In RBR/TVBR's May print issue examining the upfront process, we look a bit into predictions for 2005-2006's upfront. What about demand and potential CPM increases this time around? We excerpt a bit: It's a bit soft, as most are saying, due to an unimpressive scatter market. In fact, scatter pricing is down 5% overall vs. 2004-2005 upfront pricing. ZenithOptimedia Group predicted in its recent updated forecast that the 2005-06 network upfront will be "relatively soft." "Telecom and retail mergers, government scrutiny, high oil prices and the weak dollar have led advertisers such as P&G, Pfizer, Merck, and Kraft to exercise cancellation options at generally higher rates this year," noted the report, which predicts network TV ad spend will climb only 3% in 2005.

However, Jack Myers of the Myers Report, in an upfront forecast released this week, sees a comparatively robust upfront for the networks. His upfront spending forecast for the networks to 3.2%, to 9.365 billion, from a 600 million loss he had earlier anticipated. Like Roehm (see below), he expects network CPMs to grow 5% to 6%. Myers is now forecasting 11% growth for cable, to 7.1 billion; syndication growing by 8.2%, to 2.375 billion, for a total upfront of 18.84 billion, or 6.6% over 2004-2005.

The chart, below, tells the recent upfront history since 2001.

UPFRONT TRENDING Source: Merrill Lynch
Expenditures - 2001-2004 $ in Billions
Media	2001/02	2002/03	2003/04	2004/05	% Change Past Yr.
6-Net Avg. (primetime)	$ 6.98	$ 8.00	$ 9.04	$ 8.90	-2%
ABC	$ 1.70	$ 1.49	$ 1.50	$ 1.25	-17%
CBS	$ 1.40	$ 1.88	$ 2.18	$ 2.35	8%
NBC	$ 1.90	$ 2.56	$ 2.90	$ 2.80	-3%
Fox	$ 1.30	$ 1.26	$ 1.50	$ 1.50	0%
UPN	$ 0.20	$ 0.23	$ 0.25	$ 0.40	60%
WB	$ 0.48	$ 0.58	$ 0.71	$ 0.60	-15%
Cable	$ 4.00	$ 4.10	$ 5.50	$ 6.60	20%
Syndication	$ 2.15	$ 2.10	$ 2.40	$ 2.75	15%
Kids	$ 0.76	$ 0.76	$ 0.81	$ 0.91	12%
Univision and Telemundo	$ 0.71	$ 0.82	$ 0.96	$ 1.11	16%

"This year's upfront will unfortunately, continue its legacy of increased prices with decreasing ratings," complains Julie Roehm, Chrysler Group Director of Marketing Communications. "To what extent, I would guess in the 5% range. Optimistically, I continue to hope that the sellers and buyers can gather to discuss alternatives to this process hopefully spurred on our friends at the TVB or ANA."

For the categories, Carat Americas CEO David Verklin estimates Entertainment will continue to be very strong, there will be some solid strength in packaged goods and overall, automotive will be down. Pharmaceutical, he thinks, will be down. "I think you're going to see some pickup in telephony, which is a really hot category. And I think you're going to see another category begin to pick up this year-the web-using TV to drive traffic to websites: 'Digitally-centric direct marketing'."

PHD CEO Steve Grubbs agreed, that in general, "We don't see any substantial increase in demand from any product categories. The marketplace feels softer than a year ago."

OMD Managing director Ray Warren tells us the mood is that over the last two years, scatter has not been priced well, which means the upfront has been overpriced: "I think that everyone will be very cautious as to this year's upfront marketplace. And I don't think that helps the sellers-the fact that Q2 is not robust, when normally they love that, going into an upfront. It's not helping-there is no wind at the backs of the sellers. If anything, it's at the backs of the buyers."

Jon Nesvig, President/Ad Sales, Fox Broadcasting, says the scatter market hasn't been roaring, where people are paying big premiums, but there are apples and oranges comparisons as well: "Our scatter vs. our upfront is ahead of our upfront, for instance, in terms of pricing."