By Michael Leszega & Vincent Letang

The big four broadcast networks and six of the big eight cable TV groups have now reported their fourth quarter earnings, and the theme this quarter is zero growth in the overall national TV market.

However, given the strong comparable of 4Q15 when the net ad revenues (NAR) of cable and broadcast networks grew by almost +6%, this result is fairly decent. In fact, in our latest forecast (published early December ’16) MAGNA predicted 4Q16 NAR growth for national TV to be flat (-0.5%).

Broadcast network ad sales were flat year-over-year compared to strong growth of +8% in 4Q15 when the market first heated up. In fact, that stability was the average of strong NAR growth for two companies (NBC, FOX) and strong declines for the other two (ABC, CBS). Similar themes were (again) conveyed in earnings releases where strong pricing was countered by lower ratings. The decline at ABC was due to lower impressions, which was driven by lower average viewership. NBC saw strong growth due to the premiere of Thursday Night Football. However, even excluding TNF, ad revenues would have increased modestly at the network.

Conversely, CBS ad revenues declined due to fewer TNF games being aired in the quarter, as the NFL split coverage of TNF between NBC and CBS, compared to last year when CBS was the sole provider. Finally, FOX also saw strong growth due to sports related advertising, in this case baseball, as game seven of the World Series (Chicago Cubs vs Cleveland) was the most-watched baseball game in 25 years.

Here’s a breakdown of ad revenue growth and ratings (4Q16 vs 4Q15, ratings are prime time, A18-19):
• ABC: -6% decline, -15% ratings
• NBC: +10% growth, flat ratings
• CBS: -8% decline, -18% ratings
• FOX: +9% growth, -6% ratings

Cable networks NAR declined slightly compared to 4Q15 (-1% vs 4Q15) as growth at 21st Century Fox (+10%) was offset by declines by other vendors.

Growth at Fox was due to higher ratings at Fox News, as news programs continued to do well during the 4th quarter, and higher postseason baseball ratings on Fox Sports 1.

Time Warner was flat on the quarter as growth at the news business was offset by lower delivery at some of the entertainment networks.

Disney’s decline (-5%) was partially due to timing, as they aired only three college football bowl games on New Year’s Eve this year, compared to all six last year (the other three bowl games will be accounted for in 1Q17 earnings as they aired on January 2, 2017). Disney did not disclose what ad revenues would have been on a complete like-for-like basis.

Here’s a breakdown of ad sales and ratings (4Q16 vs 4Q15):
• Time Warner/Turner: flat growth, -6% ratings
• Viacom: -3% decline, -3% ratings
• NBC Universal: +1% growth, -3% ratings
• Disney: -5% decline, -19% ratings
• 21st Century Fox: +10% growth, +10% ratings
• Discovery: +1% growth, -7% ratings
• Crown Media: Now private and no longer in our composite, but worth noting that ratings were up +34%.

Scatter
The networks discussed the continued strength of the scatter market. Disney, NBCUniversal, Discovery and more mentioned this in their earnings calls.

For example, Disney said: “primetime scatter pricing at the ABC network is running over 25% above upfront levels.”

Ad Loads
Broadcast prime ad loads averaged 11.56 minutes/hour in the fourth quarter, -2% lower on a quarter to quarter basis, but flat on a year to year basis. The only significant movement was on FOX, which was down -6% Q/Q. Cable prime averaged 12.33 minutes/hour, up about +1% on a Q/Q and Y/Y basis. In totality (averaging all channels owned by the network), Viacom ad loads increased by +5%, while Turner was down -4% and A&E was down -9%. Turning to individual channels with significant movements, MTV ad load was up +8% Q/Q (or +4% Y/Y) while TBS was down -5% Q/Q, CNN was up +5% Q/Q but down -8% vs last year, and Discovery Channel was up +6%.

Check out our next US forecast, which will be released in early March where we’ll incorporate the new earnings data into new national television forecasts for 2017/2018.