Picture: ISTOCK
Picture: ISTOCK

Los Angeles — Advertisers may be leaving TV for good.

Television advertising sales in the US fell 7.8% to $61.8bn in 2017, the steepest drop outside of a recession in at least 20 years, while sales at cable networks slumped for the first time in almost a decade. And there’s no sign of a pick-up in 2018, excluding cyclical events such as the Olympics and the midterm elections, according to data from Magna Global.

The decline in TV viewership is accelerating as online rivals Google and Facebook have increased their investments in video, capturing almost every new advertising dollar entering the marketplace.

Television ad sales are falling although global advertising is growing, leading research firms and analysts to predict that the business may never recover.

"In a healthy economy, we’re looking at no growth in advertising from traditional media companies," said Michael Nathanson, an analyst with research firm MoffettNathanson. "That’s a worrying trend."

That would be a serious blow to media companies that have built multibillion-dollar businesses on sponsor-supported TV networks. Domestic TV advertising revenue declined at the world’s largest media companies in the most recent quarter, striking Walt Disney, 21st Century Fox, Comcast’s flagship NBC network and Viacom.

Media companies have relied on TV advertising dollars for more than 60 years, using money from commercials and sponsors to fund variety shows, sitcoms and news gathering.

Advertising constitutes about 41% of sales at CBS, owner of the most-watched TV network in the US, and almost 30% at Fox.

For most of the past two decades, the TV business has fought off competition from technology giants, weathering the threat better than peers in publishing and the record business.

Even as viewership has fallen, media companies have managed to extract higher ad rates. The spot for a 30-second commercial in the Super Bowl, for example, has more than doubled in the past 20 years. Yet TV is finally succumbing to the forces that have weakened its other media brethren.

The number of people paying for live TV declined for several quarters, and advertisers are following the customer online, where social networks and streaming services command more and more of people’s time.

Bloomberg

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