Woe and Thrice Woe for European TV, Warns Forecaster

08 September 2008

LONDON: UK-headquartered media analytics specialist Screen Digest is in Cassandra mode after peering into its crystal ball. If the European TV ad market is in dire shape right now, there's even worse to come warns the lugubrious seer.

The firm's latest analysis reveals an industry in a downward spiral of economic slowdown, advertising recession, deflated prices and audience fragmentation. Three major markets are the most adversely affected.

In the UK, despite outperforming a sluggish advertising market in the first six months of the year, ITV's full year guidance points to a 3% drop in ad revenues.

In France the once water-walking broadcaster TF1 has taken a double whammy of a 3.6% drop in revenues and a decline in its audience, in particular during the crucial primetime slot. The company is forecasting a 3% drop on full year revenues.

While leading Spanish broadcasters Telecinco and Antena3, having enjoyed many years of strong growth, have been brought down to earth by a deep advertising recession, the rapid rise of new competitors and concerns over the imminent introduction of more stringent ad regulations.

Across the continent only two markets have bucked the trend so far: Germany and Italy.

The German ad market has remained flat and RTL Group has claimed a record share of the advertising pie, in no small part as a result of the new sales model launched by competitor ProSiebenSat.1 which was subsequently rejected by the market.

In Italy, Mediaset has outperformed a flat TV advertising market increasing ad revenues by 2.2 per cent year-on-year.

Comments Screen Digest analyst Vincent Létang: "It may seem paradoxical that as TV audiences are still growing, TV advertising revenues are falling.

"The reason is that the demand for TV advertising is flat – and so broadcasters have been forced to drop their prices. It is cheaper to advertise now on TV than at any point in the past twenty years.

"The fact that commercial TV viewing has been growing this year to reach all-time highs adds to the pains of the British broadcasters. In a period of low demand, over-supply of audience simply fuels the downward price spiral."

Data sourced from Screen Digest; additional content by WARC staff