson University, the 12,000 student New Jersey school that stunned the world when it (a no. 16 seed) toppled the no. 1 ranked Purdue. The game drew 4.37 million viewers, the best ever for TNT since the cable channel began televising March Madness games more than a decade ago.

Even sporting events that have in the past been overlooked are garnering advertising attention. ESPN is home to the women’s NCAA basketball tournament, and the channel says it is completely sold out, with more than 100 advertisers participating, including Capital One and Nissan, which joined as sponsors for the first time this year.

It’s a reaction from the marketplace that bodes well for the NBA, which is expected to go to market for new rights packages later this year. The league is looking to double, if not triple, the value of its current deals with Disney and WBD.

It’s a hefty ask, but in a world where sports are keeping the ad industry afloat, it might not be a crazy one.

Source: Nielsen

A version of this story first appeared in the March 29 issue of The Hollywood Reporter magazine. Click here to subscribe.

Source : HollywoodReporter

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