/// Analyst: Broadcasters Poised for Another Strong Upfront

April 10, 2012  |  Media Week

In the absence of any verified client budgets, talk about what’s in store for the coming upfront marketplace is highly speculative. That said, macro-economic trends seem to portend another robust sales period. In a note to clients, Janney Capital Markets analyst Tony Wible said he believed that ratings leaders CBS and Fox were poised to set the market, eyeing 10 percent CPM increases for both broadcasters. By Wible’s estimation, ABC is in position to command a 7.5 percent rate hike over 2011-12 pricing, while NBC is likely to write 6 percent increases. CBS has already indicated that it would look for double-digit rate increases. In late February, CBS Corp. CEO Les Moonves told investors that a reviving scatter market and strong demand would pave the way to pricing hikes of 10 percent or greater. Much of Wible’s enthusiasm stems from improving economic indicators and a stronger-than-anticipated automotive market. “The economic backdrop should help ad sellers,” Wible wrote in the report. “Consumer spending appears to be rising, and the auto market is poised to benefit from pent-up demand and the spike in fuel prices that may push sales of newer, more fuel-efficient, cars.” Wible added that while political spend typically goes to local media, election campaign dollars “should nonetheless increase demand for broader advertising and help sustain momentum in the scatter market that helps set the pricing benchmark for the new upfront.” As automotive accounts for 13 percent of all advertising revenue at the Big Five broadcast nets, analysts have seized on U.S. car sales data to support their upfront theses. Late last month, Moody’s Investors Service svp Neil Begley said domestic auto sales were on pace to grow 9.3 percent to around 14 million units, a spurt that should lead to record-high pricing in the upfront. While pricing is looking up, Wible wrote that he believed dollar volume would be a mixed bag across the broadcast slate, given the range of available GRPs in play. Through the first 28 weeks of the TV season, Fox is down 8 percent in the 18-49 demo, averaging a 3.2 rating, while CBS is up 3 percent with a 3.1. Thanks in large part to the Super Bowl, NBC is in third place with a 2.6 rating, up 8 percent versus the 2010-11 campaign, while ABC is flat with a 2.4. “Ironically, it may be the networks with the largest ratings declines that will see the largest CPM price increases,” Wible said in the report

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Analyst: Broadcasters Poised for Another Strong Upfront


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