Tariffs, Recession Fears Shake Media's Fragile Foundation | Image Source: katu.com
LOS ANGELES, California, April 16, 2025 – As the U.S. economy wakes up under pressure from inflation, trade uncertainty and a possible recession, Hollywood and the media industry in general are facing a storm that could rival or even overcome the 2008 financial crisis. The danger this time? A traditional television ecosystem, rising rates and changing consumption patterns that can make the media more vulnerable than ever before.
In March 2009, Disney CEO Bob Iger was at Oakland Paramount. The theatre recognizes the severe economic crisis of time, but also expresses hope. The media industry then had a dorsal television. In 2008, more than 87% of U.S. households paid by cable or satellite, a useful constant that gave cushions to companies such as Disney, NBCUniversal and Time Warner. Today, however, this security coverage has derailed, replaced by a fragmented streaming landscape where viewers come and go with a click. According to Leichtman Research Group, fewer than 70 million households now subscribe to pay for television, and this number is rapidly decreasing.
Is the 2025 economic threat worse than 2008 for television?
Yes, and not just the weakened infrastructure. According to Jessica Rif Ehrlich of the Bank of America, cable companies considered to be resistant to recession are now facing unprecedented broadband and video competition. The context is completely different from 2008. That year, even when advertising revenues declined, ESPN prospered through integrated tariff increases. Today ESPN is no longer a guaranteed growth engine for Disney, and transmission wars have diluted loyalty and stability.
In his April 10, “Never Final” report, Ehrlich noted that the historical perception of cable as a secure bet is no longer valid. “Cable operators are now facing stronger broadband/video competition against previous recessions,” he said, implying that traditional revenue moats have eroded under digital pressure. Analysts caution that the media industry could follow the steps of the radio and printing sectors permanently weakened by past recessions.
How do advertisers respond to tariff anxiety?
The annual ”front”, where advertisers commit billions for the next fall television season, is already blurred by uncertainty. President Trump’s unpredictable pricing policies against China and other countries create headaches for advertising buyers. According to the Los Angeles Times, advertisers are reluctant to commit and beware of the impact of tariffs on consumer spending and product prices. “It’s really bananas that are moving forward,” said David Campanelli, Global Investment President for Horizon Media.
Campanelli added that while no customer has reduced advertising budgets, many anticipate worse scenarios. Brian Wieser of Madison and Wall reviewed his growth forecasts for 2025 from 4.5% to 3.6%, citing trade tension and economic prudence. For conventional television, this is a blow that comes at an already fragile moment, because linear television struggles to justify its relevance in a digital market – first.
Why is linear television in a more precarious position?
Linear television – once the basis of American advertising - may lose control completely. In 2008, television ordered the lion to contribute to advertising expenses. Today, technological Titans such as Google, Meta and Amazon dominate with performance-based digital advertising that allows real-time adjustments and measurable returns.
According to MoffettNathanson, a possible recession of 2025 could reduce total advertising spending by $45 billion – only $12 billion in television. This is an amazing figure that television simply cannot absorb without long-term damage. “We saw the risk of a more permanent reallocation to connected television and larger digital channels,” the firm wrote in its April 9 report. In other words, this setback could not only harm – it could change the hierarchy of advertising forever.
Can conventional television save sport live?
In theory, yes. Live sports – particularly the NFL – continue to offer unparalleled reach and commitment. As Ehrlich pointed out, “sports remain resilient in the lukewarm advertising markets.” However, benefits are unevenly distributed. Although ESPN still has value for Disney, the company’s largest portfolio, including theme parks and consumer products, remains highly exposed to economic slowdown and commercial pricing.
Take Disney theme parks. These experiences, while defining the brand, are resource-intensive and very sensitive to consumer sentiment. During recessions, vacation planning is one of the first costs to be reduced. Beyond that, high tariffs on imports from China and Vietnam tighten profit margins on toys, clothing and other licensed goods, a revenue pillar for Disney and NBCUniversal.
What about digital platforms like Netflix and Spotify?
Ironically, companies considered to be disruptive can become safe havens. According to Doug Anmuth of JPMorgan, Netflix can better cope with economic pressure than inherited counterparts, partly because it is less dependent on advertising revenues and has greater price flexibility in global markets. Although price increases can be delayed in a difficult macro environment, Netflix’s value proposition remains intact.
Meanwhile, Doug Creutz of TD Cowen points out that Spotify and the entire music broadcasting industry are in a much healthier position than in 2008. With relatively low subscription prices and high values, exchange rates are expected to remain stable, even in recession. “We doubt that a recession would lead to a significant increase in churn,” Creutz said, citing the only sticky use of music.
How do agencies and markets adjust their gambling books?
Advertisers are becoming more agile. The flexibility of digital advertising allows for last-minute budget reallocations, contrary to rigid television commitments. “People are looking for dynamic partners that are much more flexible,” said Michael Shaughnessy, COO of Kargo Digital Advertising Agency. As advertisers prioritize ROI in real time and performance-oriented strategies, digital platforms become increasingly attractive, especially in times of uncertainty.
This change is accelerated by generational change. The youngest have left traditional television for platforms such as TikTok, YouTube and free streaming services (FAST). According to Nielsen, streaming platforms now account for the majority of television consumption. For traditional networks, this means less leverage to ensure high-end advertising rates and more pressure to install in digital formats.
Backfire tariffs for the media industry?
Yeah, especially in the short term. Chris Fenton, a former Hollywood leader deeply involved in American film distribution – China, believes that tariffs are late and could strengthen the US industry in the long term. But the short-term impact is undeniable. Licence costs are increasing. Production times are affected. And global demand for American content can disappear as countries look inward, focusing on local content on imported blockers.
Fenton Point - which echoes Alexander Hamilton’s strategies to strengthen domestic industry in the 1800s – can be historically rational. However, in a global media environment, it is unclear whether this model remains applicable. Now, some leaders fear that the global dominance of American pop culture will decline, replacing regional blows with localized narratives.
What are the long-term implications?
If the worst fears are realized: a recession, long-term changes in advertising spending and greater localization, the implications could be swept away. Hollywood’s dependence on decades of intellectual property (IP) could become a weakness more than a strength, especially if the international public deviates from American franchises. Studies may have to resume their strategies, focusing more on narrative innovation and less on brand nostalgia.
However, there is cautious optimism. The media landscape has evolved. Unlike 2008, businesses have diversified revenue flows: directly to consumer platforms, global subscription models and even unnoticed revenues from goods and theme parks. But diversification is just a shield, not a sword. The industry must prepare not only to survive the coming storm, but also to get out in shape.
As the avant-garde starts in New York next week, all eyes will be on the advertisers’ strike and the commitments they undertake, or not. The conversations that take place behind the scenes can finally determine which actors are adapting and are behind a media world transformed by inflation, innovation and instability.
