Media economy
A slightly rosier outlook for the upfront
By Kevin Downey
Mar 24, 2009 - 8:46:32 AM

With the ad economy suffering and the U.S. economy on the ropes, one might expect the worst for the upfront market for the broadcast and cable television networks, with advertisers holding back spending on the coming year's shows.

But actually, while it's still early to be making solid predictions, prospects for this year's upfront are decent and improving as the weeks go by.

Last year advertisers committed some $9 billion in ad dollars to broadcast networks and nearly $8 billion to the cable networks, and it appears this upfront will match those figures when media buyers and sellers open negotiations, typically in late May.

One positive sign is that prices in the scatter market have been inching up.

“Network scatter pricing is generally slightly above last year’s upfront from what I can discern,” says David Joyce, an analyst with Miller Tabak in New York, of second-quarter scatter.

“That’s pretty good given how bad first quarter is from the loss of automotive and financial advertising at the local and national levels.”

When prices are rising in the scatter market, where ad inventory not sold in the prior upfront is auctioned off, advertisers have that much more incentive to heavy up in the upfront market, where they can lock in prices for the coming year.

If scatter prices are falling, buyers are more inclined to hold back in the upfront and take their chances buying ad time as needed later in the year, hoping that prices remain low.

The worry, of course, is that between now and late May a lot could change, and the upfront outlook could change with it.

One noted forecaster, Jack Myers of the Jack Myers Report, is holding off making any forecasts for this year's market, citing the dicey economy, which he says is making it hard for both buyers and sellers to craft an upfront strategy.

Says Myers: “The upfront will be especially confusing and complicated this year.”

Some cable networks have already met with media buyers to present their upcoming shows, and more will do so in the coming weeks. Most of the broadcast networks will unveil their fall lineups in May, though NBC will do its presentation next month.

In years past, it seemed assured that each upfront would bring a shift in ad dollars from broadcast to cable as the cable networks increased their share of viewership at broadcast’s expense, but that's become less certain as cable has matured and the growth slowed.

Meanwhile, the pace of this year’s upfront is moving along much as it has in the past, says Harry Keeshan, executive vice president of national broadcast at buying shop PHD.

“I don’t see the pace slowing down,” he says. “We’re flat out on the same schedule, just about, as we were last year. We are analyzing our positions. It hasn’t slowed at all and I don’t anticipate a change in the pace.”

While formal negotiations won't take place until May, after the broadcasters hold their presentations, buyers have begun having internal upfront discussions, and some initial talks have taken place with networks.