Ad Market Has ‘Bottomed Out,’ NBCU CEO Jeff Shell Says

NBCUniversal CEO Jeff Shell at 2021 Allen & Co. conference
NBCUniversal CEO Jeff Shell (Image credit: Kevin Deitsch/Getty Images)

The weak television ad market may have “stabilized,” but a rebound may be months away, according to NBCUniversal CEO Jeff Shell.

Speaking on parent company Comcast’s fourth-quarter earnings call Thursday, Shell said “the ad market steadily worsened over the course of last year. It feels like it bottomed out around late November, early December, and really since then it hasn’t gotten worse and maybe even a little bit better.”

NBCU ad sales were up 4% in the fourth quarter, but would have been down 5.6% without $263 million generated by Telemundo’s coverage of the World Cup, according to Comcast president Mike Cavanagh. NBCU also benefited from ad growth at Peacock and political advertising, which offset declines in linear advertising.

At this point, Shell noted that there are parts of the ad market that are doing well. He said the pharmaceutical and entertainment categories were good. “Travel is on fire,” he said.

Other categories are weak, including tech, autos and financial services, Shell said.

“It feels like the weakness is less to do with businesses not doing well and more to do with macro uncertainty,” he said. “None of us really know where the economy is headed and I think some advertisers in those segments are really holding back and when they do advertise, they’re coming in later than usual.”

Shell said NBCU was assuming the market will stay weak for the first half of this year and then recover. “But who really knows, based on the macro economy.”

In this market, NBCU was doing better than its peers, he said. It is being helped by growth at Peacock, which is offsetting declines at the company’s linear networks, which are losing subscribers and viewers. He added that the company’s investment in data and measurement are also helping.

Cavanagh said that Peacock lost $2.5 billion in 2022 and was expected to generate $3 billion in red ink in 2023. He said those would represent peak losses for Peacock.

Analysts asked Shell when Peacock would turn a profit, what its margins would look like and whether that would help NBCU return to pre-pandemic earnings levels.

Shell failed to provide specifics. 

“Our content business is doing great, and that’s a business that should grow over time,” he said. “We made a decision to invest in Peacock. It’s very clear that we picked the right business model.”

Shell said NBCU expected a return on its Peacock investment, and that it was more confident in that return now than a year or two ago.

“The trajectory, the timing of that really is up to macro conditions. How when does the ad market recover? What are linear declines going forward? We continue to cut costs in the linear segment to maintain our margins. So I'm pretty confident that we have a lot of growth ahead at NBCUniversal,” he said. ■

Jon Lafayette

Jon has been business editor of Broadcasting+Cable since 2010. He focuses on revenue-generating activities, including advertising and distribution, as well as executive intrigue and merger and acquisition activity. Just about any story is fair game, if a dollar sign can make its way into the article. Before B+C, Jon covered the industry for TVWeek, Cable World, Electronic Media, Advertising Age and The New York Post. A native New Yorker, Jon is hiding in plain sight in the suburbs of Chicago.