Broadcast TV Enjoys 'Upfront' Lift, but Long-Term Gains Uncertain
July 13 2017 - 4:30PM
Dow Jones News
By Suzanne Vranica
The problems plaguing digital advertising have helped broadcast
TV networks achieve a positive outcome for the annual advanced TV
ad selling season.
The top broadcast TV networks including CBS Corp., 21st Century
Fox's Fox, Comcast Corp.'s NBC and Walt Disney Co.'s ABC have
largely wrapped up their annual "upfront" negotiations, the time of
year when advertisers commit to buying the bulk of ad inventory for
the coming TV season.
Jefferies & Co. estimates that prime-time ad spending
commitments for broadcast TV are up about 3% compared with last
year, to $9.2 billion, while Pivotal Research Group estimates a 4%
jump in volume.
Ad buyers and analysts said the upfront was more robust than
some had expected. That is partly because some advertisers --
concerned over issues in digital advertising such as ad fraud, the
viewability of ads, and risks for brands that appear adjacent to
objectionable content -- moved money back into television, they
say.
The positive momentum was also fueled by advertisers who have
decided to make ad commitments early this year instead of waiting
for the "scatter market," when ad time is bought closer to air
date, according to analysts and ad buyers.
"The increase in total dollars is a combination of effectively
selling digital and part of the scatter budgets being pulled
forward into the upfront," said John Janedis at Jefferies, who
earlier this year had predicted that the overall volume of ad
dollars being committed during the upfront this year would be
down.
Mr. Janedis added that the prime-time volume gains were largely
driven by NBC. ABC had 3% to 5% increase in prime-time broadcast
volume, according to a spokeswoman for the network.
Broadcast networks saw strong demand for morning news and
late-night TV, ad buyers said. Morning news programming benefited
from consumer packaged good companies that committed more ad
dollars this year and were seeking cheaper inventory.
To be sure, the upfront ad-selling season is full of murky math
-- ad buyers and network executives offer their best spin on
negotiations -- and success at the upfronts doesn't necessary
translate into long-term financial gains.
Moreover, advertisers have the ability to cancel a portion of
their upfront commitments during the course of the year. And it's
impossible to tell whether advertisers with bigger upfront
commitments are increasing overall spending for the year or simply
shifting spending they would have done in the scatter market.
"We caution over-reading into" upfront numbers because
"negotiated volumes in upfronts do not necessarily turn into actual
revenues," said Brian Wieser, a senior analyst at Pivotal Research.
"We can note that last broadcast year's prime time volumes grew by
approximately +6%, and yet it seems likely total revenues for
owners of national TV properties are set to be flat or slightly
down during the 2016-17 season," he said in a note to
investors.
Despite the upbeat outcome, don't expect too much celebrating.
The television business continues to be under enormous pressure,
with ratings trending down and consumers increasingly gravitating
to ad-free video services offered by the likes of Netflix and
Amazon.
Despite its many issues, online advertising continues to
grow.
Digital ad spending reached $71.6 billion in the U.S. last year,
overtaking for the first time TV spending, which totaled $71.2
billion (excluding outlays on TV programming that runs online),
according to estimates from eMarketer.
Write to Suzanne Vranica at suzanne.vranica@wsj.com
(END) Dow Jones Newswires
July 13, 2017 16:15 ET (20:15 GMT)
Copyright (c) 2017 Dow Jones & Company, Inc.
Comcast (NASDAQ:CMCSA)
Historical Stock Chart
From Mar 2024 to Apr 2024
Comcast (NASDAQ:CMCSA)
Historical Stock Chart
From Apr 2023 to Apr 2024