Ad Revenue Is Down. Blame A Lack Of Sports.

Four times a year, public companies share earning reports. While the reports are most pertinent to shareholders, anyone can access them on the Internet to get a sense of how the company is doing financially. Below is a glance at the revenues and expenses of the broadcast and cable television departments for Disney, Viacom, FOX, and NBCUniversal as reported in their most recent fiscal quarters.


Disney is a true media empire, with ABC falling in the 'Broadcasting' category and ESPN, FX Networks, and A+E Networks under the 'Cable Networks' category. They note in their earnings report that ESPN had lower advertising revenue in the quarter ended June 27, 2020 due to a lack of live sports programming. ESPN typically carries live coverage of the MLB and NBA, among other sports, alongside pre-game and post-game analysis. They also have the rights to the Little League World Series, which is not being played this year.

Luckily for Disney, major sports leagues are starting to return. Their ESPN losses are most likely short-term. If customers cancel cable, the streaming service ESPN+ is being bundled in with Disney+ and Hulu as a way to get more people to subscribe. 

Disney also cites an increase in operating income for the newly-acquired FX Networks, including FX and FXX. They mention a "decrease in marketing and programming costs driven by the shift of original programming to later quarters in response to COVID-19." Similar language is used to describe the state of A+E Television Networks. 

With that in mind, one would have to wonder if the same fate will come to the broadcasting side of Disney's operations, with no set premiere dates for scripted ABC programming. Their traditional summer programming will extend into fall, including new episodes of The Bachelorette, Card Sharks, and Supermarket Sweep. 

Overall, Disney's revenue in their television division is up 16% in the nine-month period ending on June 27, 2020, and down 2% from the three-month period compared to the same time frame in 2019. That seems far from dire at first look, and future earnings reports should be able to tell everyone more about their COVID-19-affected situation. 


Above is the TV Entertainment chart in Viacom's latest earnings report. This includes the broadcast network CBS alongside CBS All Access, CBS News, CBS Sports, CBS Television Stations, and CBS Television Studios.

Other than earnings from their affiliates, Viacom had some struggles in both the quarter ended June 30 and the six months ended June 30. Advertising revenue fell significantly in both time periods. Viacom's earnings report cites "the adverse effects of COVID-19." Like Disney did with ESPN, Viacom put some of the blame on the cancellation of sports events. Back in March, just as COVID-19 cases were beginning to be reported as more widespread in the United States, the NCAA canceled NCAA March Madness, including conference tournaments. The NCAA tournament airs games on CBS, Viacom's broadcast network. This is one of the major live sports programming CBS airs, and games bring in high ratings, especially as the tournament progresses. 

Viacom does credit lower programming and marketing costs to a decrease in expenses. While this is certainly good news, the dip in advertising revenue indicates Viacom needs live sports programming to make a full return as soon as it is safe. Programming is gradually coming back, but the NCAA March Madness could very well be canceled again if COVID-19 is not contained. 

The above table relates to Viacom's cable networks, which include MTV, BET, VH1, Comedy Central, CMT, Showtime, Nickelodeon, Paramount Network, Pop, Smithsonian Channel, TV Land, and the streaming service PlutoTV. A sizable decrease in advertising revenue is reflected in the table, which Viacom attributes to "the adverse effects of COVID-19," just like with TV Entertainment. The earnings report highlights Comedy Central's long-running animated hit South Park on more than one occasion, naming it as a major reason why Content Licensing Revenue increased significantly. HBO Max bought the exclusive streaming rights for the show for a reported price tag of over $500 million. This demonstrates the importance of streaming deals in an age where every major media company wants in on the so-called “streaming wars.”


FOX’s advertising revenue was down nearly 30% in the quarter ended June 30, 2020 compared to that same quarter in 2019. This is “primarily as a result of COVID-19,” as the earnings report puts it. It appears to be a valid reason, too, when looking at the ‘Twelve Months Ended’ column, seeing that FOX’s advertising revenue was up by hundreds of millions of dollars. Now that 20th Century Fox is owned by Disney, FOX relies heavily on advertising revenue to operate. Having to end Empire early and create the low-rated Celebrity Watch Party to fill up scheduling space, two products of COVID-19, certainly could not have helped. FOX gave a passive aggressive mention to Celebrity Watch Party by blaming lower ratings on “fewer hours of scripted programming.”

Like Disney and Viacom, FOX was negatively affected by having less live sports to air. When referring to the figures in the above table, FOX paints this in a positive manner, citing less expenses due to having less sports to air. However, they are clear in stating the negative effect when referring to the figures in the table below:

This table indicates that advertising revenue is down in both reported time periods pertaining to FOX’s cable programming. This includes shows and events broadcast on FOX News, FOX Sports 1, and FOX Sports 2. FOX cites “lower revenues at FOX Sports as a result of COVID-19.” Still, the amount by which advertising revenue decreased looks minuscule compared to those in some of the other tables. FOX has its news division to thank for this. They cite gains on FOX News, which makes sense given its rise in ratings throughout the pandemic. It remains television’s highest-rated cable news network in all key demos, with some of its prime time lineup often leading cable television in the key adults aged 25-54 demo. 

It is likely that FOX would be in a weaker position if not for FOX News. While FOX Sports understandably disappointed the company during the most recent earnings quarter due to COVID-19, FOX News eased the burden. 


While the cable news station MSNBC is partly owned by NBCUniversal, they make no mention of it in their earnings report. In the publicly-released transcript of a call to major corporate investors, the CEO of NBCUniversal gives a passing mention to MSNBC, grouping it in as one of their networks that “generated strong ratings.” As MSNBC often lags behind FOX News and CNN in key demos, the lack of in-depth conversation on the state of the network is notable. NBCUniversal doesn’t say if MSNBC contributed to the decline in revenue with their cable networks, which has a much weaker trend than that of their broadcast television department. 

NBCUniversal’s sports department, however, is mentioned on multiple occasions. Like Disney, Viacom, and FOX, NBCUniversal is blaming a lack of sports due to COVID-19 as a main reason why revenue has decreased. NBCUniversal had the exclusive rights to the canceled 2020 Summer Olympics. 

Something very notable is that NBCUniversal puts a lot of focus on the launch of Peacock. They claim there have been over 10 million sign-ups as of the end of the fiscal quarter, a date at which only Comcast customers had access to it. They paint Peacock in a positive light, which further highlights the importance of television streaming services in today’s business. 

Ending Summary
Here are three things one should take away from this article:
1. Loss of sports due to COVID-19 decreased both the revenue and expenses for media giants. 
2. Owning a high-rated cable news station is valuable, while owning a lower-rated cable news station appears to be less valuable at best.
3. Everyone rightfully wants to successfully launch their own streaming services. 

What do you think? Leave your thoughts in the comments!

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