LONDON: Television broadcasters in the "big five" European markets already faced the challenges of fragmenting audiences and the increased importance of online prior to the financial crisis, and the recession now seems to have produced a "perfect storm".
While TV has performed comparatively strongly in previous recessions in countries like the UK, the medium is set to see ad revenues decline during the current slump in most European markets.
In Germany, ProSiebenSat1, the pay-TV operator, reported a 14% decline in total revenues, to €627m, in Q1, and a net loss of €1.7m, although this was down from a loss of €7.9m in the same period last year.
The company said marketers' "reluctance to spend is leaving substantial dents in European TV advertising markets," and attributed the relative improvement in its losses to "efficient cost management."
Premiere, which is part-owned by News Corp and is one of ProSieben's major rivals, also posted a loss of €29.8m in the first three months of 2009, with revenues largely unchanged at €232.7m.
It is now planning to change its name to Sky Deutschland, a move bringing it into line with BSkyB and Sky Italia, but which will result in a writedown of over €250m linked to the loss of its current brand.
The UK's biggest commercial broadcaster, ITV, recorded total net sales of £425m from January to March, down from £492m in the year-ago period, as ad revenues fell 15%.
As part of its efforts to reverse the trend, it has increased the amount it hopes to save on costs by £40m, taking its proposed overall savings to £215m in 2010 and £285m in 2011.
Spain's government has recently approved draft proposals that would remove all advertising from the public TV channels Primera and La Dos in an effort to boost revenues at private stations.
However, networks like Antena 3 would have to pay a 3% tax on their ad sales under the terms of the scheme, and the company saw adspend through its main channel fall 23.5%, to €139.6m in Q1.
Similarly, France's TF1 registered an operating loss of €12m in the first quarter, down from a profit of €99m in the year-ago period, with adspend at its eponymous flagship channel falling 27%.
TF1 said the tax imposed by the French government to fund a similar scheme as that under consideration in Spain reached €6m, and it aims to increase its cost-cutting measures by €10m, to €70m overall.
Mediaset, Italy's biggest ad-funded broadcaster, did post a profit of €60m in Q1, and even though TV adspend in Italy fell by an estimated 13% in this period, it predicts the market may improve in Q2.
As such, it seems that a range of strategies – from rebranding to cost-cutting – are being used in an effort to abate the worst impacts of the downturn, but whether these measures will be sufficient to deal with problems both old and new is open to question.
Data sourced from Wall Street Journal, Reuters and company reports; additional content by WARC staff