Digital Media Growth Leads Analyst to Cut Ad Estimates

While TV and other traditional media outlets look forward to a better year driven by the Olympics and mid-term elections, analyst Michael Nathanson of MoffettNathanson Research says the trend of digital outlets sucking up ad dollars is not going away.

“We are cutting our estimates across the board for traditional media advertising for 2017,” Nathanson says in a research note Friday. “While we adjust our estimates upwards for digital advertising from +19% to +20%, (which might still be too low given the +23% run rate for the first half of the year), we are lowering traditional ad growth in 2017 by over 200 basis points from -6% to -8%.”

For 2018, Nathanson said he is expecting a recover in overall spending, with the Olympics and election improving traditional ad growth to -1% from -8%.

Related: Broadcast Ad Revenue to Rise 5% in 2018, Says Poltrack

“Note that while this is a 650 basis point improvement, traditional media spending is still forecast to be negative in an election and Olympic year,” he says.

Nathanson sees TV doing best among traditional media in 2018, with advertising growing 2.7% after a 5.5% drop in 2017. He sees the broadcast networks up 2%, national cable down 1.5%, syndication down 1%, local stations up 9.1% and local cable up 6.6%.

With those ad trends in mind, Nathanson said he still has “buy” ratings on Disney, Comcast, 21st Century Fox, Alphabet and Facebook. He’s neutral on CBS, Scripps Networks, Time Warner and Viacom, and has a sell rating on AMC Networks, Discovery Communications, Twitter and Snap.

(Photo via Glenda Alvarez's Flickr. Photo was taken on September 18, 2011. Using Creative Commons License 2.0)

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.