Report: TV Ad Revenue To Sink 6.5%, Radio Down 3%

U.S. TV stations’ total advertising revenues are estimated to record a 6.5% decline to $21.38 billion in 2017.

According to SNL Kagan, a unit of S&P Global Market Intelligence, this is somewhat expected, due to unfavorable comparisons to the year before, which saw higher political and Olympic TV advertising.

According to MediaPost, results are expected to show recovery next year -- rising 9.6% to $23.4 billion. Midterm political advertising and Olympic advertising sales are expected to contribute to the spike.

Through 2022, Kagan projects that TV stations will grow advertising revenues 3% on a compounded annual rate to $24.8 billion -- which includes linear TV advertising, both national and local, as well as digital TV advertising revenue.

Over the next five years, Kagan says, declines are expected to continue during off-Olympics and off-political years -- with a 5.3% decline in 2019 and a 6.3% pullback in 2021.

Going forward, TV stations’ linear TV advertising share is expected to continue to shrink as part of their total revenues. National and local spot ad revenues -- including political advertising -- will fall to a 59% share in 2022. It had been 94% of total TV station revenue in 2007, and 62% in 2017.

Radio station national ad revenues are expected to decline 3.0% in 2017, as the weakness carries further into the year and the industry absorbs the loss of political sales.

Local revenues could see a less pronounced decline of 2.0% in 2017 based on the firmer second quarter, with local auto dealers pushing inventory off the lot and better ad pacings later in the year driven by improving ad rates, with lower average-unit-rate political spots being displaced by higher-priced core advertising.

Kagan projects digital gains of 7.0% in 2017 to $1.18B from $1.10B in 2016, growing to $1.25B in 2018. Off-air has been another solid segment for the industry, gaining  8.5% to $2.41B and 6.0% growth in 2018 to $2.55B.

Over the next five years, Kagan expects to see radio station revenues increase gradually off a lower base as ad buying efficiencies improve through programmatic platforms and higher growth segments in digital/online and live events become a larger part of station revenue.

Radio's lower ad cost, local audience and relatively high return on investment compared to other media will also continue to generate business for station owners.

Between 2017 and 2022, SNLKagan expects radio station local and national spot ad revenues (including digital) in rated radio markets to increase at a compound annual rate of 0.9%, with non-rated markets declining at a negative CAGR of 0.9%. Total radio revenue, including national and local spot, digital, off-air and network revenue, is expected to grow at a five-year CAGR of 1.1% from an estimated $17.65B in 2017, reaching $18.60B by the end of 2022.