LOS ANGELES (Reuters) -The risk of a tariff-induced U.S. recession is hanging over the television industry's annual upfront selling season, when companies stage star-studded pitches to coax brands to commit to spending billions of dollars on advertising in the year ahead.

Starting Monday, the presentations in New York kick off weeks of negotiations in which television networks and streaming services typically lock in the largest share of their ad revenue for the year.

YouTube promises a performance by Lady Gaga and an appearance from one of its biggest stars, Mr. Beast. NBCUniversal will host its presentation at Radio City Music Hall and Warner Bros. Discovery ( WBD ) at Madison Square Garden.

But the champagne-fueled parties will take place against a backdrop of economic concerns, stemming from U.S. President Donald Trump's on-again, off-again tariff policies, which economists warn may lead to a recession.

While major media companies have not reported any decline in ad demand, industry analysts predict brands will reduce their spending as consumer confidence wanes.

Research firm eMarketer projects ad spending on traditional television during the upfronts could fall to $13.4 billion, down $4 billion from last year, depending on the level of tariffs that take effect. The Trump administration is negotiating deals with a number of major trading partners, including China.

For digital ads on online devices, the worst-case scenario is that spending will stay flat at around $13 billion, eMarketer said. If tariffs are limited, digital ads could rise to $14.7 billion.

Data firm Guideline said a pullback was already evident. Ad spending rose 7% in the first quarter compared to the same period in 2024, but future bookings suggest growth could decelerate to 3% in the second quarter, Guideline said.

Media executives acknowledged some brands might feel nervous, but said there could be a cost to cutting ad spending.

"Clients learned some important lessons during COVID, when a lot of advertisers pulled back very quickly and then had to redeploy those funds," said Jeff Collins, president of advertising sales, marketing and brand partnerships at Fox. "And I think that they're trying not to have a knee-jerk reaction to what is happening now."

Advertisers that wait to purchase time at the last minute in the so-called "scatter" market sometimes pay double-digit percentage increases in rates, Collins said.

Fox had not yet seen any impact on ad demand from tariffs, he added.

Karen Kovacs, president of advertising sales and partnerships at NBCUniversal, said brands that continued to spend on advertising during past downturns maintained better sales and market share than others that cut back.

NBCU parent Comcast ( CMCSA ), in its latest earnings report, said ad revenue was roughly flat during the first three months of 2025.

BUYER'S MARKET

Sellers of ad time may need to give concessions on pricing and cancellation terms to win business, said eMarketer senior analyst Ross Benes, adding tariffs would have most impact on the advertising of physical products like cars and consumer goods.

Digital players like Google's YouTube or Facebook parent Meta will likely emphasize the use of artificial intelligence to help brands reach customers more efficiently, said Greg Kahn, CEO of GK Digital Ventures media advisory firm.

Many U.S. companies have cut or withdrawn their annual forecasts, citing an uncertain trade environment, including General Motors ( GM ), Kraft Heinz ( KHC ) and bleach maker Clorox.

Clorox is evaluating how much it spends on advertising, CEO Linda Rendle said on an earnings call last week.

"We're going to continue to invest strongly in our brands, but at what level makes the most amount of sense given the returns that we're getting," Rendle said.

Still, some media firms remain upbeat.

Disney ( DIS ) expects annual advertising growth to surpass its previous 3% forecast, while Netflix ( NFLX ) co-CEO Greg Peters said in April the company was not seeing any signs of softness in its pre-upfronts discussions.

The company does not disclose ad revenue, but analysts polled by LSEG project Netflix ( NFLX ) will bring in $2.7 billion from advertising in 2025. Netflix ( NFLX ) launched its ad-supported options in November 2022 and is still in the early stages of building that business.

"That smallness probably provides us some insulation to market shifts right now," Peters said, adding that Netflix ( NFLX ) expects to double ad revenue this year.