TV networks vowed to cut back on commercials. Instead, they stuffed in more
Last quarter, commercial time rose 1%, according to Michael Nathanson, an analyst at MoffettNathanson LLC. After declining in 2017, the volume of ads increased every quarter last year and expanded again in the first half of 2019, he said. Fox was the only major cable network group to lower its ads last quarter, cutting them by 2%, Nathanson said.
As TV viewership declines and more consumers jump to streaming services like Netflix, media companies have only a couple of options to generate the advertising revenue that Wall Street expects: They can raise prices, run more commercials or do a little of both.
Media companies are adding more commercials because sponsors are more sensitive to price increases than to clutter, said Brian Wieser, global president of business intelligence at the advertising giant GroupM. And if a TV network were to cut the time allotted for commercials, it would need to boost advertising rates to make up the difference — a tough sell if rival networks aren’t doing the same, Wieser said.