JA N U A R Y 2 0 1 3 Weak Ad Signals Plague the U.S. Warning signs fromseveral advertising companies in the fall indicated a decline in ad spending in the U.S. ahead of pending reports for the September quarter from companies such as CBS Corp., Time Warner Inc., Discovery Communications Inc. and News Corp. As reported in The Wall Street Journal, advertising holding companies Interpublic Group of Cos., WPP and Publicis Groupe all stated that marketers slashed their spending in September as a result of political uncertainty in the U.S. and the economic crisis in Europe. They saw a decline in a number of industries, including retail, pharmaceutical and consumer packaged goods. It’s likely that Hurricane Sandy, which ravaged the northeast at the end of October, impacted ad spending as well, since some stations opted to limit or forego advertising altogether for a few days in order to provide uninterrupted coverage of the storm. Pivotal Research Group analyst BrianWieser estimated the storm’s impact on the U.S. advertising market could manifest as a revenue loss of around $500 million, or one percent of the volume for the fourth quarter. In October, Comcast Corp., which owns NBCUniversal, stated that its cable networks division recorded flat ad sales for the quarter, and News Corp. — which owns Fox News, Fox and FX, as well as The Wall Street Journal — was projected to report flat ad revenues. VoD $ Signs Getting Clearer Industry experts are predicting that U.S. Video-on-Demand /Pay-PerView revenue data is about to become a lot more transparent. As the Los Angeles Times recently noted, studio accountants have traditionally been criticized for not being entirely forthcoming about VoD revenue numbers, leading filmmakers to wonder whether they’re getting a fair share of the pie. Arbitrage, a Roadside Attractions/ Lionsgate Entertainment feature film that was released concurrently in theaters and on VoD, is being seen as a sign of the sea change, the Times reported. According to the two companies, VoD sales for Arbitrage (which include Internet, cable and satellite television), have reached about $11 million, and are expected to reach $12 million. Combined with expected box-office gross of around $7.5 million, the film will break the combined sales record for a day-and-date release. Companies like Lionsgate seek to benefit from an increase in revenue transparency, the Times explained, since they can now show off those profits when they go to buy films at festivals and markets. Usually, 70 percent of VoD revenues are allocated to the distributors, as opposed to the 50-50 theater owner/distributor split often used for box-office sales. TV Rights Boost Brazil’s Football Domestic TV rights to sports games are helping Brazilian football (soccer) clubs earn more money and hold onto talented players. The top clubs earned total revenues of R$1.93 billion (U.S.$927 million) in the 2011 season, an increase of 29.7 percent from the year before, as reported in the Financial Times. With the rise of pay-TV in the country, 36 percent of clubs’ income stemmed from TV rights. In 2011, the top-earning club was the São Paulo-based Corinthians, which generated total revenues of R$281 million. This marked a 36 percent rise compared to the year before, according to investment bank Itaù BBA. Coming in second was São Paulo, up 15 percent with R$225m. Santos came in third, pulling in R$189m, an increase of 62 percent. Although consulting and financial advisory firm Deloitte reported that Brazilian clubs were still earning below the level of those in Europe and the U.K., Brazil’s domestic growth and plans to host the 2014 World Cup could bolster earnings. Another factor contributing to the rise in revenues were sponsorships, with state bank Caixa Econônmica Federal paying a record R$30m to put its brand on the Corinthians’ jerseys.
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