Three ways tariffs could hit media stocks, Citi says

Investing.com -- U.S. media stocks face a multi-pronged threat from tariffs, with ad-centric firms most exposed, according to a new note from Citi analysts, who outlined three key ways trade policy could pressure the sector in 2025.

Tariffs will impact U.S. media in three main ways: through lower personal consumption expenditures, equity market declines, and recession-linked shifts in ad spending, the bank wrote.

Direct Tariff Impact on SpendingCiti estimates that the sweeping U.S. import tariffs—covering about $4 trillion in goods and potentially generating $700 billion in duties—could cut personal consumption expenditures and ad spending by 1.9%. “While these measures may boost U.S. production over the long term, the near-term effect is deflationary for media revenues,” analysts said.

Wealth Effect from Market DeclinesThe second and possibly more damaging route, according to Citi, is the ‘wealth effect.’ With U.S. equity markets shedding around $8 trillion in value this year, consumer spending could decline by about 3%, compounding pressure on advertising. “This may be a larger contributor to reduced PCE and ad spending than the tariff’s direct impact,” the note said.

Recession Risk and Ad Ratio CompressionHistorically, recessions have led to a drop in the ad-to-PCE ratio, meaning advertisers spend less relative to consumer outlays. Citi believes this dynamic could lead to a further 600–700 basis points of downside to ad spending, particularly if economic activity slows further.

The impact will vary significantly by revenue mix. Ad-centric firms like AppLovin (NASDAQ:APP) and Lamar Advertising (NASDAQ:LAMR) could see as much as a 4% revenue hit in 2025, Citi estimates. Media giants such as Netflix (NASDAQ:NFLX), Disney (NYSE:DIS), and Spotify (NYSE:SPOT) may face more moderate 2% headwinds, while contract-revenue-focused players like F1, TKO, and Universal Music (AS:UMG) are expected to be least affected, with around 1% revenue impact. Lionsgate may be the most insulated, Citi said.

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Citi notes that while longer-term benefits could emerge if companies eventually move production to the U.S., most firms are unlikely to do so unless tariffs appear permanent—leaving the short-term outlook for media stocks skewed negative.

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