Spanish TV advertising in freefall

Percentage drop now in double digits

MADRID — The higher they fly, the further they fall. After six years’ growth, powered by one of Europe’s most vibrant economies, Spanish TV advertising is plunging.

In fact, it’s falling so fast that major reports can’t revise downwards fast enough. Hardly a week goes by without analysts painting a worsening picture of Spain’s ad deterioration.

Late last week, Giuseppe Tringali, advertising CEO at top-rating commercial web Telecinco, announced that, although Telecinco is weathering much of Spain’s ad downturn, overall Spanish TV advertising this year will drop by 11%-12%.

Rival Antena 3 saw first nine-month ad coin plunge 12.9%.

This week, buzz is that TV ad revs at pubcaster RTVE could be 15% down on 2007.

Those stats contrast with a ZenithOptimedia ad expenditure forecast, made in early October, of only a 3.3% decline for Spain in 2008.

ZenithOptimedia is now revising many forecasts downward, said its head of publications, Jonathan Barnard.

Four factors are at play in Spain, said Vincent Letang, at Screen Digest.

“Spain’s housing bubble has burst precipitating Spain into deep economic recession; it is having to tighten ad restrictions, adapting them to E.U. standards, such as on proliferating infomercials.”

Also, “Commercial broadcasters’ inventories have been excessive and high-priced, which was detrimental to ad efficiency, meaning they’ll contract with weaker demand. And established networks are losing market share fast to new competitors such as La Sexta and Cuatro, and fast growing digital channels, creating downward pressure on prices,” Letang added.

TV ad revenues will fall 10% this year and by 12% next year, he predicted.

Until recently two of the three healthiest broadcasters in Europe, commercial nets Telecinco and Antena 3 TV are still punching profits: Euros 228.9 million ($294.4 million) and $86.7 million respectively, January to September.

But Spain’s emerging as the sick man of European advertising.

“The World TV Market,” a soon-to-be published European report by Gallic research company IDATE, forecasts French TV advertising will drop 3% this year to $4.4 billion.

Of France’s commercial nets, M6 Group ad coin fell 0.5% in the third quarter; TF1 channel’s first nine-month ads were 3% down.

TV advertisers are discouraged by the disappearance from 2009 of advertising after 8 p.m. on public broadcaster France Televisions, said Florence Le Borgne, head of TV and digital content at IDATE.

Yet Gallic ad agencies estimate commercial nets TFI and M6 should scoop up 80%-90% of post 8 p.m. ad coin relinquished by France Televisions, Letang said.

Also, broadcasters will benefit from relaxed TV advertising regs, which look set to come into force in January.

Screen Digest suggests a 3% fall in 2009 TV ad revs for both France and the U.K.

“In some markets such as the U.K., TV advertising is still high, but competition from the Internet makes it increasingly hard for TV to attract advertising,” said Le Borgne.

Germany and Italy will be broadly flat in 2009.

Marco Giordani, CFO of Italy’s Mediaset, declared last week at a Morgan Stanley conference in Barcelona that it expected a tough first quarter of 2009, but that Italy was less affected by an ad downturn than Spain or the U.K.

Real recovery in Euro TV advertising may not come until 2012, the year of London’s Olympic Games.

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