Recently released figures for advertising spending show that the market continues to be tough, but that doesn't mean money can't be made by buying media shares.
In a research note sent to clients this week, the team at Macquarie have named their top pick in the media sector.
Even the companies Macquarie has a neutral rating on are changing hands below its price targets, meaning double-digit gains might still be on the table.
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Ad spend weak in October
Macquarie said the Standard Media Index – a measure of Australian ad agency spending – showed that spending for October fell 15% compared to the same month last year, and across the first half of the year to date, spending was down 7%.
Spending in the out of home sector was down 6% for October, while free-to-air TV spending was 16% lower for the month.
Macquarie said further:
The ad market does not look to have seen the expected stabilisation during the December quarter, which generally makes up 27% of volumes. There is however some optimism into early-2026 for improvement, but without clear catalysts, noting: 1) Australia likely moving to a rate hike cycle and 2) booking visibility still short.
Macquarie said that media stocks generally underperformed when rates were rising, but it did name one company it expected to outperform, in oOh!media Ltd (ASX: OML).
For Nine Entertainment Co (ASX: NEC) and Seven West Media Ltd (ASX: SWM), the broker's research team said they remained cautious with regard to free-to-air television advertising spending, "and the need to constantly manage costs to support earnings''.
Revenue set to increase
Positives for oOh!media included an increase in out of home spending of 9% year to date, despite the weakness in October.
Macquarie is predicting 6% year-on-year revenue growth for the company, "supported by positive 1Q26 feedback, although visibility is low, and an Australian rate hike cycle may impact growth''.
The Macquarie team have a price target of $1.45 on oOh!media shares, compared with $1.29 at the close on Tuesday.
With regard to Nine and Seven, Macquarie points out that the FTA TV market has been in structural decline for the past 10-plus years.
Looking at the fourth quarter of 2025, the expected stabilisation of total TV revenues (FTA + broadcast video on demand growth) across the industry does not seem likely as FTA declines (over 80% of volumes) continue to more than offset BVOD. During October 2025, we estimate that total volumes were down 9%-11% and November / December also looks challenging, with Nine recently commenting that 'the total TV market remains soft and very short for the run into Christmas'.
Macquarie said for both Nine and Seven, "further cost initiatives will be paramount to protecting profitability''.
Despite not being bullish on the advertising market, Macquarie's price targets for both shares are above current trading levels, with a target of $1.25 for Nine, against a price of $1.11 on Wednesday, and a price target of 16 cents for Seven, compared with 13.5 cents.
Seven is also currently undergoing a process to merge with Southern Cross Media Group Ltd (ASX: SXL), with the deal announced in late September.
