Cable TV ads didn’t crater in Q2 – Pali

August 8, 2008

It looks like cable networks advertising held up quite well, despite investors fears, says Pali Research’s Richard Greenfield.

“We are encouraged that all but two reported double-digit increases in advertising revenues; particularly in light of the weakening economic environment,” he writes on his blog, citing quarterly earnings reports. He expects growth to slow in the third quarter and a pick-up in the fourth.

His comments echo those of Gabelli & Co associate portfolio manager Larry Haverty, with whom we spoke right after Viacom reported a sharp fall-off in second quarter ad revenue at MTV Networks.

Here’s what Haverty told us:

I’ve seen it probably many more times than I care to. When you hit prior to the Olympics, advertisers get very conservative. They either are an Olympics sponsor or they run and hide. If you are looking at spending money in the months preceding and during Olympics, you probably are not going to do it.

What Viacom saw is indicative of that. It’s being punished way more than they should be. You’ll see other companies reporting slow down. I would expect the ad market to bounce back pretty nicely.

Not everyone, including ad buyers, shares this view.

Greenfield’s chart on second quarter cable network ad revenue growth:

(Chart: Pali Research / Richard Greenfield)

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