MW Tariffs to hammer media companies as ad and consumer spending fall, analyst says

By Lukas I. Alpert

The companies most dependent on advertising could see revenue fall by as much as 4% as tariffs crimp spending, Citi Research says

Here's some bad news: The media industry will likely take it hard on the chin as tariffs are expected to cause ad spending to plunge, according to a team at Citi Research led by Jason Bazinet.

While media companies are less likely to feel a direct impact from tariffs on imported goods, a resulting slowdown in both the economy and consumer spending is expected to weigh on the advertising industry, the analysts said in a note to clients.

Companies more reliant on advertising could see their revenue fall 4% this year, as the impact of tariffs sweeps through the economy and causes cutbacks in spending.

Even companies that depend less on advertising could see revenue declines of 1% or 2% in 2025 from tariffs, Bazinet's team said.

"We believe there are three dimensions to tariffs for U.S. media stocks. First, the direct impact on PCE [personal consumption expenditures] and ad spending as consumers and businesses adjust to the tariffs. Second, the indirect impact on PCE from the 'wealth effect' as lower net worth puts pressure on consumer spending. Third, the impact of marketing teams spending less on ads (relative to PCE) during periods when the economy slows (or enters a recession)," the note read.

Media companies most exposed to an advertising downswing include mobile marketing company AppLovin Corp. (APP) and billboard operator Lamar Advertising Co. $(LAMR)$, according to Citi's model. Citi estimated that both companies could see declines in revenue of 4%.

AppLovin reported in the fourth quarter that approximately 75% of its revenue came from advertising. Lamar derives almost all of its revenue from advertising. Messages seeking comment from AppLovin and Lamar weren't immediately returned.

AppLovin's stock has tumbled 20% since President Donald Trump's tariff announcement after the April 2 close through recent morning trading on Monday, while Lamar shares have dropped 10%.

More-diversified media companies that can count on a mix of consumer spending and advertising revenue - such as Netflix Inc. $(NFLX)$, Walt Disney Co. $(DIS)$ and Spotify Technology S.A. (SPOT) - could see revenue downswings of 2%. Representatives for Netflix, Disney and Spotify didn't immediately respond to messages seeking comment.

Newspaper groups such as New York Times Co. $(NYT)$, Gannett Co. Inc. $(GCI)$ and News Corp $(NWSA)$ - and television companies including Warner Bros. Discovery Inc. (WBD) and Fox Corp. $(FOXA)$ - all fall into this middle bracket as well, Citi said. Messages left with representatives for the Times, Gannett, News Corp, Warner Bros. and Fox weren't immediately returned.

(News Corp is the parent company of MarketWatch publisher Dow Jones, which shares common ownership with Fox Corp.)

Even firms more insulated from advertising declines, such as TKO Group Holdings Inc. $(TKO.UK)$ and Universal Music Group N.V. (NL:UMG), could see their revenue fall 1% due to declines in consumer spending. Messages sent to representatives for TKO Group and Universal Music weren't immediately returned.

Citi said the best-case scenario would be if tariffs forced companies to more firmly move production to the U.S., lessening the blow to advertising spending, but that it didn't expect that to happen, at least in the short term.

More likely scenarios are that companies either pas the additional tariff costs on to their customers, depressing both consumer and ad spending, or that companies absorb some of the costs themselves, leading to reduced advertising budgets.

-Lukas I. Alpert

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April 07, 2025 11:28 ET (15:28 GMT)

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