The one-two punch of explosive sportsbook advertising and the return of political ad spending will help fuel the ongoing radio and TV rebound from the pandemic in 2022. Kagan Senior Research Analyst Justin Nielson says “a deluge of ads from expanded legalized sports betting,” along with a rich influx of midterm election ads as Democrats and Republicans battle for control of both chambers of Congress, will provide growth catalysts for broadcasters in 2022.
Nielson’s outlook, part of “The Big Picture: 2022 TMT Industry Outlook,” from Kagan parent S&P Global, doesn’t put a specific number on how much sportsbooks will spend next year. But in third quarter 2021 earnings reports, broadcasters provided some color on the fast-growing category in states where online gambling has been legalized. “We expect sports and sports betting to be a significant growth engine for us going forward,” said iHeartMedia Chairman and CEO Bob Pittman, pointing to the company’s partnership with DraftKings as “further evidence of that potential.” Audacy CEO David Field repeated his earlier prediction that sports betting will grow into a $100 million category for the company in a few years as legalized sports betting continues to spread across the country. Citing its multi-platform partnership with WynnBet and ad deals with eight additional sports betting operators, Cumulus CEO Mary Berner told investors the company is “on track to grow this category by more than four-times 2020 spend.”
Back to Nielson’s 2022 forecast, broadcast political advertising is on track to reach $3.25 billion in the 2022 cycle, up 7.0% from the last midterm elections in 2018. “Political advertising will disproportionately be spent on local TV stations in swing-state markets — such as Arizona, Florida, Georgia, Nevada, North Carolina and Texas — which are forecast to rise more than the national average,” Nielson says.
Other ad categories forecast to outperform in 2022 include healthcare, professional services, telecom, banking and home improvement with the auto, retail and travel categories still soft.
Radio revenues will rise 6.2% to $15.75 billion in 2022 as the industry bounce-back from the pandemic-induced recession continues, according to Nielson. While radio is heading in the right direction, next year marks a partial recovery in light of the steep 23.0% decline in 2020 when revenues fell to $13.68 billion.
“Radio ads are predominantly local and focused on the auto, retail, travel and entertainment categories, which were heavily impacted by the advertising pullback,” Nielson notes. “Radio also must compete with multiple streaming and on demand options for music and talk and is hindered by the new hybrid or permanent work-from-home economy, which has greatly reduced commuting hours during prime in-car radio time. Despite those headwinds, radio’s lower ad cost, local audience and relatively high return on investment compared to other media should help it maintain its share of the U.S. advertising market.”
The Kagan forecast calls for TV station industry revenue, including retransmission fees, to climb to $38.22 billion, up from $43.06 billion estimated in 2021. Total TV spot billings are expected to improve 20% to $21.20 billion, including $3.25 billion in political ad spend. Digital is forecast to come in at $3.10 billion for a 5% year-over-year uptick, and gross retrans revenue to rise 3% to $13.92 billion.
Based on Kagan projections, the total U.S. broadcast station industry is expected to reach $40.05 billion in 2022, up 13.2% from $35.39 billion in 2021, surpassing the $39.66 billion posted pre-pandemic in 2019.