Media companies look to woo advertisers as spending shifts to digital

Media
giants
are
making
their
annual
pitches
to
advertisers
this
week
against
the
backdrop
of
significant
disruption
in
the
industry.

The

Hollywood
writers
and
actors
strikes
are
over,
meaning
Upfronts
will
likely
be
star-studded
once
again,
major
cost
cutting
is
largely
in
the
rear
view
mirror
and
streaming
has
fully
embraced
advertising
models.
Still,
this
year’s
Upfronts
presentations
come
in
the
midst
of
further
tumult
for
the
industry.

“It does feel like this is a moment, a moment in terms of what the next year, two years will bring,”


Warner
Bros.
Discovery
CEO
David
Zaslav
said
during
the
company’s
earnings
call
last
week. “I said a
while back that this is a generational disruption.”

Here’s
what
will
likely
be
topics
of
discussion
during
Upfronts
week,
whether
it’s
on
stage,
in
the
audience
or
in
private.

Media
companies
just
finished
reporting
quarterly

earnings,
which
showed
traditional
TV
is
still
lagging
behind
streaming
and
digital
when
it
comes
to
ad
revenue.

Traditional
TV
ad
buying
during
Upfronts
is
expected
to
increase
about
1%
to
$18.79
billion
this
year,
according
to
data
from
eMarketer.
This
is
an
improvement
from
last
year
when
it
was
down
about
4%
to
$18.64
billion.

Meanwhile,
digital
advertising
spend
during
the
Upfronts
and
Newfronts
—
which
take
place
a
few
weeks
ahead
of
the
traditional
media
events
—
is
expected
to
increase
nearly
32%
to
$16.45
billion
this
year,
according
to
eMarketer.

There
was
a
general
improvement
in
traditional
TV
ad
revenue
last
quarter,
down
8%
as
opposed
to
nearly
16%
in
the
same
quarter
last
year,
according
to
a
note
from
Macquarie
senior
media
tech
analyst
Tim
Nollen.
Streaming
advertising
was
up
22%
across
media
companies,
and
now
makes
up
18%
of
total
advertising.

Tech
companies
including


Snap,


Roku,


Google
and


Microsoft
each
saw
digital
advertising
revenue
make
a

comeback
this
past
quarter.
And


Netflix,


Amazon
and


Alphabet‘s
YouTube
all
have
growth
stories
to
tell
advertisers.

“Netflix
is
in
many
respects
the gold standard
when
it
comes
to
streaming,”
Disney
CEO
Bob
Iger
said
during
the
company’s
earnings
call
this
month.

Netflix
ended
last
quarter
with
about
270
million
global
subscribers,
riding
a
wave
of
password-sharing-freeloaders-turned-paying-customers
during
the
past
year.

The
company
has
leaned
on
its
cheaper,
ad-supported
tier
—
at
$6.99
per
month
in
the
U.S.
—
to
coax
price-conscious
subscribers
to
pay
monthly
subscription
fees.
As
of
January,
a
little
more
than
a
year
after
its
launch,
Netflix’s
ad-supported
tier
had

more
than
23
million
monthly
active
users. 

Amazon
Prime
Video

debuted
its
advertising
tier
earlier
this
year.
Amazon
has
spent
billions
on
live
sports
rights
–
coveted
advertising
real
estate
–
in
recent
years,
including

paying
about
$1
billion
per
year
to
stream “Thursday
Night
Football,”
one
of
the
National
Football
League’s
season-long
packages
of
games.
Amazon

reported
last
month
that
its
advertising
revenue
jumped
24%
in
the
first
quarter
to
$11.8
billion.

YouTube’s
first-quarter
advertising
revenue

also
surged
more
than
20%
to
$8.1
billion,
surpassing
analyst
estimates.
In
February,
YouTube
became
the
most-watched
streaming
application
for
12
consecutive
months,

according
to
Nielsen.

Amazon
will
hold
its
Upfront
presentation
on
Tuesday
in
New
York
City,
with
Netflix
and
YouTube
following
a
day
later.

The
vibe
may
not
be
as
positive
among
some
of
the
traditional
media
players.

Domestic
advertising
for


Comcast‘s
NBCUniversal
was
flat
in
the
first
quarter
at
about
$2
billion,
but
streaming
service
Peacock
was
lifted
by
ad
revenue.
NBCUniversal
will
kick
off
upfronts
week
Monday
at
Radio
City
Music
Hall.

Disney
reported
a
first-quarter
decline
in
advertising
revenue
for
its
traditional
cable
networks
and
at
Hulu,
though
ESPN
domestic
ad
sales
increased
by
more
than
20%
in
the
quarter
versus
the
prior
year.
Disney
will
hold
its
presentation
Tuesday.

“The
challenge,
obviously,
in
the advertising market
right
now
is
there’s
a
lot
more
supply
in
the
market,
largely
as
a
result
of
one
of
our competitors
entering
the
ad
tier,”
said
Disney
CFO
Hugh
Johnston
during
this
month’s
earnings
call. “But
that
said,
I
think
generally
speaking
we
feel
like
we’re
in
a
better
place
than
we
were
a
year
ago.”

Warner
Bros.
Discovery,
which
is
holding
its
presentation
at
Madison
Square
Garden
on
Wednesday,
reported
traditional
TV
advertising
revenue
fell
11%
last
quarter
from
a
year
earlier
to
about
$2
billion.
Streaming
advertising
revenue
jumped
70%,
but
the
overall
number
is
much
lower
—
just
$175
million.

Warner
Bros.
Discovery
and
Disney
announced
last
week
they
would
offer
their
streaming
services
—
Max,
Disney+
and
Hulu
—
together,
marking
the

first
streaming
bundle
of
major
services.
The
two
companies,
along
with
Fox,
are
also
working
on
a
sports
streaming
joint
venture.
It
remains
to
be
seen
what
other
companies
join
the
fray
in
bundling.

Sports
remain
the
glue
of
the
TV
bundle,
still
beckoning
the
largest
audiences.
And
in
the
background
of
conversations
during
Upfronts
week
is
the
future
of
the
NBA
rights.

While
Warner
Bros.
Discovery
owns
them
until
the
end
of
the
2024-25
season,
the
next
owner
is
currently
being
sorted
out.
NBCUniversal
has
emerged
as
an
apparent
top
contender
while
Warner
Bros.
Discovery
mulls
if
it’ll
match
NBC’s
offer.

The
future
of
the
regional
sports
networks
also
remains
a
question,
and
broadcasters
have
been
slowly
snapping
up
rights
to
local
games.

EMarketer
Senior
Analyst
Ross
Benes
noted
that
in
order
for
Warner
Bros.
Discovery
to
add
value
to
its
sports
joint
venture
with
Disney
and
Fox,
it
needs
to
retain
its
NBA
rights.

“Without
NBA
rights,
WBD
will
become
a
weak
third
leg
on
the
sports
JV
tricycle…If
it
loses
the
NBA,
many
WBD’s
customers
will
be
left
wondering
what
all
the
cost-cutting
was
for,”
he
said.

Fox
Corp.,
which
holds
its
Upfront
on
Monday,
said
first-quarter
ad
revenue
was
down
compared
to
the
prior
quarter
when
it
aired
the
Super
Bowl
on
its
broadcast
network.
CEO
Lachlan
Murdoch
said
on
last
week’s
earnings
call
that
ad
trends
are “clearly
moving
in
the
right
direction”
in
early
Upfront
discussions,
thanks
in
large
part
to
Fox’s
sports
slate.

Like
last
year,


Paramount
Global
skipped
holding
an
Upfront
presentation
this
year.
Instead,
the
media
company
held
nine
events
beginning
in
April
in
Los
Angeles,
Chicago
and
New
York.

Although
there
wasn’t
a
big
presentation
at
Carnegie
Hall,
the
events
still
included
sneak
peaks
of
upcoming
content
and

featured
A-listers
like
Nicole
Kidman,
Demi
Moore,
Stephen
Colbert,
Tony
Romo,
and
others.

Paramount
is
grappling
with
an

ongoing
sale
process
and
is
also

currently
without
a
singular
CEO.

Disclosure:
NBCUniversal
is
the
parent
company
of
CNBC.