In an interview with daily Puls Biznesu, the head of Polish public television company TVP said the condition of the Polish TV ad market in 2H12 could be similar to that observed in 1H12. TVP’s CEO Juliusz Braun also said that if revenues from obligatory subscriptions increased from the current PLN 200m to PLN 950m annually (i.e. the level that would be reached if the obligatory subscription was paid by every person/household who owns a TV or radio set in Poland), the company would be able to lower its available advertising air time from the current 12 minutes to 7-8 minutes per hour.
Our view:
The TV ad market in Poland is currently weak. The deeper than previously expected aversion to ad spending resulted in a deeper than previously expected shift of 1H12 budgets to the second half of the year. As a consequence, we believe the TV ad market could post a decline of between 8% y/y and 10% y/y (versus our previous forecast of -3% y/y) in 2Q12. However, our base-case scenario assumes that most of the money moved to 2H12 will eventually be spent, which should leave the annual growth rate of Poland’s TV ad market oscillating around 0% in fullyear 2012. If these latest comments from TVP’s CEO turn out to be accurate, then Poland’s TV ad market could be deeply in the red in the full-year 2012. While we agree that TVP is likely to book a very weak 2H12 (even weaker than 1H12 due to the positive effect of Euro 2012 in the first half of the year), we expect to see a rebound in TV ad spending in commercial TV stations in 2H12. The realization of the most positive scenario for TVP (i.e. growth of obligatory subscriptions to slightly below PLN 1bn annually and cuts in available advertising air time) would obviously be positive for all commercial TV stations. However, we do not expect people to start paying obligatory TV/radio subscriptions and therefore believe the dreams of TVP’s CEO are likely to remain on paper.
The news could put some pressure mostly on (8,07 PLN, -1,94%) stock price today.