Upfront Forecast: Broadcast Will Dip, Cable Will Rise 5%

MediaDailyNews

by Wayne Friedman, Yesterday, 9:58 AM 

This is a viable reason why station management needs to move forward and increase focus on local-direct revenues. Philip Jay LeNoble, Ph.D.

This year’s upfront looks more like a repeat of a year ago -- slightly higher volume for cable networks, slightly lower revenues for broadcast networks, with digital video spending gaining a little.

JP Morgan Equity Research believes, according to media buyers, that broadcast network upfront dollar volume will decrease around 2% to 3%, with cable network revenues up 5%.

Upfront revenue estimates made a year ago for the 2013-2014 season for all ad-supported cable networks was $9.8 billion -- up about 5% from the season before -- with broadcast networks around $9.1 billion, off about 2% from the previous upfront market.

Broadcast networks will be looking at low-single digit cost-per-thousand increases (CPMs), with cable networks gaining 5% on average, according to the JP Morgan report.

That said: “The buyers noted significant stratification within cable, with the best networks expected to secure pricing and volume gains well above 5%.”

In addition, "scatter and the upfront may likely be stronger than these buyers’ predictions.” JP Morgan noted. Magna Global revised its overall forecast for U.S. advertising spending to grow a somewhat healthy 6.0% for 2014 -- up from its December forecast of 5.5%.

The second-quarter scatter market has been somewhat weak, according to media buyers who talked to Media Daily News recently -- with pricing a bit higher or close to that of upfront pricing set last year. The second quarter is often viewed as a barometer for the upfront market.

Digital video advertising might see some gains in share this upfront TV market -- although digital video consumption is tiny, compared to all TV consumption. JP Morgan says viewership on all digital platforms only accounts for 6% to 7% of total viewing.

It also says there is “overall growth in allocated digital spend during the planning and strategy process, as well as with online video to supplement TV spend. ... We may start to see a greater impact to TV going forward (maybe 1%-2% this year).”