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Japan's TV stations feel coronavirus blow despite audience surge

More stay-at-home viewers but carmakers and leisure companies slash advertising

Public service announcements on Japanese TV surged in April amid the coronavirus pandemic but commercial advertising dropped.

TOKYO -- Japan's coronavirus state of emergency has led to more TV viewing by people forced to stay at home -- but has not helped to expand TV stations' profit after a big drop in advertising spending.

Television audiences have risen dramatically since Japan's government declared a state of emergency in April. In the third week of that month, viewing time was 50% higher than a year earlier, with a big rise among 13- to 19-year-olds, according to Video Research, a Tokyo based company specializing in TV audience ratings. Nippon Television Holdings (NTV) said its April audiences were the highest since 2003.

But those audiences have done little for NTV and its rivals after a big drop in demand for advertising from companies that were among the biggest on-screen advertisers before the virus hit. These companies have been hard hit by the downturn caused by the pandemic.

Toyota Motor, Tokyo Disney Resort operator Oriental Land and other big advertisers are now reluctant to put their resources into marketing to customers who will not or cannot spend.

Tokyo Kikaku, a consulting and research company, says the car industry showed the biggest drop in the number of TV advertisements among 20 different business categories in March. The industry accounts for almost 4% of Japan's total TV commercials.

But Toyota halved its number of commercials in April compared to the same month of the previous year, while Mitsubishi Motors and Daihatsu Motor cut their commercials 95% and 40% respectively as they struggle with sales globally.

This has been reflected in earnings results from media companies such as Fuji Media Holdings, which announced on May 13 that its annual operating profit declined 24.1% to 26.3 billion yen ($246million) for the fiscal year ended March 2020.

The company said there had been a 34.2% drop in automobile advertisement sales for the three months through March.

Nippon Television said it saw a tough business environment, including poor ad sales and event suspensions. The company had a 13.3% drop in operating income for the fiscal year ended March and refrained from giving an earnings forecast for the current business year.

At Tokyo Broadcasting System Holdings, operating profit fell 29.4% to 13.1 billion for the full year through March. "Fiscal 2020 is likely to be a tough start due to the impact of coronavirus," Takashi Sasaki, CEO at TBS, told reporters at a news conference at the end of March.

A high school students in Osaka. Large number of schools nationwide still keep doors closed  (Pool photo)

The leisure and tourism sector is another that has cut its TV ad spending.

Oriental Land typically spends heavily in April to promote its amusement park ahead of Japan's Golden Week holiday from late April to early May. But it did no TV advertising at all in April, compared with 1,090 slots last year.

Travel agency H.I.S. reduced its commercials to about 10 in April from 90 the previous year.

Advertising related to the Tokyo Olympics and Paralympics, originally scheduled for this summer, has also been affected. The Games have been postponed to 2021.

Low demand from the automobile and leisure industries has affected the price of television advertising. The Bank of Japan's services producer price index shows prices fell 8.9% in March compared to the same month last year.

Not all companies are reluctant to advertise on TV. Takeshi Niinami, president of drinks group Suntory Holdings, told the Nikkei Asian Review that TV ads "are more effective than before" because more people are staying home.

"There is no strong push to reduce ads, because (TV commercials) create more returns now," Niinami said.

Companies offering delivery and other services as well as at-home activities are taking advantage of the lower prices. Food delivery service provider Uber Eats and video-streaming service Hulu aired three to five times more spots in April than March. Frozen food advertisements increased four times in the same period.

"Now is the chance for businesses to raise awareness as audience ratings are high, especially among younger generations," said Shintaro Sekine, president of Tokyo Kikaku, adding that young people usually spend more time with their smartphones but are at home now more because of schools being closed.

Tokyo's five major TV stations broadcast about 1.5 million commercials a year, and according to Tokyo Kikaku data, the number has not waned as public service announcements have filled slots vacated by corporate advertisers.

Advertising Council Japan, known as AC Japan, the country's largest public service announcement association, provided more than 10 times as many commercials for some days in April as it would normally, according to Tokyo Kikaku.

But AC Japan, which is funded by companies, does not pay TV stations for airing its spots.

Japan's broadcasters face another long-term threat. Advertising giant Dentsu reported in March that online advertising expenditure exceeded the 2 trillion yen mark in 2019, surpassing TV advertising for the first time. The food and cosmetic industries are shifting to online advertising.

Tokyo Kikaku's Sekine expects that even though television broadcasters welcome signs of rising engagement among young people, it may be temporary and will not stop the ad industry's digital transformation.

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