Car showrooms re-opened this week for the first time in two months. You could almost hear an audible sigh of relief – and it wasn’t coming just from the showroom floors. Broadcasters’ beleaguered sales teams also took it as a sign that they could begin to breathe more easily.

Sales of new cars in the UK were down 97.5% in April and, unsurprisingly, there have been hardly any car adverts at all on TV for the last two months; add to that all the other businesses that simply stopped advertising and no wonder the UK TV ad market plunged to a near-50% decline in April and May.

Now with lockdown easing, ad agencies are beginning to book TV airtime again, which is particularly good news for Channel 4 and ITV which rely on advertising for 83% and 53% of their revenues respectively. June should see a jump in advertising but the industry is not out of the woods yet.

Indeed, Claire Enders of Enders Analysis calls the decline “nothing short of catastrophic” and predicts that the market will not enter any kind of real recovery until the middle of 2021.

Speaking on an RTS Lunchtime virtual panel event late last month, she highlighted the end of the government-funded furlough scheme followed by Brexit as hampering recovery. Enders predicted that advertising income will not return to its pre-coronavirus levels until 2025 if the country slips into a “great depression”.

For UK broadcasters, the impact of a slow recovery, combined with a structural shift in the advertising market towards online, points towards a smaller advertising market that begs the question: how many PSBs can be supported by advertising?

Channel 4 vulnerability

The broadcaster most at risk in this scenario is Channel 4. DCMS Select Committee member Damian Green told the RTS audience that while C4 is more “vulnerable” than its PSB peers he doesn’t expect government to offer support amid competition from more exposed creative industries including theatres and smaller institutions.

“I don’t think there will be another pot of money put into broadcasters,” he said.

The BBC, ITV and Channel 5 are better protected.

The BBC licence fee will be renegotiated under the next DG and Channel 5 is part of global conglomerate, Viacom CBS.

Meanwhile, ITV has topped up the £100m cuts from its programming budget with a further saving of £200 million from the suspension of its shareholder dividend. Unlike in the 2008/9 recession, ITV has over £100 million in cash, a £630 million untapped revolving credit facility and £199 million available from a bilateral facility.

In 2009, ITV raised cash through a rights issue, which adds new shares, diluting current shareholders. Enders mooted a further rights issue now as a prudent move, but ITV said this is not under consideration, highlighting the “good access to liquidity” noted in its 6 May trading update.

Whether the recovery is V-shaped or a more gradual Nike swoosh-shaped will be crucial to all broadcasters. This is the real unknown and could be a make or break for many creative businesses.

A better strategy is possibly to lean into untapped revenue. According to data from commercial TV body Thinkbox, the decline in broadcaster VOD revenue has been much less steep over the last two months. Chief exec Lindsey Clay told the RTS panel that advertisers have sustained their investment in the format “more than they have in linear TV.”

Clearly, that’s an important takeaway for all commercial broadcasters.