Report: Upfront market looks to be flat


networksThe upfront ad sales season is under way, but no amount of glitz can make up for what is likely to be another anemic market for TV commercials, says a WSJ story.

Amid shrinking audiences and intensifying competition for ad dollars from online video outlets like YouTube and Yahoo, and Hulu, the overall volume of upfront commitments to networks for the fall season are likely to be essentially flat, analysts say. Spending commitments for broadcast networks are expected to drop by 2%-3%, projects Magna Global. The slightly larger volume of money flowing to cable channels could rise 4%-5%, Magna says. On a combined basis, the firm anticipates volumes will be up about 1%.

Magna Global’s volume projections for the 2013 upfront were almost identical to its estimates for this year. And the Journal reported that Fox network took in 10% less in ad dollars in 2013 while CBS was flat. ABC was flat to down. NBC, boosted its take. For FY, ad spend on television dropped 0.1%, according to Kantar Media, to $74 billion.

The challenge facing television is reflected in sharp declines in viewership for many TV networks, particularly in the younger demos that advertisers pay most for. Among 18-49 the group, this season’s average prime-time audiences through 3/30 were down 19% at CBS and 6% at ABC but up 3% at Fox and 22% at NBC. These ratings, which include the impact of the Super Bowl which aired on Fox this year and CBS last year, and the winter Olympic Games that aired on NBC, cover the seven days after broadcast. Advertisers pay for viewers only up to three days after broadcast: the “C3” currency

Lou LaTorre, president of ad sales for FX Networks, echoed the prediction that ad spending on cable will be up 5% at this year’s upfront. He added that he expects a tough year for the broadcast networks. “I don’t think there is going to be an increase for that group,” he told WSJ. “In fact, I think some of that money will migrate to cable and digital.”

NBC, which has improved in the ratings this year, is particularly bullish. Addressing the question of video websites snatching away TV money, Linda Yaccarino, president of advertising sales at NBCUniversal, said: “Am I sweating them? No. Am I aware and watching them? Yes. The difference is we have a collection of content that no one can compete with.”

CBS Corp. CEO Les Moonves, known for his optimistic upfront predictions, said recently he was “pleased” with the ad pricing for the NCAA tournament and that “as we head into the rest of the season, post Olympics, everything for us is looking great.”

And of the 15 cable channels with the largest number of viewers in 18-49, nearly all had their audiences shrink in the 12 months ending 3/30, compared with the previous year, according to Nielsen data. TNT was down 8.9%, USA was down 6.3%, FX was down 5.1% and History Channel was down 13.7%.

However, AMC had a 27% jump in 18-49 viewership, and NBCU’s Bravo was up 3.7%.

See the Wall Street Journal story here.

RBR-TVBR observation: When ratings numbers go down, so to the dollars. While anyone can blame cord-cutting, migration to viewing online or just a general movement toward time spent with social media, another big factor is the ever-increasing amount of VOD programming available—which is not credited viewing (DVR up to three days after airing is). And yes, there is a lot of money going to Hulu, Netlix and YouTube. In fact, you almost can’t watch anything at all on YouTube anymore (not even counting original programming) without seeing an ad preceding it these days.