Hollywood execs gear up for ‘Storm Clouds’ announcement

At the boiling point of economic instability, the media and entertainment giants are starting to feel the heat. In any recession, publicity is a menu of the first expenses that large companies analyze to reduce costs, and with concerns about a growing recession, Hollywood companies that depend on income for advertising are starting to observe more the market.

CEOs, CFOs, and ad sales executives say they still don’t feel pain, though, as one CEO says the hollywood reporterThe macroeconomic environment “cannot be ignored”.

And while executives say their previous talks for 2022-23 look good, with high single-digit growth each year, NBCUniversal CEO Jeff Shelley was “delighted” with the results and Fox’s CFO at the Credit Suisse conference From this week. Steve Tomsic said the network “has delivered what we set out to achieve” and that Paramount CEO Bob Bucky was “very pleased” with the performance: anxiety builds as they look beyond progress. “We still don’t see any sign of this in our business, but in the dispersion market we are starting to see some weakness,” Shell said on 14 June. So it’s still very strong, but it’s definitely weaker now than it was last week, last month, last year. ”

“Advertising, of course, has savings and inflation. “And now there’s a little bit of confusion,” Bakishi said the same day. “So look at the market in general, visibility is mixed and there are some challenges in terms of economic resilience. “It is true.”

This creates an economic environment that Bank of America analyst Jessica Reif Ehrlich writes about in “Storm Cloud Development.”

Reif Ehrlich wrote in an explicit research post on June 16: “The recent macro instability is starting to affect the ad market. While companies that spend in a recession often come out stronger, the market is receptive due to advertisers’ concerns about labor shortages, inflation and supply chain problems. Stories are already starting to emerge about media and tech companies “delaying” hiring, or planning to cut or buy, from Netflix and Vice Warner Bros. Discovery and Spotify.

Meanwhile, media analysis and investment firm Magna lowered its 2022 advertising outlook on June 14 from 12% to 9.2%, citing the overall economy. “The economic downturn will definitely start to affect the ad markets in the second and third quarters, and Magna expects low growth in the second to fourth quarters, as well as throughout 2023,” the advertising and marketing firm wrote in its revised report. analysis.

But the publicity problems are not necessarily widespread, and despite the negative, there are pockets of optimism. “I think there’s probably an element of smoothness in things like linear entertainment and software in general,” said Fox Corp’s chief financial officer. Tomsic, speaking at a Credit Suisse conference on June 14, but added that live sports and news continue to be highlights. And of course, between now and November, media companies that own local TV stations will be gearing up to receive political advertising bonuses. “The strange thing about this is that it is still a specificity of the segment, right? “It’s not like the whole market is shrinking to some degree,” Shell said.

Automotive, tech, crypto, canteen, pharmaceutical, and some CPG categories suffer from inflation and supply chain issues (and, in the case of crypto, its own market slump), but categories like travel and entertainment (with box office angles each increasingly larger). . Top Gun: Maverick s Dr. Strange in many worlds of madness) is improving.

But runaway inflation, a stock market crash and the likelihood of a recession could hurt. With the dust from the 2022 election season and greater clarity on the expected recession potential in the coming months, marketers and media-backed media and entertainment companies need to figure out where things stand. And it might not be pretty. The combination of a strong early and political ad market with longer-term concerns could cover some of the revenue data to come in the coming months.

Closed deals on past deals and lucrative political revenues can create the illusion of a growing ad market, even if the dispersed market lags behind. There may not be an economic slowdown until early 2023, which in turn will have a negative impact on pre-trading next year. And when Disney+ and Netflix plan to roll out ad-supported tiers by the end of 2022, the market will face even higher levels of competition from advertisers.

“What will the consumer look like on April 1, 2023?” That’s the assumption, that’s eternity from now,” said Warner Bros. John Steinlauf, advertising sales manager for Discovery US, on June 15. For companies betting ad dollars to change their subscription streaming concerns, this is a question they want to answer first. this later.