Morgan Stanley predicts downturn in broadcast TV

Media analysts at Morgan Stanley predict that ongoing audience and advertiser erosion in broadcast television will continue to impact the industry. Results of the report, published in Crain Communications’ TelevisionWeek, calls last year’s robust upfront ad market (plus an estimated $2.5 billion in political and Olympics ad spending in 2003) mere “aberrations.”

Morgan Stanley’s best-case forecast, said the report, calls for an overall six percent rise in advertising revenues in 2004 (based on an increase in political spending) that drops back to 3.9 percent in 2005. Richard Bilotti, Morgan Stanley’s veteran media analyst, told the publication that the first “major crack in the armor of the entertainment companies” will become evident in the 2004-05 upfront negotiations beginning this May.

“Investors are over anticipating the length and magnitude of the advertising recovery,” Billotti said. As the broadcast networks are forced to lower their audience guarantees for next season, he said, revenue per spot will be flat to up five percent.

Even now, Fox, The WB, NBC and other broadcast networks are providing advertiser make-goods to compensate for this season’s missed guarantees and the dramatic decline in male viewers age 18 to 49, who fled not only to cable TV but to video games, the Internet and other competing high-tech pastimes, the report said.

“These shifting dynamics are part of a deteriorating vortex that is transforming the media and entertainment businesses right out from under executives in charge, regardless of how or if they deal with the changes,” TelevisionWeek reported.

Back to the top