Time Warner’s decline in ad revenues
Time Warner (TWX) has lately been witnessing softness in the advertising business in its Turner segment. In 2017, advertising revenues declined in the Turner segment, which had been growing for the past few years.
In 2017, Time Warner’s advertising revenues fell 2.3% YoY (year-over-year) to $4.7 billion, due to lower domestic revenues. However, international advertising revenues rose on a YoY basis, primarily driven by growth in Latin America.
Lower ad revenues
In 2017, ad revenues fell $147 million, due to lower audience delivery in the Turner’s entertainment networks. In the first nine months of 2017, ad revenues fell 3.8% YoY due to comparisons related to revenues earned from its telecast of the NCAA Men’s basketball tournament.
Meanwhile, the shift of consumers’ viewing habits from the linear TV to the availability of low-cost video streaming companies such as Netflix (NFLX), Amazon Prime (AMZN), and Hulu may have affected Turner’s ad sales as well.
Ad revenues to grow in 2018
For 2018, Time Warner expects the Turner unit’s total advertising revenues to grow in the high single digits to low double digits in the first quarter of 2018, compared with its revenues in 1Q17, driven by high-single-digit growth in scatter pricing for Turner’s domestic entertainment networks.
The company also anticipates that the airing of the Final Four games of the NCAA Division I Men’s Basketball Tournament will benefit revenues by approximately five percentage points in the first quarter alone.
Meanwhile, Time Warner’s multiplatform rights to the UEFA (Union of European Football Associations) Champions League and its partnership with Snapchat (SNAP) could drive TWX’s ad business going forward. At the same time, the merger with AT&T (T)—if it gets approved—could boost Time Warner’s ad sales.