Coronavirus scare hits media, advertising industries
The New York Times said in a government filing Monday that it expects global advertising revenue to be down this quarter due to corporate uncertainty related to the coronavirus. The news caused shares of other media publishers to dip.
Why it matters: It's the latest example of ways that the coronavirus is impacting business and the economy more broadly. Uncertainty in marketing around retail and consumer packaged goods, which are often linked to Chinese supply chains, as well as travel and entertainment, is hitting the advertising sector particularly hard.
Details: In the filing, Times CEO and president Mark Thompson said that the company in recent weeks has seen a slowdown in international and domestic advertising bookings, which it associates with "uncertainty and anxiety about the virus."
- Thompson said the company expects total advertising revenues to decline at a rate in the mid-teens during the current quarter, with digital advertising revenues expected to fall 10%.
- But he added that the virus hasn't impacted the company's subscription business, which brings in more revenue for the Times than advertising.
The news caused short dips in other publishing stocks, like Tribune Publishing and New Media Investment Group Inc., which houses Gatehouse and Gannett newspapers.
- Ad holding group giants like WPP, Publicis, Omnicom and IPG have also seen stocks sink over the past week or so as the virus has intensified.
The big picture: Analysts predict that the entire advertising ecosystem will likely be negatively impacted by the virus, based in part on how China's advertising market has reacted to the outbreak over the past few months.
- "As we have seen in China, we would expect to see less travel, less manufacturing, reduced retail sales and cancellations of many forms of public entertainment," said GroupM's Brian Wieser, one of the top global advertising industry analysts.
- Wieser notes that in these types of situations, where there's less travel and more need for information, media consumption at home will likely rise — potentially leading to a boost in some television advertising sales. But outdoor advertising "may be worse off with lower levels of foot traffic in many places," he added.
What's next: Various media events have been canceled or are under pressure due to concerns around the virus.
- More than 15,000 people have signed a Change.org petition calling for the cancellation of the upcoming South by Southwest event in Austin, Texas, per Axios' Ina Fried.
- Some companies, like Twitter, have suspended noncritical travel for employees over coronavirus concerns.
- Movie-going in China, the largest international box office, has been impacted by the virus, which has also put a dent in some expected U.S. movie studio revenues.