Hollywood went whole-hog for Joe Biden in 2020, with celebrities, entertainment executives, and network news divisions working overtime to stump for the candidate. Now the industry is feeling the consequences of its actions as advertising revenue is cratering across the board as a result of consumer fears tied to Bidenflation and the prospect of a prolonged recession.
— John Carney (@carney) November 1, 2022
This week, a slew of major entertainment companies reported quarterly earnings and the common refrain was that the advertising market is in bad shape, putting a damper on profitability. Warner Bros. Discovery said advertising revenue tumbled 14 percent in the third quarter, helping push overall revenue down 11 percent from last year.
Shares of the media giant, which owns CNN, declined more than 5 percent in after-hours trading Thursday, after dropping 5.6 percent during normal trading hours.
AMC Networks saw its ad revenue plummet 10 percent during the quarter, helping to drive overall revenue down 16 percent and earnings per share down 24 percent from last year. The network behind The Walking Dead and Better Call Saul saw its stock fall after-hours Thursday.
AMC Networks Hits 11.1M Streaming Subs, U.S. Ad Revenue Drops 10 Percent https://t.co/qoGG2fwjRA
— MSN Entertainment (@MSN_Entertain) November 4, 2022
Paramount Global also took a hit, with advertising revenue for its TV networks, including CBS, down 3 percent. As a result, the company missed revenue expectations, causing its stock to plummet 12 percent after-hours Wednesday.
The streaming entertainment company Roku saw its stock drop as much as 20 percent this week after it reported weak ad figures tied to its free channel. Roku painted a gloomy outlook for the advertising market in a note to shareholders this week.
“As we enter the holiday season, we expect the macro environment to further pressure consumer discretionary spend and degrade advertising budgets,” the company said.
Bidenflation ranks among voters’ top concerns heading into next week’s midterm elections.
A recent Pew Research poll found 73 percent of Americans are “very concerned” about the rising prices of food and consumer goods prices due to inflation. As a result, households are being forced to curtail overall spending, thus discouraging corporations from making expensive ad buys on TV.
Prices paid by U.S. households surged higher than expected in September, with prices rising 8.2 percent compared with a year earlier.
The one exception in the media-entertainment landscape is Fox, the parent company of Fox News. The conglomerate saw ad revenue rise 11 percent for the quarter thanks in large part to a surge in political ad spending, primarily at its local TV stations, ahead of the midterm elections.