After a steep 31% drop in the second quarter because of the effect of the COVID-19 pandemic, TV advertising revenue was down 8% in the third quarter, according to new figures from Standard Media Index.

SMI said that spending returned as local lockdowns ended. The rebound was also fueled by high levels of news viewing and the delayed start of the National Basketball Association and National Hockey League playoffs.

SMI’s figures including national broadcast, cable, syndication, spot TV and local / MSO cable.

Overall ad spending was down 5% in the third quarter after a 32% drop in the second quarter.

Digital media actually turned positive, increasing 8% and accounting for 50% of spending between July and September. Search and digital video were particularly strong.

Other media, including out-of-home, cinema, radio and print were down 46% in the third quarter.

Among advertiser categories, pharmaceuticals were the top performer up 19%. The key auto category was down 19%.

With the decline in ratings slowing, second-quarter ad revenue is likely to be flat as media companies start to report Q2 earnings, analyst Michael Nathanson of MoffettNathanson Research said.

In a report Thursday (July 19), Nathanson upgraded his ad revenue forecast to a 0.5% decline to $9.2 billion. The slight decrease follows five straight quarters of much steeper declines.

Cable networks show a 0.7% increase to $6 billion. Nathanson adjusted Disney upward to flat because of additional NBA playoff games, and lowered Viacom because of ratings issues. The big gains in the quarter are at 21st Century Fox, Discovery Inc. and Time Warner. Viacom is expected to be down 3% in ad revenue.

Nathanson sounded a note of concern in regard to domestic cable affiliate fees. He said he sees their growth slowing to 4.5% in the quarter, which could be the smallest increase in four years as the impact of big-bundle pay TV cord-cutting takes hold.

On the broadcast side, Nathanson sees revenue down 2.6% to $3.2 billion, factoring gains at ABC from the high ratings Roseanne garnered before being canceled and revenue Fox generated for early World Cup action.

Related: Fox Sports Finishes World Cup Coverage on High Note

The quarter has been a good one for media investors, mainly because of the bidding war for 21st Century Fox and the closing of AT&T's acquisition of Time Warner.

“The upshot of all this craziness is that media stocks enjoyed their best quarterly performance in a long, long time, with almost every company – except Viacom – significantly outperforming the S&P 500, driven by multiple expansions,” Nathanson said.

Analyst Michael Nathanson of MoffettNathanson Research is forecasting a bigger decline in TV advertising for 2017.

In a new report released Thursday (Aug. 24), Nathanson said he sees national and local TV ad revenue decreasing by 5.1% compared with his prior 4.1% estimate.

Nathanson said he expects the broadcast networks to drop 4%; cable nets, 2.5%; local TV stations, 9% (including political ads); local cable, 10%; and syndication, 1%.

Related: Analyst Forecasts 5% Decline in Total TV Advertising

Overall, Nathanson’s latest forecast sees U.S. advertising growing at a slower 2.5% rate, with digital increasing 18.5%.

The new forecast follows second-quarter earnings reports in which most TV companies reported lower advertising sales. Total national TV ad revenue was down 2%.

More recently major ad agency holding companies have reported lower revenue because of spending cutback by big clients.

“Simply put, traditional media and agencies in the U.S. face the same problem,” Nathanson said in a report Thursday. "They have too much client concentration in sectors like retail, consumer products and auto that are not growing budgets and not enough small-to-medium sized enterprises that continue to fuel online growth."

Read more at broadcastingcable.com.