Cable's top
advertising executives are more bullish than Wall Street about how the upfront
is shaping up. In a recent report, analyst David Bank of RBC Capital Markets
predicted that media budgets will be up just 2%, with spending in the broadcast
upfront dropping about 2% and cable spending increasing 4%-5%. Last year, cable
upfront volume rose 5% to $9.8 billion, according to the Cabletelevision
Advertising Bureau.
UBS analyst John
Janedis sees money moving from broadcast to cable. "Marketers continue to look
for efficiencies and cheaper CPMs, particularly with CPM deflation across some
media," Janedis said in a recent report. "As we approach the upfront, we expect
incremental share to shift to cable relative to broadcast, particularly smaller
cable nets with strong audience trends."
Executives on the
sales side see bigger things brewing for cable. Lou LaTorre, president for ad
sales at Fox Cable Networks Group, sees the cable upfront crossing $10 billion
for the first time, topping out at $10.3 billion or $10.4 billion. He also
expects cable volume to rise 5%-7%, adding that it could do better if GDP
growth improves. By contrast, he sees broadcast down 2% in terms of traditional
TV ads, but up 2% with "fluid" digital inventory counted. "It's a healthy
market. Pricing's been strong all year," LaTorre said.
That would be a good
jump, though not enough to push cable prices to parity with broadcast. That
would require a tidal wave, according to Joe Abruzzese, Discovery's president
for ad sales. "If broadcast went from $8 billion to $6 billion and cable went
from $9 billion to $11 billion, if there was a $2 billion swing from broadcast
to cable, cable would be forced to raise their rates because it wouldn't fit
the inventory," he said. "Broadcast would look at it and say, ‘There's not
enough money. I need to get more sold out and lower the price.'"
Abruzzese says that
scenario is unlikely to happen this year. "If that was going to happen, I would
have gotten some phone calls already. I would have gotten pressed with some
early deals."
Looking ahead,
Abruzzese says things are only getting stronger. "We're having a [very strong]
second quarter. Lots of volume. We're getting very sold out," he said.
David Levy,
president of ad sales, distribution and sports at Turner Broadcasting, also
anticipates a strong upfront. "I'm seeing double-digit scatter pricing in the
second quarter. I saw it in the first quarter as well. I see no cancellation
options," Levy said. In fact, he added, "It's been a long time since I felt
this confident about an upfront."
Digital will be a
factor, but Levy doesn't see it stealing money from TV. "A lot of the brands we
have here at Turner-CNN, Funny Or Die, Bleacher Report-are certainly going to
play a role in this upfront, and I think TV Everywhere is really starting to
take shape and move in the right direction," he said. That means more content
being viewed on different devices and more opportunities for marketers to
advertise on that content.
"When dynamic ad
insertion is universal, budgets will gravitate to it because it will then
accommodate the creative and timeline flexibility most clients need," added Fox
Cable's LaTorre.
