Listen to (and share) episode 35 of our audio podcast Deadline Big Media With David Lieberman. Deadline’s executive editor joins host David Bloom to discuss the advertising upfronts this week, including the CBS victory lap and whether an auto ad spending blitz will finance this year’s pricey programming; Daniel Loeb’s (and possibly Les Moonves’) plans for Sony; and National CineMedia’s whiz-bang new technologies to give exhibitors and studios more bang for their in-theater ad bucks.
I hear CBS might be done ordering new series, at least until after its upfront presentation on Wednesday. The network already has picked up five comedy series and three dramas, including two pickups on Sunday, of drama Reckless and comedy …
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.
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
Advertisers like NBC’s and Fox’s decisions to add comedies to their fall lineups but say the clips shown to them today don’t show enough to suggest whether any will become hits. ”Comedies are the hardest …
Here’s why: Media stocks are up 24.4% over the last six months, outperforming the benchmark Standard & Poor’s 500, which rose 15.1% over the period. So they already reflect a lot of optimism. But investors may be disappointed by upcoming news about ad sales, ratings, and ticket sales, Nomura Securities analyst Michael Nathanson says in a report out this morning. His warning comes as media executives prepare to release their quarterly earnings and talk to Wall Street about the state of the business. They conduct hour-long infomercials designed to persuade the world that everything is fine — or, if it manifestly isn’t, that it’s someone else’s fault.
But Nathanson says the companies’ go-go projections about over-the-top ad sales miss how much Japanese auto makers are cutting production as they grapple with parts shortages following the country’s earthquake and tsunami. For example, Toyota will crank out 35,000 fewer cars than planned in North America in March and April. That’s a big deal: Auto companies typically spend about $1,200 on ads for each car they sell. Meanwhile, overall broadcast and cable network ratings stank in the first quarter. The Big Four networks’ live ratings were down 15.9% vs. the same period last year. As for movies, if you don’t know about this year’s miserable ticket sales, then you aren’t paying attention — although Nathanson says that box office would have been up 11% if last year didn’t include Fox’s Avatar and Disney’s Alice In Wonderland.
Discovery Communications’ networks will hold their upfront presentation in New York this afternoon. Here is the new programming they will be announcing. (The slate for OWN’s, Discovery’s co-venture with Oprah Winfrey’s Harpo, was announced separately.) Flagship Discovery Channel is adding four new unscripted series to its lineup, including Penn & Teller’s Secrets of the Universe. TLC has picked up new spinoffs of its Say Yes to the Dress franchise. New series also include the previously announced Homecoming, hosted by Billy Ray Cyrus, and I Kid, starring Brad Garrett. TLC also has acquired the U.K. series Big Fat Gypsy Wedding and will develop an American version. Animal Planet will add 14 new series to its lineup, including Romance is Dead, about a family running a taxidermy shop in Romance, Ark., and my personal favorite, Ned Bruha: Skunk Whisperer. On the heels of its recent facelift, Science announced a second season of Ricky Gervais and Stephen Merchant’s An Idiot Abroad, An Idiot Abroad: The Bucket List. Here are descriptions of the new programs by network:
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.