As usual, this morning’s quarterly conference call for Paramount Global was heavily focused on the streaming business. But President-CEO Bob Bakish reported some macro-economic impact on advertising, with the traditional broadcast and cable networks less impacted than the digital platforms.
“A difficult macro-economic environment is certainly impacting ad sales in the quarter. It is a function of what we’re seeing in the scatter market, where there is softness, more so on the digital side vs. television. It is worth noting, as you know, TV has the additional benefit of a large upfront base and our audience share growth — the performance of our brands, notably CBS, in the broadcast year — allowed us to take more volume in the upfront. That’s something I’m very happy about sitting here today,” Bakish said in his Q&A with Wall Street analysts.
“In terms of categories, we’re seeing travel good, electronics are good. Auto still hasn’t moved, but I would point out that auto’s a very interesting study because they’ve been building all the cars — they’re just missing the last chip, or maybe a couple of chips. Once those chips show up, there are zillions of cars out there that are going to have to move. So, I don’t know when that’s going to happen, but when it does it’s going to be very good for the ad market,” he said. And Bakish went on to suggest that history shows when there’s a down cycle for advertising it tends to be followed by some very robust quarters.
An analyst later asked the CEO to elaborate on TV’s strength.
“I think there are a couple of reasons for that. One is, yes, the upfront base. Remember, our strategy in the upfront — we didn’t know what the market was going to be like, but we had the concern that things could soften and we had taken 18 points of broadcast share for the year—so we decided to have a volume upfront, vs. a price upfront. We did middle to high singles, but we took significant volume and that was a good thing and certainly a healthy TV [Upfront] for us.
“Second, and somewhat related to that, you always have a place where TV has a limited supply. Broadcast is obviously the most limited supply, then cable. But effectively those vehicles are sold out and that supply pool is not getting any bigger, let’s say. And after that you’ve got proven effectiveness. If you’re an advertiser with either a product or service in the United States and you want to make an impact on the national level, there really is no better demonstrated media than television. And people know that,” Bakish added.
For the third quarter, the TV Media segment of Paramount reported total revenues down 5% to $4.9 billion. Advertising was off 3% to just under $2 billion. The company said increased political advertising only partially offset the impact of lower impressions and the impact of foreign exchange. Affiliate and subscription revenue declined 5% to $2 billion. And licensing and other revenues were down 9% to $975 million.
The company pointed to a strong start to the fall season at CBS, including the top three new series and seven of the 10 top entertainment shows.
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