As recession fears mount following Trump's sweeping new tariffs, US media and internet companies face a potential multibillion-dollar hit to ad spending that could potentially deliver the death knell to traditional television advertising.

"Given the ongoing secular headwinds facing the linear TV ecosystem, we worry that television could mirror the fate of radio and newspapers during past recessions," MoffettNathanson analysts Michael Nathanson and Robert Fishman warned in a report last week.

If a recession were to materialize, MoffettNathanson estimates US ad spending would come in $45 billion below current forecasts. 

That estimate would mean an 11.5 percentage point blow to top-line revenue growth across the media landscape. Digital platforms would bear the brunt, realizing $29 billion less in ad spending, with TV facing a $12 billion shortfall.

Read more: What is a recession, and how does it impact you?

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Even before the Trump administration's April 2 announcement of a 10% baseline tariff on nearly all foreign imports, MoffettNathanson said companies were already in wait-and-see mode, holding back ad spending while trade policy remained unclear.

Read more: The latest news and updates on Trump's tariffs

It's a stark reversal from the significant spending rebound the advertising industry enjoyed in 2024 on the back of record political spending, a booming economy, and lingering momentum from the post-pandemic digital and e-commerce boom.

But as MoffettNathanson argued, the tone has shifted from "softly pessimistic" to "significantly more bearish."

"The shift is driven largely by the current administration's unorthodox and aggressive approach to addressing 'unfair' trade practices," the analysts said. "The heightened uncertainty following the tariff announcement has led us to adopt a more cautious outlook for advertising." 

Best and worst positioned

Companies heavily reliant on advertising — like Meta (META), Snap (SNAP), and the Trade Desk (TTD) — would be hit "disproportionately harder," with projected stock declines of at least 30% each, the firm estimates. 

Digital players with variable cost structures and less reliance on advertising, like Netflix (NFLX) and Alphabet (GOOG, GOOGL), are "better positioned to weather the storm."

Meanwhile, connected TV player Roku (ROKU) would see the biggest relative impact, flipping from positive earnings in 2024 to a net loss in both 2025 and 2026, according to MoffettNathanson's projections.

Paramount could also reverse recent positive earnings trends, and other traditional media names like Disney (DIS), Fox (FOX), and Warner Bros. Discovery (WBD) would likely see earnings per share (EPS) declines of around 20% to 25%.

As earnings season kicks off, some clarity on the outlook may emerge. But if a US recession takes hold, a drop in ad spending could send lasting ripple effects across a broad spectrum of companies, regardless of their size.

As a UBS analyst said in a separate client note sent Tuesday: "Advertising is usually the first to go in an economic downturn as companies look to cut expenses." 

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