LOWDOWN ON THE UPFRONT: Cable ‘Better-Positioned’ Than Broadcast: Analyst
Merrill Lynch’s Reif Cohen Projects Cable’s Take At Up To $8.1 Billion
By Mike Reynolds -- Multichannel News, 5/8/2008 1:13:00 PM
When it comes to the 2008-09 upfront advertising selling season, cable is “better-positioned” than broadcast, according to Merrill Lynch analyst Jessica Reif Cohen.
Reif Cohen, presenting both “bull-case” and “bear-case” scenarios, forecasts that cable’s take in the annual Madison Avenue bazaar, during which networks sell commercial time for the upcoming TV season, could fall somewhere between $7.45 billion and $8.06 billion.
“We expect cable networks to materially outperform the broadcast nets, increasing commitments 5% in our bull-case scenario and falling 3% in our bear-case scenario,” Reif Cohen wrote in the report titled, What Happens If The Upfront Is Down A Lot.
“While ratings strength and CPM increases would suggest more upside, the economic slowdown could constrain growth," she continued. "Cable networks focused on the adults 18-to-49/25-to-54 demographic should show the best performance, a continuation of recent strong performances, as the key beneficiary of falling broadcast ratings.”
Reif Cohen’s cable's projections come off a $7.68 billion base for the 2007-08 upfront season. That estimate, according to Merrill Lynch, represented a 3% increase over the $7.31 billion the national cable networks took in during the 2006-07 upfront selling season.
Conversely, Reif Cohen predicts only downturns ahead for the broadcast medium.
On the high end, Merrill Lynch projects broadcast’s primetime take could reach $8.79 billion. On the low end: $7.73 billion.
Those projections came off a base of $8.98 billion for the 2007-08 upfront, a total that marked a 2% gain from $8.71 million the prior year.
“We anticipate that the broadcast upfront will be marginally down in a best case scenario and that a material decline is probable given ratings declines, the disruption in the development cycle due to the recent writers’ strike and economic woes,” she wrote. “Our bull case scenario (-1%) assumes low to mid single digit CPM increases for broadcast television, a 5% decline in ratings guarantees relative to last year’s upfront and flat sellout. Our bear case scenario (-14%), which we see as far more plausible, assumes flat CPMs, high single digit declines in ratings sold and a 5% drop in sellout across all networks.”
As for the individual networks in primetime, Cohen, under the best-case scenario, foresees Fox growing 2% to $1.85 billion, but all the others would decline: CBS, 3% to $2.2 billion; ABC 2% to $2.35 billion; NBC to $1.78 billion; and The CW 15% to $560 million.
Under her bear view, double-digit drops would ensue everywhere: 12% for Fox to $1.59 billion; 15% for ABC to $2.04 billion; 15% for CBS to $1.93 billion; and 13% for NBC to $1.57 billion. Once again, The CW would decline 15% to $560 million.
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