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THIRD ANNUAL SCREENS ISSUE - MediaPost

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Q+A<br />

With so many consumers switching to<br />

online video services, cutting the cord<br />

and turning their noses up at current<br />

TV programming, it’s hard to think<br />

that advertisers’ TV budgets will be left<br />

unaffected for much longer. In reality,<br />

TV ad revenues are up, live programming<br />

is stronger than ever, and the<br />

upcoming elections and Olympics are<br />

setting TV ad spending up for a strong<br />

year. But what of digital? Vincent<br />

Létang, MAGNAGLOBAL’s executive<br />

vice president and director of global<br />

forecasting, recently sat down with<br />

MEDIA to talk about the brave new<br />

world of TV.<br />

Vincent Létang<br />

EVP/Director of Global Forecasting for MAGNAGLOBAL BY CARRIE CUMMINGS<br />

What is the current state of TV ad spending? Projection<br />

for 2012?<br />

In 2011, television companies’ advertising revenues were<br />

$58.4 billion. That is a third, 33.6 percent, of the total advertising<br />

market in the U.S. The share of television has gradually<br />

increased since the early 2000s, mostly due to the rise of cable<br />

networks. National networks attract 66 percent of the revenues<br />

against 34 percent for local television. Broadcast television —<br />

national and local — represent 55 percent versus 45 percent<br />

for cable television.<br />

For 2012, we predict TV revenues to grow by 6.8 percent, but<br />

a lot of that growth will be driven by the periodic events that<br />

generate incremental ad spending in quadrennial and even<br />

years: elections and Olympics. The 2012 election cycle will generate<br />

$2.5 billion just for local broadcast TV which gets the bulk<br />

of the bonanza, which will be an all-time high. The Olympics<br />

will generate approximately $600 million for national television.<br />

Without the $3.1 billion of extra revenues, TV growth would only<br />

be 2.4 percent in 2012.<br />

How will companies like Hulu and Netflix impact TV ad<br />

spending in the future?<br />

So far, Netflix does not carry any advertising, so it “competes”<br />

with traditional television for viewers’ time, not for advertisers’<br />

money. The 21.7 million Netflix household clients who are<br />

streaming — out of 25 million clients — streamed an average 93<br />

hours in Q4 of 2011. That’s 2 billion hours during the quarter.<br />

Compared with the total U.S. population, that’s only 2 percent<br />

of linear TV viewing. Netflix streaming subscribers stream<br />

approximately 7 hours a week compared to 34 hours of TV view-<br />

Spring 2012 MEDIA MAGAZINE 37

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