Ad Limbo: How Low Can It Go?

Michael Hedges March 5, 2013 Follow on Twitter

Free-to-air television is inextricably tied to the fickle fates of advertising. And when media buyers place their bets on the media best to attract anxious consumers reach matters less than price. Viewers have many screens on at once, after all, and seem to like everything.

Consumer confidence in Spain dropped in February, according to the Centro de Investigaciones Sociológicas (CIS) survey index (March 4), to 50.7 points, less than 100 indicates pessimism. Among those surveyed, 55% felt a worsening of the Spanish economy in the last six months and 55% believe the next six months will be even worse. Just under half the respondents (46%) say making household ends meet is difficult. When consumers lack confidence spending falls and advertisers typically respond by cutting their spending, too.

Spain’s biggest television broadcasters are feeling that crunch. Reporting 2012 results last week, profits for Mediaset España dropped 54.6% year on year to €50.14 million and Grupo Antena 3 saw profits 65.8% lower at €31.9 million. Both companies cited falling ad revenues.

Mediaset España owns seven channels, including Telecinco and Cuatro, and is owned by Italian media house Mediaset. Net income for the group dropped 12.1% over 2011 to €886.7 million, more than 90% of which came from TV ad saleshouse Publiespaña. TV advertising in Spain dropped 18.9% year on year, according to Publiespaña, which has a 45% TV ad market share.

The company called 2012 “a difficult year,” in the annual securities commission (CNMV) filing (February 28). Operating cost savings “offset the cost of investing in the European Football Championships, the Motorcycle World Championship, launch of the Energy (TV channel) and film production.”

Spain’s number two private TV broadcaster Grupo Antena 3 saw its 2012 profit drop like a rock to €31.9 million, 65.8% lower than 2011. Ad revenue was down 16% for the year; the fourth quarter off only 0.2% year to year. Total revenues fell 8% to €741.16 million. The radio division, operator of national network Onda Cero, produced 7.5% less revenue, €82.8 million. 

Grupo Antena 3 also held fast on operating costs to “absorb the higher programming costs derived from Formula 1rights and the costs incorporated into the fourth quarter from La Sexta.” Antena 3 and La Sexta merged, officially, after protracted negotiations that included government approval to allow, effectively, the duopoly with Mediaset España in private sector television. Grupo Antena 3 operates eight television channels. RTL Group, which hold a 20.5% stake, took a significant “impairment charge” on Antena 3 losses in its 2012 annual financial report. The Grupo Antena 3 board of directors took a 15% reduction in annual compensation.

Ad spending in Spain continues the downward spiral begun in 2008. According to InfoAdex estimates, total 2012 spending dropped another 9.9%, year on year to €10.05 billion and television still gets the biggest chunk, 39.2%. Even internet advertising, which eclipsed newspapers in total ad spending, dropped 2%. Daily newspaper ad revenues were off 20.8% and radio advertising was down 13.6%. Only point of purchase and telemarketing spending rose in 2012.

See also in ftm Knowledge

Media in Spain and Portugal

The Iberian Peninsula is home to media with vast international reach. Yet, at home the economic crisis has taken its toll. The ftm Knowledge file profiles Spanish and Portuguese public and private media as it struggles to cope. Includes Resources 61 pages PDF (March 2012)

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