Media Firms Signal Sluggish Ads

Warning signs from several big advertising companies late last month about a significant slowdown in ad spending puts the spotlight on U.S. media-company earnings due this week.

CBS, Time Warner, Discovery Communications and News Corp, all of which have significant advertising exposure through their TV networks and other media outlets, will report for the September quarter. Analysts looking for clues about the state of the ad market are likely to closely scrutinize their results, along with any comments company executives make about the fourth quarter. Executives are likely to indicate the expected impact of Hurricane Sandy. Some TV stations broadcasting news coverage of the storm cut their advertising drastically or went ad-free for a couple of days last week. The superstorm's total impact on the advertising market could be a revenue loss of about $500 million, or 1% of the volume for the fourth quarter, estimates Pivotal Research Group analyst Brian Wieser. The overall ad climate this year has been lackluster, despite the strong boost provided to TV advertising by the election. During earnings reports for the second quarter, over the summer, media executives blamed the Olympic Games for soft ad-revenue growth, saying that much of the available ad spending had been shifted to NBC during the Games, hurting competing media companies. At that time, executives, in general, were cautiously positive about the third quarter. In late September, Time Warner Chief Executive Jeff Bewkes said at a conference that the ad market looked "a little better," but "there's not yet resurgence."