Credit Suisse’s Michael Senno adds fresh data today to support the increasingly popular view on Wall Street that the TV ad market is losing steam — and may endanger the boom in media company stock prices. His survey of ad buyers indicates that they “expect modest low to mid-single digit CPM inflation and flat to slightly higher total dollar volume growth” in the 2013/2014 upfront market which follows “last year’s trend of slowing growth.” Senno predicts unit prices to rise 4% with CBS +5%, Fox and cable +4%, NBC and ABC +3%, and syndication +2%. The problem goes beyond sluggish ratings. Overall ad spending was lower in relation to the GDP than it’s been at least since 1980. And national broadcast ad sales last year were still 7% below their pre-recession peak in 2006, despite a 12.6% growth in spending by auto makers. It seems that ad buyers who are cutting spending on print newspapers and magazines are shifting more dollars to online media than to TV. All told, Senno says that TV ad sales this year will fall 2.8% — which would represent 1.7% growth if you eliminate spending tied to the elections and the Olympics from the 2012 tally. READ MORE »
The analysis today from Nomura Equity Research’s Michael Nathanson could dampen the mood at TV networks as we head into the big upfront ad sales season. The most startling discovery: total ad revenues didn’t grow at all in 2012 at the Big Media companies he tracks. Declines at Viacom and News Corp outweighed gains at Discovery and Scripps Networks while sales were “essentially flat” at CBS, Disney, and Time Warner. “Given the surge in media stocks, the aggregate 0% growth was somewhat surprising,” Nathanson says. Factoring out political and Olympics-related ads in 2012, he sees ad sales at the companies growing 3.6% in 2013. But the analyst is “cautious” about his forecast. The pickup in the U.S. economy has been “weak” and the ongoing budget stalemates portend “an uncertain economic future.” Meanwhile Internet-based media are taking market share, and driving ad rates down. “In effect, online advertising — specifically online display advertising — is enabling advertisers to reach their ‘eye-ball targets’ with less (and sometimes even no) ad dollar budget growth.” For example, last year media and entertainment companies cut their ad spending 4.2% — even as box office sales hit a record high.
Here’s the dirty little secret behind broadcasters’ campaign to change the way ads are sold — to include people who watch them up to seven days after they air (called C7), up from three (C3): It wouldn’t increase …
You wouldn’t think so based on the lousy prime time ratings for everybody except NBC so far in the 2012-2013 season. But CBS’ dauntless Chief Research Officer David Poltrack vigorously argued today in his annual industry forecast at the UBS Global Media and Communications Conference that broadcasters are in great shape. Poltrack projects that advertiser spending for time on the major broadcast networks will fall 2% next year vs 2012. That’s good: It would represent 3% growth if you factor out this year’s boost from the Olympics and the elections. “The economy is finally gaining momentum in the right direction,” Poltrack says. (Zenith Optimedia also predicts a 2% drop for network TV to $16.9B in 2013.) As for the recent ratings, Poltrack says not to worry: The slide is due to what he calls “a chaotic start” with some shows premiering a week early, the presidential debates, and Hurricane Sandy. That’s “not indicative of how the season will progress,” says Poltrack.
Analysts are starting to wrap their minds around an idea raised by CBS’ Les Moonves (here) and Disney’s Bob Iger (here) in recent earnings calls in response to questions about broadcasters’ disturbingly soft ratings in the new primetime season: With DVRs and time-shifting becoming more popular, they said, it’s time to sell ads based on the number of people who watch them up to seven days after they first air (C7, in industry jargon), up from today’s Live+3 days (C3). But the early verdict seems to be that a change would only help broadcasters a little, if at all — and won’t happen quickly. With DVRs’ ability to speed through commercials, “The problem is not ‘when’ people choose to watch particular content, it is that they are not watching advertising at all when they watch that programming,” BTIG’s Rich Greenfield says this morning. “You can try boosting viewership via C7 or even C14, but the ads are simply not being watched.” His suggestion: Networks should offer more shows on VOD, and fill them with fewer ads that are targeted to viewers’ needs and interests. The shift to that kind of model, including through TV Everywhere initiatives, “has simply been far too slow and we are being kind,” he says.
The ranking comes from Advertiser Perceptions, a company that surveys thousands of advertisers each spring and fall to see what they think about media brands with whom they might do business. The polls measure diffferent qualities that contribute to overall brand strength. ABC took the top honor for a media company, as well as for broadcast TV brand strength and sales knowledge. Another Disney-owned property, ESPN, won the brand strength competition among cable networks. Here’s the list of Media Brand winners in categories that also include print, digital, mobile, and ad networks:
Broadcasters and Pay TV distributors will have to make sure that ads have the same average volume as the shows they accompany according to the rules the FCC adopted today. It will take a year before the regulations that implement a congressional mandate — the 2010 Commercial Advertisement Loudness Mitigation Act (also known as the CALM Act) – take effect. When they do, consumers shouldn’t have to lunge for the remote control to avoid volume spikes for sales pitches. While the order sounds straightforward, the industry had big concerns: Cable and satellite companies warned the FCC that they might not be able to monitor all of the channels they carry. To deal with that, the FCC says the distributors are off the hook if they can get channels to certify that their ads comply with the rules. Large pay TV providers will be subject to spot checks every two years; regulators will investigate smaller operators if there’s a pattern of complaints. In addition, pay TV and broadcast companies urged commissioners to
The dust has barely settled from the turmoil that last week engulfed the Academy Awards cermonies for 2012, and word is out that ABC is asking from $1.6 million-$1.7 million for 30 seconds of ad time during the 2012 telecast. That’s about the same as or a bit less than the $1.7 million the network sought for the same amount of time for the 2011 show. The commotion over the departures of producer Brett Ratner and host Eddie Murphy had little to do with pricing, which was established weeks ago according to Ad Age’s MediaWorks blog. Brian Grazer and Billy Crystal quickly filled those slots. Back in 2009, prices for Oscar ads dropped to about $1.3 million because of the recession, ratings performance and other factors. Current asking prices haven’t fully restored Oscar’s luster to 2008 levels when 30 seconds of time went for about $1.8 million.