The TV Advertising Market Is Slumping, but Sports Ads Are Booming

An unrivaled audience, hard-core fandom and good timing could help some media companies boost their bottom line

As major media companies downsize in search of better profit margins, a recurring theme has been a focus on an advertising downturn. In recent months, Warner Bros. Discovery CEO David Zaslav has called the ad market “very weak” and NBCUniversal chief Jeff Shell deemed it “shallow,” while Paramount topper Bob Bakish described it “cyclically tough.”

But the difficult ad environment obscures a silver lining: Despite the tough macro environment, the sports ad business is still booming. Look no further than Fox’s broadcast of the Super Bowl in February, when 30-second ads sold for north of $7 million, with the network expecting a record ad haul. Or the NCAA March Madness Men’s Basketball Tournament, which Bloomberg Intelligence estimates will bring in $1.2 billion in ad revenue for partners Warner Bros. Discovery and Paramount this year, up 8 percent from a year ago. In the current climate, an 8 percent gain can be considered, well, madness. “The sports dollars continue to be relatively consistent each year with the advertisers that have these tentpole events that they participate in,” says John Bogusz, exec vp at CBS Sports advertising for Paramount. For March Madness, “seasonality is on our side,” notes Jon Diament, exec vp ad sales for Warner Bros. Discovery.

While sports is inconsistent on the TV schedule, the impact can be clearly seen. The World Cup in the fall led

NBCUniversal and Fox to advertising growth in a quarter when everyone else was down (ESPN, for its part, was merely flat when accounting for a change in college football playoff schedules). Disney CFO Christine McCarthy said on the company’s last earnings call that while the ad market had “softened,” demand across sports “remains solid.” And the NFL playoffs earlier this year will surely provide a nice bump to the league’s TV partners, including Fox, which had the Super Bowl and the NFC Championship. There’s also the fact that sports is providing something that few other programs on linear TV can deliver: a meaningful audience. While the NFL season is over, the marketplace for other sports is warming up, potentially offering a key boost to national networks (regional sports networks are another story). March Madness will deliver Paramount about $755 million and WBD about $475 million, per the Bloomberg Intelligence estimates, while the NBA (Turner Sports and Disney) and NHL (Turner Sports and Disney) seasons are in high gear. Meanwhile, the MLB season (Fox and Turner Sports) is about to begin.

The timing is fortuitous for WBD, which does not have NFL rights and was hit hard by the ad slowdown last year. A combination of March Madness, the NBA, NHL and MLB could provide an ad cushion to what has otherwise been a tough few quarters. Even sporting events that in the past have been overlooked are garnering ad attention. ESPN is home to the NCAA Women’s Basketball Tournament, and the channel says it is sold out, with more than 100 advertisers participating, including Capital One and Nissan, which joined as sponsors for the first time this year. It’s a reaction from the marketplace that bodes well for the NBA, which is expected to go to market for rights packages later this year. The league is looking to double, if not triple, the value of its deals with Disney and WBD. It’s a hefty ask, but in a world where sports are keeping the ad industry afloat, it might not be a crazy one.