Network TV 2008/2009 Upfront Pricing Report

As the advertising economy softens heading into the holiday season, and as 2009 forecasts look increasingly bleak, the broadcast and cable networks are looking smart for having sold a higher percentage of their inventory for the 2008/2009 Upfront season. The five broadcast networks sold an estimated four to six percent more commercial inventory in this year's Upfront. Primetime costs-per-thousand increased an average 7.5% to 8.0% over 2007/2008 Upfront CPMs. Three network evening news CPMs increased an average 6.5% and late night CPMs increased an average 5.5%, driven by NBC's estimated 6.0% CPM gains. Daytime CPMs grew 8.5%.

ABC-TV and The CW led the industry with average 9.0%+ and 8.5% increases respectively, followed closely by Fox at 8.0% to 8.5%, CBS at 6.5% to 7.0% and NBC at 5.5% to 6.0%. Cable network Upfront costs-per-thousand increased an average 6.8% to 7.5%, with TBS/TNT, USA Network, Scripps and ESPN generating CPM gains averaging between 8.0% and 9.0%. News CPMs were also strong.

Cable's CPM growth is noteworthy since the industry experienced some year-to-year ratings growth and several networks grew their subscriber base. Availability of increased inventory supply often has a negative impact on costs. In addition to CPM gains, cable sold an estimated ten to twelve percent more inventory in this year's Upfront compared to the prior season.

Primetime broadcast network Upfront revenues have been extensively reported at $9.2 billion, but Jack Myers Media Business Report does not confirm Upfront sales due to significant disparities between the revenues reported by networks and the spending levels reported by media agencies. The reported figure would represent a 3.0% to 4.0% decline from last year, resulting from year-to-year ratings losses. Cable Upfront revenues are estimated at $7.8 billion, an 11.0% to 12.0% increase. Upfront sales are partially cancelable although it appears few advertisers have been exercising their options to date. The worsening economy could quickly change that.

ABC and CBS both captured 26.1% of Upfront broadcast network spending, with NBC and Fox each booking 20.7% of spending. Advertisers spent 6.5% of their budgets on The CW.

Television networks' strong Upfront performance reinforces advertisers' continuing dependence on and confidence in the television medium even in the face of dramatic 21% year-to-year primetime audience erosion. The Writers Guild of America strike contributed to audience declines and agency executives are closely watching Fall season premieres to ascertain if viewers are returning this season and how many new series, if any, can be successfully launched.

Because the networks sold substantially more of their available inventory this year, they approach the economic crisis in better shape than most other media. If ratings hold steady or even increase, they will have inventory remaining to meet possible demand. Scatter markets have been very soft, but networks have little incentive to drop costs below Upfront levels. News networks have been generating some of their largest sustained ratings in history due to public interest in the presidential campaign and several major hurricanes.

Jack Myers Media Business Report will publish our 2009 Media Spending Forecasts on October 13. Although the national television marketplace remains comparatively secure heading toward 2009, there will be little good news to report. Some sectors, almost all video-related, will experience growth, but there are few positive trends to report.

About Jack Myers: For more than two decades, Jack Myers has been the media industry's leading analyst, researcher and advisor on relationships among marketers, agencies and media sellers, providing business development services and custom insights on relationship best practices to more than 200 marketers, agencies, media companies and industry service providers. Jack can be reached at jm@jackmyers.com.