“The consumer is not consuming,” CBS Corp. Chief Research Officer David Poltrack told the UBS 36th Annual Global Media and Communications Conference in New York to sum up the challenges facing ad-supported media. He sees the big four networks facing a revenue drop of 7% in 2009. But Poltrak isn’t buying the notion that the ad market has changed forever and insists “this too shall pass.”
Poltrack noted that he has lived through four recessions in his tenure at CBS. While the current downturn is more challenging than an of those other four recessionary periods, “I do not share the fatalism of many of the analysts that have been suggesting that the advertising market – and more specifically the television advertising market – will not recover from this recession,” he said.
A year ago, Poltrack had been “fairly optimistic” about 2008, forecasting at the UBS confab that the big four networks would see revenues rise 7% this year, with two of those percentage points coming from the Summer Olympics broadcast on NBC. Now he expects the final tally for 2008 to be flat with 2007, or down 2% excluding the Olympics.
While prospects for the 2008-2009 television season began with a good upfront, Poltrack thinks some of that was due to advertisers moving money from scatter to upfront to lock in lower pricing, which eroded the scatter market at the same time that the economy was crashing. Now that the economy is in the tank and consumers are hoarding their cash, the question is now deep the recession will be and how long it will last. “At this point, the smart guess would be to the deep and the long,” Poltrak said.
His forecast for 2009 is that revenues will decline 7% for the big four networks. Adjusted for the Olympics, that’s an underlying decline of 5%. “The impact of the recession should lessen as each quarter progresses. Always the optimist, I am assuming that the end of the recession will at least be in sight by the fourth quarter and there will be no further loss of revenue in that quarter,” Poltrack said.