With sales cooling in television’s scatter advertising market, negotiations underway now for the huge upfront market will generate less than networks would like Nomura Equity Research’s Michael Nathanson predicts this morning in his thorough quarterly review of ad trends. He forecasts that overall U.S. sales will grow 5.6% in 2012, making him more optimistic than ZenithOptimedia (which projects U.S. sales +3.6%) and MAGNA Global (anticipating +4.0%). Television will be +6.6% this year with help from the additional spending for the 2012 election campaigns and the Summer Olympics — but will decelerate to +0.9% next year. Demand in the broader marketplace “seems to be stable,” he says, after rising 5.3% to $19.2B in the first three months of this year vs the same period last year. The 11.8% boost in Q1 online sales to nearly $5B accounted for much of the growth. But television was up 6.0% to $10.2B. The return of NBA games, following the basketball league’s lockout, helped cable networks to lead the way, +7.9% to $4.8B. But the major broadcast networks enjoyed a 5.0% bump to nearly $3B. Nathanson says that Fox’s ratings struggles with American Idol (and not including the network’s boost from the Super Bowl) offset the mid-to-high single digit growth at CBS and ABC.
AOL, Hulu, Yahoo, and Google’s YouTube are among the companies that provided so-called “newfront” presentations to advertisers this year — sales pitches urging them to divert to Web video platforms some of the billions that they plan to spend on conventional TV. Some major advertisers including GM and Samsung Mobile have said that they expect to do just that this year. But while that’s made this upfront season interesting, “we think it is still too early for online video to be meaningfully disruptive to TV,” Barclays Equity Research analyst Anthony DiClemente says in a report this morning. He notes that most viewers still flock to TV much more than the Web: The average person spent 153:19 hours a month watching the tube in Q4 — with another 11:44 hours going to time-shifted TV — according to Nielsen data. But they devoted just 4:34 hours watching Web video, and 4:20 watching videos on mobile phones. Things are changing slowly. Monthly television watching was down 46 minutes from the average at the end of 2010, more than made up by the 1:17 hours added to timeshifted TV. But Web videos were only up 11 minutes, and there was no change in video viewing on mobile phones. What accounts
It’s in almost everybody’s interest to try and gin up excitement for next week’s major TV network upfront presentations: The celebrities are lined up, and the shrimp and booze ordered, in an effort to entice ad buyers to conditionally bet billions of dollars on shows that haven’t been written yet, and ratings points that can’t be accurately measured. Wall Street analysts say that CBS will be the big winner in light of its strong ratings. For example, Credit Suisse’ Spencer Wang predicts this morning that CBS will record commitments of $2.8B (+4%), followed by ABC at $2.4B (+2%), Fox at $2.0B (+2%), NBC at $1.7B (no change), and CW at $477M (-1%). But for the most part, analysts are preparing to yawn. ”As it currently stands,” RBC Capital Markets’ David Bank writes this morning, “broadcast year 2012/13 is setting up to be a ‘boring’ year for network TV advertising, with few surprises.” He reflects the consensus view that advertisers are less likely to be stampeded into making deals than they were last year. The economy looks wobbly — nobody knows how the European debt crisis will play out — and overall TV ratings continue to slide. Demand from auto companies is robust “but likely will decelerate,” Bank says. Meanwhile pharmaceutical companies have been standoffish “and likely will continue to remain so for the foreseeable future” with fewer new products teed up and some major patents due
Cable channels are already making upfront presentations to advertisers, and those sales efforts will accelerate on Thursday when Discovery Communications introduces its fall shows. According to new forecasts out this week which do not take into account the deepening NFL labor strife, cable channel sales could hit $9 billion during the coming 2011 upfronts, up 11.5% over last year. As for broadcast, Miller Tabak analyst David Joyce projects a 14.9% increase to nearly $9.9 billion for the Big Four networks’ primetime schedule unveiling next month. Media services firm Zenith Optimedia also said this week that it expects double-digit gains in cable and broadcast sales. Car, cell phone, and banking service companies – eager to take advantage of the thawing economy – could make this upfront ad-sales season one of the strongest since 2003. Auto companies normally account for about a quarter of TV ad sales but were in a deep slump during the economic crisis giving the TV honchos fits. Now they’ll likely drive the market once more. They’re introducing 65 new models this year vs. 60 in 2010, and only 40 in 2009.