The overall TV upfront market is expected to increase 4.8% to $14.1 billion, with 5% increases for broadcast networks, cable and syndication and flat revenue for the kids' upfront, according to Ad Age's final pre-upfront survey of media executives. But program prices-cost per thousand viewers (CPMs)-likely will fall for many sellers, especially in cable and syndication.
In a rare occurrence, media executives predict that while broadcast networks could eke out a 2% to 3% CPM gain, cable and syndication CPMs on average could decline 1% or 2%. Typically, program pricing moves in a similar pattern across all major national TV.
The dollar forecast for this year's upfront: Broadcast prime time, $7.1 billion; broadcast outside prime time, $700 million; cable networks, $4.1 billion; syndication, $1.6 billion; kids, $600 million. The upfront market refers to ad commitments for the coming TV season.
Cable's outlook is mixed: Cable viewers have access to more channels than ever, and cable's share of audience is growing. But media executives say all of that translates to an oversupply of cable ratings points, which means average CPMs could fall slightly even though overall cable revenue will increase.
`a hell of a deal'
"Cable [networks] have become a hell of a deal," said Dan Rank, managing director of Omnicom Group's OMD USA, New York. "They are 10% more efficient now than they were."
Media executives predict broadcasters will see a split market in prime time, with strong gains for Viacom's CBS, General Electric Co.'s NBC and two upstart networks, AOL Time Warner's the WB and Viacom's UPN (see chart). The big losers: Walt Disney Co.'s ABC and News Corp.'s Fox. If the predictions are correct, CBS will displace ABC as the No. 2 upfront seller.
"All the signs point to stronger upfront," said Joe Abruzzese, president-advertising sales for the CBS Television Network. "The scatter has progressively gotten stronger, and that's a good sign. The third quarter is phenomenal, with some pricing up 40% over the upfront." Scatter refers to time bought during the season.
Mr. Abruzzese wouldn't speculate on whether CBS will repeat its 2001 strategy of holding back ad inventory from the upfront. The sales directive from Mel Karmazin, Viacom president-chief operating officer, had CBS selling less inventory in last spring's upfront because of depressed pricing. CBS now says it made the right decision because of the booming prices in the scatter market.
For this upfront, Mr. Abruzzese said the strategy in part remains the same: Not to sell at lower prices. However, he said, "We will be more sold out than last year."
For CBS it's an issue of price against the adults 18 to 49 demographic. CBS, for the last few years, has been priced at a discount to the other network such as NBC, ABC, and Fox. Since the network has improved its situation in the 18 to 49 race-it is No. 2 to NBC-CBS feels it is still a bargain for advertisers. "We are still competitive in price," said Mr. Abruzzese. "We have closed the gap."
The upfront comes in a midst of a transitional year for TV advertising, one where advertisers are still looking for overall leverage. More marketers are attempting to do early upfront deals in the hope of getting low prices or other incentives.