PepsiCo Pulling Ads Has Everything to Do with Sports, Jim Cramer Says

Jim Cramer weighs in on Disney, CBS, NBC and AT&T saying that as much as 50% of their third-quarter corporate ad spending on cable and broadcast TV may be at risk.
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Let's talk about ad spending.

Television advertisers are trying to pull back on deals with broadcast and cable outlets as the coronavirus continues to hit the U.S. economy hard, according to a published report Tuesday.

Most of the $42 billion being spent on national ads in the U.S. this year is under long-term contracts, according to the report. However, new options that became available to advertisers at the start of May could lead to cancellation of as much as half of spending in the third quarter, the report said.

The Wall Street Journal reported that companies such as PepsiCo, Inc. (PEP) - Get Report and General Motors Co. (GM) - Get Report are among those trying to rework deals.

The impact of sports cancellations has been particularly intense.

Last month, researcher EMarketer told the Los Angeles Times it expects ad spending tied to sports to come in $10 billion to $12 billion below its previous forecasts for the first half of the year. That's off between 22% and 29% from the same period a year earlier when the industry took in nearly $34 billion. 

Jim Cramer thinks that this may only be temporary until we get sports back on TV. 

"Nah, that's all nonsense," Jim Cramer said when asked whether or not this could permanently impact ad spending.

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