MUMBAI: The American 2004/05 broadcast network upfront advertising season was officially kicked off in the second week of May and the network presentations to ad buyers ended on 20 May. The coming days might see ad buyers finalising their strategies and going for the deals. Business is already selectively being placed at the cable networks.
According to financial management and advisory giant Merrill Lynch's 2004/05 upfront marketplace revenue forecasts for the broadcast and cable networks, the four major broadcast networks are expected to increase total upfront dollar commitments 4 per cent in 2004/05 to approximately $8.4 billion. Merrill Lynch predicts 10%-11% CPM growth at Viacom's CBS.
Though scatter pricing remains modestly up, last year's exuberance of "across the board" double-digit CPM and total dollar increases for all networks would be missing for 2004/05 upfront, predicts Merrill Lynch. Merrill Lynch estimates 0%-3% CPM gains at ABC; 8%-9% CPM growth at NBC and FOX; and 10%-11% CPM growth at CBS. Though these projected CPM increases are for primetime, the good news is that the ad buyers have also started taking care of "value day-parts," such as early morning and daytime, now.
Merrill Lynch anticipates a bifurcated broadcast network upfront performance led by CBS (up 12% to $2.45bn total dollars; MLe) with the largest CPM gains and the most consistent schedule. NBC (up 2% to $2.95bn; MLe) is expected to hold its own with the onus is now on The Apprentice, which replaced Friends. FOX (up 3% to $1.55bn; MLe) is somewhat of a wildcard given its bold strategy of year round programming, and ABC (down 3% to $1.45bn; MLe) is aiming to stabilize from a clear down trend.
In terms of total upfront dollars across all TV formats and day parts, Merrill Lynch estimates a 10% increase, approaching $23 billion, led by a $500mn share shift from broadcast to the cable networks. Merrill Lynch believes that total dollars for the cable upfront will reach $6.6 billion, up 20% (increase of $1.1 billion) on a combination of 8% secular ratings growth (A18-49, excluding news), varying CPM gains across networks, and relatively consistent inventory sellout across the bulk of key cable networks (historically 40%-60%).
Merrill Lynch expects Viacom's MTV Networks, Fox's relatively newer networks including FX and Fox News, and Time Warner's Turner Entertainment Networks to do well while highly targeted niche cable networks (such as Discovery Networks and Scripps) successfully leverages product integration and ad frequency.
Merrill Lynch predicts Viacom to be the biggest winner in this year's upfront. The reasons it list out to back the chances for Viacom are CBS' impressive ratings which are up 4% in total households and 3% among A18-49, and MTV Networks showing solid ratings gains across the board. Affirming its dominance among younger viewers, MTV commands 23% share of viewers A18-34, up an impressive 500 bps vs. 18%. Nickelodeon appears to have enjoyed double-digit pricing increases vs. a year ago in the kids segment. Viacom will allow advertisers to purchase advertising across several networks in a single spot, offering significant audience in a single buy, suggests the Merrill Lynch forecast.
