Syndication upfront: Sickness unto death

'The syndicators have effectively ridden the coattails of the networks.
So what you’ve got is artificially inflated demand that happens year over year. But it eventually it catches up with you, and I think there is a little bit of that happening this year.'

Syndication upfront:
Sickness unto death

Down 25 percent from lackluster 2000 sales

By Kevin Downey

    Each bit of news that trickles out of the painfully prolonged upfront ad-selling season gets worse.
    The latest is that most major deals are now done in the syndicated television upfront, according to media buyers.
    And to put it mildly: It ain’t pretty.
    Syndication’s total ad dollar intake stalled at $1.5 billion, according to most media buyer estimates. That translates into roughly a 25 percent drop from last year’s already stagnant ad market.
    "It’s not surprising to anybody that it’s a soft market," says one media buyer.
    "But it varied among syndicators, in terms of the amount of time it took to come to the realization that it was as soft as it was. Those who took their medicine early probably had a better share story than those who waited."
    Accurate estimates for syndication’s final upfront are a bit hard to come by.
    Last year, the Syndicated Network Television Association estimated that its 2000 upfront was flat at about $2.4 billion. But media buyers say the actual intake more likely hovered around the $2.0 billion mark.
    Either way, the drop to $1.5 billion in ad dollars is dramatic and surpasses the pain endured in the network and cable upfronts.
    Ad spending on network TV, which was the first upfront to get underway, was down about 14 percent–or $1 billion–to just under $7.0 billion. While some deals are still being made in the cable upfront, spending is expected to be down 17 percent to $3.8 billion.
    One key factor in syndication’s drop in ad dollars is the same factor that the broadcast and cable networks faced this summer: demand from advertisers is way down.
    "Syndication, as a vehicle, is not supported by as many advertisers as the broadcast and cable networks," says one media buyer.
    "So when you start with a lower base and you have a soft economy, you get hit a lot harder."
     But syndication is perhaps suffering hardest this year because its ad dollars may have been pumped up too high in years past.
     "For the last couple of years we may have gotten swept away in the momentum of the upfront," explains one buyer. "And the syndicators have effectively ridden the coattails of the networks.
    "So what you’ve got is artificially inflated demand that happens year after year. But eventually it catches up with you and I think there is a little bit of that happening this year."
    Soft advertising demand means that the rate syndicators charge for advertisers to reach 1,000 viewers–the CPM–comes down.
    "The very top tier shows received decreases similar to the network primetime decreases," says a broadcast buyer in the Midwest.
    "When you talk about top shows, you’re probably talking about five and they are not reflective of the overall marketplace.
    "Beyond that, they were much steeper. My guess is the top-tier went between negative eight and 10; for the middle tier it was down 11 to 16 percent; and then there was the 20-plus for the third tier," she says.
    Another reason for the overall decline in ad dollars is the amount of inventory that has been sold.
    Media buyers say that while syndicators typically sell up to 80 percent of commercial spots in the upfront, this year the percentage is down to an estimated 50 to 60 percent.
    While syndicated television, like the broadcast and cable networks, can chalk up a grim upfront season to the weak economy, its problems go well past the ups and downs of the economy.
    Ratings for syndicated shows have been down across the board for years.
    And the fall season is not expected to turn things around. Poor initial ratings for shows like "Iyanla" seem to confirm the worst predictions.
    The irony of syndicated TV’s troubles, say media buyers, is that in the scheme of all television ad time available to them, syndication represents a pretty good deal for many advertisers.
    "There are really some advantages to purchasing syndication," says one buyer.
    "If you were to buy fringe in syndication, as one example, cable is probably indexing at about a 60 on price but is probably indexing at about a 20 on ratings."

-Kevin Downey is a staff writer for Media Life.

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