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Five TV Sectors Impacted by COVID-19

The spread of the coronavirus continues to wreak havoc on the economy, as new cases continued to surface worldwide, the death toll mounted and the World Health Organization officially declared the outbreak a global pandemic. The media business responded quickly, banning live studio audiences from show tapings and postponing upfront gatherings and industry conferences, including the sector’s biggest trade event, NAB Show in Las Vegas.

Other organizations have postponed smaller industry gatherings like the ACA Connects annual Washington, D.C., policy conference and the T. Howard Foundation’s annual fundraising dinner.

As the cases mount — at press time, there were about 2,000 COVID-19 cases in the U.S., with 41 deaths — many in the industry fear the impact could grow worse. Globally, more than 140,000 people have been infected with the virus and more than 5,000 have died. With information around the virus and its potential effects changing daily, here is an update of the potential impact to the TV business.

Industry Conferences

Perhaps the biggest conference cancellation so far for the television industry is that of the National Association of Broadcasters’ NAB Show 2020 in Las Vegas, April 18-22. The NAB had tried for weeks to keep the show on schedule, but threw in the towel March 11. The organization said it was working on alternative dates, but none had been set as of yet.

The coronavirus has forced several smaller industry conferences and fundraisers scheduled for March to postpone their dates, including the ACA Connects policy summit, scheduled for March 17-19 in Washington, D.C.; the T. Howard Foundation’s annual fundraising dinner in New York on March 25; and the International Wireless Communications Expo, slated for March 30-April 3 in Las Vegas.

The LPTV Spectrum Rights Coalition also cancelled its annual event at the NAB Show in Las Vegas due to coronavirus concerns. The event, now in its seventh year, was scheduled for April 17.

MIPTV, the international TV conference that was scheduled to be held in Cannes, France, March 30-April 2 has been canceled, as has the Google I/O Developers Conference set for May 12-14 in Mountain View, California.

The Paley Center for Media also announced that it was postponing its PaleyFest event, scheduled for March 13-22 in Los Angeles, to a later date.

Content

CBS was the first major network to cancel its annual upfront presentation to advertisers, opting instead to present its 2020-21 lineup in a video upfront special posted to digital platforms.

The network had expected to present its upfront at Carnegie Hall in New York on May 13. In addition to the 2020-21 broadcast lineup, content from CBS Entertainment, CBS News, CBS Sports and CBS All Access were also scheduled to be highlighted. The broadcaster said further details regarding the upfront special will be announced at a later date.

Later on March 12, NBCUniversal said it too would cancel its upfront, opting to televise and stream its presentation for the 2020-2021 season “to ensure the safety of all participants while also reflecting the increasingly direct relationship between NBCUniversal, its fans and its partners.”

Fox joined the fray later in the day, announcing that it would cancel its upfront presentation originally scheduled for May 11.

The CW also said it would cancel its live upfront in May, and was exploring alternative ways to present its lineup to advertisers. Discovery Inc. also said it would cancel its live upfront, scheduled for May 12.

The Walt Disney Co. said late March 12 that it too would cancel the upfronts for its networks and streaming service Hulu.

AT&T’s WarnerMedia and its advanced advertising unit Xandr said they also would alter plans for the upfronts.

Other networks that postponed, canceled or modified upfront events include:

• Fox News Channel canceled its live upfront in New York scheduled for March 24;
• Comcast postponed the March 12 upfront for its Freewheel cable network;
• AMC Networks canceled its March 18 upfront presentation in New York.
• A+E Networks said it would replace its live March 25 upfront meeting with a series of virtual presentations conducted on an agency-by-agency basis;

NBCUniversal has suspended production across all of its production units for about 35 programs — including all Dick Wolf dramas still in production like Chicago Fire, Chicago P.D. and Chicago Med, Law & Order: SVU (NBC) and FBI (CBS); and syndicated talk show The Kelly Clarkson Show — in response to the coronavirus. Universal Television also put on hold several productions that haven’t started yet, like season 2 of Russian Doll (Netflix) and Little America (Apple) and season one of Rutherford Falls (Peacock), according to reports.

CBS also said it was postponing the upcoming season of reality shows The Amazing Race and Survivor because of the virus. Season 33 of The Amazing Race was about three weeks into production when the order came down. Season 32, already produced, is expected to debut in the spring. Survivor will delay production of season 41 (season 40 is currently airing and will not be affected), with producers saying they hope to resume filming in Fiji in May.

Advertising

Most analysts were cautiously optimistic that any impact of the virus to ad sales would be minimal and for the short-term.

Moody’s Investors Service estimated that automotive, travel, consumer products and restaurants would be the sectors hardest hit by the virus, predicting that it could impact supply chains for those businesses as well, limiting inventory and products to sell.

Moody’s also estimated that a prolonged outbreak of the virus requiring consumers to self-quarantine could have a positive effect on pay TV and streaming video distributors by increasing viewership and engagement.

“That, together with political advertising ahead of the presidential election, may partially offset the reduction in demand for ads,” Moody’s senior VP Neil Begley wrote.

UBS Securities analyst John Hodulik also predicted that any impact the virus will have on the TV ad market would be short lived.

In a note to clients, Hodulik wrote that most advertisers are in a “wait-and-see mode.”

Although further event cancellations could drive a pullback in ad dollars, the UBS analyst said the ad market has been resilient in the past and should remain so now. He said the travel sector — which represents less than 10% of TV ad spend — is likely to feel the greatest impact, followed by advertisers with close travel connections like credit card companies. Delays in film releases could also impact studio ads on TV. The loss of sporting events could also force advertisers to move spending to digital or pull back entirely, as those audiences are tough to duplicate, particularly as pay TV subscribers and ratings continue to decline, according to Hodulik.

Stock Market

The Dow Jones Industrial Average fell into bear market territory March 11, ending an 11-year bull run as investors continued to panic over the pandemic. The Dow fell 1,464 points on March 11, capping a 5,870-point (20%) decline in the market since Feb. 13. Broadcast stocks like Sinclair Broadcast Group (down 36%), Nexstar Media Group (down 34%), and Gray Television (down 47%) fell hard during that period, amid fears that the virus would impact the advertising markets. Being the focus of a possible bidding war between three potential suitors — Byron Allen, Allen & Co. and Gray TV — helped ease the slide for Tegna stock, which was down only 3% between Feb. 13 and March 11.

Cable stocks, which according to some analysts are expected to weather the pandemic better than some sectors, fell fairly hard during the decline, as some companies had exposure in countries affected more seriously by the outbreak. The Walt Disney Co. saw its stock fall about 25% since Feb. 13, as strength in its over-the-top and content units were overshadowed by fears around its theme park and cruise line businesses. Comcast, whose cable and content units could benefit if consumers are forced to self-quarantine, nevertheless fell 17% over the period over fears concerning its U.S. theme parks business and the possible loss of the Summer Olympic Games.

Sports

As fears mounted over large gatherings of people potentially accelerating the spread of the virus, sporting events began to feel the heat, with the National Basketball Association and the National Hockey League suspending their seasons. Major League Soccer said it would suspend its season for 30 days because of the virus.

On March 12, the National Collegiate Athletic Association decided to cancel its Men’s and Women’s Division I Basketball Championships, also known as “March Madness,” a day after initially saying the tournaments would be held in empty arenas. After consulting with members — and after two major men’s basketball powerhouses, Duke and Kansas, suspended their athletic programs — the NCAA decided to throw in the towel.

CBS and Turner hold the television rights to the NCAA tournament, scheduled for March 19- April 8. In a joint statement, CBS and Turner said they support the group’s decision.

Major League Baseball on March 12 said it was cancelling Spring Training and would delay Opening Day dates for the regular season by at least two weeks.

NBA commissioner Adam Silver made the decision to suspend play on March 11, after Utah Jazz center Rudy Gobert (and later guard Donovan Mitchell) tested positive for COVID-19.

WarnerMedia’s Turner Sports carries NBA games on TBS and TNT, and Turner Sports said it supports the NBA’s decision.

The NHL has 189 games remaining, including 10 scheduled for March 13. The regular season was scheduled to end April 4, with the Stanley Cup Playoffs starting the week of April 6.

A ban on gatherings and events of more than 250 people in King, Snohomish and Pierce counties in Washington state imposed by Gov. Jay Inslee meant that an XFL contest in Seattle between the Dragons and the Los Angeles Wildcats on March 14 also would be played without fans. Later, the XFL announced it too would suspend its regular season.

Washington state has been hit hardest in the U.S. by the coronavirus, with 268 reported cases and 24 deaths at press time.

The biggest question in sports remains whether the International Olympic Committee will postpone or cancel the Summer Olympic Games, scheduled for July in Tokyo, which has been hit hard by COVID-19. At press time, the IOC maintained the games will go ahead as planned, which should be good news for U.S. broadcast rightsholder Comcast NBCUniversal. Comcast has said that even if the Olympics were canceled, which some analysts predicted could result in as much as $1 billion in lost ad revenue over the two weeks of the Games, it has adequate insurance to protect the company.