As recession fears grow in the wake of Trump’s sweeping new tariffs, U.S. media and internet companies face billions in ad spending losses that could spell the death knell for traditional TV advertising.
“Given the secular headwinds facing the linear TV ecosystem, we are concerned that TV could go the way of radio and newspapers during past recessions,” MoffettNathanson analysts Michael Nathanson and Robert Fishman warned in a note last week.
If a recession does occur, MoffettNathanson estimates U.S. ad spending will be $45 billion less than currently forecast.
That estimate would represent an 11.5 percentage point drop in revenue growth for the media industry as a whole. Digital platforms would bear the brunt of the impact, with $29 billion in ad spending cuts, and TV ad spending facing a $12 billion shortfall.
Even before the Trump administration’s April 2 announcement of a 10% baseline tariff on nearly all foreign imports, companies were already in wait-and-see mode, holding back on ad spending amid uncertainty over trade policy, MoffettNathanson said.
That stands in stark contrast to a sharp rebound in ad spending in 2024, when the industry benefits from record political spending, a booming economy and continued momentum from the post-pandemic digital and e-commerce boom.
But the tone has shifted from “slightly bearish” to “clearly bearish,” as Moffett Nathanson puts it.
“This shift is largely due to the current administration’s unconventional and aggressive approach to addressing ‘unfair’ trade practices,” the analysts said. “Heightened uncertainty following the tariff announcement has led us to take a more cautious approach to our advertising business.”
Best and Worst Positioning
The firm estimates that companies that rely heavily on advertising — such as Meta ( META ), Snap ( SNAP ) and Trade Desk ( TTD ) — will be “harder hit,” with each expected to see its stock price fall by at least 30%.
Digital companies with flexible cost structures and less reliance on advertising, such as Netflix ( NFLX ) and Alphabet ( GOOG , GOOGL ) are “better positioned to weather the storm.”
Meanwhile, connected TV player Roku (ROKU) will be most affected on a relative basis, moving from positive earnings in 2024 to net losses in 2025 and 2026, according to MoffettNathanson’s forecasts.
Paramount could also reverse its recent positive earnings trend, while other traditional media companies like Disney (DIS), Fox (FOX) and Warner Bros. Discovery (WBD) could see earnings per share (EPS) decline by about 20% to 25%.
The outlook may become clearer as earnings season arrives. But if the U.S. recession persists, the drop in ad spending could have lasting ripple effects for companies of all sizes across industries.
As UBS analysts said in another client note sent on Tuesday: “In a downturn, advertising businesses are typically the first to suffer as companies look to cut spending.”
