Michael Nathanson, senior research analyst at MoffettNathanson, has declared 2024 will likely be the year linear TV advertising officially breaks.
“We had initial concerns about the early promises of a second-half 2023 recovery,” Nathanson said in a research note Tuesday. “In all honesty, despite these concerns throughout the years, linear TV has ended up even worse than we expected.”
Nathanson has lowered his forecasts for broadcast and cable TV revenue. He now expects total national linear TV to be down 2.6% to 27.5 billion in 2024, compared to his prior estimate of a 0.2% decline, helped by Olympics spending. He sees broadcast ad revenue down 3.3% and cable down 7,4%
Things get worse in 2025, when Nathanson’s forecast calls for a 12.4% drop to $24.2 billion, compared to the prior forecasts calling for a 10% decline. He sees broadcast down 15.6% in 2025 and cable off 9.1%.
“It is now clear that outside of sports advertising, there should no longer be expectations of a recovery for linear TV advertising,“ Nathanson said. “Of course, there will always be noise in the ecosystem, with the Hollywood strikes and macro weakness appropriately taking some blame. That said, the strength digital advertising enjoyed throughout 2023 — with surprising macro strength helping propel a return to double-digit growth — limits any hope that a stronger economy may deliver a shift in momentum.”
Nathanson adds that with streamers adding commercial tiers, even more ad dollars will be pulled from linear TV.
“These new entrants may also, however, pull dollars away from what has been, to date, among the largest beneficiaries of the outflow of dollars from linear: legacy AVOD services and FAST channels,” he said.
Nathanson lowered his target stock price for Roku by $10 a share to $56.
“The biggest negative impact to EBITDA is at Roku with a -15% revision,” he said, adding, “we reduce Paramount by -2%, plus Warner Bros. Discovery and AMC Networks by -1%.”
