The broadcast network prime-time upfront-the locomotive that moves the market-posted a whopping 20% increase in expected revenue to $8.1 billion for the coming season. That has had media executives hoping for a major turnaround from a year ago, when TV ad revenue fell for the first time in a decade.
Now, industry executives say expectations should be much more modest. At the end of the coming TV season, overall ad sales for broadcast network prime time will be up only about 5% to $8.6 billion, according to an Advertising Age projection based on interviews with TV buyers, sellers and analysts. That's after accounting for upfront sales, upfront cancellations and scatter-market sales.
The TV upfront market takes place in late spring and early summer when advertisers buy time for the season that begins in September. Buyers get an option to cancel a percentage of their upfront commitments. Scatter is TV time bought during the season on a quarter-by-quarter basis.
The broadcast network prime-time upfront rose 20%. But scatter sales could fall about 32% to $1.5 billion. The bottom line: Prime-time broadcast network revenue next season should rise only about 5%.
The sluggish market reflects expectations from media-agency executives that marketers haven't increased TV budgets but merely shifted money into the upfront from dollars that otherwise would have been spent next season in scatter.
"A good 70% of the increase seems to be money moving from scatter to upfront," said Rino Scanzoni, president of national broadcast for WPP Group's Mediaedge:CIA.
The bad news for marketers was that this season's current tight scatter market witnessed major price hikes in the 15% to 25% range over depressed upfront pricing set in June/July 2001.
buying in bulk
TV advertisers figured better TV deals would be found by apportioning more of next season's TV budgets into the upfront, where they can buy in bulk for presumably lower prices. So far, this strategy has paid off as the average network cost-per-thousand viewers (CPM) during last month's upfront only rose in the 5% to 10% range.
The big question mark for next season is how strong the scatter market will be. Industry estimates are that scatter dollars could drop substantially to $1.5 billion for the coming broadcast prime-time season vs. this season, which has seen a roaring $2.2 billion scatter market.
In the current season, big scatter money came because networks, especially Viacom's CBS, sold less inventory in the upfront than the year before.
Cable networks' sales have indicated a less-robust TV advertising picture. "We wrote many decreases in cable," said one veteran media-buying executive.
The cable TV market really was two radically different markets. First there were general-interest entertainment networks, which suffered with weak CPMs because of a glut of inventory. They represent about half the $4.4 billion upfront cable market. For the first time in recent memory, a number of major established cable networks couldn't keep pace with broadcast networks during the upfront market. Cable channels such as USA Network offered a reduction in CPMs of 10%; Lifetime offered mid-single-digit reductions (see related story, P. 23).
Second was the niche or new networks' market, which witnessed solid price increases as marketers looked to be more efficient with targeted media buys.
Non-prime-time broadcast network dollars more or less remained the same, according to advertising executives. The biggest daypart-daytime TV-saw lower or weaker dollars. The same was true for broadcast news shows. But early morning news shows and late-night programs showed improvement.
good news for syndie
Good news hit the syndication market, where overall upfront revenue jumped about 16%, according to Ad Age estimates. The year before, syndication took a bloodbath as advertisers cut spending almost 30%.
The kids' upfront improved slightly, also benefiting from a strong scatter market in the 2001-2002 season, particularly in this year's second quarter.
Strong categories for kids' TV included increased budgets in theatrical movies, home video and video games, according to executives. On the opposite end, the toy business was down. The kids' food business was flat vs. a year ago.