An analyst content to ruffle feathers weighs in on upfront, media evolution

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Thirty-three-year-old media analyst Michael Gallant has become known as one of the most outspoken forecasters in the business. Just this month, Mr. Gallant was featured on Forbes.com under the headline, "Bold analysts stick their neck out."

To be certain, Mr. Gallant does not run with the pack. He has been a thorn in the broadcast networks' collective side, having developed metrics that aim to deconstruct the TV-advertising upfront for outsiders by looking at ratings and translating the increases and decreases into potential dollar gains or losses.

With upfront presentations happening this week, Mr. Gallant predicts ABC will pull off its own Cinderella story. "ABC is the big winner in growth in dollars since last year. Disney is so much more exposed in broadcast, they'll sell less to maintain CPM [cost per thousand] integrity." He estimates that ABC will command a 5% increase in CPMs. CBS will come in a close second in share gains, he said, because of its Thursday ratings increases. In true form, Mr. Gallant's report doesn't pull any punches. "We believe many are underestimating the degree of share- shift impact on ad spending and company financials away from NBC."

Mr. Gallant, who followed the energy business for 11 years, then moved to telecom before landing in the media business, added: "The trends are that we're seeing auto and retail trying to shift as much to cable networks from broadcast because of a renewed focus on [return on investment] sparked by the Internet."

However he adds, "I don't think anyone can afford to make wholesale cuts on broadcast, but the Internet has proven equally effective. What I'm surprised about is how weak magazines are."

An avid reader of major sports magazines-as a loyal Bostonian, he's a Red Sox and Patriots fan-Mr. Gallant believes that magazines are an effective ad vehicle. "We're still looking for the new business models to emerge that address the fact that people are reading online. [Print media] has to figure out better ways to monetize online. It has been a struggle for the last couple of years."

Mr. Gallant believes that we are in a period of fluctuating business models. "The Google/Yahoo vs. broadcast TV is an interesting face-off. How are people addressing that? Some companies are now thinking long and hard about it."

He suggests the recent Viacom decision to split the company in two, one half containing broadcast assets such as CBS and UPN, the other housing cable assets such as MTV Networks, is reaction to what he calls "the new world environment." "Broadcasting is a slower-growth business; they'll run one for cash and one for growth," he said.

As far as which major media companies are addressing the need for rapid evolution, Mr. Gallant thinks Walt Disney Co. is ahead of the game. "They are being aggressive in trying to face the customer to capture the biggest chunk rather than just sticking with the affiliate-license-fee model."

The best example of that is ESPN's move to establish its own cellphone venture or MVNO (mobile virtual network operator). "That's an aggressive move," Mr. Gallant believes. Viacom President and Co-Chief Operating Officer Tom Freston is also looking at digital opportunities for MTV Networks, "what they're exactly working on, they haven't shown their hand," he said.

SOME MISTAKES

Though Forbes.com describes Mr. Gallant as a five-star analyst, he admits to some mistakes. He predicted the demise of the Fox broadcast network, based on expected weakness from "American Idol." That did not happen, and it remains Fox's and America's No. 1 TV show. "We're still waiting for that correction. ... If `Idol' falls apart they'll have a hard landing," he said.

Mr. Gallant added that ratings declines at ABC came around a little slower than he expected, after "Who Wants to Be a Millionaire" collapsed. "ABC took a year longer for the underlying trends to show."

Given his tough stance on the broadcast networks peaks and valleys, few executives contacted wanted to talk about him.

The broadcast networks have frequently questioned the validity of analysts upfront metrics in general, claiming that there are many more complexities to consider than simply looking at how many GRPs (or gross ratings points) each network has to sell, and whether ratings are up or down.

Ask him whether the upfront will be around in years to come, and he says it will remain unchanged for as long as the clients find it useful. And that is anyone's guess.

Just Asking

What's your media gadget of choice? TiVo

What news media do you read? All the financial publications, sports magazines and Advertising Age

Favorite TV show? I don't watch I terrific amount of TV, but I'm pretty hooked on Fox's "24."

How much are you on the road? I travel more than I care to admit, but we hit every major city in the U.S. and Canada on a regular basis, and then one or two times a year I'm in Europe and Asia.

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