Warc Blog

US media groups rely less on ads

27 August 2014
CHARLOTTESVILLE, VA: A number of major US media groups have taken a strategic decision to reduce their reliance on advertising revenues, according to new analysis.

After studying the Q2 2014 results and earnings conference calls of CBS, Walt Disney and several other media conglomerates, financial analysts SNL Kagan concluded that some want to boost other sources of revenue, including subscriptions.

Among the examples highlighted in the study, CBS CEO Les Moonves told investors that the company is now "much closer to a 50/50 split of advertising and non-advertising revenue".

Revenues in its entertainment division fell to $1.84bn in Q2 2014 from $2.01bn in Q2 2013, and CBS intends to earn more from licensing and syndication revenues.

"One of the things that clearly has changed about our businesses is that the back end of the show's revenue is now as important, if not more important, than the front end from advertising," Moonves said. "Ownership of content is the key to our success."

Similarly, Walt Disney is moving to diversify its revenue streams, SNL Kagan said, pointing to recent comments from Disney CEO, Bob Iger.

"We've made a conscious decision as a company to essentially not be as reliant on advertising as we were in the past. So it represents probably somewhat in the neighbourhood of the low-20% range of our total revenue," Iger said.

Disney has become less reliant on advertising partly because of increased revenues from other sources, such as its theme parks.

Despite this, Iger said Disney will continue to participate in digital advertising although he thought traditional advertising platforms would continue to come under pressure.

When looking at some other media groups, the report said NBCUniversal Media had a weak quarter in terms of advertising revenue, which fell 2.2%.

And there was a mixed picture for 21st Century Fox, which posted both big declines in advertising revenue in its TV segment but large increases for its cable networks.

Data sourced from SNL Kagan; additional content by Warc staff ,

 
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