Analyst: (Television) Upfront Sales to Fall 2% to 14% (Dinosaur Media DeathWatch™)

Broadcast TV networks' upfront advertising sales will be down this year, posting a drop of between 2% and 14%, a leading Wall Street analyst said.

A "material decline is probable given ratings declines, the disruption in the development cycle due to the recent writers' strike and economic woes," Jessica Reif Cohen of Merrill Lynch said in a report published yesterday.

Next week, the broadcast networks will meet with advertisers, presenting their fall schedules in what are expected to be less lavish circumstances than in past years. Production disruptions from the 100-day Writers Guild of America strike, as well as uncertainty about the economy, have contributed to the more conservative approach. Some networks this year are eschewing Broadway-show-style presentations, which generally mark the start of negotiations to buy ad time for the new TV season.

'Bull case scenario' In what Ms. Reif Cohen called her "bull case scenario," the broadcast networks would take in $8.79 billion in prime-time ad commitments during the upfront, down 2% from last year. Including daytime, late night and news, the broadcasters' take would decline 2% with commitments of $11.05 billion, she said.

In prime time, Ms. Reif Cohen projects Fox up 2% to $1.85 billion, but the other big broadcasters taking a hit. She sees CBS off 3% to $2.2 billion, ABC falling 2% to $2.35 billion and NBC down 1% to $1.78 billion. The CW's total is expected to decline 15% to $560 million.

In Ms. Reif Cohen's "bear case scenario," upfront spending for the broadcasters in prime time would fall 14% to $7.73 billion. Including other parts of the programming day, broadcast spending would decline 12% to $9.88 billion by her reckoning.

Under the gloomier forecast, Fox's take would be down 12% to $1.59 billion, ABC sales would drop 15% to $2.04 billion, CBS would be down 15% to $1.93 billion, NBC would decline 13% to $1.57 billion and the CW would plummet 15% to $560 million.

Availability of inventory "The key question for whether commitments are really down materially may be sellout," Mr. Reif Cohen said in her report, referring to ad inventory.

"If networks truly believe in a fourth-quarter recovery, then they may decide to hold back inventory and try their luck in the scatter market," she said.

"Conversely the difficult macro environment could lead the networks to offer more flexible cancellation options for advertisers" to bring more dollars into the market.

Ms. Reif Cohen said this year's situation mirrors the bear markets of 1991 and 2001, when prices were flat, ratings were down and networks sold 5% less of their inventory during the upfront.

In her bullish scenario, the cable upfront would rise 5% to $8.06 billion. In her bear case, it would decline by 3% to $7.45 billion.

"While ratings strength and CPM increases would suggest more upside, the economic slowdown could constrain growth," she said.

Syndication is seen as coming in flat in the best case scenario and down 10% in the bearish case, Ms. Reif Cohen said.

"There are a thousand hacking at the branches of evil to one who is striking at the root." ~ Thoreau

Old school politics:

Elites instruct masses about politics and social values chiefly through television, the major source of information for the vast majority of Americans. Those who control this flow of information are among the most powerful persons in the nation. In 1972 virtually every family in America (99.8 percent) had a TV set, compared to only 19.8 percent in 1952. Thus, it is only recently that TV newsmakers rose to power. Newspapers have always reported on wars, politics, crime, and scandal, just as they do today; but the masses of Americans did not read them. Instead, they quickly passed over the headlines to the sports and comics, pausing perhaps at the latest scandals and violent crimes. But television is the first really mass communication form. Nearly everyone, including children, watches the evening news. And over two-thirds of the public testify that television provides "most of my views about what is going on in the world today."¹ But TV has its greatest impact because it is visual: it can convey emotions as well as information. Police dogs attacking blacks, sacks of dead American GIs being loaded on helicopters, scenes of burning and looting in cities, all convey emotions as well as information.

2 Sam 1:25a

25a
How are the mighty fallen in the midst of the battle!

The Media Debate, Part Deux
To paraphrase, the battle for print publishing is over, the battle for media itself has begun…

Several years ago, Leo Laporte predicted that 2007 would be the year of the podcast, and that 2008 would be the year of online video. He was pretty much right on the money.
Things have changed for big media in so many fundamental ways. In so many ways the problems facing video providers (formerly known as “television”) are, as with the print publishers, about delivery means. Here again we have a quaint and outmoded delivery means that enforces some rather bizarre requirements upon its users. Let’s step back and have a look, pretending we’re looking at television for the first time.

A schedule? Why can’t I watch what I want, when I want?
I have to pay for access so they can advertise to me?
I have to pay extra for access to movies? Didn’t I already pay you?
What was up with that “Writers Strike”?
How much “Sur-reality” programming do you really need?

The fight in broadcast media actually started with the advent of cable, has slowly simmered through the days of vcrs and on [to] the Tivo revolution. A core constituency of viewers was trained to expect to be able to get what they want when they want it, and once that genie is out of the bottle, you’ll never get it back in.

Back in the day when we had 4 of 5 broadcast channels to choose from and they went off the air sometime after Johnny Carson, we were quite happy to take our video on their terms. Then, the big three networks schedules really meant something, since that was what we were going to have to watch. Now we’ve got hundreds of cable channels and the networks are hemorrhaging viewers. Look at what’s happened to the nightly news cast viewership if you don’t believe me.

(excerpt)

John Wallace, NBC Universal president of local media, concurs:

Mr. Wallace said local television "has a perception issue right now as to whether it is a sustainable business long term." Once a huge generator of cash for media companies, local stations, whose audiences are "eroding and aging," have become "slow-growth business," Mr. Wallace said, now averaging between 1 percent and 3 percent revenue growth.

"We look at our content and we believe it’s relevant content," Mr. Wallace said. "It's just not convenient because of the way people’s lives have changed with technology."

http://online.wsj.com/article/SB121036785731781477.html?mod=todays_us_page_one

‘Upfronts’ Go Low Key
By REBECCA DANA
May 10, 2008

During this strike-wounded TV season, some television executives consoled themselves by saying that the turmoil might at least prompt changes in one of the industry’s more cumbersome traditions: the annual “upfront” presentations to advertisers. In a world of year-round program introductions and digital video recorders, these expensive pep rallies to trumpet the “fall season” seemed old-fashioned.

No such luck. This year they need upfront razzle-dazzle more than ever.

Two weeks into the May “sweeps” period, when the networks trot out their best attention-grabbing programming and audiences are usually among the largest of the year, ratings for the broadcasters are down about 20% from last year, according to Nielsen Media Research.

Spooked advertisers will be looking for a sign from network executives that autumn will bring the return of those viewers who defected to cable and the Internet during this winter’s crippling 100-day Hollywood writers’ strike. They will want further assurances that a possible actors’ strike this summer won’t disrupt next season as this one was.

The strike delayed by several weeks the traditional spring development period, where networks and studios decide which veteran series to pick up for another year and order pilots for new shows. Consequently, the networks will have few polished pilots to show advertisers.

Instead, the networks have prepared an array of low-key presentations, combining scant video clips with plenty of evocative descriptions of the shows yet to come.

Executives will emphasize the past year’s efforts to dramatically expand broadcast television’s presence on the Web, whether with home sites such as Walt Disney Co.’s ABC.com1, or other video-streaming sites, including Hulu.com2, a joint venture between News Corp.’s Fox and General Electric Co.’s NBC Universal.

snip

A newsmaker named Michael Bay, executive producer of the recent movie "Transformers," shares his thoughts on a SAG strike.

Oh my god. SAG wants more than Directors and Writers? That's a smart tactic I guess. When are people going to understand, most importantly actors - we are at war - we are facing a major recession - our country is in dire need of being fixed - our country also has no money because we have given trillions to the Iraq war and we have NOT even started to pay for it - it is just paid right now by printing more money on presses - China owns our ass in every way. Why not strike on a business in a down fall. Just like the writer's they made pennies on the four extra months striking - when you do the real math and they are paying the price for it still - so many writer's out of work still!!! I want this business to thrive - I know the studio heads and they will punish those that defy them. Okay, be an idealist - but you will never get a better deal then the writer's or directors - only the same - the studio's will never allow it, don't kid yourself. The working actors don't want a strike - they have said so. Too many non working actors have a say which is crazy - maybe there are just too many actors?? Gosh I'm even a member of SAG, but I don't feel I've earned the right to vote in this guild.

One hunch, the leaders of these guilds seem to like the limelight they get in the press, it becomes more about the ego in the room rather than something smart. Striking is not smart. Through the history in America, strikes in businesses have only gained the union worker 6% at the max - so take the emotion out of it and go for the 6%. A path to strike is not smart for the the hundreds of thousands of people in this business. Sanity needs to prevail here - talk real and talk the same talk as your union brothers - not more!

Mr Bay's fine argument may fall upon deaf ears to a rank-and-file that perceives him as the man on the Kremlin balcony.

Disclaimer: Opinions posted on Free Republic are those of the individual posters and do not necessarily represent the opinion of Free Republic or its management. All materials posted herein are protected by copyright law and the exemption for fair use of copyrighted works.