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TV Upfront Market, After A Slow Start, Might Be Helped By Stable Economy

Deadline logo Deadline 6/23/2017 David Lieberman
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The adage about a rising tide lifting all boats seems to be especially relevant to the major television networks as they swing into the homestretch of this year’s upfront ad sales season.

Early indications suggest that ABC, CBS, the CW, Fox and NBC collectively will  meet or beat analyst expectations to sign deals worth more than $10 billion — up from $9.8 billion last year — for the season that begins this fall.

Nothing’s certain. This year has been a tough sell; the market’s moving slowly. CBS and the CW virtually have wrapped, but other networks still are slogging through the process of selling as much as 80% of their inventory for the coming year.

Still, industry watchers were surprised and encouraged by CBS and CW’s results.

CBS’ per-viewer prices for its primetime inventory rose by high-single-digit percentages with flat volume vs. last year. CW raised pricing by high-single-digit-to-low-double-digit percentages and volume by 3%-5%.

That might say more about the health of the economy, and changes in the way networks sell ads, than about advertisers’ feelings about network TV and the fall primetime lineups.

The “strong macro” economy suggests that “the TV ad market is likely to hold in better than feared,” RBC Capital Markets’ Steven Cahall said.

Last week the Federal Reserve showed its confidence by lifting the Fed funds rate for the third time in six months. That “reflects the progress the economy has made and is expected to make toward maximum employment and price stability,” Fed Chair Janet Yellen said.

Consumer packaged-goods companies, drug makers and quick-service restaurants helped corporate siblings CBS and the CW.

Other networks also might cash in on continuing strength in travel, telecom and financial services.

Analysts who tried to handicap the upfronts were chilled when network owners reported weaker-than-expected Q1 ad sales. Several signs suggested that it wasn’t a blip.

The auto boom appeared to be over early this year as sales declined for Ford, Nissan, GM and Toyota. Movie studios are disappointed by ticket sales so far in Q2. And retail seemed to be cratering with announcements of store closings for chains including Macy’s, JCPenney, Sears, Kmart, Gymboree, GameStop, Staples, CVS, RadioShack and Payless ShoeSource.

“Pharma, [quick-service restaurants] and telcos have all piled into National TV in recent months,” Standard Media Index CEO James Fennessy said, “but the big categories of movies and auto continue to pull money out of National TV and experts in the space are questioning at what point does this start impacting sales.”

On top of that, the major broadcasters saw total viewers, and those in the target 18-49 demo, continue to decline for their primetime shows in the season that ended in May.

CBS avoided some of the pain by increasing prices for its strengthening morning and late-night shows, including the Late Show with Stephen Colbert. They saw prices rise by as much as low-double-digit percentages.

NBC’s also said to be seeing seeing strong demand for late-night.

Early reports also indicate that advertisers are warming to network owners’ efforts to sell inventory in novel ways. Everybody’s packaging network inventory with cable and digital.

They also offer granular data — including from sources other than Nielsen, the traditional gold standard — to help buyers identify opportunities. Companies that sell, say, dog food want to reach dog owners. not just men or women of a particular age bracket.

Digital platforms including Google and Facebook offer that kind of specificity.

As a result, buyers “have expectations of full-time transparency,” said Brendan Condon, president of AdMore, which helps advertisers and agencies with targeted buys.

The data are “supplemental” to the TV sales process, he added. But the numbers reassure advertisers who became skittish about digital after seeing cases where YouTube and Facebook algorithms linked major brand messages to content from jihadist and hate groups.

Industry watchers will be especially interested in seeing how well Fox Networks, Turner and Viacom fare with OpenAP, their new TV ad sales targeting consortium.

“I’ve heard good things about it in the marketplace,” said Mark Lieberman, CEO of Viamedia, an independent cable ad company. “It’s a big step in the right direction. My guess is it will have a positive impact.”

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